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Lessons Learned From Apple's Collapse
January 03, 2019, 12:03 PM
PASigLessons Learned From Apple's Collapse
Interesting article on Zero Hedge today about Apple's woes right now.
Let me be clear, I like Apple and own their phones and computers but I have been saying this for a couple years now:
1. Steve Jobs WAS Apple. This current Apple is not the Apple of Steve Jobs. They seem to have plateaued on innovation without him
2. Their phones COST TOO MUCH and their decision to double down and make them even more expensive seems to be a giant misstep
Everyone who wants a smartphone has a smartphone and the time between replacements is starting to stretch out as they get more expensive.
quote:
The iPhone is a mature product and the high-end smartphone market is saturated, with most of the unit growth a function of the replacement cycle. In support of this view is the company's decision to stop disclosing iPad and iPhone unit shipments.
Since the introduction of the iPhone X, Apple has been raising prices. ASPs (average selling prices) in the most recent reporting period buoyed sales (up 24%) even though unit sales were flat. This briefly buoyed Apple's shares, but it is more likely representative of "Peak Apple (Margins)." (Note: Beginning in late 2017 I began to get concerned about demand elasticity from high-priced iPhones.)
With a lack of significant product innovation, those higher iPhone prices will likely elongate the replacement cycle from slightly under two years to as much as four years.
In order to grow, the company has monetized its installed base of Apple products by selling services (apps, music, movies, etc.), sales of which reached $10 billion in the most recent quarter. But Apple's digital store has had its share of failures. An example is Apple's email product (MobileMe) and its iCloud data-storage service, which respectively lost their relevancy to Alphabet Inc.'s (GOOGL) Gmail and to Google Drive and DropBox Inc. (DBX) . Apple Maps only exists as it is a default service on the iPhone. Meanwhile, Apple competes versus Amazon.com, Inc. (AMZN) in streaming music and movies. Its closed systems don't allow Apple music to work on speakers furnished by Amazon and Google. Finally, there is Siri, the quality of which is materially lower than both Alphabet's Hey Google and Amazon's Alexa, which have opened their digital voice assistants to other developers.
Apple is a products company (two-thirds of its sales come from the "closed" iPhone) that has developed complex and expensive operating devices that evolve over time. By contrast, services (software) require more prompt revisions and almost continual improvements and usually are inexpensive, as much of services is commoditized. Consider that Apple speakers will not play Spotify (SPOT) , one of the most popular music services and a competitor to Apple. So, in a sense, Apple in the services arena is fighting with one arm tied behind its back in order to protect the iPhone (hat tip to my contrarian friend, Vitaliy Katsenelson).
There is no apparent new category that lies ahead in the relatively near future that will move Apple's sales/profits needle.
Should Apple's installed base growth ease in rate-of-change terms, the valuation argument that Apple should be valued as a consumer packaged goods company -- something I have consistently rejected -- versus a lesser-valued hardware company may prove to be faulty.
Kass: Lessons Learned From Apple's Collapse
January 03, 2019, 12:08 PM
Gustoferquote:
Originally posted by PASig:
2. Their phones COST TOO MUCH and their decision to double down and make them even more expensive seems to be a giant misstep
This is the root of their problem. $1000 for a phone is ridiculous.
I have no problem paying more for their premium product, but I'll not pay $1000 for a phone that is the size of an iPad. I love the iPhone, but this is not something that I want...which is why I'll be keeping my SE for the foreseeable future.
They need to get their shit together.
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"Great danger lies in the notion that we can reason with evil." Doug Patton.
January 03, 2019, 12:14 PM
Pipe SmokerI had a ton of AAPL, which I’d held for several years, but sold all of it several months ago. It was increasingly apparent to me that Tim Cook wasn’t even close to Steve Jobs’ caliber.
The root of Apple’s problem isn’t the $1K phone price – it’s Tim Cook.
Serious about crackers January 03, 2019, 12:15 PM
x0225095[QUOTE]Originally posted by PASig:
Everyone who wants a smartphone has a smartphone and the time between replacements is starting to stretch out as they get more expensive.
