Considering how small Computers have become, as a percentage of Apple's Revenue and Profits, it is indeed strange that Apple still insists on high margins in this space. In Apple's own reckoning, the PC market is a dying market, and the future is in tablets. Then why don't they lower their margins and make a play for increased marketshare?
Today, the barrier to developing iPhone and iPad software is significantly higher than the barrier to develop Android Software. You absolutely need a Mac to build iOS software. And with Apple's prices, this is a stiff entry barrier indeed.
Even if Apple lowers margins on Macs to 10%, it will not hurt their bottom line in a significant way. And in all likelihood, the resulting increase in sales will more than make up for the lower margins.
I argue that immediately following product refresh of a product line of the Mac product family that Apple Mac is the best value.
Reducing margins to reduce cost would potentially damage the aspirational branding of Apple products. Despite a aspirational, luxury brand pricing strategy the Apple MacBook Air is highly competitive on a price basis with competitors. The only area where the Apple Mac product family is not competitive is netbooks because their strategy for the netbook market is the iPad.
With the agreement with at least 9 major auto makers to put a Siri button on the steering wheel (a major, and shocking development according to friends in the auto business), Apple is getting in front of that business. How far it will go is anyone's guess right now, but we can be sure that Apple has plans for this that go further than it may now seem.
So, 'the barrier to developing iPhone and iPad software is significantly higher than the barrier to developing Android software'. Does this mean that developers are leaving iOS for Android?
There are too many additional factors to be able to come to any firm conclusions based solely upon this info.
Just curious. Are there private companies who make more profit than Apple?
I'd imagine. The royal Saudi oil company comes to mind… I think I remember reading that if it was public it'd have a three trillion dollar market cap or something, and profits are obviously quite high.
Considering how small Computers have become, as a percentage of Apple's Revenue and Profits, it is indeed strange that Apple still insists on high margins in this space. In Apple's own reckoning, the PC market is a dying market, and the future is in tablets. Then why don't they lower their margins and make a play for increased marketshare? [...]
Because they don't have to. Apple is gradually bringing their retail pricing down while maintaining their high margins. For example, the original MacBook Air began life as an $1800 "executive laptop." Now, the 11" model starts at $1000 and the 13" model starts at $1200.
And Apple can maintain their high margins because they get the best deals on many of their components. For example, Apple is the world's leading consumer of NAND memory. 78% of the world's NAND memory production went into iPads last year according to Computerworld. And all MacBook Air models (and the new Retina MacBook Pro) use NAND-based SSDs instead of HDDs now. Everyone else is forced to out-bid each other for the remaining supply. And Apple is working hard to lower other component costs while maintaining or improving quality. The recent Foxconn-Sharp IGZO LCD screen deal is an example.
In case you hadn't noticed, Apple just dropped the price of the three higher-end MacBook Air models by $100. You better believe that the Ultrabook makers of the world noticed.
Before someone else says it, Apple did not invent the tablet category. What they did invent was the first usable, attractive tablet.
This category that they did invent will grow to take over most of the PC industry, because it's what more people need in more places. It will take over the book and magazine industry as well, maybe also news and TV. Huge growth lies ahead.
The phone category is really the pocket computer category, or better, the pocket communication and knowledge terminal. Everyone in the world is the market for these.
The next category is wearable. Eyeglass screens, eyeglass cameras, etc.
Old concepts of growth limits do not apply to a company that is behind a new industrial revolution. Actually a new postindustrial revolution that doesn't even have a name yet, as far as I know. The Tofflers' Third Wave doesn't capture what we're dealing with. It's unprecedented, so new horizons in thought are called for.
Edit: I see Mel Gross tossing out 500 million a year for tablets. I don't know about that kind of number, but that's the kind of talk we ought to be seeing. The future is huge.
Edit 2: At this point, we can say that Apple shows the computer industry to really be the communications, knowledge and arts/entertainment industry. It has been doing this from the garage days, still doing it, humanizing the Turing machine. Other companies give this humanizing only lip service, while they're bound by engineering, not art or even much design.
Estimates for tablet sales in 2016 for 375 million units have already been made by a couple of the companies doing that sort of thing.
