Apple's iPhone drops to fifth place in Chinese smartphone market

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Comments

  • Reply 41 of 54
    avon b7 said:
    Ebonydog said:
    Ireland, anyone who was an Apple fan in the 90s can tell you why it matters. Back then Apple had similar advantages to what they have now: elegant design, solid hardware, even an ecosystem of more refined apps and fewer viruses. But they nearly died due to falling market share, which could be attributed to high prices and a lack of vision and discipline on Apples part. The result was a mass migration by developers to the Windows world (Adobe and others used to be Mac only). Yes market share, revenue and profit aren't everything, but they do afford a company the ability to be innovative and daring – the very qualities you want to talk about. Back to the story, what are we seeing in the Chinese market for Apple? Like Apple of the 90s, a lack of vision and high prices. it looks to me like the market is growing at an astonishing rate, and Apple isn't offering enough to justify the high prices. It isn't so much that Apple sales are slowing, it's that they are missing out on a huge wave of opportunity. That's cause for concern.
    That's basically my opinion too. Every sale to Android is a lost sale to Apple. [...]

    I will never pay more than 500 dollars for a new phone as, for me, I can get all I need for less than 300. This from an ex iPhone user.
    Is every sale to Honda a loss of sale to Mercedes? Not really. Mercedes doesn't chase the low-end, it works to beat its competitors in the high-end. So does Apple -- it doesn't worry about trying to capture all the budget Android crap phones out there.

    If you won't spend more than 300 or 500 on a smartphone, you're simply not in Apple's target market. That's fine, you don't need to be. They aren't after market share at the cost of profit share. The profit on the hardware outweighs any would-be gain on the services.
  • Reply 42 of 54
    avon b7avon b7 Posts: 7,624member
    avon b7 said:
    Ebonydog said:
    Ireland, anyone who was an Apple fan in the 90s can tell you why it matters. Back then Apple had similar advantages to what they have now: elegant design, solid hardware, even an ecosystem of more refined apps and fewer viruses. But they nearly died due to falling market share, which could be attributed to high prices and a lack of vision and discipline on Apples part. The result was a mass migration by developers to the Windows world (Adobe and others used to be Mac only). Yes market share, revenue and profit aren't everything, but they do afford a company the ability to be innovative and daring – the very qualities you want to talk about. Back to the story, what are we seeing in the Chinese market for Apple? Like Apple of the 90s, a lack of vision and high prices. it looks to me like the market is growing at an astonishing rate, and Apple isn't offering enough to justify the high prices. It isn't so much that Apple sales are slowing, it's that they are missing out on a huge wave of opportunity. That's cause for concern.
    That's basically my opinion too. Every sale to Android is a lost sale to Apple. [...]

    I will never pay more than 500 dollars for a new phone as, for me, I can get all I need for less than 300. This from an ex iPhone user.
    Is every sale to Honda a loss of sale to Mercedes? Not really. Mercedes doesn't chase the low-end, it works to beat its competitors in the high-end. So does Apple -- it doesn't worry about trying to capture all the budget Android crap phones out there.

    If you won't spend more than 300 or 500 on a smartphone, you're simply not in Apple's target market. That's fine, you don't need to be. They aren't after market share at the cost of profit share. The profit on the hardware outweighs any would-be gain on the services.
    Car Analogies don't work very well. Mercedes isn't limited to luxury cars. They have runaround city cars too and its typical to see Mercedes as taxis where I live, something that normally surprises people when they visit.

    The analogy might work better if Mercedes could generate revenue streams from every user, every day out of its cars. Google just needs Google Search on the device to start generating income. Add in Chrome and Google's other services and those streams become relevant just through the volume spread. If Apple wants to move into mores services areas it would be far better positioned to do so through volume. The SE is the first serious attempt to go there without hurting its highest hardware earners. The problem is that size does matter, as Apple saw with it last earnings call.
  • Reply 43 of 54
    avon b7 said:
    avon b7 said:
    Ebonydog said:
    Ireland, anyone who was an Apple fan in the 90s can tell you why it matters. Back then Apple had similar advantages to what they have now: elegant design, solid hardware, even an ecosystem of more refined apps and fewer viruses. But they nearly died due to falling market share, which could be attributed to high prices and a lack of vision and discipline on Apples part. The result was a mass migration by developers to the Windows world (Adobe and others used to be Mac only). Yes market share, revenue and profit aren't everything, but they do afford a company the ability to be innovative and daring – the very qualities you want to talk about. Back to the story, what are we seeing in the Chinese market for Apple? Like Apple of the 90s, a lack of vision and high prices. it looks to me like the market is growing at an astonishing rate, and Apple isn't offering enough to justify the high prices. It isn't so much that Apple sales are slowing, it's that they are missing out on a huge wave of opportunity. That's cause for concern.
    That's basically my opinion too. Every sale to Android is a lost sale to Apple. [...]

    I will never pay more than 500 dollars for a new phone as, for me, I can get all I need for less than 300. This from an ex iPhone user.
    Is every sale to Honda a loss of sale to Mercedes? Not really. Mercedes doesn't chase the low-end, it works to beat its competitors in the high-end. So does Apple -- it doesn't worry about trying to capture all the budget Android crap phones out there.

    If you won't spend more than 300 or 500 on a smartphone, you're simply not in Apple's target market. That's fine, you don't need to be. They aren't after market share at the cost of profit share. The profit on the hardware outweighs any would-be gain on the services.
    Car Analogies don't work very well. Mercedes isn't limited to luxury cars. They have runaround city cars too and its typical to see Mercedes as taxis where I live, something that normally surprises people when they visit.

    The analogy might work better if Mercedes could generate revenue streams from every user, every day out of its cars. Google just needs Google Search on the device to start generating income. Add in Chrome and Google's other services and those streams become relevant just through the volume spread. If Apple wants to move into mores services areas it would be far better positioned to do so through volume. The SE is the first serious attempt to go there without hurting its highest hardware earners. The problem is that size does matter, as Apple saw with it last earnings call.
    Regardless of the analogy used, the point remains the same -- Apple's doesn't chase market share at the cost of significant profit share. They make more on the hardware than they do on the services, so it doesn't make much sense to sell cheaper hardware to peddle services if it brings in less overall profit. Maybe it will someday, but not today where the iphone commands significantly more profit than cheap Androids. 
    edited February 2017
  • Reply 44 of 54
    brucemcbrucemc Posts: 1,541member
    avon b7 said:
    avon b7 said:
    Ebonydog said:
    Ireland, anyone who was an Apple fan in the 90s can tell you why it matters. Back then Apple had similar advantages to what they have now: elegant design, solid hardware, even an ecosystem of more refined apps and fewer viruses. But they nearly died due to falling market share, which could be attributed to high prices and a lack of vision and discipline on Apples part. The result was a mass migration by developers to the Windows world (Adobe and others used to be Mac only). Yes market share, revenue and profit aren't everything, but they do afford a company the ability to be innovative and daring – the very qualities you want to talk about. Back to the story, what are we seeing in the Chinese market for Apple? Like Apple of the 90s, a lack of vision and high prices. it looks to me like the market is growing at an astonishing rate, and Apple isn't offering enough to justify the high prices. It isn't so much that Apple sales are slowing, it's that they are missing out on a huge wave of opportunity. That's cause for concern.
    That's basically my opinion too. Every sale to Android is a lost sale to Apple. [...]

    I will never pay more than 500 dollars for a new phone as, for me, I can get all I need for less than 300. This from an ex iPhone user.
    Is every sale to Honda a loss of sale to Mercedes? Not really. Mercedes doesn't chase the low-end, it works to beat its competitors in the high-end. So does Apple -- it doesn't worry about trying to capture all the budget Android crap phones out there.

    If you won't spend more than 300 or 500 on a smartphone, you're simply not in Apple's target market. That's fine, you don't need to be. They aren't after market share at the cost of profit share. The profit on the hardware outweighs any would-be gain on the services.
    Car Analogies don't work very well. Mercedes isn't limited to luxury cars. They have runaround city cars too and its typical to see Mercedes as taxis where I live, something that normally surprises people when they visit.

