How should Apple spend its $147 billion cash pile?

According to The Wall Street Journal, as of the end of the third fiscal quarter, Apple had a cash reserve of $147 billion. In the subsequent fourth fiscal quarter, this reserve is expected to grow further. However, the plan proposed by activist investor Carl Icahn — to repurchase $150 billion worth of shares — represents one of the worst ways Apple could use its cash reserve. Apple should be investing its cash in the company's future rather than short-term gains.

Icahn seems to overlook the fact that, like other tech companies, Apple could become obsolete overnight and be replaced by others. The key to ensuring Apple's long-term success lies in its cash reserves, which it needs to "spend on buying its future." Icahn’s plan focuses on the short term; while stock repurchases may temporarily boost Apple's share price, they do nothing to improve its products, customer service, manufacturing capabilities, or competitive advantage against other tech giants.

Below are several smarter ways Apple could utilize its cash reserves:

- Develop its own web-based systems independently. The failure of its first Maps app and ongoing issues with Siri indicate that Apple struggles with services that rely on analyzing vast amounts of online data. Apple CEO Tim Cook may already be aware of this issue, as Apple has been acquiring talent through hiring and acquisitions. However, it appears he hasn't fully grasped how this problem poses an immediate danger to Apple.

Cook should address this issue through investment. Google's long-term vision is to turn all digital devices into something akin to the computer from *Star Trek* — communicating with users in ways they prefer and providing any information they need at any time. The closer Google gets to achieving this goal, the less important individual devices become, ultimately diminishing the appeal of Apple's devices. This is why developing such systems should be a priority for Apple.

- Start or acquire a mobile carrier. The iPhone is Apple's most important product, but nearly all iPhones are sold through partnerships with mobile carriers. The late Steve Jobs, Apple's former CEO, once said that Apple aims to "control the primary technologies related to our products." Mobile data services fall under this category, and Apple should prioritize owning and improving these services. Apple could initially offer data services in limited areas, but with sufficient investment, it could develop its own mobile data network, spurring existing carriers to enhance their service quality and lower prices through competition.

- Expand production capacity. Every time Apple launches an important new product, it faces supply shortages, partly due to its no-inventory manufacturing strategy. Apple never wants to produce more units than it can sell, so it adjusts production based on demand. While this approach reduces inventory costs and increases profits, it also leads to supply shortages when products are first released.

With enough capital investment, increasing Apple's production capacity is not impossible. Apple could build factories in more countries and regions, invest in next-generation manufacturing technologies, such as fully automated production lines.

- Provide free storage services or reduce prices. Of course, this would erode Apple's profit margins and upset investors. However, this measure could help drive device sales and market share growth, benefiting Apple's future profit growth, especially given the intense competition from Google due to Apple's relatively low smartphone market share.

Another way to increase Apple's market share is to lower prices, returning cash to customers rather than shareholders. Shareholders should still be pleased, as pleasing customers rather than shareholders will benefit Apple in the long run.