VC: Apple has largely lost its 'mojo'
Former Facebooker Chamath Palihapitiya says Apple is merely producing more of the same and is "screwed."
When a VC looks at the world, he doesn't look at it with a generosity of spirit or a loving eye.
He looks at it in terms of cold, crinkly cash.
This can lead to definitive views of what the future holds. Not much cash=bad. Lots of cash=good.
This context might be borne in mind when hearing the views of Chamath Palihapitiya, as he expressed them to Bloomberg's Emily Chang.
The former Facebooker, who now describes himself as "An Aspiring Merchant Of Progress," marveled at how brilliantly Facebook was marshaling its forces.
"WhatsApp will turn out to be the cheapest and smartest acquisition done probably by any Internet company," he said.
See that word? "Cheapest."
Palihapitiya predicted that WhatsApp will have more monthly active users than Facebook. Indeed, Facebook has the world surrounded, apparently, with not only social networking, but instant communication.
Google too, he said, is doing a wonderful job of unlocking (translation: owning, so that it can use it to sell ads) the world's information. Which means cash money.
And then there's Apple. Arguably the world's largest company, with arguably the world's most popular brand, is surely appealing to a VC who finds money appealing.
"I think they're screwed," said Palihapitiya.
He explained: "These guys have lost largely their mojo."
So why on Earth are those boys and girls in tight trousers queuing around the block to buy the latest Apple products? Perhaps they simply haven't got the progressive message yet.
Palihapitiya was especially critical about Apple's purported deal to buy Beats. He described the latter as a low-margin hardware business. How can this possibly be worth $3 billion?
If Apple is interested in a music service, he said, it could simply slap down $10 billion to buy Spotify.
"Why not buy the Number 1 for three times as much than buying an also-ran for $3 billion?" he sniffed.
Whether Apple comes out with a TV, a new phone or a smartwatch, it's "more of the same," according to the money man. No one ever made big money by selling more of the same, did they?
Some might say that Apple has done very nicely by not pushing into areas that consumers reject. The company essentially created the tablet category, makes most of profits that phones offer, and still has an ecosystem that breeds uncommon loyalty.
Still, for this VC, content is wafting up to the cloud. Devices are "getting cheaper and becoming more abstracted." Apple is, therefore, "in a race to the bottom."
Apple seems to have resisted this so-called race for a long time. It has turned its nose up at the bottom and built a cash-rich, still-thriving business.
As wily commentator Jean-Louis Gassee pointed out, VCs -- Fred Wilson, for example -- might not entirely appreciate that Apple doesn't sell hardware, but a totality of experience that gives it a huge strategic advantage.
There's always a temptation to put all your money and support behind what seems like the future. But people's basic needs can change less radically than it appears.
Palihapitiya might be convinced that Apple needs to buy "the winners in software," such as Dropbox and Spotify.
But perhaps he underestimates the value of things that have been around for a while. Not so long ago, he was the man who described the government as "completely useless."
Yet still somehow governments persuade enough people to elect them and even occasionally have enough cash to bail out banks who behave with a clueless recklessness.
The world's a complicated place. One of Apple's strongest virtues is how it tries to make it simpler. People like that.
It makes them feel less screwed.