    The analogy might work better if Mercedes could generate revenue streams from every user, every day out of its cars. Google just needs Google Search on the device to start generating income. Add in Chrome and Google's other services and those streams become relevant just through the volume spread. If Apple wants to move into mores services areas it would be far better positioned to do so through volume. The SE is the first serious attempt to go there without hurting its highest hardware earners. The problem is that size does matter, as Apple saw with it last earnings call.
    This is a common misconception. Apple is not trying to shift the company to value services over product. They are highlighting the growing services business that they have consistently built over years that is now contributing meaningfully revenue and profit, and showing strong growth. However, this is s result of a best product strategy that has allowed them to grow the iOS installed base while st same time growing ASP.  They are not trying to grow by sacrificing product margins to build services.  H/W margins are much more than services on a per unit basis. 

    As as to your last sentence, not sure what problem you are highlighting.  In its last quarter Apple had record revenue, increased iPhones sales, and increased iPhone ASP.  Outside iPhone, the other product lines were also strong performers, with exception of iPad.  What is the "problem"?
  • Reply 45 of 54
    avon b7avon b7 Posts: 7,624member
    avon b7 said:
    avon b7 said:
    Ebonydog said:
    Ireland, anyone who was an Apple fan in the 90s can tell you why it matters. Back then Apple had similar advantages to what they have now: elegant design, solid hardware, even an ecosystem of more refined apps and fewer viruses. But they nearly died due to falling market share, which could be attributed to high prices and a lack of vision and discipline on Apples part. The result was a mass migration by developers to the Windows world (Adobe and others used to be Mac only). Yes market share, revenue and profit aren't everything, but they do afford a company the ability to be innovative and daring – the very qualities you want to talk about. Back to the story, what are we seeing in the Chinese market for Apple? Like Apple of the 90s, a lack of vision and high prices. it looks to me like the market is growing at an astonishing rate, and Apple isn't offering enough to justify the high prices. It isn't so much that Apple sales are slowing, it's that they are missing out on a huge wave of opportunity. That's cause for concern.
    That's basically my opinion too. Every sale to Android is a lost sale to Apple. [...]

    I will never pay more than 500 dollars for a new phone as, for me, I can get all I need for less than 300. This from an ex iPhone user.
    Is every sale to Honda a loss of sale to Mercedes? Not really. Mercedes doesn't chase the low-end, it works to beat its competitors in the high-end. So does Apple -- it doesn't worry about trying to capture all the budget Android crap phones out there.

    If you won't spend more than 300 or 500 on a smartphone, you're simply not in Apple's target market. That's fine, you don't need to be. They aren't after market share at the cost of profit share. The profit on the hardware outweighs any would-be gain on the services.
    Car Analogies don't work very well. Mercedes isn't limited to luxury cars. They have runaround city cars too and its typical to see Mercedes as taxis where I live, something that normally surprises people when they visit.

    The analogy might work better if Mercedes could generate revenue streams from every user, every day out of its cars. Google just needs Google Search on the device to start generating income. Add in Chrome and Google's other services and those streams become relevant just through the volume spread. If Apple wants to move into mores services areas it would be far better positioned to do so through volume. The SE is the first serious attempt to go there without hurting its highest hardware earners. The problem is that size does matter, as Apple saw with it last earnings call.
    Regardless of the analogy used, the point remains the same -- Apple's doesn't chase market share at the cost of significant profit share. They make more on the hardware than they do on the services, so it doesn't make much sense to sell cheaper hardware to peddle services if it brings in less overall profit. Maybe it will someday, but not today where the iphone commands significantly more profit than cheap Androids. 
    Right now, as in 'today', you are right but if you want services to become an income driver it makes sense to get some volume spread. 'Someday' will have to come sooner rather than later in that case. 

    Some Android hardware already pushes Apple neck and neck (some have exceeded Apple for a while).

    Android itself has also become a very solid platform.

    Even if services are just envisaged as a plus and all your efforts go into premium hardware at premium prices, you should look at what happened to Pioneer's TV division.

    Things become commodity very quickly. It's very hard to make money on premium or luxury goods when they are, first and foremost, just tools. And tools that do not hold their value over time. Nobody buys a phone as a fashion statement alone. That is secondary. It's a communication tool first and then a consumption tool and then a productivity tool. The fashion statement is there but down the list and anyone who thinks its trendy today to have an iPhone, could think different tomorrow.

    Apple has positioned itself purposefully and cornered itself knowingly. It could be a strategic gamble to milk the cow before breaking out into the lower tiers because if the next cow to milk is the services cow, you will need volume.

    And what would happen if someone delivers on the battery life/charging issue?

    Huawei is already spanking Apple on fast charging.

    If someone makes a breakthrough in how long charges last while not radically increasing weight, it would be tempting even to Apple's most fervent users, which are actually a minority. Most people I know are simply 'happy' with their iPhones. They could probably be just as happy with an Android phone. If Apple were to make the battery breakthrough, the impact would be minor as most people simply can't afford an iPhone (or premium Android phone) anyway. I will add that I have yet to find one single iDevice user that hasn't complained about the 16GB versions of their equipment. And they complain a lot about the hassle of not having space for anything and the lack of SD storage.

    That's a lot of potentially disgruntled users I guess.

  • Reply 46 of 54
    avon b7 said:
    avon b7 said:
    avon b7 said:
    Ebonydog said:
    Ireland, anyone who was an Apple fan in the 90s can tell you why it matters. Back then Apple had similar advantages to what they have now: elegant design, solid hardware, even an ecosystem of more refined apps and fewer viruses. But they nearly died due to falling market share, which could be attributed to high prices and a lack of vision and discipline on Apples part. The result was a mass migration by developers to the Windows world (Adobe and others used to be Mac only). Yes market share, revenue and profit aren't everything, but they do afford a company the ability to be innovative and daring – the very qualities you want to talk about. Back to the story, what are we seeing in the Chinese market for Apple? Like Apple of the 90s, a lack of vision and high prices. it looks to me like the market is growing at an astonishing rate, and Apple isn't offering enough to justify the high prices. It isn't so much that Apple sales are slowing, it's that they are missing out on a huge wave of opportunity. That's cause for concern.
    That's basically my opinion too. Every sale to Android is a lost sale to Apple. [...]

    I will never pay more than 500 dollars for a new phone as, for me, I can get all I need for less than 300. This from an ex iPhone user.
    Is every sale to Honda a loss of sale to Mercedes? Not really. Mercedes doesn't chase the low-end, it works to beat its competitors in the high-end. So does Apple -- it doesn't worry about trying to capture all the budget Android crap phones out there.

    If you won't spend more than 300 or 500 on a smartphone, you're simply not in Apple's target market. That's fine, you don't need to be. They aren't after market share at the cost of profit share. The profit on the hardware outweighs any would-be gain on the services.
    Car Analogies don't work very well. Mercedes isn't limited to luxury cars. They have runaround city cars too and its typical to see Mercedes as taxis where I live, something that normally surprises people when they visit.

    The analogy might work better if Mercedes could generate revenue streams from every user, every day out of its cars. Google just needs Google Search on the device to start generating income. Add in Chrome and Google's other services and those streams become relevant just through the volume spread. If Apple wants to move into mores services areas it would be far better positioned to do so through volume. The SE is the first serious attempt to go there without hurting its highest hardware earners. The problem is that size does matter, as Apple saw with it last earnings call.
    Regardless of the analogy used, the point remains the same -- Apple's doesn't chase market share at the cost of significant profit share. They make more on the hardware than they do on the services, so it doesn't make much sense to sell cheaper hardware to peddle services if it brings in less overall profit. Maybe it will someday, but not today where the iphone commands significantly more profit than cheap Androids. 
    Right now, as in 'today', you are right but if you want services to become an income driver it makes sense to get some volume spread. 'Someday' will have to come sooner rather than later in that case. 

    Some Android hardware already pushes Apple neck and neck (some have exceeded Apple for a while).

    Android itself has also become a very solid platform.

    Even if services are just envisaged as a plus and all your efforts go into premium hardware at premium prices, you should look at what happened to Pioneer's TV division.

