Revisiting my thoughts on what Apple should do with cash hoard – Feb 2013
A bit over a year ago I posted my thoughts on what Apple should with their cash hoard, at that time it was nearly $70B. While I stand by most of my thoughts then, now they have over $130B in cash, even after planning to disburse over $45B in dividends over the next 3 years.
Earlier today my friend Ben Parr was on CNBC to discuss his thoughts about what Apple should do with their cash hoard now – his suggestions echo many of mine. Instead of trying to issue more stock or pay even higher dividends he suggests that Apple should be using (and probably are) their cash hoard to reinvest in the components they current use and plan on using the future like Flash Memory.
I still stand by my core suggestions from a few years ago with some updates:
- Apple should invest in the Enterprise. Apple’s Enterprise successes are not as well known as their consumer successes. But they have made significant traction in getting iOS adoption within enterprise companies and the willingness of Enterprises to support Macs has been growing. However Apple’s Enterprise offerings in terms of servers and large scale enterprise purchasing and deployment of computing devices is not as well known or well managed. There are many opportunities for Apple inside of the Enterprise to build on the popularity of the iPad and the iPhone to expand upon their successes. Innovative firms and startups as well as independent consultants have for many years now be early adopters of the MacBook line, especially the MacBook air and more recent Retina Display models.
- Apple should consider buying Foxconn (if possible) and buying more of their supply chain in general. Apple since their switch off of Intel processors and onto their own processors has seen their biggest years ever. Buying Foxconn may not be possible due to Chinese laws (and the costs) but they should be looking closely at ways to continue to own much of their core components and their full supply chain as they have shown the very big value they can extract when they do so.
- There is a growing window for an Apple gaming console not (just) an Apple Television. I still think that Apple has a major opportunity to dominant the living room if they were to seriously explore a new gaming console (which also embeds all of the functionality of the latest generations of the AppleTV devices) and which might be paired (though would not require) any new screen that Apple offers as an Apple Television. In 2013 we almost certainly will see the announcement of new consoles from Sony and Microsoft, though whether those will arrive in time for the holiday season in 2013 or won’t show up until 2014 is still open to debate. In either case Apple has an opportunity to explore a new platform to compete with the WiiU, Playstation and next gen Xbox. I said this could happen years ago, I stand by that – in particular the growing power of iOS for immersive games suggests that Apple could do something interesting with a game console. And imagine if instead of a proprietary controller w/screen (ala WiiU) if Apple could allow iPads and/or iOS devices like the iTouch or iPhone to pair with the games console and be used for navigation, data entry and at times as a second (secret) screen. Apple could look at buying a new firm like Ouya (for their controller designs more than their device) or swinging even bigger and far more costly look at trying to buy Valve (and get Steam in the process). There were rumors to this effect in April of 2012 after a visit to Valve by Apple’s CEO but I think it should be given serious consideration. I would, however, guess that the cost might be in the multiple billions.
- Apple should consider buying PayPal from Ebay. Okay this is a wild speculation and new (not part of my previous speculation) but I think that Apple should look at buying PayPal from Ebay. The intersection of a global payment processor with the iOS device global ecosystem (and the new Passbook offering) could be quite significant. Apple could potentially help PayPal find a route into use by millions (hundreds of millions actually) consumers and integration with thousands of developers building upon the iOS and Mac platform. PayPal however suffers from a UI and UX problem (for consumers, merchants and developers) which Apple could potentially help through allocation of Apple designers and developers (and management). What Apple could get is a further extension upon their massive payment processing – i.e. the millions of payment cards linked to iTunes accounts. And among payment processors and applications PayPal is among the most global and Apple is very much a global company today.
- Apple should expand even more globally. Apple is very global already with stores globally and manufacturing on a global scale, but this suggestion is that Apple should also be looking to aggressively hire staff at all capacities globally. This suggestion isn’t, I should note, that Apple should be looking to do this as a cost saving method. In fact I would argue that this should be done whether or not the staff hired globally is cheaper than US alternatives. Instead I’m suggesting that to keep up with a global demand for Apple products Apple should be looking to hire the smartest technologists, designers and business people wherever they live and whatever languages they speak. And I would bet that if they do this aggressively it will be an idea sparked by one of these non-US employees that will lead to their next $1B+ (many times plus) product line. LIkely a type of very Apple product that might never occur to their US based staff (either in type or in the business potential)
- I still think Apple should attempt a national (at least) Wifi network. Legal issues and barriers may make this functionally impossible (liability for open Wifi hotspots in particular) but if Apple could find a way to help support the richer spread of municipal wifi networks as well as the overall expansion of actually good broadband throughout the US that can only help their ongoing sales (in all categories). However there may be too many issues around this for them to consider.
What are your suggestions for how Apple should spend their billions?