The Dumbest Tech Company Idea I've Ever Heard

When you've knocked around Silicon Valley for as long as I have, you're bound to hear your fair share of really bad ideas.

And I just heard a bad idea for a tech company that tops them all.

On June 16, The Wall Street Journal suggested that Apple Inc. (Nasdaq: AAPL) drop its Mac desktop computer division.
Specifically, it ran a column suggesting that Apple flush its line of Mac desktop computers.

That idea makes some of the biggest "loser" pitches I heard during my days as an advisor to venture-capital funds sound like polished gems of genius.

tech companyFirst off, slashing its Mac division would sap nearly $6.9 billion - that's 9% - from Apple's top line. Does taking a 9% pay cut sound like a good idea to you?

But that's just the "simple" reason for not following the Journal's advice.

Today, I want to show you exactly why Apple needs to protect tech investors and their hard-earned money from this horrible advice.

And I'll tell you what to do if Team Tim Cook even considers such a move...

The Tech Company's Creative Department's Secret Weapon

At first glance, the Journal's advice might seem smart.

After all, PC makers have been under pressure for years - starting even before the rise of smartphones and tablets.

In late 2004, International Business Machines Inc. (NYSE: IBM) sold off its PC business because of declining profits.

And just two years ago, we saw the worst decline in PC shipments ever - from a 6.9% drop from 88.7 million units shipped in the fourth quarter of 2012 to 82.6 million units in fourth-quarter 2013.

So, from that survivor standpoint alone, Apple's Mac has to be considered the single most successful PC ever.

First released in January 1984, the Mac was the first mainstream PC to feature a graphical user interface - those are the icons on your PC's screen you use to navigate through your computer - and a mouse.

In no time, the Mac turned the creative and publishing industries upside down. Suddenly, advertising agencies, magazines, and newspapers - and later, websites - could use a single computer for just about everything.

To this day, the Mac remains the standard of excellence in just about every creative field, from animation and publishing to website design and engineering.

So, for The Wall Street Journal to suggest Apple should "kill off the Mac" shows an utter lack of understanding of the critical role this device plays in the lives of millions of professionals.

Not to mention Apple's financials. Consider that the Silicon Valley legend makes more profit on Macs than the top five PC vendors combined.

And like I said, Apple sold 5.5 million Macs last year, bringing in $6.9 billion, or 9% of overall sales.

I'm not making this up. This next statement is a direct quotation from the article:

"This would be a crazy thing to say for any other company, but Apple doesn't need this revenue."

They're right. That is a crazy thing to say...

"Sheer Lunacy"

Now, let's drill down and see what the fuss is all about.

As the Journal sees it, Apple should ditch the Mac and instead focus on products that represent "the future" - iPhones, iPads, Apple Watches, and streaming music and TV.

This analysis ignores two key Apple fundamentals:

  • First, it was the big sales and high-profit margins from the Mac that gave the company the intellectual freedom and cash flow to come up with these other breakout devices in the first place.
  • Second, and much more important, the Mac plays a vital role in the family of Apple products. In other words, the Mac is not just a computer - it's the flagship device of Apple's constantly expanding high-tech "ecosystem."

In fact, Apple is the first and so far only company in the world to offer truly "unified computing" to you - the consumer market.

Unified computing is an ecosystem in which all of a home's computers, software, mobile devices, and other pieces of hardware (television, thermostat, etc.) communicate seamlessly with each other.

For instance, the Mac's current "Yosemite" operating system works harmoniously with the iPhone and iPad.

And Yosemite has a "handoff" feature. If you start to write a long email on your phone and put it next to your Mac or MacBook, the PC senses your iPhone and prompts you to complete your email on the larger screen.

At the Apple Worldwide Developers Conference in San Francisco last week, Apple unveiled a number of new features to be included in the fall release of the new Mac operating system, "El Capitan."

The new OS will open software applications about 1.5 times faster than Yosemite does. El Capitan also will significantly improve web searches and, more importantly, file searches - long a hornet's nest of problems for OS developers.

So as you can see, given the crucial role the Mac plays in the whole family of Apple products, it would be sheer lunacy to drop the Mac. And not just because of the $6.9 billion "charge."

It's something much more basic.

Avoiding the Angry Mob

A move like that would enrage tens of millions of Apple users, who are almost fanatical in their devotion to the company. (I'm one of them.)

It would also hurt the company's growth. Just imagine this scenario.

You go out and buy your first iPhone or iPad, fall in love with it - and then decide you'd like to go whole hog on the Apple ecosystem.

You then go to the Apple Store only to be told, "I'm sorry, we no longer sell computers."

That won't fly.

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And it gets worse.

Dropping the Mac would give many of the 135 million people who purchased iPhones over the last two quarters a reason to drop Apple entirely.

Add it all up, and the Journal has just written nothing short of a game plan for disaster.

In fact, should Apple follow this poor advice and drop the Mac, I would be seriously tempted to tell you to sell off this top tech company's shares you own.

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About the Author

Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...

  • He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
  • He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
  • As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.

This all means the entire world is constantly seeking Michael's insight.

In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.

Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.

And even with decades of experience, Michael believes there has never been a moment in time quite like this.

Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.

To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.

His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.

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