    Things become commodity very quickly. It's very hard to make money on premium or luxury goods when they are, first and foremost, just tools. And tools that do not hold their value over time. Nobody buys a phone as a fashion statement alone. That is secondary. It's a communication tool first and then a consumption tool and then a productivity tool. The fashion statement is there but down the list and anyone who thinks its trendy today to have an iPhone, could think different tomorrow.

    Apple has positioned itself purposefully and cornered itself knowingly. It could be a strategic gamble to milk the cow before breaking out into the lower tiers because if the next cow to milk is the services cow, you will need volume.

    And what would happen if someone delivers on the battery life/charging issue?

    Huawei is already spanking Apple on fast charging.

    If someone makes a breakthrough in how long charges last while not radically increasing weight, it would be tempting even to Apple's most fervent users, which are actually a minority. Most people I know are simply 'happy' with their iPhones. They could probably be just as happy with an Android phone. If Apple were to make the battery breakthrough, the impact would be minor as most people simply can't afford an iPhone (or premium Android phone) anyway. I will add that I have yet to find one single iDevice user that hasn't complained about the 16GB versions of their equipment. And they complain a lot about the hassle of not having space for anything and the lack of SD storage.

    That's a lot of potentially disgruntled users I guess.

    This has been an interesting back and forth.  But, I don't see the problem ...
    Apple is a hardware company
    Apple is a software company
    Apple is a services company

    Each feeds and supports the other.   Perhaps the analogy might be to a three legged stool.   It works great.   But you need all three legs.
  • Reply 47 of 54
    avon b7avon b7 Posts: 7,624member
    avon b7 said:
    avon b7 said:
    avon b7 said:
    Ebonydog said:
    Ireland, anyone who was an Apple fan in the 90s can tell you why it matters. Back then Apple had similar advantages to what they have now: elegant design, solid hardware, even an ecosystem of more refined apps and fewer viruses. But they nearly died due to falling market share, which could be attributed to high prices and a lack of vision and discipline on Apples part. The result was a mass migration by developers to the Windows world (Adobe and others used to be Mac only). Yes market share, revenue and profit aren't everything, but they do afford a company the ability to be innovative and daring – the very qualities you want to talk about. Back to the story, what are we seeing in the Chinese market for Apple? Like Apple of the 90s, a lack of vision and high prices. it looks to me like the market is growing at an astonishing rate, and Apple isn't offering enough to justify the high prices. It isn't so much that Apple sales are slowing, it's that they are missing out on a huge wave of opportunity. That's cause for concern.
    That's basically my opinion too. Every sale to Android is a lost sale to Apple. [...]

    I will never pay more than 500 dollars for a new phone as, for me, I can get all I need for less than 300. This from an ex iPhone user.
    Is every sale to Honda a loss of sale to Mercedes? Not really. Mercedes doesn't chase the low-end, it works to beat its competitors in the high-end. So does Apple -- it doesn't worry about trying to capture all the budget Android crap phones out there.

    If you won't spend more than 300 or 500 on a smartphone, you're simply not in Apple's target market. That's fine, you don't need to be. They aren't after market share at the cost of profit share. The profit on the hardware outweighs any would-be gain on the services.
    Car Analogies don't work very well. Mercedes isn't limited to luxury cars. They have runaround city cars too and its typical to see Mercedes as taxis where I live, something that normally surprises people when they visit.

    The analogy might work better if Mercedes could generate revenue streams from every user, every day out of its cars. Google just needs Google Search on the device to start generating income. Add in Chrome and Google's other services and those streams become relevant just through the volume spread. If Apple wants to move into mores services areas it would be far better positioned to do so through volume. The SE is the first serious attempt to go there without hurting its highest hardware earners. The problem is that size does matter, as Apple saw with it last earnings call.
    Regardless of the analogy used, the point remains the same -- Apple's doesn't chase market share at the cost of significant profit share. They make more on the hardware than they do on the services, so it doesn't make much sense to sell cheaper hardware to peddle services if it brings in less overall profit. Maybe it will someday, but not today where the iphone commands significantly more profit than cheap Androids. 
    Right now, as in 'today', you are right but if you want services to become an income driver it makes sense to get some volume spread. 'Someday' will have to come sooner rather than later in that case. 

    Some Android hardware already pushes Apple neck and neck (some have exceeded Apple for a while).

    Android itself has also become a very solid platform.

    Even if services are just envisaged as a plus and all your efforts go into premium hardware at premium prices, you should look at what happened to Pioneer's TV division.

    Things become commodity very quickly. It's very hard to make money on premium or luxury goods when they are, first and foremost, just tools. And tools that do not hold their value over time. Nobody buys a phone as a fashion statement alone. That is secondary. It's a communication tool first and then a consumption tool and then a productivity tool. The fashion statement is there but down the list and anyone who thinks its trendy today to have an iPhone, could think different tomorrow.

    Apple has positioned itself purposefully and cornered itself knowingly. It could be a strategic gamble to milk the cow before breaking out into the lower tiers because if the next cow to milk is the services cow, you will need volume.

    And what would happen if someone delivers on the battery life/charging issue?

    Huawei is already spanking Apple on fast charging.

    If someone makes a breakthrough in how long charges last while not radically increasing weight, it would be tempting even to Apple's most fervent users, which are actually a minority. Most people I know are simply 'happy' with their iPhones. They could probably be just as happy with an Android phone. If Apple were to make the battery breakthrough, the impact would be minor as most people simply can't afford an iPhone (or premium Android phone) anyway. I will add that I have yet to find one single iDevice user that hasn't complained about the 16GB versions of their equipment. And they complain a lot about the hassle of not having space for anything and the lack of SD storage.

    That's a lot of potentially disgruntled users I guess.

    This has been an interesting back and forth.  But, I don't see the problem ...
    Apple is a hardware company
    Apple is a software company
    Apple is a services company

    Each feeds and supports the other.   Perhaps the analogy might be to a three legged stool.   It works great.   But you need all three legs.
    I'm not sure if it's still a software company (in a revenue sense) as much of its software is now not driving earnings and the likes of Logic, FCPX etc are more niche products. The rest is included with the system or free.

    I'm also not sure if it's a services company  - yet. It's clear that that area is growing (and rapidly) but many of those services are reliant (in the long term) on volume. Ever since they put the focus on AppleCare a few years ago, that particular revenue stream sky rocketed but there can be no more AppleCare contracts sold than units sold. Service and support contracts are also limited. The App Store revenues and music are also limited although at least they are more dynamic than both AppleCare or services and support. People have access to AppStore purchases at any time whereas every individual mac sale provides a window of opportunity for AppleCare that lasts one year. Support services are static in the same way. Apple does offer a pay-as-you-go service where you pay to get potential solutions to your problem but it's not an earner. It also has business contracts but Apple is still not an enterprise company. So the only way to truly open the services nut is to sell more hardware or open up part of your services platform to non-Apple hardware.

    That leaves hardware, which today at least, basically means iPhone.

    iPhone hit the ground running (once price was adjusted) and has evolved nicely as an earner, to the point of overshadowing everything else. It has inertia and iPhone 8 will see that continue in all likelihood.

    But all markets have a saturation point and the question is, are we there, has it passed or is it coming?

    My thinking is that in the developed world we have reached saturation for smartphones. Everyone who needs one, has one. There is not much room for growth in new users as an industry. There is room for new iPhone users by getting Android users to switch but there are also iPhone users that move to Android, so to really increase sales the only thing left is to move into the mid tier and get a bigger slice of the market. Some will counter that the mid tier is already covered by SE but as the last earnings call made clear, large screens are very much in demand (and always have been) but Apple is only there with high-end products. They will also argue that there is no money there but isn't that what services (or inkjet cartridge sales if we put things into a different context) are all about? They will also argue that an Apple large screen mid tier phone would eat away at its high end lines.

    That is very likely but you can't have your cake and eat it all the time.

    If Apple has most of the profits you may ask yourself why there are gazillions of phones out there that are not made by Apple? What's the point? Well services is one answer, as are accessories etc but if you make a few million off your business you should be happy, that's the point of doing business. And for every unit sold, it is one sale that didn't go to your competitor. That should make most people happy on a business level. They can aspire to having most of the profits but just making money is what's all about, even if in percentage terms it's only a small part of the pie.

