It's a lot of work, being popular: Apple, Tim Cook and the gilets jaunes

No phones for the sans-culottes? It's an interesting strategy

Comment People participating in the so-called gilets jaunes* populist protests in France looted an Apple Store in Bordeaux earlier this month – taking care to snaffle the high-tech bling before trashing the place.

It must dismay the iGiant's CEO, Tim Cook, to discover that Cupertino's stores are held in about as much esteem as McDonald's and Starbucks. (Perhaps it should be even lower. McDonald's at least can claim to be feeding the poor.)

Cook may face more gilets jaunes in 2019 – and this time they'll be wearing suits. There are two kinds of shareholders in every tech firm: profiteers in it for the short term, and long-term institutional investors. If the latter aren't already strapping on the high-viz wear, they could soon be – and the company's own greed will be to blame.

The Wall Street Journal this week reported on Apple's collapse in India, giving us a fascinating insight of the perils of a high-price, high-margin product line.

"It's been a rout," said one analyst. Apple shipments in India may have collapsed by as much as 40 per cent, Canalys estimated, and Cook rarely mentions India in his conference calls.

In China, Apple may have lost as much as a third of its market share – we'll see when the full-year numbers are in.

These are the two key growth markets needed for the decades ahead, and, judging by its recent actions, Apple is pricing itself out of them.

Apple still makes 59 per cent of its revenue from the iPhone (PDF) and the company's response to counter flat or falling iPhone volumes has been to increase margins. So far it has worked. Revenues rose by $9bn on iPhone unit sales that remained static. Analysts are dazzled by the trick of charging wealthy consumers in developed nations more for their Apple products. But this year Apple has increased prices across the board to "obscene" levels, say some (a word regularly thrown about fan forums like this one).

It didn't seem so risky last year, with a range of iPhone prices encompassing the low-end iPhone SE to the X. But the SE is no more, and the most affordable new iPhone has gone up 15 per cent since 2016; the iPad Pro 23 per cent in a year. Other devices made sudden jumps, too: the Mac mini by 60 per cent; the MacBook Air by 20 per cent; the Watch by 21 per cent and 25 per cent. Here's a list. It's "pure greed".

So today, a strategy that looked risky now looks suicidal.

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Consider how more relatively useful an old iPhone is today, as I noted last week (this was not an ironic piece: Apple did the right thing by forgetting to include built-in obsolescence), and that's reminding everyone to keep old iPhones longer.

For the short term there has been surprisingly little pushback from investors. Commentators marvel at Apple's increasing services revenue, up $1bn over a year to $10bn a quarter. With the launch of a movie service, that's likely to increase. But not by much. Even with its reach and decade-long headstart, Netflix took $11bn to the bank in Q3. So only an optimist could expect the $10bn to double any time soon.

And investors these days are much more feisty than they used to be – if not as feisty as the French looters – as they fret over the value of the long-term equity holding.

Both CALPERS (the California Public Employees' Retirement System) and BlackRock, the second-largest AAPL shareholder, have been active in recent years, both helping force changes in Apple's corporate governance. They may be wondering if Apple is getting left behind, squeezing more margin out of the wealthy, while neglecting the emerging markets that will soon set tech trends.

Being disliked is one thing – being irrelevant is another. Cook must ensure that isn't his legacy as CEO. ®

*literally "yellow vests" - the regulation fluorescent yellow high-viz outfits French people must carry in their cars. The burgeoning anti-establishment movement was sparked off by a rise in fuel taxes.

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