Apple an 'antifragile monopoly,' more secure than critics believe, analyst claims

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in AAPL Investors
In spite of views by some investors and critics, Apple is an "antifragile monopoly" that can withstand competition from other giants in the high-tech sector like Amazon and Google, an analyst argued on Thursday.




While people have been worried about Apple's competitiveness, the company displays "superior pricing power," UBS analyst Steven Milunovich said in a memo obtained by AppleInsider, making reference to ideas by outside analyst Horace Dediu. Pricing power is said to be a signature of monopolies, and the memo noted that in the last quarter, Apple achieved an average selling price for the iPhone nearing $700.

The iPhone 7 starts at $649, but many people opt for extra storage and/or the Plus model, which has proven unexpectedly popular -- likely because of its its dual-lens camera.

Berkshire Hathaway's recent boost of its Apple stake to $17 billion is a sign that its CEO, Warren Buffett, is convinced Apple has a "moat" like Coke and Wells Fargo, making it more resistant to change, Milunovich wrote.

On "antifragility," a concept by thinker Nassim Taleb, the note suggests that Apple is developing a better ability to compete and adapt precisely because it's facing down many threats. The company can be integrated or modular as needed, Dediu said, and displays a relentless focus on what it needs to do -- being under fire constantly may mean it keeps its eye on improving products, for instance.

Worrying signs would be "complacency, platform mistakes, or [an] unwillingness to cannibalize itself," the memo noted.

Some critics have in fact accused Apple of complacency, citing a lack of revolutionary products. Even the "iPhone 8," due later this year, is expected to count an OLED screen and wireless charging among its signature features, but these technologies have already been implemented in some Android phones.
muadibe
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Comments

  • Reply 1 of 70
    muadibemuadibe Posts: 114member
    Good observations.   One point: ".. but these technologies have already been implemented in some Android phones." And what new 'innovations' have the Android manufactures implemented since OLED screens and wireless charging?  Since Apple is apparently always behind, surely there are several other new 'innovations' that Apple must be behind on.
    calinetmagewatto_cobracornchip
  • Reply 2 of 70
    NY1822NY1822 Posts: 253member
    Next quarter ASP's will drop as they always do in the coming quarter and articles will fail to note this and doom will be back
    watto_cobracornchip
  • Reply 3 of 70
    designrdesignr Posts: 278member
    Apple doesn't really have a monopoly. The only way anyone has been able to claim this is by defining the product and market so narrowly ("Apple has a monopoly on iPhones. Duh!") that it's meaningless.
    baconstangnetmagejohn.b
  • Reply 4 of 70
    evilutionevilution Posts: 1,110member
    Android - fit technology to a phone and then try and make it good over time.
    Apple - try to make technology good over time and then fit it to a phone.
    andrewj5790rare commentStrangeDayspscooter63califotoformatradarthekatwatto_cobracornchip
  • Reply 5 of 70
    mjtomlinmjtomlin Posts: 1,591member
    I could care less about the current state of wireless charging. It's dumb and pointless. If you have to keep your device in a specific location for charging, then it's no better than having to plug it in. And even worse you can't really hold and use the device while it's charging, it has to lay right against the charging "station".

    A friend of mine was bragging about his Samsung Galaxy with its wireless charging. It was one extra step for me to plug my iPhone in and set it down, than it did for him to just his down. But then I picked mine up and started using it while it was charging... he couldn't do that without also picking up the charging station leaving him tethered to the wall by a wire anyway.