    As I said before, iPhone got off to a flying start but the market has matured since then. Competitors now often exceed Apple in many areas, areas where Apple is perceived to be better but actually isn't.

    We are now in the comfort zone. Most people can be happy with any modern phone.

    If I were Google, I'd be preparing to hit Apple on its home territory with a joint venture ad campaign with the goal of changeing perceptions. Get a select group of Android vendors together and 'sell' the features in a string of very short ads and pit them directly against the iPhone.

    It would be so easy. Cheap, as costs would be shared and the ads would be devastatingly short. No smugness, just the facts and straight to the point. It's more than enough to sow a seed of doubt.

    Two phones charging from zero. Unplug them after the same period of time. Which had charged more?

    Fingerprint scanner. Show what gestures can do on a scanner. Which phone can do more?

    Curved screens?

    Dual lens? Full manual camera control?

    OLED displays?

    Power?

    Graphics?

    Micro SD?

    Price?

    Choice?

    Etc

    It would have the same purpose (awareness) as the Mac vs PC campaign but with the boot on the other foot. Letting people know that perceptions of Android and Android phones may be based on information that currently isn't true or not completely true.

    Such an ad campaign could be supplemented by each individual manufacturer to highlight their own devices' strong points.

    Google is currently pushing the Android brand in some markets but in a non aggressive way.

    I don't think it would be difficult at all to cause serious disruption in the mindset of many iPhone users in the same way that the Mac vs PC campaign likely worked on PC users.

    If such a campaign were to emerge and have even a modicum of success, how would Apple react?

    More phone models? Faster release cycles? Cheaper phones? Ignore the situation?

    The point of this post is that the stool may have three legs but only one is a big earnings driver. Another (services) has potential but potential that an only be realised fully by gaining volume sales. The other (software) isn't likely to do much in the short term.

    I think health and home are obvious areas to develop (along with services) but if you pigeon hole yourself into a  premium slot, your scope will be reduced.











    edited February 2017 gatorguy
  • Reply 48 of 54
    GeorgeBMacGeorgeBMac Posts: 11,421member
    avon b7 said:
    avon b7 said:
    avon b7 said:
    avon b7 said:
    Ebonydog said:
    Ireland, anyone who was an Apple fan in the 90s can tell you why it matters. Back then Apple had similar advantages to what they have now: elegant design, solid hardware, even an ecosystem of more refined apps and fewer viruses. But they nearly died due to falling market share, which could be attributed to high prices and a lack of vision and discipline on Apples part. The result was a mass migration by developers to the Windows world (Adobe and others used to be Mac only). Yes market share, revenue and profit aren't everything, but they do afford a company the ability to be innovative and daring – the very qualities you want to talk about. Back to the story, what are we seeing in the Chinese market for Apple? Like Apple of the 90s, a lack of vision and high prices. it looks to me like the market is growing at an astonishing rate, and Apple isn't offering enough to justify the high prices. It isn't so much that Apple sales are slowing, it's that they are missing out on a huge wave of opportunity. That's cause for concern.
    That's basically my opinion too. Every sale to Android is a lost sale to Apple. [...]

    I will never pay more than 500 dollars for a new phone as, for me, I can get all I need for less than 300. This from an ex iPhone user.
    Is every sale to Honda a loss of sale to Mercedes? Not really. Mercedes doesn't chase the low-end, it works to beat its competitors in the high-end. So does Apple -- it doesn't worry about trying to capture all the budget Android crap phones out there.

    If you won't spend more than 300 or 500 on a smartphone, you're simply not in Apple's target market. That's fine, you don't need to be. They aren't after market share at the cost of profit share. The profit on the hardware outweighs any would-be gain on the services.
    Car Analogies don't work very well. Mercedes isn't limited to luxury cars. They have runaround city cars too and its typical to see Mercedes as taxis where I live, something that normally surprises people when they visit.

    The analogy might work better if Mercedes could generate revenue streams from every user, every day out of its cars. Google just needs Google Search on the device to start generating income. Add in Chrome and Google's other services and those streams become relevant just through the volume spread. If Apple wants to move into mores services areas it would be far better positioned to do so through volume. The SE is the first serious attempt to go there without hurting its highest hardware earners. The problem is that size does matter, as Apple saw with it last earnings call.
    Regardless of the analogy used, the point remains the same -- Apple's doesn't chase market share at the cost of significant profit share. They make more on the hardware than they do on the services, so it doesn't make much sense to sell cheaper hardware to peddle services if it brings in less overall profit. Maybe it will someday, but not today where the iphone commands significantly more profit than cheap Androids. 
    Right now, as in 'today', you are right but if you want services to become an income driver it makes sense to get some volume spread. 'Someday' will have to come sooner rather than later in that case. 

    Some Android hardware already pushes Apple neck and neck (some have exceeded Apple for a while).

    Android itself has also become a very solid platform.

    Even if services are just envisaged as a plus and all your efforts go into premium hardware at premium prices, you should look at what happened to Pioneer's TV division.

    Things become commodity very quickly. It's very hard to make money on premium or luxury goods when they are, first and foremost, just tools. And tools that do not hold their value over time. Nobody buys a phone as a fashion statement alone. That is secondary. It's a communication tool first and then a consumption tool and then a productivity tool. The fashion statement is there but down the list and anyone who thinks its trendy today to have an iPhone, could think different tomorrow.

    Apple has positioned itself purposefully and cornered itself knowingly. It could be a strategic gamble to milk the cow before breaking out into the lower tiers because if the next cow to milk is the services cow, you will need volume.

    And what would happen if someone delivers on the battery life/charging issue?

    Huawei is already spanking Apple on fast charging.

    If someone makes a breakthrough in how long charges last while not radically increasing weight, it would be tempting even to Apple's most fervent users, which are actually a minority. Most people I know are simply 'happy' with their iPhones. They could probably be just as happy with an Android phone. If Apple were to make the battery breakthrough, the impact would be minor as most people simply can't afford an iPhone (or premium Android phone) anyway. I will add that I have yet to find one single iDevice user that hasn't complained about the 16GB versions of their equipment. And they complain a lot about the hassle of not having space for anything and the lack of SD storage.

    That's a lot of potentially disgruntled users I guess.

    This has been an interesting back and forth.  But, I don't see the problem ...
    Apple is a hardware company
    Apple is a software company
    Apple is a services company

    Each feeds and supports the other.   Perhaps the analogy might be to a three legged stool.   It works great.   But you need all three legs.
    I'm not sure if it's still a software company (in a revenue sense) as much of its software is now not driving earnings and the likes of Logic, FCPX etc are more niche products. The rest is included with the system or free.

    I'm also not sure if it's a services company  - yet. It's clear that that area is growing (and rapidly) but many of those services are reliant (in the long term) on volume. Ever since they put the focus on AppleCare a few years ago, that particular revenue stream sky rocketed but there can be no more AppleCare contracts sold than units sold. Service and support contracts are also limited. The App Store revenues and music are also limited although at least they are more dynamic than both AppleCare or services and support. People have access to AppStore purchases at any time whereas every individual mac sale provides a window of opportunity for AppleCare that lasts one year. Support services are static in the same way. Apple does offer a pay-as-you-go service where you pay to get potential solutions to your problem but it's not an earner. It also has business contracts but Apple is still not an enterprise company. So the only way to truly open the services nut is to sell more hardware or open up part of your services platform to non-Apple hardware.

    That leaves hardware, which today at least, basically means iPhone.

    iPhone hit the ground running (once price was adjusted) and has evolved nicely as an earner, to the point of overshadowing everything else. It has inertia and iPhone 8 will see that continue in all likelihood.

    But all markets have a saturation point and the question is, are we there, has it passed or is it coming?

    My thinking is that in the developed world we have reached saturation for smartphones. Everyone who needs one, has one. There is not much room for growth in new users as an industry. There is room for new iPhone users by getting Android users to switch but there are also iPhone users that move to Android, so to really increase sales the only thing left is to move into the mid tier and get a bigger slice of the market. Some will counter that the mid tier is already covered by SE but as the last earnings call made clear, large screens are very much in demand (and always have been) but Apple is only there with high-end products. They will also argue that there is no money there but isn't that what services (or inkjet cartridge sales if we put things into a different context) are all about? They will also argue that an Apple large screen mid tier phone would eat away at its high end lines.

