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Editorial: Apple's billions are building an empire for the future

post #1 of 142
Thread Starter 
Given that Apple now sits on well over $144.7 billion in liquid resources, there's lots of discussion about how the company could or should be spending it. What Apple is already doing with its cash is actually more interesting.


Asymco


Apple's growing cash, cash equivalents, and securities, via Asymco.


The Apple cash machine



Steve Jobs built Apple into a cash generating machine. In 2000, just as Apple was beginning to recover from its 1990s beleaguerment, the company reported just $786 million in net income on revenues of $7.8 billion for the entire fiscal year, and it sat on a "mere" $4 billion in cash.

Additionally, nearly half ($367 million) of Apple's income that year was attributable to selling off portions of its investment in ARM, the mobile chip design it had co-created with Acorn for the Newton Message Pad, resulting in the world's most popular architecture for embedded devices, which would subsequently power the iPod, iPhone, Apple TV, iPad and virtually every other smartphone.

Fast forwarding to its most recent earnings call, Apple noted that in just the first half of the 2013 fiscal year, the company had revenues of $98 billion and net income over $22 billion. And rather than relying on selling off old investments to pad its books, Apple's profits are now coming from the sales of innovative, profitable new products.

Apple's revenues grew by $13 billion over the first half of fiscal 2012, which chief executive Tim Cook stated was like adding in the performance of "five Fortune 500 companies."

Apple's annual revenue growth could also be compared to creating about half of a new Google in the space of a year; in comparison, Google own revenue growth over the past year has only been less than a third of its current self.

Apple now sits on a staggering amount of resources, much of which has been earned (and remains) outside the United States. The company is now generating so much new cash that it has jumped to the front of the line both in paying its shareholders the most dividends and in paying the U.S. the most taxes (in part because it doesn't evade taxes by routing domestic sales through other countries as many of its competitors do). Even so, it's amassing new cash faster than its spending it.

May 3, 2013


What's Apple going to do with all that buying power?



While pundits and analysts like to focus attention on how Apple is now appears incapable of growing at the same historical pace simply due to the laws of physics and the finite size of certain markets (limited by factors such as the world's population), it's simply unquestionable that Apple has incredible buying power, and that power isn't going to fade away.

What is Apple doing with its cash? First off, take a look at what it isn't doing. Apple isn't attempting to buy its way into new businesses. Unlike Google's $12.5 billion acquisition of Motorola's hardware business or Microsoft's $8.5 billion purchase of Skype for a video conferencing product, Apple built its own mobile hardware business and then crafted FaceTime in-house.

Apple's has only made a couple dozen, smaller acquisitions over the past decade, rarely spending more than $250 million on any of them. In contrast, Google has made more similarly sized acquisitions than that in just the last couple years since it splurged on Motorola!

Comparing iOS with Android, it's hard to understand what Google is getting from all its acquisitions in comparison to the key strategic features growing on Apple's platforms, from Siri to iAd to Maps to HDR and facial recognition.

It appears that Apple's corporate DNA is not programmed to simply go out and merge with or acquire other large, existing businesses. Instead, it has created new businesses, some in a virtual vacuum of market space (like the iPod), others within mature markets rife with entrenched competition (like the iPhone), and sometimes (like the iPad) in the fallow ground left idle behind by competitors who couldn't figure out how to make any money in them.

The same pundits who doubted every new product Apple ever released are now, in hindsight, attributing Apple's success entirely to "lucky" blockbuster products like the iPod, iPhone and iPad, and somehow drawing the conclusion that Apple can't replicate its historical success because there's either no more obvious opportunities left, there's too much competition, or because other companies haven't been able to figure out how to make money in a given field.

What they are missing is that Apple's product success isn't a matter of lucky products or of marketing magic. Apple is a cash machine because Apple has invested in building great products. And that means building the talent to conceptualize, develop, orchestrate, deliver and support those products. That's something Apple's competitors don't currently seem to be doing.

Samsung gets a $9 billion taste of Apple's forbidden fruit



Closest behind Apple is Samsung Electronics, a Korean powerhouse conglomerate with incredible global reach (through resellers more numerous than Apple's) and capacity (via its internal component manufacturing). Samsung is also spending incredible billions on increasing its production capacity, but those capital investments are now cooling off.

In 2012, Samsung invested about $21 billion in expanding new chip and panel production, but that was about 10 percent less than it expected to spend. This year, the company said it plans to spend about the same as last year rather than growing at all, after years of tremendous growth. Samsung is about to copy Apple again, because its spectacular recent growth will also become the baseline for measuring its future growth, something that will be increasingly unflattering.

Apple's planned investment spending for 2013 is, coincidentally, up $2 billion from what it expected to spend in 2012, a total of $9 billion outside of its retail expansions. And last year, Apple's actual capital expenditures were also $2 billion more than it expected to spend.

