Former Apple Exec Gassee Opines On Company's M&A Prospects And The Difference Between Innovating And Inventing

Who better to ask for insight into Apple Inc. AAPL's business and outlook than a former leading Apple executive? UBS's Steven Milunovich chatted with Jean-Louis Gassee, a 50-year industry veteran who was the first head of Apple Europe and current serves as a partner at Allegis Capital.

Gassee On WWDC

Gassee's two biggest takeaways from Apple's WWDC developer conference is the number of announcements the company made and management's effort to retake control of the narrative, Milunovich noted in a research report.

The ex-Apple exec added that the HomePod is an interesting concept but with small potential relative to the iPhone. On the other hand, the total market opportunity for the Apple Watch within healthcare represents a substantial opportunity.

He also thinks that Siri's sluggish performance needs to be improved, kicking Intel Corporation INTC out of the Mac would be feasible but also too disruptive to the application world and that machine learning is important because it is a critical component to augmented reality.

Autonomous Driving And M&A

Gassee believes fully autonomous vehicles are still years away, and it is unlikely that Apple will sell a car as quality and service issues are a major issue.

Also, he stated it would be a complete "catastrophe" if Apple acquires a major company. Apple's main business is to sell computers and then innovate the space, not invent new product lines. The perfect example of this is the iPhone which with new products and services to generate incremental margin and volume, such as the iPhone.

"The iPhone was another case where Apple did not invent a genre but rather gave an existing genre a new, creative, and momentous push in the marketplace," he said.

At the last check, shares of Apple were down 3.17 percent at $144.24.

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