This Company's Not Cool? Says Who?

By Chad Henage - September 20, 2012 | Tickers: AAPL, BBRY, GOOG, NOK | 0 Comments

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Let's get this out of the way first, I'm an Apple (NASDAQ: AAPL) fan, I own the stock, I own an iPad, my wife loves her iPhone, and I'm using a Mac Mini right now. Here's the thing, apparently people think that if you are an Apple fan that somehow you don't have a brain. I've seen many articles about Apple, and the comments usually have some version of “how much did Apple pay you” or “not a surprise coming from an Apple fanboy.” They will probably be at the end of this post as well. I'm here to tell you, it was not always this way for me. I was a diehard PC user until about 2003 when I got my first iPod. After that event, the fandom began. However, that's not the point of this post. I recently read an article by Alex Planes of The Motley Fool that asked, “Is Apple Losing Its Cool?” As an Apple user and investor, I wanted to know if this was a serious issue to be concerned about.

Alex made some valid points like when the first iPhone was introduced it satisfied a need and the launch was well covered by tech blogs and the news media. I personally had the issue that the iPhone was developed to solve. I loved my iPod, and I had to have my cell phone with me, but I hated carrying both around all the time. Apparently this was a big draw for many people, as millions have bought an iPhone. However, the statement was made that, “now that Apple effectively is the smartphone and tablet establishment, consumer goodwill seems to be on the wane.” Apparently marketing firm YouGov has been tracking favorability among the 18-35 year old segment and for the first time in years, people over 35 have a more favorable view of Apple than those in the “cool” demographic. This could be a good or a bad thing. Either younger people are becoming disenfranchised with Apple and will move on to something else, or Apple will benefit because older customers have higher incomes. To try and settle this question with the help of some social media, I decided to do my own research study.

Though some people on the site would kill me for mentioning it here, meet tumblr. Yes that's the name of the site “tumblr.” If you aren't aware, tumblr is similar to Pinterest in the sense that its members share pictures, quotes, thoughts, and videos, but it's more of a sharing platform than a way to connect to people you already know. Why should anyone care what people who use tumblr think? To be blunt, in social media if Facebook is the high school cafeteria, tumblr is the cool kids table. The site was launched by David Karp in 2007 and as of August 2012 there are nearly 70 million blogs. Facebook focuses on connecting people mainly through text posts. By contrast, tumblr gains 25,000 new users per day by people sharing and re-blogging pictures. The web site is most popular with teen and college-aged users, with half of the user base under the age of 25 (according to Wikipedia). Bottom line, these are the “cool” demographic that Alex is referring to, and you couldn't ask for a more grass roots way to research a company. So what does tumblr say about Apple, and their competition?

If a picture is worth a thousand words, tumblr is worth more than 10 Facebooks. The most popular activity on tumblr is re-blogging other people's pictures. There are millions of screenshots from text conversations shared all the time. The phone being used in most of these conversations is an iPhone. In fact, it's extremely rare to find a text conversation using anything else. In addition, some of the most re-blogged pictures are Apple products. Pictures of iPhones, their cases, iPad's, and Macbooks get tons of “notes” (tumblr's way of keeping up with how many people re-blogged a picture). In Facebook language, this would be akin to the thousands of “likes” on each picture. There are even posts that have been shared with instructions on how to make the switch from Google's (NASDAQ: GOOG) Android to iOS. You read that right, from Android to iOS not the other way around.

So if Apple is popular among the cool kids, what about other mobile plays like Nokia (NYSE: NOK) or Research in Motion (NASDAQ: BBRY)? Let's just say those results aren't as impressive. A search for iPhone turns up literally millions of pictures. In the first five results for “BlackBerry,” you get one picture of an actual BlackBerry, two pictures of blackberries (the fruit), and at least one text article about how RIMM is failing with the delay of BB10. If you do a search for Nokia, it takes 20 pictures to even find a Lumia 920, and the few pictures of other Nokia products can only be called vintage Nokia phones. Apparently tumblr has a lot of respect for old Nokia technology, but not so much for newer phones. A search for Google shows Google streetview cars and Google search result screenshots (usually humorous). If you search for Android, you get comments like, “I might have to break down and switch to an iPhone,” and negative comments about an Android keyboard compared to an iPhone keyboard. The bottom line is tumblr is the cool kids, and they love Apple products.

I know some people are saying, who cares about tumblr. Maybe you're biased and not paying attention to what people really like. If that's your thought, check on Facebook. If you search for Apple, Google, Nokia and BlackBerry on Facebook, you get the following:

(as of 9/17/12) 

If you are wondering where Android is in all of this, the main Android page has less than 1 million “likes.” As you can see, Apple actually has the fourth largest number of “likes,” but the second most people talking about the company. If the company has become the de-facto standard for smartphones and tablets, you would expect more “likes” and less conversation? That would indicate a more established position and less interest.

The bottom line is, in the mobile arena, Eric Schmidt of Google recently stated that there are now 1.3 million Android activations per day. Android at last count carries the lion’s share of the smartphone market with over 50%. If the most popular mobile OS isn't “cool” than Android is the OS we are talking about not iOS. If anything, the key market Apple wants (the under 25 crowd) is clearly on board with the company's products. If the older crowd (over 35) thinks more highly of Apple than they used to, this appears to be a win-win situation. Call me a fanboy or not, but I don't see anything from social media that makes me question the coolness factor for Apple is still well in place. With the stock at over $700 a share, what's amazing is that the shares still sell for under 16 times this year's estimates. That sounds like a cool bargain to me.

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