Apple's Newton was the first true tablet. In fact, it was Apple who convinced Acorn to establish a mobile division for their CPU, which Apple shared, thus taking a large part in inventing the mobile ARM chip.
One could say that Apple made the most contributions over the years to tablet computing, and to cell phone development as well, because of this.
Is Apple's model learnable and can it be duplicated by others across a wide range of products and industries? Doubtful, but does anybody understand it to teach it?[/QUOTE]
[QUOTE]Originally Posted by Flaneur
Great post. What Apple is doing doesn't even have a name yet much less a rationale. You can't teach what you don't understand.[/QUOTE]
It's called the Macintosh Way as articulated by former Apple evangelist Guy Kowasaki in his book of the same name, circa 1987 or so.
The Macintosh Way is to simply "do the right thing the right way."
[QUOTE]But White believes Apple's market cap potential in trillions of dollars, not billions.[/QUOTE]
The Macintosh Way is the secret sauce of everything Apple does. IMHO, this book is a must read for the serious Apple investor,
As for private companies it's hard to tell what they make or what their value is but I think there are some that are far beyond any public company at this point. They, too, are also most likely in the oil business. One of most prominent is Saudi Aramco.
I think the $7 trillion value is probably excessively inflated but I would say it's probably far beyond what Apple currently has. Without being able to multiply a stock value to the number of stocks it's simply impossible to determine a valuation and since they don't have shareholders to deal with there is much less oversight.
Spring 2015 : Tim announces that from now on, the Apple enormous cash resulting from recurrent revenues driven from immaterial content (advertising, music, films, press ..) enable the company to distribute its electronic consumer products at 99 cents unique price (at this point, the French people, who always like to complain, argue that this is unfair, because 99 Euros cents are a lot more than 99 US $ cents.
At this point, analysts just give up : recognizing that they will never understand Apple business, except that it is exceptionnaly profitable, they simply strongly advise to buy Apple shares at any price.
Apple could have 1/5 of its market cap in cash, strong growth, high potential growth, an incredibly low P/E compared to other companies, and... Oh wait, it already has that!
Based on what actually happens, they'd recommend dumping Apple shares at that point and push Facebook instead. Get used to it, the analysts want to look smart by being ahead of the curve when Apple does falter eventually, so they instead keep looking stupid quarter after quarter now. In the analyst world, this somehow makes sense and doesn't get them fired. (Most likely because they're being rewarded for manipulating the markets for the trading arms of their banks, but now I sound cynical.)
Estimates for tablet sales in 2016 for 375 million units have already been made by a couple of the companies doing that sort of thing.
Apple's Newton was the first true tablet. In fact, it was Apple who convinced Acorn to establish a mobile division for their CPU, which Apple shared, thus taking a large part in inventing the mobile ARM chip.
One could say that Apple made the most contributions over the years to tablet computing, and to cell phone development as well, because of this.
Don't you mean that Newton was the first true tablet from Apple? Weren't there others predating Newton that were equally (dys)functional?
It would be interesting to put this is in better historical context by adjusting these numbers for inflation.
I wondered the same thing - were they adjusted? If not, then there's probably no reason to think there's anything lower than a $2 trillion barrier. Not that it's a true barrier either way.
Great post. What Apple is doing doesn't even have a name yet much less a rationale. You can't teach what you don't understand.
I suggest that what Apple is doing is "planned disruption" to existing products and solutions -- including their own.
This week marks the first anniversary of the release of FCP X. Apple had the chutzpah to disrupt thousands of satisfied (to the extent possible) of their own FCP 7 installations.
By some accounts, Apple has sold millions of FCP X apps at $300 -- as opposed to tens of thousands of FCP 7 apps at $1,000.
More importantly, FCP X establishes a base for growth of video editing for the next decade, or longer. And, realistically, opens video editing to the evolving mobile platforms.
This ad for the Retina MacBook Pro shows FCP X running a full 1080P video in the upper right corner of 1 15" display.
This is where the puck is going -- andit is not possible on any other Video Editor on any other platform!
Further, the price of entry to FCP X video editing on a Retina MacBook Pro is $2,500 - $4,100 -- tens of thousands of $ less than other systems.