Chief financial officer Peter Oppenheimer said Apple's fiscal 2013 $9 billion in cap ex would be "spent in a variety of areas," detailing that "we're buying equipment that we will own that we will put in our partners facilities. Our primary motivation there is for a supply, but we get other benefits as well."

While so much attention has been placed on Apple's lack of continued growth at historically exponential rates, Samsung is about to copy Apple again, because its spectacular recent growth will also become the baseline for measuring its future growth, something that will be increasingly unflattering. Samsung has already started to warn its investors of this.

Conversely, Samsung's significant chip rival Taiwan Semiconductor Manufacturing Company announced a $9 billion increase in capital investments for 2013, which happens to be about the same as what Apple announced it would be spending this year to guarantee component supplies, and about half the size of Samsung's production budget (which correlates with the size of Apple's business relative to Samsung's own).

So it would appear that the most significant thing Apple is doing with its cash is pulling Samsung's knife from its back, cutting itself free from its former three-legged race partner, and planting the knife firmly in its former partner's chest.

Given that Apple's been running the smartphone race really well despite harboring that Galaxy S knife over the past three years, it will be interesting to see how well Samsung does in the 2013 lap as the course heads uphill into even more difficult terrain, now that it has its knife back and is no longer inextricably bound to the world's fastest consumer electronics sprinter.

Another $1 billion of retail palaces



Another big thing Apple is spending its money on in 2013 is retail expansion and enhancements. The company intends to open around 30 new stores and replace 20 existing locations with larger ones, allocating about a billion dollars for this purpose.

Apple currently has 402 stores, 151 of which are outside the United States. With average revenue per store at $13.1 million (up from $12.2 million one year ago), that indicates that having 30 new stores will generate at least another $393 million in revenue, a pretty incredible, immediate return on that retail investment even if the other 20 new expansions do nothing to raise per-store average revenues.

Apple Retail


Unlike other companies that are also opening retail outlets, including Microsoft and Samsung, Apple isn't opening new stores simply to showcase that it has products to sell. Apple's executives speak about store openings as strategic to product launches. Jobs remarked that stores were integral to the iPhone's launch, and Cook recently made similar comments linking Apple Stores to new iPhone launches in China.

"Going forward," Cook said in the last quarterly earnings conference call, "we still see significant opportunity in China. It's a great market. We have 11 stores there. We expect to double those in less than two years. We have added about 8,000 iPhone point-of-sales in the indirect channel to about 19,000 today, and we obviously have a plan to add more and further grow our distribution. This number is, obviously, too low currently."

While pundits like to search for Apple's potential problems and spin every fact in the most dramatically negative way possible, it's simply a readily observable fact that Apple can build lots of new stores for many years, and effectively print money as it does so, reaping immediate new revenues and growth in product sales. It's less clear that any of its rivals can do the same.

Compare Microsoft's retail initiatives for a stark contrast: the company started building its own stores in late 2009 and currently has 36. Another seven are planned for this year. Unlike with Apple's stores, it's hard to correlate the presence of these stores with any launch successes, particularly given such flops as the Zune, Windows Phone, Windows 8 and Surface. It's simply a readily observable fact that Apple can build lots of new stores for many years, and effectively print money as it does so.

Further, rather than establishing Microsoft as a brand that supports its products through actual brick and mortar retail stores with live "genius bar" like staff, Microsoft has opened holiday popups that, like the Manhattan Times Square store, vanish as soon as the holiday sales do.

Microsoft also clearly lacks Apple's virtually insatiable consumer demand for new stores. In 2011, Microsoft said it planned to have 75 retail outlets open within a couple years. One year later, it shifted the goalpost to now expect to have just 44 stores open by the summer of 2013. Microsoft isn't out of capital to build new stores, it just isn't seeing a similar return on investment comparable to Apple's retail store performance.

Samsung similarly made headlines when it announced it would rapidly open 1,400 retail spots within Best Buy locations this year, far more mini stores than Apple operates with the retailer, and more than three times the number of Apple's own chain of retail stores.

But if such mini-stores within Best Buy were money makers, it calls into question why Apple itself doesn't operate that many dedicated mini-stores with Best Buy after more than a decade of partnership. Samsung isn't spending a billion dollars to roll out the mini-stores, but it certainly will be paying a lot to staff the dedicated areas with employees. At the same time, dedicated mini kiosks in Best Buy didn't do much for sales of Windows Phone, Windows 8 PCs, or various 3D TVs either.

$4 billion in software development incentives



While its certainly not the end of what Apple's spending its money on, a third significant expenditure that the company is making as an investment in its future is its payments to software developers.

Oppenheimer recently stated that "we are now paying very happily our developers more than $1 billion every quarter," a rapidly increasing number that just one year ago was the total amount the company had paid out to iOS developers since opening the App Store four years prior.


Asymco


Apple's iTunes revenue. Chart by Asymco.


Of course, Apple isn't digging into its cash reserves to send developers charity funds in a desperate plea for new iOS apps. Those billions in revenues are coming directly from consumer demand for apps. However, there wouldn't be any substantial demand for apps if Apple did what Google, Microsoft and every other mobile developer had done (and continue to do) on their platforms.