    That is very likely but you can't have your cake and eat it all the time.

    If Apple has most of the profits you may ask yourself why there are gazillions of phones out there that are not made by Apple? What's the point? Well services is one answer, as are accessories etc but if you make a few million off your business you should be happy, that's the point of doing business. And for every unit sold, it is one sale that didn't go to your competitor. That should make most people happy on a business level. They can aspire to having most of the profits but just making money is what's all about, even if in percentage terms it's only a small part of the pie.

    As I said before, iPhone got off to a flying start but the market has matured since then. Competitors now often exceed Apple in many areas, areas where Apple is perceived to be better but actually isn't.

    We are now in the comfort zone. Most people can be happy with any modern phone.

    If I were Google, I'd be preparing to hit Apple on its home territory with a joint venture ad campaign with the goal of changeing perceptions. Get a select group of Android vendors together and 'sell' the features in a string of very short ads and pit them directly against the iPhone.

    It would be so easy. Cheap, as costs would be shared and the ads would be devastatingly short. No smugness, just the facts and straight to the point. It's more than enough to sow a seed of doubt.

    Two phones charging from zero. Unplug them after the same period of time. Which had charged more?

    Fingerprint scanner. Show what gestures can do on a scanner. Which phone can do more?

    Curved screens?

    Dual lens? Full manual camera control?

    OLED displays?

    Power?

    Graphics?

    Micro SD?

    Price?

    Choice?

    Etc

    It would have the same purpose (awareness) as the Mac vs PC campaign but with the boot on the other foot. Letting people know that perceptions of Android and Android phones may be based on information that currently isn't true or not completely true.

    Such an ad campaign could be supplemented by each individual manufacturer to highlight their own devices' strong points.

    Google is currently pushing the Android brand in some markets but in a non aggressive way.

    I don't think it would be difficult at all to cause serious disruption in the mindset of many iPhone users in the same way that the Mac vs PC campaign likely worked on PC users.

    If such a campaign were to emerge and have even a modicum of success, how would Apple react?

    More phone models? Faster release cycles? Cheaper phones? Ignore the situation?

    The point of this post is that the stool may have three legs but only one is a big earnings driver. Another has potential but potential that an only be realised fully by gaining volume sales. The other (software) isn't likely to do much in the short term.









    You are using the tree model:  Where Apple stands on a solid trunk of IPhone hardware sales and all else branch from that trunk. 
    .... All a competitor has to do is take an ax to that trunk and the whole tree comes crashing down.

    I am using the 3 legged stool model where Apple stands on 3 separate trunks, where each support the other.
    .... It is far harder to chop into all three legs at once.... 

    You want Apple to stand on its hardware and you marginalize Apple software.  Yet, without the Mac OS and IOS (and Watch OS), plus extensions such Safari, Maps, Health, etc., etc., etc., there simply would be no Apple.  They could not compete against the low cost hardware manufacturers -- or even the high end ones.

    You also trivialize Apple's services.   They go far beyond just the hardware service and support that you mention.  Apple entered the services market with the IPod when they introduced a viable downloadable digitial music business called ITunes.  Without ITunes the IPod would have been just another MP3 player.  A similar paradigm is evolving now with Apple TV where Apple is revolutionizing the TV industry from cable driven channels to internet driven Apps.  Then we get into ICloud & related functions which enables Apple to drive a multitude of services such as:  Find My Phone, Apple Music, ICloud pictures, automatic backups, FaceTIme, IMsg, Health, etc., etc., etc....

    Using the 3 legged stool model, Apple can use the other 2 legs to support the development and expansion of new products in the other leg.  A good example is Apple Maps:  the Maps themselves are a service which involves Apple software and hardware and strengthens the overall product line.  Without Apple Maps we would be reliant on Google Maps and enabling them to follow and track our every movement.    
  • Reply 49 of 54
    avon b7avon b7 Posts: 7,624member
    avon b7 said:
    avon b7 said:
    avon b7 said:
    avon b7 said:
    Ebonydog said:
    Ireland, anyone who was an Apple fan in the 90s can tell you why it matters. Back then Apple had similar advantages to what they have now: elegant design, solid hardware, even an ecosystem of more refined apps and fewer viruses. But they nearly died due to falling market share, which could be attributed to high prices and a lack of vision and discipline on Apples part. The result was a mass migration by developers to the Windows world (Adobe and others used to be Mac only). Yes market share, revenue and profit aren't everything, but they do afford a company the ability to be innovative and daring – the very qualities you want to talk about. Back to the story, what are we seeing in the Chinese market for Apple? Like Apple of the 90s, a lack of vision and high prices. it looks to me like the market is growing at an astonishing rate, and Apple isn't offering enough to justify the high prices. It isn't so much that Apple sales are slowing, it's that they are missing out on a huge wave of opportunity. That's cause for concern.
    That's basically my opinion too. Every sale to Android is a lost sale to Apple. [...]

    I will never pay more than 500 dollars for a new phone as, for me, I can get all I need for less than 300. This from an ex iPhone user.
    Is every sale to Honda a loss of sale to Mercedes? Not really. Mercedes doesn't chase the low-end, it works to beat its competitors in the high-end. So does Apple -- it doesn't worry about trying to capture all the budget Android crap phones out there.

    If you won't spend more than 300 or 500 on a smartphone, you're simply not in Apple's target market. That's fine, you don't need to be. They aren't after market share at the cost of profit share. The profit on the hardware outweighs any would-be gain on the services.
    Car Analogies don't work very well. Mercedes isn't limited to luxury cars. They have runaround city cars too and its typical to see Mercedes as taxis where I live, something that normally surprises people when they visit.

    The analogy might work better if Mercedes could generate revenue streams from every user, every day out of its cars. Google just needs Google Search on the device to start generating income. Add in Chrome and Google's other services and those streams become relevant just through the volume spread. If Apple wants to move into mores services areas it would be far better positioned to do so through volume. The SE is the first serious attempt to go there without hurting its highest hardware earners. The problem is that size does matter, as Apple saw with it last earnings call.
    Regardless of the analogy used, the point remains the same -- Apple's doesn't chase market share at the cost of significant profit share. They make more on the hardware than they do on the services, so it doesn't make much sense to sell cheaper hardware to peddle services if it brings in less overall profit. Maybe it will someday, but not today where the iphone commands significantly more profit than cheap Androids. 
    Right now, as in 'today', you are right but if you want services to become an income driver it makes sense to get some volume spread. 'Someday' will have to come sooner rather than later in that case. 

    Some Android hardware already pushes Apple neck and neck (some have exceeded Apple for a while).

    Android itself has also become a very solid platform.

    Even if services are just envisaged as a plus and all your efforts go into premium hardware at premium prices, you should look at what happened to Pioneer's TV division.

    Things become commodity very quickly. It's very hard to make money on premium or luxury goods when they are, first and foremost, just tools. And tools that do not hold their value over time. Nobody buys a phone as a fashion statement alone. That is secondary. It's a communication tool first and then a consumption tool and then a productivity tool. The fashion statement is there but down the list and anyone who thinks its trendy today to have an iPhone, could think different tomorrow.

    Apple has positioned itself purposefully and cornered itself knowingly. It could be a strategic gamble to milk the cow before breaking out into the lower tiers because if the next cow to milk is the services cow, you will need volume.

    And what would happen if someone delivers on the battery life/charging issue?

    Huawei is already spanking Apple on fast charging.

    If someone makes a breakthrough in how long charges last while not radically increasing weight, it would be tempting even to Apple's most fervent users, which are actually a minority. Most people I know are simply 'happy' with their iPhones. They could probably be just as happy with an Android phone. If Apple were to make the battery breakthrough, the impact would be minor as most people simply can't afford an iPhone (or premium Android phone) anyway. I will add that I have yet to find one single iDevice user that hasn't complained about the 16GB versions of their equipment. And they complain a lot about the hassle of not having space for anything and the lack of SD storage.

    That's a lot of potentially disgruntled users I guess.