"planned disruption" to existing products and solutions -- including their own.
This week marks the first anniversary of the release of FCP X. Apple had the chutzpah to disrupt tens of thousands of satisfied (to the extent possible) of their own FCP 7 installations.
By some accounts, Apple has sold millions of FCP X apps at $300 -- as opposed to tens of thousands of FCP 7 apps at $1,000.
More importantly, FCP X establishes a base for growth of video editing for the next decade, or longer. And realistically opens video editing to the evolving mobile platforms.
This ad for the Retina MacBook Pro shows FCP X running a full 1080P video in the upper right corner of 1 15" display.
I argue that immediately following product refresh of a product line of the Mac product family that Apple Mac is the best value.
Reducing margins to reduce cost would potentially damage the aspirational branding of Apple products. Despite a aspirational, luxury brand pricing strategy the Apple MacBook Air is highly competitive on a price basis with competitors. The only area where the Apple Mac product family is not competitive is netbooks because their strategy for the netbook market is the iPad.
Why is this a shocking development?
Because these companies consider their vehicle to be very proprietary. They have standard interfaces for entertainment systems, and they have been willing to provide a socket in those systems for an iPod. But to give a place on the steering wheel to a third party is unheard of. It also directly competes with their highly profitable
GPS upgrades.
Don't you mean that Newton was the first true tablet from Apple? Weren't there others predating Newton that were equally (dys)functional?
The first true tablet. Period.
I still have mine. It wasn't dysfunctional. In the beginning the handwriting was not great. But it got much better. It was actually selling well when Jobs discontinued it.
Considering how small Computers have become, as a percentage of Apple's Revenue and Profits, it is indeed strange that Apple still insists on high margins in this space. In Apple's own reckoning, the PC market is a dying market, and the future is in tablets. Then why don't they lower their margins and make a play for increased marketshare?
Today, the barrier to developing iPhone and iPad software is significantly higher than the barrier to develop Android Software. You absolutely need a Mac to build iOS software. And with Apple's prices, this is a stiff entry barrier indeed.
Even if Apple lowers margins on Macs to 10%, it will not hurt their bottom line in a significant way. And in all likelihood, the resulting increase in sales will more than make up for the lower margins.
Apple is attacking the PC market from both ends.
Macs on the high end and iPads on the low end.
You can buy a used Mac mini for $200-300 and develop for iOS.
Is Apple's model learnable and can it be duplicated by others across a wide range of products and industries? Doubtful, but does anybody understand it to teach it?
Because these companies consider their vehicle to be very proprietary. They have standard interfaces for entertainment systems, and they have been willing to provide a socket in those systems for an iPod. But to give a place on the steering wheel to a third party is unheard of. <...>
I remember, many years ago, hearing automotive executives say that they did not want, in any case "let Bill Gates come under the bonnet/hood (?)" . Now they probably think it is innocent to let Apple be on the steering wheel ...
Great post. What Apple is doing doesn't even have a name yet much less a rationale. You can't teach what you don't understand.
I suggest that what Apple is doing is "planned disruption" to existing products and solutions -- including their own.
This week marks the first anniversary of the release of FCP X. Apple had the chutzpah to disrupt tens of thousands of satisfied (to the extent possible) of their own FCP 7 installations.
By some accounts, Apple has sold millions of FCP X apps at $300 -- as opposed to tens of thousands of FCP 7 apps at $1,000.
More importantly, FCP X establishes a base for growth of video editing for the next decade, or longer. And realistically opens video editing to the evolving mobile platforms.
This ad for the Retina MacBook Pro shows FCP X running a full 1080P video in the upper right corner of a 15" display.
This is where the puck is going -- andit is not possible on any other Video Editor on any other platform!
Further, the price of entry to FCP X video editing on a Retina MacBook Pro is $2,500 - $4,100 -- tens of thousands $ less than other systems.
This week marks the first anniversary of the release of FCP X. Apple had the chutzpah to disrupt tens of thousands of satisfied (to the extent possible) of their own FCP 7 installations.
By some accounts, Apple has sold millions of FCP X apps at $300 -- as opposed to tens of thousands of FCP 7 apps at $1,000.
