Apple CEO Tim Cook on Android growth: 'Success is not making the most'

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  • Reply 161 of 201
    rogifanrogifan Posts: 10,669member


    So basically what people want is Apple to become Samsung and start releasing products at every conceivable size and price point,  Wall Street doesn't get Apple, never has.  I'm glad Tim Cook isn't dancing to their tune.  Today he said something that Jony Ive has said in the past - make great products and the revenue and profits will follow.  I'm not worried about Apple's ability to continue to make great products.  And I think the less we hear from them right now the better.  It means they have their heads down working on really cool stuff.  Maybe this year we'll go in to WWDC and other keynotes not knowing everything Apple is going to announce.  How nice would that be?

  • Reply 162 of 201

    Quote:

    Originally Posted by frxntier View Post





    It would've been quicker for you to look it up yourself than do a quote-reply. I just hope you missed the /s tag.


     


    It would have been quicker to answer his question than post your dickhead reply too.  

  • Reply 163 of 201


    Originally Posted by Lemon Bon Bon. View Post

    Post




    Great post! You should be CEO instead of Tim Cook :D

  • Reply 164 of 201
    MarvinMarvin Posts: 14,222moderator
    I would think the best way to compare the current models with the older ones that were "cheaper" is what Apple's margins were then vs now. I have no idea what the answer is, but it would be interesting to find out. Anyone have data on this?

    Back in Summer 2000, the Indigo Blue iMac was $799. Apple's quarterly reports for q3 and q4 2000 noted their gross margins were 29% and 25%. Apple's gross margins today are around the 38-45% mark. That includes the iOS line and services but it's safe to assume the gross margins on Macs are up.

    If Apple had gross margins of 29%, the current $1299 iMac would be roughly $1099, basically $200 off. A $200 average off every Mac sold would result in a $1b hit to their quarterly profits (which are around $13b) if they didn't increase shipment volume. They should increase shipment volume to some extent. If the net margins on the Macs are 25% and the average selling price drops to $1100, they make $275 per Mac. So they'd have to ship 3.6m more Macs or 70% more per quarter. This should be achievable but not trivial and would put them into the top 5 worldwide PC manufacturers. Also additional Mac sales means more peripheral sales as well as more software sales.

    edit: most likely their net margins would drop if they just cut the prices without finding ways to cut the expenses so it would be more like 15% net margins. The average selling price probably wouldn't drop $200 as they'd take more off the higher models so say it's $1200 average = $180 profit per Mac, which would require 100% more per quarter. The premium PC market has limited volume and it's not likely that a $200 price cut would result in a 100% increase in sales. As I say though, there will likely be increased software and peripheral sales. Someone who buys an iMac might get an iPad or iPhone instead of an Android device or buy software on the Mac App Store.

    Say Apple aimed for 50% more Mac sales at $200 average less to offset the $1b, that's about 2.5m Macs = ~$450m. The Mac App Store sells at least 100 million apps per year at an average price of $11 so an increase of 50% can generate over $165m for Apple. If 25% of those Mac buyers got an iPad, each with a profit of $100, that's $63m. Those iPad buyers then buy apps. They could get ~$700m in sales in the first year.

    At first glance it doesn't seem like a sensible idea for them to purposely make ~$300m less than they already do. They've already worked their way up to the prices they have and it would be undoing some of that but I think they're just slightly on the wrong side of the volume/profit balance with the Macs and more people in the eco-system means more sales beyond the first year. I think the Minis are mostly priced fine, which is their high volume audience but they don't have cheap peripherals to go with them. The Macbook Air is no good starting at 64GB, it's $100 for the 128GB model so they can absorb that cost. I'd rather they dropped the 11" line though and just brought the 13" one down $100 to $1099 and you get 128GB and the 13" screen at the entry level. Maybe a 64GB 13" at $999.