In Google's case, it set up a poorly managed outlet for Android apps that encouraged lots of junk but did very little to attract valuable development. It is so easy to steal Android apps that there is very little value to developers in creating them, apart from "ad supported" titles and ports that exist only to minimally address the volume market. This makes Android apps much like the web itself: lots of dubious content littered with ads and malware threats, but so difficult to monetize that it can't really compare with a real platform ecosystem like iOS.Rather than looking at the more than $4 billion Apple will pay its developers this year, one can also direct attention to the roughly $1.7 billion Apple will earn from the sales of App Store titles.

Microsoft similarly started with a Windows Mobile Marketplace that appeared to have Apple beat in leveraging the development tools and numbers of desktop Windows developers.

But that market not only never took off, but was shuttered and replaced with a new store for incompatible new Windows Phone apps, closely pattered after Apple's App Store. Microsoft also learned first hand that it is impossibly expensive to pay developers directly to build apps for which there isn't any consumer demand.

In the realm of developer payments, rather than expecting "the community" to create value in chaos as Google has, or trying to bankroll speculative development without demand as Microsoft has, Apple has carefully tended a market for apps, reinvesting billions in iTunes and iCloud to create a market where voracious consumers are matched with prolific, creative developers.

Apple's curation of iTunes is notable because the company dedicated itself to reinvesting its 30 percent cut on app sales back into iTunes infrastructure, resulting in a market that keeps handily outpacing competing mobile platforms.

Rather than looking at the more than $4 billion Apple will pay its developers this year, one can also direct attention to the roughly $1.7 billion Apple will earn from the sales of App Store titles, which will fund new development in the future of iTunes and App Store infrastructure.

What's a few billion when you need new digs?



A fourth significant investment Apple is making in its future is the billions being spent on its new Apple Campus 2 project (speculatively estimated to cost as much as $5 billion by Apple's critics) and a series of the world's greenest data centers for iCloud, each of which may cost as much as the $1 billion funding its Reno Nev., project.

spaceship campus


Apple desperately needs new office space, so it seems foolish to second guess the value of investing long term in even the most extravagant new headquarters complex drawn up by the company for occupancy in 2016.

That hasn't stopped the tech media from wondering out loud if Apple's new project is an expensive harbinger of doom, even if they don't also concern themselves with the bleakest of possible future prospects related to the construction plans of far less profitable and capital rich companies like Facebook, Nvidia, Google and Samsung, who are also building lavish new buildings.

Given Apple's cash-rich ability to source and shift global production of component supplies, expand its globally leading retail operations, enhance its position as the world's most important digital storefront and orchestrate vast construction projects, it shouldn't be surprising that the company is aiming at the future, not at short term gimmickry to prop up the appearance of its stock price or its standing in the arbitrary market share graphics of research companies that are paid to express various ineffectual opinions on the future of the industry.

Looking at the spectacular payoffs on investment Apple has previously earned with its capital, it's hard to take serious the commentary that the company should instead be trying to acquire dubious social app fads or duplicative or complementary larger businesses like Netflix, DropBox, Twitter and so on.

If there were someone better equipped than Cook and Apple's Executive Team to be spending Apple's money, those persons would have accumulated vast capital of their own to spend, and would already have the global power and influence that Apple has earned for itself.

That makes it all the more interesting to see what the company that Jobs built will be doing next. The company's upcoming Worldwide Developer Conference should reveal quite a lot along those lines.
post #2 of 142

Just think!  

Apple could afford to give $1 billion to each and every satisfied, productive Android user!

post #3 of 142

I wonder if Samsung execs thought it would be impossible for Apple to move away from them, just too big and too complex a task? If so, they underestimated what Tim Cook (with his background in operations) was capable of.

post #4 of 142
Everyone says that Apple was just lucky to get a couple of successful products and most of that luck relied on Steve Jobs. Now that Steve Jobs is long gone, never to return, Apple is claimed to be finished as a company. Everyone says that Apple's innovation died with Steve Jobs and now the iPhone is woefully behind the entire Android platform. Google spent $12.5 billion on Motorola and seems to have gotten much more money back. Google's shareholder wealth has increased greatly and so has Google's P/E ratio. Wall Street says that Google has a very bright future, unlike Apple, and values Google with high regard. Motorola definitely did not become a financial waste for Google and also provided a deeper patent base. Google has gained many tens of billions of dollars in market cap since acquiring Motorola.

As for Google's other acquisitions, they're providing constant upgrading in services at an astounding rate. What does Apple have to show for itself? It's like Apple is in some sort of service drought. Google is just flooding iOS with all their own services. Apple should keep that crap off the iOS platform and start building their own services. All Google is doing is planting free trojan horse services to undermine iOS. Apple should have more than enough money to acquire or design its own services without having to depend upon Google.

