Fred Wilson Doesn't Have A Great Track Record With Apple

Yesterday, VC Fred Wilson said that he didn't think Apple would be a top 3 technology company in six years.

His reason for doubting Apple's staying power: "Apple is too rooted to hardware and I think hardware is increasingly becoming a commodity. Their stuff in the cloud is largely not good. I don't think they think about data and the cloud in the way you need to think about things."

It's a completely fair criticism of Apple. It's cliche at this point, but the truth is that Apple just doesn't get the web, and it doesn't do a good job of producing internet services.

If you believe that Google's suite of internet services - Gmail, Maps, Google Drive, Docs, Google Now - are superior to Apple's, then it certainly makes sense to believe Apple is in danger. Android phone makers are getting better and better at making hardware, and if Google's software and services eclipse Apple, then it is a problem for Apple.

Sure, Google's services are all available for the iPhone. But, with Android, Google can build a better, more-integrated product that could surpass the iPhone.

However, before you take Wilson's critique too seriously, it's important to note that Wilson has a bit of a blind spot when it comes to Apple. He's one of the smartest technology investors in the world, but his big-picture view of Apple hasn't been great. Let's look through the archive of Wilson on Apple.

• In January of 2009, he sold his Apple shares for ~$91 because he didn't think Apple was being honest about Steve Jobs' health. He also sold Google shares that day. He was right that Apple was not being honest, but it didn't matter since Apple shares went on a crazy run. Today, they're at $600.
• In February of 2009, he said, "I believe Apple is making a mistake by snubbing Adobe's desire to get Flash on the iPhone ... I don't even think an app ecosystem is the long term solution for the mobile web. It's a bridge environment that allows for rich experiences on devices that don't have reliable high bandwidth connections yet." Snubbing Flash was the right decision, and the app world is growing stronger, not weaker even with all phones getting high speed LTE.
• In October of 2010, he said, "iPhone and iPad have been amazing products that have opened new markets. But I do not think they will own either market in a few years. Android will." This is a hotly contested debate, but Wilson is correct. Android has grown to be the dominant operating system as measured by market share.
• In December of 2010, he said, "I am pretty convinced we are going to see the mobile OS market split between Apple and Google, with Apple having the better business in terms of revenues and profits and Android having the bigger market share." Correct!
• He also said, "So, when thinking about where to invest your precious mobile development resources, I'd say Android first and iPhone second. And think hard about HTML5. You may want to hedge your bets by having a kick ass HTML5 experience." Oops. This was probably bad advice, at least in 2010. Right around that time, Instagram launched as an iPhone-only company, and went on to great success. Developers are still focused on iPhone-first because it has a less fragmented, more affluent audience.
• In August of 2013, Wilson's predictions were proven to be correct, and he started to worry about Apple, "I find myself rooting hard for Apple now. I sense the danger they are in and I don't want either smartphone OS to be so dominant that we lose the level playing field we have now."
• And a month later, after Apple failed to release a cheaper phone, Wilson said, "The C in 5C does not mean 'cheap' as I had hoped. It means clueless, as in clueless about how the vast majority of new smartphone users are paying for their phones."
• And then yesterday, he predicted Apple's poor cloud services would be a problem in the future.

So, looking back at Wilson's bold public calls on Apple since 2009, you get a fairly consistent, though mixed picture.

He made two wrong calls: Flash for iPhone didn't matter, and developing for iPhone first is not something developers did or should have done.

But, his broader thesis that Apple's closed ecosystem would lose out on a market share basis to Android is correct. His declaration that the iPhone 5C wouldn't move the needle for Apple in terms of market share, was also right.

Yet, while he's been right in a narrow sense, in a broader sense, he's been wrong.

Apple's shares have risen as high as $700 since 2009. Today, they're at $600. Growth at Apple has cooled lately, but it's the biggest technology company in the world. In the first quarter of 2014, Apple's revenue was $43.7 billion. That's more than Google, Amazon, and Facebook combined.

By just about any measure, Apple has been the most successful technology company of the past five years, despite the accurate critiques of its business by Wilson.

Wilson is right that Apple's cloud services need work. But, based on his past predictions, that doesn't necessarily mean the company is going to suddenly drop from its perch as one of the top technology companies.