    They can do price cuts gradually and monitor the change in volume. If it doesn't have the desired effects, they just adjust it at the next revision.
  • Reply 165 of 201

    Quote:

    Originally Posted by Marvin View Post





    Back in Summer 2000, the Indigo Blue iMac was $799. Apple's quarterly reports for q3 and q4 2000 noted their gross margins were 29% and 25%. Apple's gross margins today are around the 38-45% mark. That includes the iOS line and services but it's safe to assume the gross margins on Macs are up.



    If Apple had gross margins of 29%, the current $1299 iMac would be roughly $1099, basically $200 off. A $200 average off every Mac sold would result in a $1b hit to their quarterly profits (which are around $13b) if they didn't increase shipment volume. They should increase shipment volume to some extent. If the net margins on the Macs are 25% and the average selling price drops to $1100, they make $275 per Mac. So they'd have to ship 3.6m more Macs or 70% more per quarter. This should be achievable but not trivial and would put them into the top 5 worldwide PC manufacturers. Also additional Mac sales means more peripheral sales as well as more software sales.



    edit: most likely their net margins would drop if they just cut the prices without finding ways to cut the expenses so it would be more like 15% net margins. The average selling price probably wouldn't drop $200 as they'd take more off the higher models so say it's $1200 average = $180 profit per Mac, which would require 100% more per quarter. The premium PC market has limited volume and it's not likely that a $200 price cut would result in a 100% increase in sales. As I say though, there will likely be increased software and peripheral sales. Someone who buys an iMac might get an iPad or iPhone instead of an Android device or buy software on the Mac App Store.



    Say Apple aimed for 50% more Mac sales at $200 average less to offset the $1b, that's about 2.5m Macs = ~$450m. The Mac App Store sells at least 100 million apps per year at an average price of $11 so an increase of 50% can generate over $165m for Apple. If 25% of those Mac buyers got an iPad, each with a profit of $100, that's $63m. Those iPad buyers then buy apps. They could get ~$700m in sales in the first year.



    At first glance it doesn't seem like a sensible idea for them to purposely make ~$300m less than they already do. They've already worked their way up to the prices they have and it would be undoing some of that but I think they're just slightly on the wrong side of the volume/profit balance with the Macs and more people in the eco-system means more sales beyond the first year. I think the Minis are mostly priced fine, which is their high volume audience but they don't have cheap peripherals to go with them. The Macbook Air is no good starting at 64GB, it's $100 for the 128GB model so they can absorb that cost. I'd rather they dropped the 11" line though and just brought the 13" one down $100 to $1099 and you get 128GB and the 13" screen at the entry level. Maybe a 64GB 13" at $999.



    They can do price cuts gradually and monitor the change in volume. If it doesn't have the desired effects, they just adjust it at the next revision.


     


    Again, why should Apple cut prices? Not one person I know who purchased an Apple product (including myself) has ever said 'I bought it anyway even though it was too expensive'. All I ever do hear is 'wow, this is a really cool [enter device]'. When I do ask them about price (as I do with new Apple people all the time), I ALWAYS here, yeah, but it's worth it due to [enter reason]' 


     


    Therefore I am at a loss as to why Apple needs to charge less when everyone I have ever known to own an Apple product raves about its quality, features, ease of use, etc. etc. etc. (with the exception of PC tech guys which seem to hate Apple)


     


    Why does Apple need to sell more when they have a hard enough time meeting demand now? They are selling everything then can make. I have never heard in the last 10 years that Apple has pallets of product in warehouses waiting to be sold. I do hear often on new releases that people standing in lines for hours were not able to get products due to running out. I do see videos and videos of people coming out of Apple stores holding up their new product with great joy. 


     


     


    When demand is there, price is not the factor. 