[QUOTE]
If you are only considering the 325 million people in the US then you are correct.
If you are considering the 1.35 billion people in India then you are incorrect.
0:01
January 03, 2019, 12:18 PM
rusbroquote:
Originally posted by PASig:
1. Steve Jobs WAS Apple. This current Apple is not the Apple of Steve Jobs. They seem to have plateaued on innovation without him
Yeah, they learned that decades ago. They were able to bring him back once, but I don't think it will work again.
January 03, 2019, 12:21 PM
esdunbarFull disclosure, I am an Apple product user.
The title of your thread is BS imo. "Lessons Learned From Apple's Collapse?" Really, they've collapsed? Wishful thinking perhaps?
They are the first company in history to reach I trillion in market cap and it occurred recently. I find it hard to believe that they've suddenly collapsed.
The article you link shows they wrote down projections a couple percent. Having record pacing growth and then writing down year end projections a few points is hardly a collapse.
The iPhone accounts for $60+ Billion of an $80+ Billion top line. 11 years ago Apple wasn't even in the phone game.
Apple is just now starting to get into movie and TV content creation. I heard on the radio today that Netflix did $13 billion in 2018 up from $8 billion in 2017. Clearly the streaming/content market is growing rapidly and still in its relative infancy. You don't think Apple will become a major player in this market once they enter it?
iPhones are indeed a saturated market in the US, but one product line reaching maturity hardly constitutes a collapse considering plenty of countries still don't have iPhones and ever emerging revenue streams.
January 03, 2019, 12:47 PM
Les007quote:
Originally posted by rusbro:
Yeah, they learned that decades ago. They were able to bring him back once, but I don't think it will work again.
Thanks for a good laugh sir!
January 03, 2019, 12:49 PM
esdunbarJust checked, Apple's EPS is an all time high.
January 03, 2019, 12:50 PM
gearhoundsI’m not sure Apple is collapsing, but completely agree that their phones are retarded-expensive and that the company image has suffered significantly with the death of Steve Jobs. Jobs seemed to actually care about the people using Apple products beyond a spreadsheet showing profits.
As far as the technology is concerned, they haven’t done anything so earthshaking with new products that I’m anywhere near ready to rush out and dump my 64gb 6S. In fact, I just replaced a 64gb standard 6 with slight water damage, and a replacement screen that removed my ability to use the fingerprint reader. I sold it for $150 with full disclosure of the issue which tells me the 6’s have a ways to go before they are considered ready for the recycling center.
“Remember to get vaccinated or a vaccinated person might get sick from a virus they got vaccinated against because you’re not vaccinated.” - author unknown January 03, 2019, 12:56 PM
deepoceanI do not like that Apple chooses to not allow their iPads, iPhones, etc., to be able to expand their memory with sd cards. That is one of the major reasons I have not bought an iPhone. I am open to an iPhone, but not the way they currently do things. I am certain others feel that way.
I can live without an iPhone the same way I live without facebook and twitter.
January 03, 2019, 12:56 PM
1967Goatquote:
Originally posted by x0225095:
If you are considering the 1.35 billion people in India then you are incorrect.
How many people in India can afford a $1,000 phone? There's a reason a lot of IT work gets outsourced there, they work for peanuts. The exchange rate is about 70 Indian Rupee per 1 US Dollar. The average salary for a software developer in India is 430,000 Rupee and can go to 1 million. At an exchange rate of 70, the range is $6,142 - $14,285 per year.
India's per capita income (nominal) was $1670 per year in 2016. How many of those folks are going to buy a $1,000 iPhone?
January 03, 2019, 12:58 PM
parabellum"Collapse"? Sorry, I don't think so. They may have saturated their markets, but "collapse"? No.
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January 03, 2019, 01:27 PM
mutedbladequote:
Originally posted by 1967Goat:
quote:
Originally posted by x0225095:
If you are considering the 1.35 billion people in India then you are incorrect.
