Apple, once the world's most valuable company, experienced a significant decline in market value from 2021 to 2025, falling to third place. This backfiring is attributed to a strategic shift under CEO Tim Cook, prioritizing financial engineering over product innovation, a stark contrast to Steve Jobs's hardware-first philosophy.
Jobs focused on creating great products, leading to unprecedented growth and not paying dividends or engaging in stock buybacks. Under Cook, Apple initiated massive dividend and buyback programs, appealing to shareholders but leading to stagnant product design and innovation, evidenced by minimal changes in iPhones and other devices. Apple's AI, Siri, also lagged behind competitors due to reliance on outdated technology and underinvestment in AI chips, with the "Apple Intelligence" initiative facing delays and accusations of false advertising. The company's increased spending on stock buybacks over research and development highlights its current profit-driven approach, potentially leading to long-term decline.
Apple's Market Cap decline from 2023 to 2025
[
00:00:20
]
Steve Jobs believed that creating great products was the secret to Apple's success, a philosophy proven when he saved the company from bankruptcy in the late 1990s.
Jobs's Approach to Saving Apple:
He rejected advice from prominent figures like Gil Amelio and Michael Dell to break up the company, sell hardware, or shut down.
He also disregarded Larry Ellison's advice to move away from hardware and focus on software, despite software companies like Microsoft enjoying 80% profit margins compared to Apple's 35%.
Jobs's plan centered entirely on hardware, cutting Apple's 20 computer models to just four, starting with the iMac.
The iMac became Apple's bestselling computer, restoring profitability and shareholder confidence.
This hardware focus also led to iconic products like the iPod and iPhone.
Profit Margin comparison between Microsoft and Apple
[
00:01:40
]
Jobs's Stance on Stock Price and Financial Engineering:
He was not overly concerned with Apple's stock price, believing that great products and customer communication would naturally lead to stock growth.
Upon his return in 1997, Apple's stock was at $0.10, and by his departure in 2011, it was $11.50, an 11,400% growth.
This growth was fueled by major product releases every other year: iMac, iBook, iPod, iPod mini, MacBook, iPhone, and iPad.
Jobs never paid dividends or allowed stock buybacks, prioritizing strengthening Apple's enterprise value over directly rewarding shareholders.
Apple's Stock Price from 1997 to 2011
[
00:02:40
]
Apple's Stock Price and key product releases from 1997 to 2011
[
00:02:59
]
Accumulation of Cash: By the end of 2010, Apple had almost $27 billion in cash, and Jobs consulted Warren Buffett on how to utilize it. Buffett suggested acquisitions, dividends, or stock buybacks. Jobs had already acquired Siri but was uninterested in other companies and refused to implement dividends or buybacks, a practice only seen during his absence.
Apple's Cash on Hand from 1997 to 2010
[
00:03:49
]
Warren Buffett's suggestions for Apple's cash
[
00:04:09
]
Tim Cook's Era: Prioritizing Financial Engineering [00:05:19]
Upon becoming CEO in 2011, Tim Cook, known for his financial and logistical expertise, shifted Apple's focus from industrial to financial engineering.
Implementation of Dividends and Buybacks:
Less than seven months into his CEO tenure [2012], Cook initiated Apple's first dividend and stock buyback program.
Initially planning to spend $45 billion from 2012 to 2015, they ended up spending $80 billion, almost doubling the amount.
Apple's stock price responded positively, increasing from $17 in 2012 to $27 in 2015.
Apple's Buyback & Dividend Spending from 1995 to 2015
[
00:06:08
]
Apple's Stock Price from 1997 to 2015
[
00:06:18
]
Warren Buffett's Investment:
Warren Buffett, traditionally against investing in tech companies, invested a billion dollars in Apple in 2016, a sign of confidence in Cook's financial strategy.
This implied that the company's shift toward financial engineering was understandable and attractive to investors, potentially sidelining product development.
Impact on Product Innovation and Design [00:07:09]
Cook's financial focus led to a decline in product innovation and design, causing friction within the company.
Jony Ive's Diminished Influence:
Tim Cook's limited involvement in Apple's design studio (monthly visits vs. Jobs's daily presence) led to a perception of decreased design priority.
Chief Design Officer Jony Ive, once a powerful figure, found his ideas challenged by finance and marketing executives, especially if they increased costs.
An example was the Apple Watch launch event, where Ive's elaborate $25 million plan for a fashion-like introduction was met with resistance, though eventually approved.
These conflicts led Ive to distance himself from Apple, working remotely and delegating tasks, eventually leaving the company.
