Team up with Apple at your own risk
Thinking about forging a multi-million or even billion-dollar deal with Apple? Hey, we’ve all been there. You’re sitting around on a Tuesday afternoon, watching old episodes of Columbo in your underwear while eating string cheese that’s past its best-by date and you think, “I should do a big-time deal with Apple!”
Well, hold on, Fabio (can the Macalope call you “Fabio”?). Before you ink that deal, you might want to take a look at how some of the other partners Apple’s taken on over the years have faired. Because it’s not always great for the other guy.
HP
In 2004, HP started selling special branded iPods. No, really, this happened. You can look it up. HP agreed not to make a rival digital music player through August of 2006 and Apple agreed to not laugh so hard that milk came of its nose. Apple was so into this deal that these iPods had to be repaired by HP, even though they were just standard iPods with an HP logo on them. HP’s CEO was soon forced out and the deal was terminated before anyone could figure out what the heck it was all about.
Grade: Incomplete, no credit
Motorola
In 2005, Apple partnered with Motorola on the Rokr, a device that literally everyone agreed was garbage. Limited to 100 songs that could only be transferred to the phone by low-speed USB, the Rokr was eclipsed by the iPod Nano, which was unveiled on the same day.
The following year, Motorola unveiled an update that worked with RealPlayer (remember RealPlayer?) instead of iTunes. You can imagine what a hit that was. Apple, meanwhile, was working on the smartphone that would essentially drive Motorola and dozens of other cell phone manufacturers out of business. Only Goldman Sachs could make this deal look slightly better in comparison by losing a metric butt-ton of cash.
Grade: D
Cingular/AT&T
Apple eased its way into the cellular business without a lot of pain and Cingular got exclusive rights to sell the iPhone in the U.S. for four years. Cingular clearly gave up a lot of control, but it also got something extraordinarily valuable in return. Somewhere Stan Sigman is still monotonously reading from cue cards about this deal, even though he died four years ago.
Grade: B
Intel
Usually, if Apple is buying something from you, it’s a relatively good relationship (as long as you don’t mess anything up). Foxconn has done alright. So has Samsung. Intel did fine for years, but it really missed the memo on processors for mobile devices.
Most of this is the fault of Intel itself, but Apple was also quietly improving its iPhone processors so they could be used in Macs to run fast with very low power consumption. Intel was sailing along as if nothing had changed since 1997.
Grade: C-
Google has largely done fine in its relationship with Apple, you know, other than getting into an argument about Maps and having to deal with lawsuits about Android. Its lucrative search deal has drawn the attention of the U.S. Department of Justice, but it’s likely that some well-time donations to the incoming administration’s inauguration will snuff that out. Definitely a passing grade, if not terribly high.
Grade: B-
Goldman Sachs
Goldman Sachs partnered with Apple on the Apple Card and, boy, does it wish it had not done that. How do you lose $859 million in a year? Who does that? Probably a company that’s used to having the taxpayers bail it out, that’s who.
Goldman’s mistake here seems to have been rushing so fast to get into the consumer business that it didn’t A) ask itself it was capable of getting into the consumer business and B) read the fine print on its deal with Apple. Something something ground war in Asia, something something going in against a Sicilian when death is on the line.
Grade: F
Nike
Apple has been selling Nike-themed Watches and bands for years now and this relationship largely works because Apple and Nike are in completely different lines of business (same with Hermès). You might think, hey, so are Apple and Goldman Sachs! But, no, not according to the U.S. government.
Grade: A-
The Macalope isn’t saying you can’t win by partnering with Apple. Clearly you can do fine and there are, of course, many non-monetary benefits to partnering with an 800-lb gorilla. But, you should expect that the gorilla is going to get more of the bananas than you are. If you go into the relationship thinking, hey, lotta bananas to be had by partnering with this gorilla because people keep throwing it bananas, think again. There are a lot of bananas that will be thrown, yes, but you’ll mostly get left with the peels and maybe those little stringy bits no one likes.
By the way, there are no flaws in this gorilla analogy. None.