  • Reply 166 of 201
    Interesting discussion. Although I will say this: I'm about to spend AUD$3500 on an iMac, simply because that's the price I have to pay to get the specs I want. I know I could get similar hardware in a PC setup for probably $1000 less, but there's something about OS X. I just can't go back to Windows. And I can't go back to shit PC hardware all thrown together by different companies. Apple knows people want stuff that works well, is easy to use, and doesn't have problems. I'm fine with paying a price premium knowing that I'm getting the best all-in-one desktop in the world.
  • Reply 167 of 201
    jungmarkjungmark Posts: 6,705member
    piot wrote: »

    Lemon not only lives in another country, but he has created his own little planet. :\

    When life gives you lemons, you crush the hell out of them.
  • Reply 168 of 201

    Quote:

    Originally Posted by jungmark View Post





    When life gives you lemons, you crush the hell out of them.


     


    I prefer to zest them first :) 

  • Reply 169 of 201

    Quote:

    Originally Posted by Slurpy View Post


     


    Why? Why do they need a tablet cheaper than $329? 


     


    When the first iPad came out everyone was predicting it would be between $800-$1200. People were shocked at the $499 price. It was a device from science fiction. Now, only a couple years later, we have the iPad mini, a tablet that is infinitely more capable than the original, MUCH lighter, thinner, faster, more portable, with 2 cameras, an almost infinite library of apps,etc- for $329. Why have we become so synical, so spoiled, as to not have a sense of history and context, and consider this "expensive"? Because cheaper tablets can be found, which are shittier in every single sense? I'm amazed daily at my iPad mini, which I use for a variety of tasks such as reading, browsing, emailing, gaming, and everything else under the sun, in a form factor that is infinitely versatile, portable, and flexible- and which cost merely $329. It doesn't need to be cheaper, it needs to retain the same pricepoint while becoming even more capable. Apple didn't get to where it is today by cutting corners and going for marketshare by releasing bargain bin products. This will do nothing but chip away at brand value and decrease useability and satisfaction. Maybe good for some short term slaes, but catastrophic for the long term. We have enough shitty electronic gadgets produced by every company on the planet, with limited shelf-life and no long term vision. We don't need more. 



    Absolutely on the button!


     


    If the world "needs" a cheaper phone than an iPhone (though almost every other teenager I see seems to be using an iPhone) then there are already many many companies supplying them. Apple does not need to go there.

  • Reply 170 of 201


    Originally Posted by jungmark View Post

    When life gives you lemons, you crush the hell out of them.


     




    Originally Posted by Cave Johnson


    Alright, I've been thinking. When life gives you lemons, don't make lemonade. Make life take the lemons back! Get mad! I don't want your damn lemons! What am I supposed to do with these?! Demand to see life's manager! Make life rue the day it thought it could give Cave Johnson lemons! Do you know who I am?! I'm the man who's gonna burn your house down! With the lemons! I'm gonna get my engineers to invent a combustible lemon that burns your house down!


  • Reply 171 of 201

    Quote:

    Originally Posted by Jony0 View Post


     


    Marketshare is worthless without profits. Just follow the money.



    Wrong on the first sentence, right on the second.  You oversimplified your response.  You underestimate mindshare/branding which is directly correlated to marketshare (of some sort).  Apple does indeed need to sustain and grow marketshare.  Marketshare does NOT equal profits.  But marketshare is a vital factor in obtaining profits.


     


    Quote:

    Originally Posted by SolipsismX View Post



    This is all by design and this is why they are winning, not in spite of.



     



    I agree that Apple was winning.  And that in the past, it was by design.  But the future is now.  I agree with Mstone and Lemon, but I wouldn't go as far to say that Apple has gone down the wrong path.  But I would say that Apple is beginning to go down the wrong path if they don't revise into something closer to what Mstone and Lemon advocate.


     


     


    Quote:


    Originally Posted by Richard Getz View Post




    So when you take away capacity, capability, and screens, the price lowers naturally. It is NOT an attempt on Apple's part to make cheaper iPods, but to make different iPods for different lifestyles. 


    If you think that Apple does not study/research/consider price points as and end point, you are dead wrong.


    Price point is not the only factor, and there are compromises made in order to provide proper UX, but don't be misled...price points are hugely important.