More importantly, FCP X establishes a base for growth of video editing for the next decade, or longer. And realistically opens video editing to the evolving mobile platforms.
This ad for the Retina MacBook Pro shows FCP X running a full 1080P video in the upper right corner of 1 15" display.
Apple poised to post highest profit and revenue ever thanks to the perfect storm. As we see Apple has just released new hardware with more to follow, the New Ihone 5 coming this fall, a possible new TV or Ipanel, new operating systems for mobile and land............lets face it, it doesn't get any better than this. (I forgot to mention Apples upcoming deal with China Mobile)
Comments
I argue that immediately following product refresh of a product line of the Mac product family that Apple Mac is the best value.
Reducing margins to reduce cost would potentially damage the aspirational branding of Apple products. Despite a aspirational, luxury brand pricing strategy the Apple MacBook Air is highly competitive on a price basis with competitors. The only area where the Apple Mac product family is not competitive is netbooks because their strategy for the netbook market is the iPad.
Why is this a shocking development?
Quote:
Originally Posted by IQatEdo
So, 'the barrier to developing iPhone and iPad software is significantly higher than the barrier to developing Android software'. Does this mean that developers are leaving iOS for Android?
There are too many additional factors to be able to come to any firm conclusions based solely upon this info.
"Steve would have never created record profits."
I'd imagine. The royal Saudi oil company comes to mind… I think I remember reading that if it was public it'd have a three trillion dollar market cap or something, and profits are obviously quite high.
Quote:
Originally Posted by macarena
Considering how small Computers have become, as a percentage of Apple's Revenue and Profits, it is indeed strange that Apple still insists on high margins in this space. In Apple's own reckoning, the PC market is a dying market, and the future is in tablets. Then why don't they lower their margins and make a play for increased marketshare? [...]
Because they don't have to. Apple is gradually bringing their retail pricing down while maintaining their high margins. For example, the original MacBook Air began life as an $1800 "executive laptop." Now, the 11" model starts at $1000 and the 13" model starts at $1200.
And Apple can maintain their high margins because they get the best deals on many of their components. For example, Apple is the world's leading consumer of NAND memory. 78% of the world's NAND memory production went into iPads last year according to Computerworld. And all MacBook Air models (and the new Retina MacBook Pro) use NAND-based SSDs instead of HDDs now. Everyone else is forced to out-bid each other for the remaining supply. And Apple is working hard to lower other component costs while maintaining or improving quality. The recent Foxconn-Sharp IGZO LCD screen deal is an example.
In case you hadn't noticed, Apple just dropped the price of the three higher-end MacBook Air models by $100. You better believe that the Ultrabook makers of the world noticed.
On another point…
Unfortunately, when MobileMe gets shuttered in 2 weeks sp basic functionality will be lost.
However, there is a movement to save some of the soon-to-be-lost features. Check out this link. Just vote in the poll to register your vote.
— http://savemefeatures.wordpress.com/
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"Apple's 2012 profits forecast to be highest of any public company ever"
And the lowest in charitable giving - ever...
Estimates for tablet sales in 2016 for 375 million units have already been made by a couple of the companies doing that sort of thing.
Apple's Newton was the first true tablet. In fact, it was Apple who convinced Acorn to establish a mobile division for their CPU, which Apple shared, thus taking a large part in inventing the mobile ARM chip.
One could say that Apple made the most contributions over the years to tablet computing, and to cell phone development as well, because of this.
Is Apple's model learnable and can it be duplicated by others across a wide range of products and industries? Doubtful, but does anybody understand it to teach it?[/QUOTE]
[QUOTE]Originally Posted by Flaneur
Great post. What Apple is doing doesn't even have a name yet much less a rationale. You can't teach what you don't understand.[/QUOTE]
It's called the Macintosh Way as articulated by former Apple evangelist Guy Kowasaki in his book of the same name, circa 1987 or so.
The Macintosh Way is to simply "do the right thing the right way."
[QUOTE]But White believes Apple's market cap potential in trillions of dollars, not billions.[/QUOTE]
The Macintosh Way is the secret sauce of everything Apple does. IMHO, this book is a must read for the serious Apple investor,
In 2011 there were still public companies that made more profit than Apple. Both oil companies. That's likely not going to be the case in 2012.
