by - January 12th, 2005
In October of 2004, Seth Jayson wrote a piece about Apple for a Fool vs. Fool debate titled "Apple is Rotten" (see our full coverage for more information). He, of course, took the con side of Apple when it came to investing. On Wednesday, Mr. Jayson penned a new piece called "Apple's Magic Act" that takes a more aggressive and direct approach to completely dismissing everything announced by Apple this week at Macworld Expo.
Operating from the premise that Apple's stock is still overvalued, and that target prices of US$100 from analysts like Piper Jaffray's Gene Munster are way off base, Mr. Jayson said that the iPod shuffle (or iPod waffle as he called it) and Mac mini are the wrong products to make Apple a better investment.
"Unfortunately for Apple shareholders," wrote Mr. Jayson, "Jobs had to pull a rabbit out of a hat. He did yank out a couple of cute little white critters, but let's just say Dumbledore's position looks pretty safe for now. There's nothing particularly magical about either of these, and that may add up to trouble for everyone expecting Apple stock to continue its moon shot."
Concerning the Mac mini, Mr. Jayson wrote: "The Mac Mini -- I'm pretty sure Minimac is something you get from Kraft -- is a cute little device. Yes, it cribs mercilessly from PC-based mini-ITX designs that have been around for over a year now, but it does put low-end Mac guts into a smaller, stylish little Mac package. The most interesting magic trick here is the illusion -- somehow completely lost on the mainstream press -- that this is really a $500 computer. Check out this sleight of hand."
From there, Mr. Jayson takes exception to the lack of a keyboard, mouse, and monitor for the Mac mini, and compares it unfavorably to a $450 box with monitor from Dell.
About the iPod shuffle, he wrote: "Jobs also introduced a cute little flash-based iPod subtitled the 'waffle,' I mean, 'Shuffle.' Silly me, where did I get waffle? Oh yeah, the famously opinionated CEO derided the need for a display and visual user interface on this model, saying that it would be too small to be useful. Need I point out the irony in that point of view?"
His angle is the fact that Steve Jobs has dismissed flash-based music players in the past. Dismissing a market and then saying that Apple has finally fixed whatever kept that market from being viable is actually a long-standing pattern for Steve Jobs. He did so with the original iPod and the iTunes Music Store when both products were introduced.
The rest of the piece is dedicated to explaining why Apple can't grow with the iPod forever, and is therefore obviously not worth the stock price where the company is currently trading. In the process, he calls Walt Mossberg of the Wall Street Journal "Mac-happy,"" and hurls a few more somewhat pedantic epithets at Apple and its products that are similar in sophistication to calling the iPod shuffle the iPod waffle.
In his usual myopic look at Apple -- his perpetual doom and gloom has yet to be born out -- Mr. Jayson is both selective in his criticism and in what he doesn't mention. For instance, when he said that the iPod can't sustain Apple's growth indefinitely, he never mentioned the notion that Apple could develop, and will need, other innovative devices, and perhaps new markets, to achieve new growth. He doesn't allow for the iPod to evolve into new uses.
Similarly, when criticizing the Mac mini's lack of keyboard, mouse, and display, he doesn't acknowledge the idea that many potential Switchers want to be able to continue to use their existing peripherals and displays, instead focusing on the fact that buying those products from Apple bumps the price of the mini to about $800.
All of the issues he raises certainly merit discussion and being pointed out, but in the end, his analysis is marred by his obvious issues with Apple and the Mac platform. He called Mr. Mossberg "Mac-happy," but it would be fair to call Mr. Jayson "anti-Apple."
You can read the full article at the Motley Fool.
Bryan Chaffin owns shares of Apple.