    Also, OLED screens aren't an "innovation" - they're just another type of display technology that so far offer nothing superior to Apple's continued innovations in LCD technology. OLED display have worse color accuracy and ONLY save energy when the interface is mainly black.
    gilly017pscooter63calibaconstangradarthekatnetmagewatto_cobracornchipjohn.b
  • Reply 6 of 70
    SpamSandwichSpamSandwich Posts: 25,967member
    Apple does not have a monopoly in any sense of the word.
    designrjohn.b
  • Reply 7 of 70
    Apple does not have a monopoly in any sense of the word.
    Eh...they have a monopoly on new tech that actually works.  B)
    andrewj5790rare commentStrangeDayslolliverpscooter63radarthekatwatto_cobra
  • Reply 8 of 70
    I think that the anti-fragility advantage lasts only as long as Apple is able to remain unique in its focus on customer satisfaction at profitable pricing (versus, for example, unit sales or advertising revenue). This advantage does NOT mean that Apple will permanently enjoy industry leading absolute profits but it does mean that it will be difficult for Apple to disappear (a la RIM or Nokia). A perfect example is iPad. So long as iPad users are happy and continue high engagement with their purchase, the business is fine. Of course it would be preferable if unit sales and revenues were increasing but, someday, those historic units will wear out or be insufficiently useful and, so long as those customers were happy for long enough, their next tablet purchase decision will be Apple's to lose. Again, given Apple's additional constraint of profitability, Apple may lose some of these customers because of pricing but that (including the related loss of overall profit) is tolerable given the advantages of a satisfied customer base. And marginal per unit profits are a worthwhile goal for a company that wants to survive (but not necessarily a great basis for investment where profits per share are really more relevant). On the comments noting that Apple is not a monopolist. The point is that Apple's level of profitability (especially relative to its nominal competitors) is reminiscent of the profitability of monopolists. And, although not a monopolist (in the sense of having some sort of external lever of control making it the only choice for customers), because of the high levels of satisfaction, Apple enjoys a customer set that likely does not even contemplate buying a non-iOS phone and thus Apple faces little true competition for its customers' interest. It's certainly a circular argument (Apple is a monopolist in iPhones) but I think the real point here is that iPhones and app-capable phones are not quite the same market.
    edited March 9 pscooter63apple jockeytmaynetmagewatto_cobracornchip
  • Reply 9 of 70
    sog35sog35 Posts: 12,195member
    Apple does not have a monopoly in any sense of the word.
    Monopolies are characterized by pricing power. While the rest of the industry is selling phones for less and less, iphones are selling for more and more.

    Apple has a monopoly on elite level phones.

    Horace Dediu, who gets credit for this thesis is the best Apple analyst in the world. And he never gives price targets
    watto_cobra
  • Reply 10 of 70
    avon b7avon b7 Posts: 760member
    muadibe said:
    Good observations.   One point: ".. but these technologies have already been implemented in some Android phones." And what new 'innovations' have the Android manufactures implemented since OLED screens and wireless charging?  Since Apple is apparently always behind, surely there are several other new 'innovations' that Apple must be behind on.
    Fast charging?
    Fingerprint Scanner Gestures?
    AI for phone optimization?
    Facial recognition?

    On the simple hardware side I like to have a physical button I can apply actions too.

    In software I can reduce the screen size for one handed use by using a simple thumb slide. If I ask my phone where it is and it's within listening distance, it will call back to me and flash the screen and LEDs. I can send files directly to other phones without failure.

    You seem to be on the defensive with your 'it seems Apple is always behind'. 

    Apple can't be first with everything and it would be great if they borrowed some ideas from Android phones. They have a release cycle which limits what can be done.

    Oled screens might be better but most users would be happy with current screens. Screen sizes are now optimum for most people too. The same applies to weight and thickness and many other phone 'must haves'. Cameras are decent enough. Noise cancellation is good enough. Speakers are good enough etc.

    We are seeing some good under the hood improvements to antenna arrays, modems, the ability to hold a call in difficult areas (basements, tunnels etc) but, as most phones are more than good enough for most people,  'fashion' (colours, materials etc) can also sway a purchase.
    apple jockeybaconstang
  • Reply 11 of 70
    SpamSandwichSpamSandwich Posts: 25,967member
    sog35 said:
    Apple does not have a monopoly in any sense of the word.
    Monopolies are characterized by pricing power. While the rest of the industry is selling phones for less and less, iphones are selling for more and more.

    Apple has a monopoly on elite level phones.