     


    Quote:

    Originally Posted by SolipsismX View Post



    Finally and most egregious, is your comments about the iPhone following the iPod model of a larger HDD-based device, a small screened device, and a no screen device that only uses Siri to communicate without any consideration for the App Store ecosystem that is a huge part of the success for the iPhone, iPod Touch, and iPad.


    ...the App Store ecosystem?...Stop saying this as if it's an end to all perceivable conclusions.


    A mobile phone with a smaller screen (like the iPod nano) would appeal to an entirely different UX/form, to which the App Store may not be very relevant.


     


    I would agree that a (successful) computing device with absolutely no screen is many, many years away from us.

  • Reply 172 of 201
    MarvinMarvin Posts: 14,222moderator
    Again, why should Apple cut prices? Not one person I know who purchased an Apple product...

    The people who already buy them aren't as much of a concern as the people who don't.
    Why does Apple need to sell more when they have a hard enough time meeting demand now?

    When demand is there, price is not the factor.

    In the case of the iOS devices, I don't think they can do much better. They sell nearly 50 million iOS devices per quarter vs 5 million Macs, the latter giving them just under 6% worldwide PC marketshare. This isn't as bad as it sounds because the largest PC manufacturer, HP, only has 15%.

    It's not essential to their business model to lower the Mac prices but some people just don't have an entry point into the Apple eco-system because the entry prices are too high. A 15" laptop is the most popular PC form factor but there's an $1800 entry fee on the Mac side, which is a bit steep.

    It's not necessary for them to do it from a financial point of view - they certainly aren't struggling financially - but it would be nice to see them boost the Mac profile a bit so that more people see them as value for money instead of overpriced like Apple has done for iOS devices for the most part. A lot of that isn't Apple's fault but if people can't afford to even buy into the Mac products, it won't change and they'll focus on that sticker price.

    A $1299 entry price for a 15" laptop isn't unreasonable, even if it's a 15" Air. A $999 entry price for a 13" laptop also isn't a wild idea. They're still premium products but they hit price points that are more accessible to people. I think the price of the Minis is fine but there aren't any affordable peripherals, mainly a display. The iMac prices aren't bad but they went up from last year and it would at least be good to see them go back down to the old prices or offer more at the same price points.
  • Reply 173 of 201

    Quote:

    Originally Posted by Richard Getz View Post


     


    Again, why should Apple cut prices? Not one person I know who purchased an Apple product (including myself) has ever said 'I bought it anyway even though it was too expensive'. All I ever do hear is 'wow, this is a really cool [enter device]'. When I do ask them about price (as I do with new Apple people all the time), I ALWAYS here, yeah, but it's worth it due to [enter reason]' 


     



    I would argue that this was the case in the past, but far less so today.  Same with the apple being a luxury brand...  I don't see it as "true" going forward, at least not in the two big market segments they're currently concentrating on (phones and tablets).


     


    When the iPhone came out it was leaps and bounds better than the competition. It was hardly competition, and paying $200 more for an iphone vs a blackberry was a no brainer.  Apple was wiping the floor with their competitors at the time, and their products warranted the price difference.  Even when the iPhone 4 came out, apple was leaps and bounds ahead of Android (blackberry was mostly dead by this point, and android had started taking off) at the time.  Particularly when it came to how fluid and integrated the system was. Additionally, the phone hardware was better than anything else out there.  It would be difficult for anyone to argue otherwise, as the iPhone 4 was a game changer.  The high PPI display was awesome, and the entire device wowed people.  That was two and a half years ago.  Since then, iOS on the phone has gotten marginally better, but most of the ecosystem has remained static.  The devices have gotten faster, and the only real "game changer" apple's tried seems to be SIRI.  And although I haven't really tried it (despite my iPad supporting siri), I don't find talking to a computer as a leap forward.  Also,from the demos I've seen, it doesn't seem particularly useful.  Especially if you have to say things multiple times for it to understand you.  Aside from that, what else has changed since the iphone 4 days?  A slightly larger display that android forced apple to adopt, check.  The iphone now syncs with "the cloud", and the whole icloud experience.... Isn't that something most android users have done since day one with their google accounts?   I will admit the iphone 5 looks sexy, and the alluminum frame is cool.  The battery life is pretty awesome, and all around it is a GREAT phone.


