Friday, June 08, 2007

Bucking the Trend


Three consecutive days of sell-offs, triggered by interest-rate and inflation fears, have degraded most equity portfolios but two stocks that I follow, Apple (which I own) and Google (which I do not), have bucked the trend. Unlike other tech one-trick ponies, AAPL and GOOG churn out transformational products on a regular basis. Creative organizations are rare, and those that can generate profitable products quickly while maintaining creativity over an extended period are the rarest of them all.

A few characteristics that Apple and Google share:

  • They pay lip service to the transparency of the Internet while zealously guarding the secrets of their proprietary technology.


  • The obfuscate their strategies. Mission slogans such as “think different” and “organizing the world’s information” are too broad to enable outsiders to decipher the companies’ next moves.


  • Many of their products are cheap, or even free.


  • Products are easy to use; the iPod startup menu and the Google home page have a simple, clean appearance.


  • Quality is sufficiently high—although far from perfect—so as not to dissipate each company’s coolness quotient.


  • They introduce so many products (Google Earth, Google Street View, AppleTV, iPhone) over a short period of time that the competition doesn’t have time to adapt.


  • History teaches that Google and Apple can’t keep up the pace. Talent moves on, competition catches up, and governments interfere. Witness how last decade’s tech darlings (Dell, Intel, Microsoft, Cisco--hat tip: Jim Cramer), while still leaders in their respective markets, now appear a step slow. Meanwhile, speaking as a user, fan, and investor, it’s fun to be along for the ride. © 2007 Stephen Yuen

    Stock prices for passé-tech are off from their pre-2001 highs.

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