As for private companies it's hard to tell what they make or what their value is but I think there are some that are far beyond any public company at this point. They, too, are also most likely in the oil business. One of most prominent is Saudi Aramco.
I think the $7 trillion value is probably excessively inflated but I would say it's probably far beyond what Apple currently has. Without being able to multiply a stock value to the number of stocks it's simply impossible to determine a valuation and since they don't have shareholders to deal with there is much less oversight.
Quote:
Originally Posted by umrk_lab
Spring 2015 : Tim announces that from now on, the Apple enormous cash resulting from recurrent revenues driven from immaterial content (advertising, music, films, press ..) enable the company to distribute its electronic consumer products at 99 cents unique price (at this point, the French people, who always like to complain, argue that this is unfair, because 99 Euros cents are a lot more than 99 US $ cents.
At this point, analysts just give up : recognizing that they will never understand Apple business, except that it is exceptionnaly profitable, they simply strongly advise to buy Apple shares at any price.
Apple could have 1/5 of its market cap in cash, strong growth, high potential growth, an incredibly low P/E compared to other companies, and... Oh wait, it already has that!
Based on what actually happens, they'd recommend dumping Apple shares at that point and push Facebook instead. Get used to it, the analysts want to look smart by being ahead of the curve when Apple does falter eventually, so they instead keep looking stupid quarter after quarter now. In the analyst world, this somehow makes sense and doesn't get them fired. (Most likely because they're being rewarded for manipulating the markets for the trading arms of their banks, but now I sound cynical.)
Quote:
Originally Posted by melgross
Estimates for tablet sales in 2016 for 375 million units have already been made by a couple of the companies doing that sort of thing.
Apple's Newton was the first true tablet. In fact, it was Apple who convinced Acorn to establish a mobile division for their CPU, which Apple shared, thus taking a large part in inventing the mobile ARM chip.
One could say that Apple made the most contributions over the years to tablet computing, and to cell phone development as well, because of this.
Don't you mean that Newton was the first true tablet from Apple? Weren't there others predating Newton that were equally (dys)functional?
Quote:
Originally Posted by MJ1970
It would be interesting to put this is in better historical context by adjusting these numbers for inflation.
I wondered the same thing - were they adjusted? If not, then there's probably no reason to think there's anything lower than a $2 trillion barrier. Not that it's a true barrier either way.
Quote:
Originally Posted by Flaneur
Great post. What Apple is doing doesn't even have a name yet much less a rationale. You can't teach what you don't understand.
I suggest that what Apple is doing is "planned disruption" to existing products and solutions -- including their own.
This week marks the first anniversary of the release of FCP X. Apple had the chutzpah to disrupt thousands of satisfied (to the extent possible) of their own FCP 7 installations.
By some accounts, Apple has sold millions of FCP X apps at $300 -- as opposed to tens of thousands of FCP 7 apps at $1,000.
More importantly, FCP X establishes a base for growth of video editing for the next decade, or longer. And, realistically, opens video editing to the evolving mobile platforms.
This ad for the Retina MacBook Pro shows FCP X running a full 1080P video in the upper right corner of 1 15" display.
http://www.apple.com/macbook-pro/#macbookpro
This is where the puck is going -- and it is not possible on any other Video Editor on any other platform!
Further, the price of entry to FCP X video editing on a Retina MacBook Pro is $2,500 - $4,100 -- tens of thousands of $ less than other systems.
"planned disruption" to existing products and solutions -- including their own.
This week marks the first anniversary of the release of FCP X. Apple had the chutzpah to disrupt tens of thousands of satisfied (to the extent possible) of their own FCP 7 installations.
By some accounts, Apple has sold millions of FCP X apps at $300 -- as opposed to tens of thousands of FCP 7 apps at $1,000.
More importantly, FCP X establishes a base for growth of video editing for the next decade, or longer. And realistically opens video editing to the evolving mobile platforms.
This ad for the Retina MacBook Pro shows FCP X running a full 1080P video in the upper right corner of 1 15" display.
http://www.apple.com/macbook-pro/#macbookpro
This is where the puck is going -- and it is not possible on any other Video Editor on any other platform!