     


    However, unlike when the iphone 4 was released, the iphone 5 is not leaps and bounds ahead of the competition.  If anything, it's neck and neck with what the competitors have to offer.  Since the iphone 4 was released, android has made huge strides.  The marketplace has become much more useable, the phones are now more fluid, and the interface works quite well.  In fact, after using an android phone, I'm sure most iphone users would love to have "widgets" on their app screens to show the weather, stock tickers, news feeds, rss feeds etc.  These things just make sense.  Overall, the android experience has improved remarkably in the past few years, and although it might not quite match the ios experience, it's pretty damn close for most people, and it keeps getting better.  This is going to impact apple in the coming years, because unless apple can release another "game changing"' device years ahead of everyone else, they're going to have a hard time convincing consumers to pony up the extra money for an iphone.


     


    The same is now becoming true with tablets.  When the ipad was released, there was no real competition for it.  Same when the ipad 2 was released.  The early android tablets were pretty poor in quality, and there were some big improvements needed in android to make them competitive, and the apps weren't up to speed. Those early tablets just lacked compared to the ipads at the time.  When the ipad 3 was released, the same thing was true,and it wasn't until the nexus 7/10 were released that I'd say android tablets were close to parity with apple's ipads.  Additionally, the kindle fire, and kindle fire HD have improved greatly, and although not as nice as an ipad, they're great devices for significantly less.  Going forward, it will be difficult for apple to establish itself as being so much better to justify its higher price. Of course, ipads aren't nearly as overpriced as iphones as they don't have carrier subsidies.  


     


    But going forward, I can see multiple issues coming apple's way.  They have the popularity now, but I think much of that is riding in off prior success.  As more and more people have good experiences with android devices, apple will have a difficult time justifying their higher prices.  It's just the way the market works.  Apple's ipad and iphone is no longer the BMW in a world of ford fiestas.  It's more like they're the BMW, and android has the mercedes, lexus, toyotas,hondas, fords, etc.  BMW can price itself over the fords, but they have to compete with the mercedes and lexuses out there. 


     


    Phil

  • Reply 174 of 201
    cgr111cgr111 Posts: 40member
    It is not my responsibility to suggest actions for Tim Cook to implement. If he can't do his job without my help, then Apple needs to replace him!

    It is not my responsibility to suggest concrete actions to take. If he cannot do Gus job, Apple needs to replace him who can turn the company around on Wall StreeT.
  • Reply 175 of 201
    cgr111cgr111 Posts: 40member
    It is not my responsibility to suggest concrete actions to take. If he cannot do Gus job, Apple needs to replace him who can turn the company around on Wall StreeT.
  • Reply 176 of 201
    jungmarkjungmark Posts: 6,705member
    cgr111 wrote: »
    It is not my responsibility to suggest concrete actions to take. If he cannot do Gus job, Apple needs to replace him who can turn the company around on Wall StreeT.

    Why would anyone want Cook to "turn around" a company that had the most profitable year in corporate history and one of the most profitable qtrs in history.
  • Reply 177 of 201
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by cgr111 View Post

    If he can't do his job without my help…


     


    This is precious. I'm pretty sure the most successful and efficient COO of all time can do his new CEO job without your help.

  • Reply 178 of 201
    cgr111cgr111 Posts: 40member
    If he so great, why has the stock tanked, folks?
  • Reply 179 of 201
    cgr111cgr111 Posts: 40member
    Also, why can't he manage his in house law people, so that don't screw up a simple proxy. This will cost the company about 1.5 M.
  • Reply 180 of 201
    cgr111cgr111 Posts: 40member
    This is precious. I'm pretty sure the most successful and efficient COO of all time can do his new CEO job without your help.

    Precious? Who said he was the most successful and efficient COO of all time? You!
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