Apple keeps trying to save its reserve cash but so far Apple is only succeeding in losing hundreds of billions of dollars in shareholder value within a relatively short time. That's a very poor trade-off for cash. Apple has has a P/E ratio of 10 while Google now has a P/E ratio of almost 30. Google's value is skyrocketing while Apple's value continues to drop. Google is now worth nearly $1000 per share while Apple struggles to hold $450. Apple's so-called empire must not be very impressive to Wall Street despite dividends and stock repurchases. Apple needs to use that cash to its advantage instead of just saving it. Get that money working to give the company some extra value like Google has.

Apple is still seen as a doomed company by investors and analysts as Android grabs major mobile market share as Apple's market share continues to fall. How is all that reserve cash giving Apple any advantage over anything? Even Samsung is now said to be pummeling Apple from all sides. Everyone still believes Apple is dying without Steve Jobs, so how has all that reserve cash helped Apple.
post #5 of 142
``While pundits and analysts like to focus attention on how Apple is now appears incapable of growing at the same historical pace simply due to the laws of physics....''


Please just don't include subject matter you clearly don't grasp, especially when it's insulting to those that do: ``...due to the laws of physics...'' is obnoxious.

Money is a man-made construct, not a universal physics construct.

P.S. The rest of the Op-Ed is solid.
post #6 of 142
Quote:
...So it would appear that the most significant thing Apple is doing with its cash is pulling Samsung's knife from its back, cutting itself free from its former three-legged race partner, and planting the knife firmly in its former partner's chest...

It's what Steve would have wanted.
post #7 of 142
Quote:
Originally Posted by ascii View Post

I wonder if Samsung execs thought it would be impossible for Apple to move away from them, just too big and too complex a task? If so, they underestimated what Tim Cook (with his background in operations) was capable of.
I wouldn't think it was such a purposeful, nefarious act or that such a calculus was done.

Samsung's 'copying' behaviour was kind of standard business operandi in the Windows PC market for years. It also happened against a background of Android copying iOS and seemingly get away with it.

From their point of view it was business as usual and they were indeed stunned to be accussed of anything.
post #8 of 142
I just wish that Apple would spend a fraction of those tens of billions on improving text services for OS X. I waste hours because the spell-checking and particularly the lookup for misspellings is so dreadful. And why can't OS X (and thus all the apps that depend on it) output documents in ePub as easily as in PDF? We've been in the mobile age for almost a decade and Macs still think we output to paper.

And why is moving documents from applications on my Mac to those on my iPhone or iPad such a hassle? Why do I have to use parallel apps with iCloud sharing? Why aren't there send to commands that make sending documents between devices as easy as printing?
post #9 of 142

"While its certainly not the end of what Apple's spending its money on, a third significant expenditure that the company is making as an investment in its future is its payments to software developers."

 

Paying developers is not any part of *spending cash* or investment. I fail to see how it can be lumped in the same discussion as capex. This inclusion spoils what is otherwise an interesting article.

post #10 of 142
Quote:
Originally Posted by realitychecks View Post

Hmmm my post disappeared

Edit: all I said was Apple is expected to reinvent markets and create markets constantly. So them simply doing great isn't enough for investors they expect them to be miraculous.

To consumers Apple is still fine and I know many people who are happy with their Android phones who still wish to get an iPhone at some point.

Whether you like iOS or not it is still considered quality unless you're way too much of a fan droid or a troll to state otherwise.

I think iOS is stale, sure, but it is still the os I suggest most people get.

It's consistent, simple, and intuitive (mostly). Good enough for most.

Your post hit the spam filter. I don't know how just yet.
post #11 of 142

Thinking long term (a few years rather than a few months), a rational person would expect the move to the spaceship campus to disrupt operations. Perhaps the recent drought of Apple announcements is because they're working extra hard behind the scenes to "prime the pump" with products that can be produced and sold while the quite sizable staff moves into the new headquarters.

post #12 of 142
Quote:
Originally Posted by mdriftmeyer View Post

``While pundits and analysts like to focus attention on how Apple is now appears incapable of growing at the same historical pace simply due to the laws of physics....''


Please just don't include subject matter you clearly don't grasp, especially when it's insulting to those that do: ``...due to the laws of physics...'' is obnoxious.

Money is a man-made construct, not a universal physics construct.

P.S. The rest of the Op-Ed is solid.

Harsh. First, he was characterizing the arguments of others, not making his own. Second, it seemed more of a rhetorical flourish (analogy or hyperbole) than a theory. Can we not use literary embellishments here without being called out?
A.k.a. AppleHead on other forums.
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A.k.a. AppleHead on other forums.
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post #13 of 142

Someone needs to plot some graphs superimposing profit, market cap, money etc. for Apple, Amazon, Google etc. so that we can see if Apple is really doomed.

post #14 of 142

i hope so...

 

Only Apple can do a full size TV right.