How many people in India can afford a $1,000 phone? There's a reason a lot of IT work gets outsourced there, they work for peanuts. The exchange rate is about 70 Indian Rupee per 1 US Dollar. The average salary for a software developer in India is 430,000 Rupee and can go to 1 million. At an exchange rate of 70, the range is $6,142 - $14,285 per year.
India's per capita income (nominal) was $1670 per year in 2016. How many of those folks are going to buy a $1,000 iPhone?
Yep, not a lot of disposable income around most places in Asia. Most of those countries don't subsidize poor financial decisions, so a choice between keeping up with the Joneses and eating/having a place to live isn't exactly hard.
IMHO, the problem with Apple is over-saturation and locking out innovation. Transferring files between a PC/iDevice shouldn't be so damned hard, but leave it to Apple to pull some stupid shit and keep people from using an otherwise awesome device. Maybe they should look into playing nice with other platforms....
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No thanks, I've already got a penguin.
January 03, 2019, 01:31 PM
tatortoddI'm not replacing my iPhone X until 5G comes to my neighborhood (already in some parts of Houston).
I've been all Apple (3 personal iPhones, 2 business iPhones, iMac, MacBook Pro, and an iPad) since mid-2012, but as far as I'm concerned 5G looks to be such a game changer that I'll be buying both a laptop and smart phone so I'll be open to a new ecosystem.
Apple better not come out with 5G a year after Samsung like they seem to do with everything else.
Ego is the anesthesia that deadens the pain of stupidity
DISCLAIMER: These are the author's own personal views and do not represent the views of the author's employer. January 03, 2019, 01:33 PM
oddballquote:
Originally posted by Pipe Smoker:
The root of Apple’s problem isn’t the $1K phone price – it’s Tim Cook.
Actually, it is both.
Tim Cook is great at the distribution and manufacturing end of the company, but cannot replicate Jobs and his innovation and vision,
and strategy of Apple Inc. It is no secret designer Jonny Ives had stuff in the pipeline when Jobs passed, but now Apple has hit a roadblock in product innovation. When Jobs was King, they would put out a crazy, innovative piece, and when other companies start to catch up to it, he dumps it and comes out with something completely different. That has not been the case for years with Apple. iPads are at a standstill, and their computers are expensive jokes right now, the Macbook Pro is a tired beast.
The $1000 phone is a problem- the U.S. and some of the Asian markets are already saturated with cell phones, but in the emerging markets, including India, Africa, etc. the high end premium phones are not going to cut it. Apple needs to come up with a $200 phone not just for the U.S., but for areas not yet cell phone savvy, a large percentage of the world. The iPhone is over 60% of Apple's revenue. Either innovate and expand elsewhere or come out with a cheaper alternative to the present iPhone.
"I’m not going to read Time Magazine, I’m not going to read Newsweek, I’m not going to read any of these magazines; I mean, because they have too much to lose by printing the truth"- Bob Dylan, 1965
January 03, 2019, 01:39 PM
PASigquote:
Originally posted by parabellum:
"Collapse"? Sorry, I don't think so. They may have saturated their markets, but "collapse"? No.
Maybe "collapse" is a bit of hype by the author but he did make the point that they've lost 30% of their value in a very short time.
January 03, 2019, 01:43 PM
mutedbladequote:
Originally posted by tatortodd:
I'm not replacing my iPhone X until 5G comes to my neighborhood (already in some parts of Houston).
Which is another issue that needs to be addressed. There are many places in our country that don't offer reliable 4G or LTE service. Smartphones are useless to those of us outside of supported service areas. Another pool of customers that big tech decides isn't worth going after
!
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No thanks, I've already got a penguin.
January 03, 2019, 01:45 PM
PowerSurgeThe main reason Apple’s stock dropped is because of a slowing economy in China and slower sales in emerging markets.
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The fool hath said in his heart, There is no God. Psalm 14:1
January 03, 2019, 01:45 PM
GeorgeairI'll double down, thanks.
You only have integrity once. - imprezaguy02
January 03, 2019, 01:54 PM
6gunsNot all current iPhones are $1000.
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