Apple's brains are starting to drain away

The iconic tech company has a perception problem that is hurting its reality

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But it doesn't matter. If an Apple engineer owns 5,000 shares, his or her once-$3.5 million nest egg is now worth $2.1 million. Sure, that's still a lot of money, but people freak when their retirement accounts shrink, and it explains the drift toward the exits that Chowdhry has seen.

Although Chowdry is relatively small potatoes on Wall Street, I value his opinion because he understands technology and goes to the trouble to attend numerous industry events every year. While he's there, he makes a point of talking to engineers and developers who do the work inside a technology company. He doesn't just talk numbers with the CFOs.

Six or seven months ago, Chowdhry told me he didn't see much movement of employees out of Apple. But since then, while attending conferences on cloud and mobile development, he's come across several dozen employees who have left or are looking hard. Recruiters at those conferences told him they are hearing from engineers who are even interested in moving to Hewlett-Packard, a company that not too long ago was beginning to look like a zombie. Why go there? In a word, perceptions. Right or wrong, there is a perception that HP is moving forward. And of course, working at Google and Facebook has always been attractive.

Samsung is losing its swagger, too
Apple is not the only company being hit by exaggerated perceptions. Samsung, Apple's major rival, had been an industry and Wall Street darling. But that started to change when the Galaxy S 4 shipped. It got fairly tepid reviews, and perceptions of Samsung's place in the technology universe began to shift.

The merits of the Galaxy S 4 aside, it's actually selling quite well. It sold 10 million units in the first 27 days after its introduction in April 2013. For reference, it took its predecessor, the Galaxy S III, 50 days to reach the same benchmark.

Meanwhile, both Samsung and BlackBerry recently reported earnings figures that disappointed Wall Street. It's becoming apparent that the market for high-end smartphones is close to saturation, at least in the United States and Europe. There's still strong demand in less developed parts of the world, but buyers there will likely opt for lower-priced models, a shift that will further depress earnings and profit margins for companies like Apple and Samsung.

Chowdhry argues that Apple needs a change in top management -- and needs it now. I'm not ready to say that. But the process of bringing expectations in line with reality is a difficult one, and it will take some time.

I welcome your comments, tips, and suggestions. Post them here (Add a comment) so that all our readers can share them, or reach me at Follow me on Twitter at BSnyderSF.

This article, "Apple's brains are starting to drain away," was originally published by Read more of Bill Snyder's Tech's Bottom Line blog and follow the latest technology business developments at For the latest business technology news, follow on Twitter.

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