    This has been an interesting back and forth.  But, I don't see the problem ...
    Apple is a hardware company
    Apple is a software company
    Apple is a services company

    Each feeds and supports the other.   Perhaps the analogy might be to a three legged stool.   It works great.   But you need all three legs.
    I'm not sure if it's still a software company (in a revenue sense) as much of its software is now not driving earnings and the likes of Logic, FCPX etc are more niche products. The rest is included with the system or free.

    I'm also not sure if it's a services company  - yet. It's clear that that area is growing (and rapidly) but many of those services are reliant (in the long term) on volume. Ever since they put the focus on AppleCare a few years ago, that particular revenue stream sky rocketed but there can be no more AppleCare contracts sold than units sold. Service and support contracts are also limited. The App Store revenues and music are also limited although at least they are more dynamic than both AppleCare or services and support. People have access to AppStore purchases at any time whereas every individual mac sale provides a window of opportunity for AppleCare that lasts one year. Support services are static in the same way. Apple does offer a pay-as-you-go service where you pay to get potential solutions to your problem but it's not an earner. It also has business contracts but Apple is still not an enterprise company. So the only way to truly open the services nut is to sell more hardware or open up part of your services platform to non-Apple hardware.

    That leaves hardware, which today at least, basically means iPhone.

    iPhone hit the ground running (once price was adjusted) and has evolved nicely as an earner, to the point of overshadowing everything else. It has inertia and iPhone 8 will see that continue in all likelihood.

    But all markets have a saturation point and the question is, are we there, has it passed or is it coming?

    My thinking is that in the developed world we have reached saturation for smartphones. Everyone who needs one, has one. There is not much room for growth in new users as an industry. There is room for new iPhone users by getting Android users to switch but there are also iPhone users that move to Android, so to really increase sales the only thing left is to move into the mid tier and get a bigger slice of the market. Some will counter that the mid tier is already covered by SE but as the last earnings call made clear, large screens are very much in demand (and always have been) but Apple is only there with high-end products. They will also argue that there is no money there but isn't that what services (or inkjet cartridge sales if we put things into a different context) are all about? They will also argue that an Apple large screen mid tier phone would eat away at its high end lines.

    That is very likely but you can't have your cake and eat it all the time.

    If Apple has most of the profits you may ask yourself why there are gazillions of phones out there that are not made by Apple? What's the point? Well services is one answer, as are accessories etc but if you make a few million off your business you should be happy, that's the point of doing business. And for every unit sold, it is one sale that didn't go to your competitor. That should make most people happy on a business level. They can aspire to having most of the profits but just making money is what's all about, even if in percentage terms it's only a small part of the pie.

    As I said before, iPhone got off to a flying start but the market has matured since then. Competitors now often exceed Apple in many areas, areas where Apple is perceived to be better but actually isn't.

    We are now in the comfort zone. Most people can be happy with any modern phone.

    If I were Google, I'd be preparing to hit Apple on its home territory with a joint venture ad campaign with the goal of changeing perceptions. Get a select group of Android vendors together and 'sell' the features in a string of very short ads and pit them directly against the iPhone.

    It would be so easy. Cheap, as costs would be shared and the ads would be devastatingly short. No smugness, just the facts and straight to the point. It's more than enough to sow a seed of doubt.

    Two phones charging from zero. Unplug them after the same period of time. Which had charged more?

    Fingerprint scanner. Show what gestures can do on a scanner. Which phone can do more?

    Curved screens?

    Dual lens? Full manual camera control?

    OLED displays?

    Power?

    Graphics?

    Micro SD?

    Price?

    Choice?

    Etc

    It would have the same purpose (awareness) as the Mac vs PC campaign but with the boot on the other foot. Letting people know that perceptions of Android and Android phones may be based on information that currently isn't true or not completely true.

    Such an ad campaign could be supplemented by each individual manufacturer to highlight their own devices' strong points.

    Google is currently pushing the Android brand in some markets but in a non aggressive way.

    I don't think it would be difficult at all to cause serious disruption in the mindset of many iPhone users in the same way that the Mac vs PC campaign likely worked on PC users.

    If such a campaign were to emerge and have even a modicum of success, how would Apple react?

    More phone models? Faster release cycles? Cheaper phones? Ignore the situation?

    The point of this post is that the stool may have three legs but only one is a big earnings driver. Another has potential but potential that an only be realised fully by gaining volume sales. The other (software) isn't likely to do much in the short term.









    You are using the tree model:  Where Apple stands on a solid trunk of IPhone hardware sales and all else branch from that trunk. 
    .... All a competitor has to do is take an ax to that trunk and the whole tree comes crashing down.

    I am using the 3 legged stool model where Apple stands on 3 separate trunks, where each support the other.
    .... It is far harder to chop into all three legs at once.... 

    You want Apple to stand on its hardware and you marginalize Apple software.  Yet, without the Mac OS and IOS (and Watch OS), plus extensions such Safari, Maps, Health, etc., etc., etc., there simply would be no Apple.  They could not compete against the low cost hardware manufacturers -- or even the high end ones.

    You also trivialize Apple's services.   They go far beyond just the hardware service and support that you mention.  Apple entered the services market with the IPod when they introduced a viable downloadable digitial music business called ITunes.  Without ITunes the IPod would have been just another MP3 player.  A similar paradigm is evolving now with Apple TV where Apple is revolutionizing the TV industry from cable driven channels to internet driven Apps.  Then we get into ICloud & related functions which enables Apple to drive a multitude of services such as:  Find My Phone, Apple Music, ICloud pictures, automatic backups, FaceTIme, IMsg, Health, etc., etc., etc....

    Using the 3 legged stool model, Apple can use the other 2 legs to support the development and expansion of new products in the other leg.  A good example is Apple Maps:  the Maps themselves are a service which involves Apple software and hardware and strengthens the overall product line.  Without Apple Maps we would be reliant on Google Maps and enabling them to follow and track our every movement.    
    I know what you are saying but I don't see the software side as a solid leg and the services leg is still weak and limited in scope due to market share. If services are the future (be they music, support, maps etc), you need to be able to sell into the biggest market possible but Apple's share of the smartphone market is small and the proportion of users actually generating revenue through servicesis a subset of that market. Given this, the most logical step would be to change tactics and increase the potential market you can sell to.

    If one leg gives way the stool will fall.

    A lot of people refuse to admit it but iPhone, for all its prestige, just isn't years ahead of its competitors. It's actually behind its competitors in many areas. Selling a premium phone at a premium price in those conditions is a fragile situation to be in. I'm sure there is enough inertia there to make iPhone 8 a success but it will probably do little to increase the amount of people to sell services to.
  • Reply 50 of 54
    GeorgeBMacGeorgeBMac Posts: 11,421member
    avon b7 said:
    avon b7 said:
    avon b7 said:
    avon b7 said:
    avon b7 said:
    Ebonydog said:
    Ireland, anyone who was an Apple fan in the 90s can tell you why it matters. Back then Apple had similar advantages to what they have now: elegant design, solid hardware, even an ecosystem of more refined apps and fewer viruses. But they nearly died due to falling market share, which could be attributed to high prices and a lack of vision and discipline on Apples part. The result was a mass migration by developers to the Windows world (Adobe and others used to be Mac only). Yes market share, revenue and profit aren't everything, but they do afford a company the ability to be innovative and daring – the very qualities you want to talk about. Back to the story, what are we seeing in the Chinese market for Apple? Like Apple of the 90s, a lack of vision and high prices. it looks to me like the market is growing at an astonishing rate, and Apple isn't offering enough to justify the high prices. It isn't so much that Apple sales are slowing, it's that they are missing out on a huge wave of opportunity. That's cause for concern.
    That's basically my opinion too. Every sale to Android is a lost sale to Apple. [...]

    I will never pay more than 500 dollars for a new phone as, for me, I can get all I need for less than 300. This from an ex iPhone user.
    Is every sale to Honda a loss of sale to Mercedes? Not really. Mercedes doesn't chase the low-end, it works to beat its competitors in the high-end. So does Apple -- it doesn't worry about trying to capture all the budget Android crap phones out there.

    If you won't spend more than 300 or 500 on a smartphone, you're simply not in Apple's target market. That's fine, you don't need to be. They aren't after market share at the cost of profit share. The profit on the hardware outweighs any would-be gain on the services.
    Car Analogies don't work very well. Mercedes isn't limited to luxury cars. They have runaround city cars too and its typical to see Mercedes as taxis where I live, something that normally surprises people when they visit.