 

Where all my TV, including Sports is a la carte, especially Formula One and Tennis via ATV/iTunes. And no inane commercials. And free "Apple wifi"  ("F" the cable companies)

 

And, where free FaceTime is my only "cell" service. ("F" Sprint, Verizon, and ATT)

 

Where all my non-personal "paid for" media content is accessible via icloud, think: iTunes Match. (which means I don't massive amounts of expensive SDRAM on my devices)

 

Where my TC has a backup of all my personal photos, home movies, etc., (along with iCloud) and not only the router but the modem included in one unit-(one less ugly non Apple modem and an ugly power brick).

 

Where I only need an iPhone, iPad Mini and the biggest screen in my home is my Apple TV. No more desktops or laptops!

 

I want Apple to succeed. I don't want my life controlled by unimaginative Korean, Chinese, Google, Motorola, Dell, MS, HP, Yahoo, Nokia, Sony, Facebook, HTC, sh*thead engineers! :)

post #15 of 142

Poetic - and poetic justice, beautifully said...

 

"So it would appear that the most significant thing Apple is doing with its cash is pulling Samsung's knife from its back, cutting itself free from its former three-legged race partner, and planting the knife firmly in its former partner's chest."

post #16 of 142

We already have a hint with Cook talking about a locally built Mac with more locally sourced components.

 

Robotics and "Design for Manufacturing" has advanced to a stage with the compact highly integrated electronics (Haswell has power management, cache, CPU & video on one die) to where the size of basic high performance "computer" mother boards are indeed tiny.  Look at the Mac Mini.  Look at the actual space for the main board in your Mac Book Pro (only takes removing 10 screws to check it out:  you need to dust it out and clean the fan blades once in awhile anyway.)

 

I would not be surprised at all to see other new mobile devices sourced in the US once a volume product is established.  Making a product more quickly with fewer parts and people is an incredible advantage today in the hyper competitive markets Apple operates in.  There is question of just how long Apple can maintain its extra high margins and they know the truth of that and have planned for it. 

post #17 of 142
Quote:
Originally Posted by BoC View Post

We already have a hint with Cook talking about a locally built Mac with more locally sourced components.

 

Robotics and "Design for Manufacturing" has advanced to a stage with the compact highly integrated electronics (Haswell has power management, cache, CPU & video on one die) to where the size of basic high performance "computer" mother boards are indeed tiny.  Look at the Mac Mini.  Look at the actual space for the main board in your Mac Book Pro (only takes removing 10 screws to check it out:  you need to dust it out and clean the fan blades once in awhile anyway.)

 

I would not be surprised at all to see other new mobile devices sourced in the US once a volume product is established.  Making a product more quickly with fewer parts and people is an incredible advantage today in the hyper competitive markets Apple operates in.  There is question of just how long Apple can maintain its extra high margins and they know the truth of that and have planned for it. 

Great post and I think you're right...If BMW, Toyota, Honda can use American workers (albeit fewer than before) to make top quality products so can Apple. Honda is building a $70 million plant in the US just to build its new NSX.

 

If nothing else, it would cut down on the 747's fouling our atmosphere delivering us our iPhones from China! :)

post #18 of 142
Quote:
Originally Posted by realitychecks View Post


Apple doesn't need to reinvent TV. Apple needs to restructure content.

I guess need is the wrong word but they are about the only company capable of doing so with all of their influence. Same with NFC. If Apple incorporated it it would take off almost instantly.

It'd be the one field where they don't need to reinvent or restructure anything to make an immense impact.

Edit: also I don't want just one company to succeed. Ever. I'm undoubtedly an Android fan and in some ways a Google fan but that doesn't stop me from using OSX iOS even win phone or BB if they got compelling enough. Good tech is good tech is good tech. Period.

I take your point(s).... :)

 

I just want Apple to marginalize subpar performers in the tech world...I'm thinking telecom providers, cable companies, etc.

 

The way they have done with printers, quick shot camera, stand alone GPS units, video cameras, netbooks, dumb and feature cell phones, MP3 players, boom boxes, stereos, PC's, I'm sure I'm missing some. :)


Edited by christopher126 - 5/18/13 at 5:28pm
post #19 of 142
Quote:
Originally Posted by mdriftmeyer View Post

``While pundits and analysts like to focus attention on how Apple is now appears incapable of growing at the same historical pace simply due to the laws of physics....''


Please just don't include subject matter you clearly don't grasp, especially when it's insulting to those that do: ``...due to the laws of physics...'' is obnoxious.

Money is a man-made construct, not a universal physics construct.

P.S. The rest of the Op-Ed is solid.


That is indeed an odd metaphor. Perhaps it should have been the laws of economics. Speaking of which, economies are considered by a growing number to be a force of nature.

post #20 of 142
Quote:
Originally Posted by realitychecks View Post


Apple doesn't need to reinvent TV. Apple needs to restructure content.

I guess need is the wrong word but they are about the only company capable of doing so with all of their influence. Same with NFC. If Apple incorporated it it would take off almost instantly.

It'd be the one field where they don't need to reinvent or restructure anything to make an immense impact.