Further, the price of entry to FCP X video editing on a Retina MacBook Pro is $2,500 - $4,100 -- tens of thousands $ less than other systems.
GPS upgrades.
The first true tablet. Period.
I still have mine. It wasn't dysfunctional. In the beginning the handwriting was not great. But it got much better. It was actually selling well when Jobs discontinued it.
Quote:
Originally Posted by macarena
Considering how small Computers have become, as a percentage of Apple's Revenue and Profits, it is indeed strange that Apple still insists on high margins in this space. In Apple's own reckoning, the PC market is a dying market, and the future is in tablets. Then why don't they lower their margins and make a play for increased marketshare?
Today, the barrier to developing iPhone and iPad software is significantly higher than the barrier to develop Android Software. You absolutely need a Mac to build iOS software. And with Apple's prices, this is a stiff entry barrier indeed.
Even if Apple lowers margins on Macs to 10%, it will not hurt their bottom line in a significant way. And in all likelihood, the resulting increase in sales will more than make up for the lower margins.
Apple is attacking the PC market from both ends.
Macs on the high end and iPads on the low end.
You can buy a used Mac mini for $200-300 and develop for iOS.
Quote:
Originally Posted by gprovida
Is Apple's model learnable and can it be duplicated by others across a wide range of products and industries? Doubtful, but does anybody understand it to teach it?
Yes, and the class is free. http://5by5.tv/criticalpath/
Quote:
Originally Posted by melgross
Because these companies consider their vehicle to be very proprietary. They have standard interfaces for entertainment systems, and they have been willing to provide a socket in those systems for an iPod. But to give a place on the steering wheel to a third party is unheard of. <...>
I remember, many years ago, hearing automotive executives say that they did not want, in any case "let Bill Gates come under the bonnet/hood (?)" . Now they probably think it is innocent to let Apple be on the steering wheel ...
Quote:
Originally Posted by Flaneur
Great post. What Apple is doing doesn't even have a name yet much less a rationale. You can't teach what you don't understand.
I suggest that what Apple is doing is "planned disruption" to existing products and solutions -- including their own.
This week marks the first anniversary of the release of FCP X. Apple had the chutzpah to disrupt tens of thousands of satisfied (to the extent possible) of their own FCP 7 installations.
By some accounts, Apple has sold millions of FCP X apps at $300 -- as opposed to tens of thousands of FCP 7 apps at $1,000.
More importantly, FCP X establishes a base for growth of video editing for the next decade, or longer. And realistically opens video editing to the evolving mobile platforms.
This ad for the Retina MacBook Pro shows FCP X running a full 1080P video in the upper right corner of a 15" display.
http://www.apple.com/macbook-pro/#macbookpro
This is where the puck is going -- and it is not possible on any other Video Editor on any other platform!
Further, the price of entry to FCP X video editing on a Retina MacBook Pro is $2,500 - $4,100 -- tens of thousands $ less than other systems.
This week marks the first anniversary of the release of FCP X. Apple had the chutzpah to disrupt tens of thousands of satisfied (to the extent possible) of their own FCP 7 installations.
By some accounts, Apple has sold millions of FCP X apps at $300 -- as opposed to tens of thousands of FCP 7 apps at $1,000.
More importantly, FCP X establishes a base for growth of video editing for the next decade, or longer. And realistically opens video editing to the evolving mobile platforms.
This ad for the Retina MacBook Pro shows FCP X running a full 1080P video in the upper right corner of 1 15" display.
http://www.apple.com/macbook-pro/#macbookpro
This is where the puck is going -- and it is not possible on any other Video Editor on any other platform!
Further, the price of entry to FCP X video editing on a Retina MacBook Pro is $2,500 - $4,100 -- tens of thousands $ less than other systems.
Apple poised to post highest profit and revenue ever thanks to the perfect storm. As we see Apple has just released new hardware with more to follow, the New Ihone 5 coming this fall, a possible new TV or Ipanel, new operating systems for mobile and land............lets face it, it doesn't get any better than this. (I forgot to mention Apples upcoming deal with China Mobile)
My question is what does Apple do for an encore.