    The analogy might work better if Mercedes could generate revenue streams from every user, every day out of its cars. Google just needs Google Search on the device to start generating income. Add in Chrome and Google's other services and those streams become relevant just through the volume spread. If Apple wants to move into mores services areas it would be far better positioned to do so through volume. The SE is the first serious attempt to go there without hurting its highest hardware earners. The problem is that size does matter, as Apple saw with it last earnings call.
    Regardless of the analogy used, the point remains the same -- Apple's doesn't chase market share at the cost of significant profit share. They make more on the hardware than they do on the services, so it doesn't make much sense to sell cheaper hardware to peddle services if it brings in less overall profit. Maybe it will someday, but not today where the iphone commands significantly more profit than cheap Androids. 
    Right now, as in 'today', you are right but if you want services to become an income driver it makes sense to get some volume spread. 'Someday' will have to come sooner rather than later in that case. 

    Some Android hardware already pushes Apple neck and neck (some have exceeded Apple for a while).

    Android itself has also become a very solid platform.

    Even if services are just envisaged as a plus and all your efforts go into premium hardware at premium prices, you should look at what happened to Pioneer's TV division.

    Things become commodity very quickly. It's very hard to make money on premium or luxury goods when they are, first and foremost, just tools. And tools that do not hold their value over time. Nobody buys a phone as a fashion statement alone. That is secondary. It's a communication tool first and then a consumption tool and then a productivity tool. The fashion statement is there but down the list and anyone who thinks its trendy today to have an iPhone, could think different tomorrow.

    Apple has positioned itself purposefully and cornered itself knowingly. It could be a strategic gamble to milk the cow before breaking out into the lower tiers because if the next cow to milk is the services cow, you will need volume.

    And what would happen if someone delivers on the battery life/charging issue?

    Huawei is already spanking Apple on fast charging.

    If someone makes a breakthrough in how long charges last while not radically increasing weight, it would be tempting even to Apple's most fervent users, which are actually a minority. Most people I know are simply 'happy' with their iPhones. They could probably be just as happy with an Android phone. If Apple were to make the battery breakthrough, the impact would be minor as most people simply can't afford an iPhone (or premium Android phone) anyway. I will add that I have yet to find one single iDevice user that hasn't complained about the 16GB versions of their equipment. And they complain a lot about the hassle of not having space for anything and the lack of SD storage.

    That's a lot of potentially disgruntled users I guess.

    This has been an interesting back and forth.  But, I don't see the problem ...
    Apple is a hardware company
    Apple is a software company
    Apple is a services company

    Each feeds and supports the other.   Perhaps the analogy might be to a three legged stool.   It works great.   But you need all three legs.
    I'm not sure if it's still a software company (in a revenue sense) as much of its software is now not driving earnings and the likes of Logic, FCPX etc are more niche products. The rest is included with the system or free.

    I'm also not sure if it's a services company  - yet. It's clear that that area is growing (and rapidly) but many of those services are reliant (in the long term) on volume. Ever since they put the focus on AppleCare a few years ago, that particular revenue stream sky rocketed but there can be no more AppleCare contracts sold than units sold. Service and support contracts are also limited. The App Store revenues and music are also limited although at least they are more dynamic than both AppleCare or services and support. People have access to AppStore purchases at any time whereas every individual mac sale provides a window of opportunity for AppleCare that lasts one year. Support services are static in the same way. Apple does offer a pay-as-you-go service where you pay to get potential solutions to your problem but it's not an earner. It also has business contracts but Apple is still not an enterprise company. So the only way to truly open the services nut is to sell more hardware or open up part of your services platform to non-Apple hardware.

    That leaves hardware, which today at least, basically means iPhone.

    iPhone hit the ground running (once price was adjusted) and has evolved nicely as an earner, to the point of overshadowing everything else. It has inertia and iPhone 8 will see that continue in all likelihood.

    But all markets have a saturation point and the question is, are we there, has it passed or is it coming?

    My thinking is that in the developed world we have reached saturation for smartphones. Everyone who needs one, has one. There is not much room for growth in new users as an industry. There is room for new iPhone users by getting Android users to switch but there are also iPhone users that move to Android, so to really increase sales the only thing left is to move into the mid tier and get a bigger slice of the market. Some will counter that the mid tier is already covered by SE but as the last earnings call made clear, large screens are very much in demand (and always have been) but Apple is only there with high-end products. They will also argue that there is no money there but isn't that what services (or inkjet cartridge sales if we put things into a different context) are all about? They will also argue that an Apple large screen mid tier phone would eat away at its high end lines.

    That is very likely but you can't have your cake and eat it all the time.

    If Apple has most of the profits you may ask yourself why there are gazillions of phones out there that are not made by Apple? What's the point? Well services is one answer, as are accessories etc but if you make a few million off your business you should be happy, that's the point of doing business. And for every unit sold, it is one sale that didn't go to your competitor. That should make most people happy on a business level. They can aspire to having most of the profits but just making money is what's all about, even if in percentage terms it's only a small part of the pie.

    As I said before, iPhone got off to a flying start but the market has matured since then. Competitors now often exceed Apple in many areas, areas where Apple is perceived to be better but actually isn't.

    We are now in the comfort zone. Most people can be happy with any modern phone.

    If I were Google, I'd be preparing to hit Apple on its home territory with a joint venture ad campaign with the goal of changeing perceptions. Get a select group of Android vendors together and 'sell' the features in a string of very short ads and pit them directly against the iPhone.

    It would be so easy. Cheap, as costs would be shared and the ads would be devastatingly short. No smugness, just the facts and straight to the point. It's more than enough to sow a seed of doubt.

    Two phones charging from zero. Unplug them after the same period of time. Which had charged more?

    Fingerprint scanner. Show what gestures can do on a scanner. Which phone can do more?

    Curved screens?

    Dual lens? Full manual camera control?

    OLED displays?

    Power?

    Graphics?

    Micro SD?

    Price?

    Choice?

    Etc

    It would have the same purpose (awareness) as the Mac vs PC campaign but with the boot on the other foot. Letting people know that perceptions of Android and Android phones may be based on information that currently isn't true or not completely true.

    Such an ad campaign could be supplemented by each individual manufacturer to highlight their own devices' strong points.

    Google is currently pushing the Android brand in some markets but in a non aggressive way.

    I don't think it would be difficult at all to cause serious disruption in the mindset of many iPhone users in the same way that the Mac vs PC campaign likely worked on PC users.

    If such a campaign were to emerge and have even a modicum of success, how would Apple react?

    More phone models? Faster release cycles? Cheaper phones? Ignore the situation?

    The point of this post is that the stool may have three legs but only one is a big earnings driver. Another has potential but potential that an only be realised fully by gaining volume sales. The other (software) isn't likely to do much in the short term.









    You are using the tree model:  Where Apple stands on a solid trunk of IPhone hardware sales and all else branch from that trunk. 
    .... All a competitor has to do is take an ax to that trunk and the whole tree comes crashing down.

    I am using the 3 legged stool model where Apple stands on 3 separate trunks, where each support the other.
    .... It is far harder to chop into all three legs at once.... 

    You want Apple to stand on its hardware and you marginalize Apple software.  Yet, without the Mac OS and IOS (and Watch OS), plus extensions such Safari, Maps, Health, etc., etc., etc., there simply would be no Apple.  They could not compete against the low cost hardware manufacturers -- or even the high end ones.

    You also trivialize Apple's services.   They go far beyond just the hardware service and support that you mention.  Apple entered the services market with the IPod when they introduced a viable downloadable digitial music business called ITunes.  Without ITunes the IPod would have been just another MP3 player.  A similar paradigm is evolving now with Apple TV where Apple is revolutionizing the TV industry from cable driven channels to internet driven Apps.  Then we get into ICloud & related functions which enables Apple to drive a multitude of services such as:  Find My Phone, Apple Music, ICloud pictures, automatic backups, FaceTIme, IMsg, Health, etc., etc., etc....