Shift in Leadership and Product Strategy:
Cook replaced marketer Mickey Drexler on the board with James Bell, a finance chief from Boeing, further signaling the shift towards financial oversight.
The design team felt they were "turning the crank for one similar product after another," evident in the minimal design changes from iPhone 6 to 8 (2014-2017).
Comparison of iPhone 6, 6S, 7, and 8 models
[
00:09:37
]
Unprecedented Price Hikes:
While product innovation stagnated, Apple aggressively increased prices.
For seven years (until 2017), the flagship iPhone maintained a $650 price, effectively becoming cheaper with inflation.
The iPhone 8 and 8 Plus saw initial price increases to $700 and $800.
The iPhone X in 2017 shocked the market with a $1,000 price tag, a 30% increase from the previous model.
Subsequent models like the XS Max ($1,100) and 15 Pro Max ($1,200) continued this trend.
Even budget models like the iPhone SE [2020] and 16e saw significant price increases.
The average selling price of iPhones rose from $657 in 2016 to $974 in 2024.
Innovation vs. Profit Margins: An internal email from 2020 revealed Apple's strategy to innovate "just enough" to keep customers buying, without affecting profit margins, which the video labels as corporate greed.
Internal Apple email discussing "good enough" features
[
00:13:16
]
Failed Product Launches and AI Stagnation [00:13:56]
Apple's profit-driven approach also led to missteps in new product releases and a significant lag in AI development.
AirPower Fiasco:
In 2017, Apple announced AirPower, a wireless charging mat, as a "sneak peek" alongside new iPhones capable of wireless charging, despite the accessory not being ready.
The goal was to prevent customers from buying competitors' chargers.
Despite packaging mentions and iOS updates suggesting support, AirPower was delayed multiple times and eventually canceled in March 2019, marking the first time Apple publicly canceled an announced product.
This misstep could have been avoided by adhering to Jobs's historical practice of announcing products only when ready.
Historically, Apple products were released soon after announcement (e.g., iMac in 3 months, iPod in 2 weeks, iPad in 2.5 months).
Under Cook, delays became routine: Apple Watch (7 months), Apple TV Plus (8 months), Apple Card (5 months), 2019 Mac Pro (6 months), Vision Pro (8 months).
Months until product release comparison chart
[
00:16:55
]
Siri's Decline and Apple Intelligence Issues:
Despite pioneering voice assistants with Siri in 2011, Apple quickly lost its lead to Google Assistant and Amazon Alexa, with Siri's accuracy dropping significantly by 2017 (62% vs. 90%).
Siri's foundational rule-based technology was outdated compared to modern generative AI's transformer-based systems.
Apple struggled to catch up in the generative AI race, with other tech giants (Meta, Microsoft, Google) investing heavily in AI chips, while Apple lagged with far fewer and older chips.
A request for 50,000 new GPU chips was approved by Cook but blocked by Apple's finance team, forcing Apple to rely on Google's cloud computing for AI infrastructure, hindering optimization.
AI Chip Quantities in 2023 for major tech companies
[
00:20:04
]
Apple Intelligence Controversy:
In 2024, facing shareholder pressure over its AI strategy, Apple announced "Apple Intelligence" with a demonstration that former Siri team members claimed was "fabricated."
Key features, including an improved Siri, were delayed from October 2024 to early 2025, and then to 2026, or even 2027 by internal estimates.
A notification summary feature had to be removed due to spreading fake news, like misrepresenting a BBC article's headline.
This led to a lawsuit for false advertising, as Apple Intelligence was advertised as exclusive to new products to boost sales, despite not being fully ready.
Apple's shift has prioritized cost-cutting and profit over innovation, leading to a decline in its competitive edge.
Spending Priorities: In 2024, Apple led the world in stock buybacks, spending $110 billion, but was less competitive in R&D spending ($30.4 billion) compared to Amazon ($85 billion), Google ($45 billion), and Meta ($39 billion), all of whom have superior AI technology.
Shareholder vs. Product Focus: While shareholders have benefited from Cook's leadership, increasing Apple's market cap to over $3 trillion, this prioritization appears to be at the expense of product innovation.
Tim Cook's Perspective on AI: Cook stated that Apple has "rarely been first" but invented "modern versions" of product categories (PC, smartphone, tablet, MP3 player), suggesting this is how he feels about AI. However, the video argues this is backward for AI, as Apple was first with Siri, but others created the "modern" generative AI.
Risk of Downfall: The video concludes that the current Apple prioritizes profit, and this greed and complacency could lead to its downfall, as it functions more like a finance company than a hardware innovator.