Edit: also I don't want just one company to succeed. Ever. I'm undoubtedly an Android fan and in some ways a Google fan but that doesn't stop me from using OSX iOS even win phone or BB if they got compelling enough. Good tech is good tech is good tech. Period.

Unfortunately, a balanced perspective is still not good enough in the eyes of some here. You have to understand that they attack opposing views not necessarily because of conviction (that you're wrong or that they are right). It is because they are either defending their investment in $AAPL (under the misguided notion that by subduing every opinion perceived to be anti-Apple, they might rescue the stock), and because this is their passion - defending a company that doesn't know of their existence (kind of a groupie behavior). When they get personal with you, it's actually not personal.

post #21 of 142
Quote:
Originally Posted by ankleskater View Post

Unfortunately, a balanced perspective is still not good enough in the eyes of some here. You have to understand that they attack opposing views not necessarily because of conviction (that you're wrong or that they are right). It is because they are either defending their investment in $AAPL (under the misguided notion that by subduing every opinion perceived to be anti-Apple, they might rescue the stock), and because this is their passion - defending a company that doesn't know of their existence (kind of a groupie behavior). When they get personal with you, it's actually not personal.

Dude....I hear you. But what other company continues to innovate and upgrade its industry leading products.

 

Just look at Apple's track record for the iPod (predating the iphone even). Only Apple takes its best products and improves on them. Would there be an Samsung/Android phone if not for Apple.

 

Look at the MBA or MBP...That's where the loyalty comes from. And don't forget the Apple eco-system..........no other company has even come close to that. Not Google or MS or Amazon or Facebook....Ugh!

 

You confuse informed product knowledge and good taste with fanboyism! :)

post #22 of 142
To me, this says it all ... "Apple is a cash machine because Apple has invested in building great products. And that means building the talent to conceptualize, develop, orchestrate, deliver and support those products. That's something Apple's competitors don't currently seem to be doing."

Until the entire management education and consulting industries wake up to this, and the boards of every major corporation on this planet learn this lesson, we as consumers, are doomed to see a flood of cheap and nasty products that do nothing more than satisfy our desire for instant gratification, and leave us with endless frustration and disappointment.

Surely we can all learn, and benefit, from the tremendous success that is Apple, and stop trying to bag or copy Apple products, but to build organisations that design great products that will beat Apple's products on merit rather than price alone.
post #23 of 142
Quote:
Originally Posted by pauldfullerton View Post

To me, this says it all ... "Apple is a cash machine because Apple has invested in building great products. And that means building the talent to conceptualize, develop, orchestrate, deliver and support those products. That's something Apple's competitors don't currently seem to be doing."

Until the entire management education and consulting industries wake up to this, and the boards of every major corporation on this planet learn this lesson, we as consumers, are doomed to see a flood of cheap and nasty products that do nothing more than satisfy our desire for instant gratification, and leave us with endless frustration and disappointment.

Surely we can all learn, and benefit, from the tremendous success that is Apple, and stop trying to bag or copy Apple products, but to build organisations that design great products that will beat Apple's products on merit rather than price alone.

Great post! :)

post #24 of 142
Quote:
Originally Posted by Gazoobee View Post


I wouldn't think it was such a purposeful, nefarious act or that such a calculus was done.

Samsung's 'copying' behaviour was kind of standard business operandi in the Windows PC market for years. It also happened against a background of Android copying iOS and seemingly get away with it.

From their point of view it was business as usual and they were indeed stunned to be accussed of anything.

That may have been the case in the beginning, but my understanding is Apple execs met repeatedly with Samsung execs to voice their concern over the issue (of copying), and at that point surely there had to be a calculus. I think even Google warned Samsung at one stage that they were sailing too close to the wind.

post #25 of 142
Quote:
Originally Posted by Constable Odo View Post

Everyone says that Apple was just lucky to get a couple of successful products and most of that luck relied on Steve Jobs. Now that Steve Jobs is long gone, never to return, Apple is claimed to be finished as a company. Everyone says that Apple's innovation died with Steve Jobs and now the iPhone is woefully behind the entire Android platform. Google spent $12.5 billion on Motorola and seems to have gotten much more money back. Google's shareholder wealth has increased greatly and so has Google's P/E ratio. Wall Street says that Google has a very bright future, unlike Apple, and values Google with high regard. Motorola definitely did not become a financial waste for Google and also provided a deeper patent base. Google has gained many tens of billions of dollars in market cap since acquiring Motorola.

As for Google's other acquisitions, they're providing constant upgrading in services at an astounding rate. What does Apple have to show for itself? It's like Apple is in some sort of service drought. Google is just flooding iOS with all their own services. Apple should keep that crap off the iOS platform and start building their own services. All Google is doing is planting free trojan horse services to undermine iOS. Apple should have more than enough money to acquire or design its own services without having to depend upon Google.