    Horace Dediu, who gets credit for this thesis is the best Apple analyst in the world. And he never gives price targets
    Oh, please. This is just playing word games. In the category of so-called "smartphones" Apple does not have monopoly control. Large profits are not an indicator of a monopoly, theyre a simple indicator that Apple markets and sells to the right group of consumers.
    pscooter63designr
  • Reply 12 of 70
    StrangeDaysStrangeDays Posts: 1,094member
    Even the "iPhone 8," due later this year, is expected to count an OLED screen and wireless charging among its signature features, but these technologies have already been implemented in some Android phones.
    Er, OLED and wireless charging are rumored, but then other rumors (including a recent editorial here) say it may not be here yet. So expected by whom?
    edited March 9
  • Reply 13 of 70
    sflocalsflocal Posts: 3,611member
    Apple does not have a monopoly in any sense of the word.
    The only "monopoly" they have in any sense is a monopoly on quality and service.  
    pscooter63watto_cobrajohn.b
  • Reply 14 of 70
    StrangeDaysStrangeDays Posts: 1,094member
    avon b7 said:
    muadibe said:
    Good observations.   One point: ".. but these technologies have already been implemented in some Android phones." And what new 'innovations' have the Android manufactures implemented since OLED screens and wireless charging?  Since Apple is apparently always behind, surely there are several other new 'innovations' that Apple must be behind on.

    Fingerprint Scanner Gestures?
    AI for phone optimization?
    Fingerprint scanner gestures? Boy you're really digging deep for those missing, uh, innovations. 

    And I don't even know what AI phone optimization means. I'm sure it's mind blowing, tho.
    edited March 9 calibestkeptsecretwatto_cobra
  • Reply 15 of 70
    The analyst tells us that Apple is a monopolist with competitors. The analyst obviously does not understand that the "mono" in monopolist means one. A monopolist haz zero competitors. I hope no one is paying him for his "insights."
  • Reply 16 of 70
    SpamSandwichSpamSandwich Posts: 25,967member
    sflocal said:
    Apple does not have a monopoly in any sense of the word.
    The only "monopoly" they have in any sense is a monopoly on quality and service.  
    It's a nice joke but in the legal sense of the word, it's simply untrue.
  • Reply 17 of 70
    lkrupplkrupp Posts: 4,602member
    So after years of predicting Apple’s demise because it doesn’t follow traditional Wall Street rules the AAAA (Amalgamated Asshat Analyst Association) now has to come with some theory as to why Apple is still around. And THIS is what they came up with? Apple is a monopoly? 
    watto_cobracornchip
  • Reply 18 of 70
    The big one here is self-cannibalisation. Apple does it so competitors can't.
    mike1netmagewatto_cobracornchip
  • Reply 19 of 70
    brakkenbrakken Posts: 555member
    In other news, erstwhile benchmark of journalistic integrity blogsite, The Verge, has just announced an all-out campaign to discredit Apple, and is lobbying to have the company broken up due to its vast monopoly of profits and customer satisfaction in the tech industry. 

    Gainimg popular support by every company and blogger site impacted by Apple's ruthless product development with the highest standards of engineering and design, Microsoft and Google in particular have remeained conspicuously silent, as their repective monopolies of desktop software and paid search could be next, despite repeatedly being fined for anti-competitive practices. 

    CEO's of former tech leaders, such RIM and Palm, have alternatively made random statements about 'fairness' and 'justice'. Meanwhile, TUSA's president has released a florish of emotional, irrational and inappropriate tweets that may, or may not, have been related to the topic of monopolies. 

    Unusually for popular media, however, major US news sources have begun discrediting ridiculous analysts as being inherently without merit based in their history of being paid to create surveys paid for by parties with vested interests.

    At the time of this writing, Apple, naturally, is continuing to reinvest its profits into technological developments, proving that as a capitalist, consumerist entity is perfectly capable of supporting society with not only jobs but in contributing to standards of living and the overall health of society through transparent competitive practices. 
    watto_cobracornchip
  • Reply 20 of 70
    jungmarkjungmark Posts: 6,323member
    "Some critics have in fact accused Apple of complacency, citing a lack of revolutionary products. "

    These same critics 
    probably think the Apple watch is a flop and amazon echo/Google home is the future. Um no mention that the watch sold more than both of those devices, combined. 
    edited March 9 StrangeDayswatto_cobracornchip
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