The gods of Apple?

It is ironic that during Steve Jobs' second tenure at Apple, he was revered as god; but even before Steve Jobs' passing, many were saying that Tim Cook was better than Steve Jobs (better than god, really?) due to the appreciation of the stock price. When the stock price started to tumble, many of the same pundits were calling for Tim Cook’s head; they wanted a new god, perhaps Elon Musk, someone who can sell dreams for big multiples. When Apple share price recovered to record level, “Cookie” reigns as interim god once again. Recently, Apple share price started to correct, the new god movement started to appear once more. The sad truth is the Apple story is all about subsidies; yes, the iPod helped relaunched Apple as a consumer product player & gave halo effect to help sell a few Mac., but not until Steve Jobs chose AT&T as an exclusive launch partner for the iPhone that started to catapult Apple into the Juggernaut that it is today. In choosing AT&T, Apple found a launch partner willing to give Apple carte blanche to develop a product that was ahead of its time for the than wireless internet speed & bandwidth capacity to support. To secure the Apple deal, AT&T had to provide an unlimited data plan so customer could experience the full iPhone experience. The first generation iPhones were data hogs, they created major strain into the AT&T’s network; to mitigate the problem, AT&T offered bandwidth friendly devices (i.e. RIM’s Blackberry) big subsidies to ease the burden on the network. Competing carriers (i.e. Verizon) had to offer other device makers (i.e. Samsung, LG, HTC etc.) big incentives to compete with AT&T/Apple’s package; that period became the golden age of smartphone makers profitability.
When AT&T exclusive deal with Apple was near expiry, many pundits were predicting mass migration of AT&T’s iPhone customers to Verizon; I never bought that theory, company don’t just rollover and hand their customers to competitors, they compete. That was the trump card of Apple’s deal with AT&T; they chose a desperate carrier who has the financial means to compete. Every bad experience was blamed at AT&T and every good to Apple; and when the exclusive deal with AT&T lapsed, Apple trickled the carriers’ availability, first Verizon, than others. That strategy ensures fierce competition among carriers, thus more subsidies.
When Apple share price broke than all-time high of over $700; Verizon, whose contract with Apple were near exhausted, they began to roll back subsidies to improve on the bottom line. Apple share tumbled from just over $700 to below $400 pre-split; activist investor Carl Icahn started pounding on Tim Cook’s door to engage in some financial engineering to strengthen the share price. But none of those measures would have mattered if it wasn’t for an unsung hero, the original launch partner of the iPhone, whose idiotic failed purchase of T-Mobile, gave rise to a new competitor. Armed with a $6 billion break fee ($3 billion cash, $2 billion in spectrum, $1 billion in roaming right), the new T-Mobile US raised an additional almost $4 billion in debt & equity, merged with the struggling MetroPCS; who was burdened by a lot of unfulfilled iPhone liabilities. The new merged company led by the flamboyant CEO, John Legere started his famous un-carrier campaign with those MetroPCS unexhausted iPhone liabilities; thus more competition meant more subsidies. That was a significant turning point in Apple’s fortune & extended the subsidy war on iPhone. Yes, getting into China with China Mobile & the bigger form factor all helped to propel Apple share price higher. But, they might be a source of serious liability going forward as nothing happen in China by chance. Despite warning from Central Government, Chinese carriers continue giving subsidies to their iPhone customers; the recent detention of the head of China Telecom, who was the head of China Unicom, the launched partner of iPhone in China should raise some doubt about Apple’s prospect in China.
All those pundits who talked about new product categories (iPad, watch, car etc.); none of them matter because without subsidies, consumer electronic companies don’t generate that like of margin. I wonder when those pundits on Wall Street will stop looking for idol gods?