Apple keeps trying to save its reserve cash but so far Apple is only succeeding in losing hundreds of billions of dollars in shareholder value within a relatively short time. That's a very poor trade-off for cash. Apple has has a P/E ratio of 10 while Google now has a P/E ratio of almost 30. Google's value is skyrocketing while Apple's value continues to drop. Google is now worth nearly $1000 per share while Apple struggles to hold $450. Apple's so-called empire must not be very impressive to Wall Street despite dividends and stock repurchases. Apple needs to use that cash to its advantage instead of just saving it. Get that money working to give the company some extra value like Google has.

Apple is still seen as a doomed company by investors and analysts as Android grabs major mobile market share as Apple's market share continues to fall. How is all that reserve cash giving Apple any advantage over anything? Even Samsung is now said to be pummeling Apple from all sides. Everyone still believes Apple is dying without Steve Jobs, so how has all that reserve cash helped Apple.

Sorry, but this post is trash and strikes of someone who doesn't understand how business and the markets work.

Google's acquisition of Motorola has thus far been an unmitigated disaster, and you can't include that as a reason why Google has seen its value increase; that's based off of its core services, not anything Motorola related.

Second, the P/E ratio Google is trading at is unlikely to be sustainable; the market seems to keep thinking that Android and Google by extension will somehow translate market domination into profit. It's the same thing with Amazon.

And you can't compare share prices to share prices. Seriously? Who cares that Google's share price is higher? In a vacuum it means squat.
post #26 of 142
Ah. Dilger and Dediu. Nice.
post #27 of 142

Apple needs to be careful or it risks being seen as greedy with a subsequent consumer backlash.  Consumers may well ask why they're continuing to pay margins that are significantly greater than those required for the long-term viability of the platform.  Greedy profiteering doesn't tend to go down too well with the public.

 

While it's true that Apple's gains have been related to its success in increasing revenues, volumes and market share, it's also widely regarded that Apple's margins are by far the highest in the consumer electronics industry, all while sitting on more cash than it knows what to do with.

 

I think there's already been a major shift in the past 3 or 4 years in how Apple is viewed by the public.  Certainly my opinion has shifted substantially.  With so much cash I expect far more from Apple and am less tolerant to mistakes than I used to be.  I'm also less likely to upgrade just for the sake of it if I see it as simply padding an already massive cash hoard and I'm less vociferous in my recommending Apple products for friends or colleagues.  It's a far cry from when Apple was the underdog in the early 2000s.

 

Also, Apple no longer has that "golden shield" which was the genuine warmth and affection people had towards Steve Jobs.  Under Steve, Apple could literally get away with anything.  I think Apple's behaviour in hoarding so much cash is a product of and reaction to its experience in nearly going under, something that Steve was obviously deeply affected by.  The danger is being too paranoid about the past.

post #28 of 142
Quote:
Originally Posted by s.metcalf View Post

Apple needs to be careful or it risks being seen as greedy with a subsequent consumer backlash.  Consumers may well ask why they're continuing to pay margins that are significantly greater than those required for the long-term viability of the platform.  Greedy profiteering doesn't tend to go down too well with the public.

While it's true that Apple's gains have been related to its success in increasing revenues, volumes and market share, it's also widely regarded that Apple's margins are by far the highest in the consumer electronics industry, all while sitting on more cash than it knows what to do with.

I think there's already been a major shift in the past 3 or 4 years in how Apple is viewed by the public.  Certainly my opinion has shifted substantially.  With so much cash I expect far more from Apple and am less tolerant to mistakes than I used to be.  I'm also less likely to upgrade just for the sake of it if I see it as simply padding an already massive cash hoard and I'm less vociferous in my recommending Apple products for friends or colleagues.  It's a far cry from when Apple was the underdog in the early 2000s.

Also, Apple no longer has that "golden shield" which was the genuine warmth and affection people had towards Steve Jobs.  Under Steve, Apple could literally get away with anything.  I think Apple's behaviour in hoarding so much cash is a product of and reaction to its experience in nearly going under, something that Steve was obviously deeply affected by.  The danger is being too paranoid about the past.

You have a choice not to go Apple if you think they are too greedy for your taste.

Money didn't flow to Apple because they are Apple, money flows Apple's direction because they make great products and consumers love them. Their products hold their value much much better than the race to the bottom products of their competitors.

Yes everyone pundits and iHaters complained of the Apple tax but they never think of the lasting quality and value of these products over the years.
post #29 of 142
Quote:
Originally Posted by realitychecks View Post

Hmmm my post disappeared

I think iOS is stale.....

Tell us why. Or shut up.

 

I wish more of your posts would disappear......

post #30 of 142
Quote:
Originally Posted by Constable Odo View Post

,

Apple keeps trying to save its reserve cash but so far Apple is only succeeding in losing hundreds of billions of dollars in shareholder value within a relatively short time.

Almost all of which was due to analysts me their baseless crap talking. Not anything Apple or hasn't done.

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

Reply

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

Reply
post #31 of 142
Quote:
Originally Posted by realitychecks View Post

Apple doesn't need to reinvent TV. Apple needs to restructure content.

