Apple’s $40 Billion What to do: Big and Bold thoughts

Apple has $40 billion in the bank. According to Apple CEO Steve Jobs, they are just sitting on it at the moment. They have no clear intentions on doing a whole lot with it for now. Jobs also emphasized that Apple must “Think big” with the cash. Well, I just happen to have some ideas for what they could do with all of that cash.

Apple's Wad of Cash

  • Start a philanthropic organization

  • I think Apple, or Steve Jobs personally, could follow in the footsteps of some of the country’s previous billionaires. Take after people like Andrew Carnegie who helped build libraries, J. D. Rockefeller who founded schools like the University of Chicago, or even modern day philanthropist (and former Microsoft CEO) Bill Gates who started the Bill and Melinda Gates Foundation which gives computers to schools and libraries.

    With this new theoretical foundation, they could give away products to schools and libraries. They could assist in the infrastructure of these entities by bringing them up to the 21st century. Additionally, they could provide support for the administration of these new machines. The cost for this would be high, yes, but it would also provide a foothold into a segment of the market that can use all of the help they can get.

  • One Day Price Cut

  • I think Apple could do a one day (or even a week long) sale where they cut 50% off of all of their current prices. So a base model Mac Mini would be $299. We know that Apple has gross margins around 35%. So we’ll use that number for this argument. With the retail price of $599 for a Mac Mini, Apple’s cost would be about $390. If Apple were to do a sale at 50% off, the total loss would be $89.85 per machine. If they sold 100,000 machines during the weeklong sale, they would be losing $8.98 Million. Granted this would only be for the Mac Minis, which probably do not carry a 35% margin. Even if they only did this on the base model of each of their lines, there would be a huge influx of Macs on the market. The total loss across all of the base models would be $119.9 Million (assuming selling 100,000 of each unit). This is a very minor amount to the total amount of cash that Apple has on hand.

    In addition to showing good faith, Apple would garnish some credibility for showing the community that they are willing to maintain their trust, and that they are willing to do what it takes to retain them as customers and evangelists.

  • Move one product line’s assembly and manufacturing to the US

  • I know this is on the “Cold Day in Hell” list, but as much as the US loves their Apple products, and we typically do not mind paying a premium, Apple could do it’s part by bringing some manufacturing back into the US.

    Despite being in a recession — yes it’s a damn recession — Apple has managed to make money every single quarter. Some of this money could be given back to those who have helped make Apple the company it is today. By bringing back some manufacturing to the US, Apple could help the economy. Yes, this would cost some money. Not just in capital outlay, but also in ongoing labor costs. Isn’t it worth it, though?

    I know this part is going to sound dumb, but I’d pay even more of a premium to have my products manufactured in the US. Call it what you would like, but if it loosens the US’s reliance on foreign countries I’m all for doing my part to make it happen.

  • Give away Mobile Me

  • Apple probably does not make much, if any, money from Mobile Me. If Apple were to give away or price cut Mobile Me, it would gain a lot of ground on other cloud services. I think as though Apple’s vision for full integration and playing in Apple’s picket fence area is understandable. Charging for items that make that allow that picket fence to get bigger and make everything work together can be a deterrent for some users.

    I had a Mobile Me account for a year when the iPhone 3G launched, but did not renew it. I did not find any major value within Mobile Me. It might be because I have Amazon S3 as my backup, but there is just not enough value in Mobile Me for my workflow.

  • Create Televisions

  • Apple is a self-proclaimed consumer electronics company. What is the biggest consumer electronic? The television. Apple has a little project called Apple TV which has not been a runaway success like the iPod or even the iPhone. If Apple were to start manufacturing televisions, and incorporating the Apple TV within them, I could see the Apple TV taking off.

    Imagine, if you will, the ability to channel surf and just hit a button on your nine-button remote (or all touch screen via iPhone OS based device) and instantly watch a movie. I know this is a tough market, and it’s something that could potentially fail, but it would definitely be a “Big risk.”

  • Buy Netflix

  • One way to really get into the streaming television and movie market would be to rival Walmart. Just purchase a company that is already established. If you were to combine the Netflix streaming in with the Apple TV software this could be a potentially huge acquisition for Apple, and a very profitable one down the road.

  • Purchase a Book publisher

  • Apple has been slowly moving into realms that support their products. The purchase of Lala is a prime example. The acquisition of Lala could be a game changer if Apple can re-negotiate the licenses for streaming music from within iTunes. If Apple were to purchase a publisher, like Random House, they could instantly have a huge library of titles for the iPad. Just think of the audio offerings that Apple could offer if they were to pick up a publishing house.

Now, I fully understand that almost none of these will actually pan out, but if Apple is looking for ideas, there are a few. Maybe I’m thinking too broad, and Apple is going to take a more focused approach. Let us know what you think Apple should do with it’s bankroll.

Image Credit: AMagill

I'm into everything technology related, particularly anything Apple related. I enjoy programming and tend to lean towards server-based technologies over client-based. You can contact me on twitter, via e-mail, or follow me on friendfeed.