You're completely clueless about how Apple makes its money, aren't you....


Edited by anantksundaram - 5/18/13 at 8:28pm
post #32 of 142
Quote:
Originally Posted by Pendergast View Post

Second, the P/E ratio Google is trading at is unlikely to be sustainable; the market seems to keep thinking that Android and Google by extension will somehow translate market domination into profit. It's the same thing with Amazon.

This is the key point. 

 

It's a matter of investing horizons, but those getting into Google/Amazon at their current value will more likely than not end in a vale of tears (sooner with the latter).

post #33 of 142
Originally Posted by reality checks View Post
…stale…

 

This word needs to automatically filter to an account ban and auto-deletion of all posts.


Originally Posted by Constable Odo View Post
…Everyone…

 

That's where your thesis pops a tire. On black ice. On a bridge.

Originally posted by Relic

...those little naked weirdos are going to get me investigated.
Reply

Originally posted by Relic

...those little naked weirdos are going to get me investigated.
Reply
post #34 of 142
Quote:
Originally Posted by s.metcalf View Post

Apple needs to be careful or it risks being seen as greedy with a subsequent consumer backlash.  

 

Utter nonsense. Name one successful company that has suffered such a 'consumer backlash.'

post #35 of 142
Love good reading like this. Great work.
post #36 of 142
Quote:
Originally Posted by AdamC View Post


You have a choice not to go Apple if you think they are too greedy for your taste.

Money didn't flow to Apple because they are Apple, money flows Apple's direction because they make great products and consumers love them. Their products hold their value much much better than the race to the bottom products of their competitors.

Yes everyone pundits and iHaters complained of the Apple tax but they never think of the lasting quality and value of these products over the years.

The funny thing about the "Apple tax" is that it seems to apply only to Apple. No one thinks about the "Microsoft tax" when they buy Windows PCs. Microsoft's margins are higher than Apple's margins. According to Yahoo! Finance, Microsoft's margins are 75% as opposed to Apple's being 40%. 

post #37 of 142
I am really getting sick of all the editorials and bitching on all the blogs about all the money Apple has in the bank. It seems like all of these people who are complaining, which they had their hands on Apple's money and wished they has Apple's problem. Come on you all - give it a rest and accept the fact that Apple continues to take the right steps. For example,

1. People complained about Apple not paying dividends. So last year, they did that and that too, if I remember was larger than anyone out there.
2. People still bitched that it wasn't enough and this year they jacked up up even higher and they are still the number 1 in amount of dividend passed out.
3. People complained that they should do buy back - And they did that - Largest buy back in the history. And they borrowed cheap money to do just that. Hey you Wall Street people, what makes you thing that only you are allowed to borrow cheap money? Apple played the same game you guys play and you guys don't like it.
4. Why are all these people want Apple to buy Netflix and this and that? Yes, if they are in single digit growth rate and if they really have to improve their earnings by means of acquiring companies and get into different space - it might make sense. Not the issue right now.

So, please enough of continuous questioning how wrong Apple is and what they ought to be doing - You are all wrong!
post #38 of 142
Quote:
Originally Posted by AdamC View Post


You have a choice not to go Apple if you think they are too greedy for your taste.

Money didn't flow to Apple because they are Apple, money flows Apple's direction because they make great products and consumers love them. Their products hold their value much much better than the race to the bottom products of their competitors.

Yes everyone pundits and iHaters complained of the Apple tax but they never think of the lasting quality and value of these products over the years.

 

Yeah I completely agree.  It's why I still buy Apple products and not only do I enjoy them but I always get a good resale price.  Apple still offers by far the best value.  You just have to put up a bit more up front.

 

However, not knowing Apple's plans I sometimes think, with a forever mounting cash hoard, they can sometimes do a bit more or give a bit more back to consumers.  Goodness knows I've bought enough from them over the years and I haven't always been completely happy.  Things like the Maps fiasco show that they simply didn't invest enough in that product for instance but there've been a few others.

post #39 of 142
Quote:
Originally Posted by mdriftmeyer View Post

``While pundits and analysts like to focus attention on how Apple is now appears incapable of growing at the same historical pace simply due to the laws of physics....''


Please just don't include subject matter you clearly don't grasp, especially when it's insulting to those that do: ``...due to the laws of physics...'' is obnoxious.

Money is a man-made construct, not a universal physics construct.

P.S. The rest of the Op-Ed is solid.

"Insulting to those that do". Insulting...?

Please don't use words you clearly don't grasp the actual meaning of when it's insulting to those that do.

post #40 of 142
Quote:
Originally Posted by s.metcalf View Post

Apple needs to be careful or it risks being seen as greedy with a subsequent consumer backlash.  Consumers may well ask why they're continuing to pay margins that are significantly greater than those required for the long-term viability of the platform.  Greedy profiteering doesn't tend to go down too well with the public.

 

Could you please site a "comparable" example in history, to what you are talking about here?

 

Thanks.

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