    Using the 3 legged stool model, Apple can use the other 2 legs to support the development and expansion of new products in the other leg.  A good example is Apple Maps:  the Maps themselves are a service which involves Apple software and hardware and strengthens the overall product line.  Without Apple Maps we would be reliant on Google Maps and enabling them to follow and track our every movement.    
    I know what you are saying but I don't see the software side as a solid leg and the services leg is still weak and limited in scope due to market share. If services are the future (be they music, support, maps etc), you need to be able to sell into the biggest market possible but Apple's share of the smartphone market is small and the proportion of users actually generating revenue through servicesis a subset of that market. Given this, the most logical step would be to change tactics and increase the potential market you can sell to.

    If one leg gives way the stool will fall.

    A lot of people refuse to admit it but iPhone, for all its prestige, just isn't years ahead of its competitors. It's actually behind its competitors in many areas. Selling a premium phone at a premium price in those conditions is a fragile situation to be in. I'm sure there is enough inertia there to make iPhone 8 a success but it will probably do little to increase the amount of people to sell services to.
    You're stuck on the failing tree trunk model:
    "I don't see the software side as a solid leg" 
    No?   Try selling an IPhone without IOS or a Mac without MacOS or an Apple Watch without Watch OS.  (It could be done.  There are alternatives out there for each:  Android, Windows and Android Wear.)  But, in truth, none of those Apple's hardware products would survive and neither would Apple.   Software is an essential leg of the stool.  Take it away and the stool falls.  The same with services.

    "If services are the future".
    They are not THE future, they are a part of the future.   Just as the IPod would not have survived without Itunes, the IPhone cannot survive without the myriad of services that support it.   Some of those services generate revenue directly, others do not.   But, they all contribute to the health of the organism and help keep the stool from toppling over.

    Yes, hardware is the central focus.  But it simply cannot exist on its own.  Somebody will chop that tree down.
  • Reply 51 of 54
    MacProMacPro Posts: 19,718member
    avon b7 said:
    avon b7 said:
    avon b7 said:
    avon b7 said:
    avon b7 said:
    Ebonydog said:
    Ireland, anyone who was an Apple fan in the 90s can tell you why it matters. Back then Apple had similar advantages to what they have now: elegant design, solid hardware, even an ecosystem of more refined apps and fewer viruses. But they nearly died due to falling market share, which could be attributed to high prices and a lack of vision and discipline on Apples part. The result was a mass migration by developers to the Windows world (Adobe and others used to be Mac only). Yes market share, revenue and profit aren't everything, but they do afford a company the ability to be innovative and daring – the very qualities you want to talk about. Back to the story, what are we seeing in the Chinese market for Apple? Like Apple of the 90s, a lack of vision and high prices. it looks to me like the market is growing at an astonishing rate, and Apple isn't offering enough to justify the high prices. It isn't so much that Apple sales are slowing, it's that they are missing out on a huge wave of opportunity. That's cause for concern.
    That's basically my opinion too. Every sale to Android is a lost sale to Apple. [...]

    I will never pay more than 500 dollars for a new phone as, for me, I can get all I need for less than 300. This from an ex iPhone user.
    Is every sale to Honda a loss of sale to Mercedes? Not really. Mercedes doesn't chase the low-end, it works to beat its competitors in the high-end. So does Apple -- it doesn't worry about trying to capture all the budget Android crap phones out there.

    If you won't spend more than 300 or 500 on a smartphone, you're simply not in Apple's target market. That's fine, you don't need to be. They aren't after market share at the cost of profit share. The profit on the hardware outweighs any would-be gain on the services.
    Car Analogies don't work very well. Mercedes isn't limited to luxury cars. They have runaround city cars too and its typical to see Mercedes as taxis where I live, something that normally surprises people when they visit.

    The analogy might work better if Mercedes could generate revenue streams from every user, every day out of its cars. Google just needs Google Search on the device to start generating income. Add in Chrome and Google's other services and those streams become relevant just through the volume spread. If Apple wants to move into mores services areas it would be far better positioned to do so through volume. The SE is the first serious attempt to go there without hurting its highest hardware earners. The problem is that size does matter, as Apple saw with it last earnings call.
    Regardless of the analogy used, the point remains the same -- Apple's doesn't chase market share at the cost of significant profit share. They make more on the hardware than they do on the services, so it doesn't make much sense to sell cheaper hardware to peddle services if it brings in less overall profit. Maybe it will someday, but not today where the iphone commands significantly more profit than cheap Androids. 
    Right now, as in 'today', you are right but if you want services to become an income driver it makes sense to get some volume spread. 'Someday' will have to come sooner rather than later in that case. 

    Some Android hardware already pushes Apple neck and neck (some have exceeded Apple for a while).

    Android itself has also become a very solid platform.

    Even if services are just envisaged as a plus and all your efforts go into premium hardware at premium prices, you should look at what happened to Pioneer's TV division.

    Things become commodity very quickly. It's very hard to make money on premium or luxury goods when they are, first and foremost, just tools. And tools that do not hold their value over time. Nobody buys a phone as a fashion statement alone. That is secondary. It's a communication tool first and then a consumption tool and then a productivity tool. The fashion statement is there but down the list and anyone who thinks its trendy today to have an iPhone, could think different tomorrow.

    Apple has positioned itself purposefully and cornered itself knowingly. It could be a strategic gamble to milk the cow before breaking out into the lower tiers because if the next cow to milk is the services cow, you will need volume.

    And what would happen if someone delivers on the battery life/charging issue?

    Huawei is already spanking Apple on fast charging.

    If someone makes a breakthrough in how long charges last while not radically increasing weight, it would be tempting even to Apple's most fervent users, which are actually a minority. Most people I know are simply 'happy' with their iPhones. They could probably be just as happy with an Android phone. If Apple were to make the battery breakthrough, the impact would be minor as most people simply can't afford an iPhone (or premium Android phone) anyway. I will add that I have yet to find one single iDevice user that hasn't complained about the 16GB versions of their equipment. And they complain a lot about the hassle of not having space for anything and the lack of SD storage.

    That's a lot of potentially disgruntled users I guess.

    This has been an interesting back and forth.  But, I don't see the problem ...
    Apple is a hardware company
    Apple is a software company
    Apple is a services company

    Each feeds and supports the other.   Perhaps the analogy might be to a three legged stool.   It works great.   But you need all three legs.
    I'm not sure if it's still a software company (in a revenue sense) as much of its software is now not driving earnings and the likes of Logic, FCPX etc are more niche products. The rest is included with the system or free.

    I'm also not sure if it's a services company  - yet. It's clear that that area is growing (and rapidly) but many of those services are reliant (in the long term) on volume. Ever since they put the focus on AppleCare a few years ago, that particular revenue stream sky rocketed but there can be no more AppleCare contracts sold than units sold. Service and support contracts are also limited. The App Store revenues and music are also limited although at least they are more dynamic than both AppleCare or services and support. People have access to AppStore purchases at any time whereas every individual mac sale provides a window of opportunity for AppleCare that lasts one year. Support services are static in the same way. Apple does offer a pay-as-you-go service where you pay to get potential solutions to your problem but it's not an earner. It also has business contracts but Apple is still not an enterprise company. So the only way to truly open the services nut is to sell more hardware or open up part of your services platform to non-Apple hardware.

    That leaves hardware, which today at least, basically means iPhone.

    iPhone hit the ground running (once price was adjusted) and has evolved nicely as an earner, to the point of overshadowing everything else. It has inertia and iPhone 8 will see that continue in all likelihood.

    But all markets have a saturation point and the question is, are we there, has it passed or is it coming?

    My thinking is that in the developed world we have reached saturation for smartphones. Everyone who needs one, has one. There is not much room for growth in new users as an industry. There is room for new iPhone users by getting Android users to switch but there are also iPhone users that move to Android, so to really increase sales the only thing left is to move into the mid tier and get a bigger slice of the market. Some will counter that the mid tier is already covered by SE but as the last earnings call made clear, large screens are very much in demand (and always have been) but Apple is only there with high-end products. They will also argue that there is no money there but isn't that what services (or inkjet cartridge sales if we put things into a different context) are all about? They will also argue that an Apple large screen mid tier phone would eat away at its high end lines.

    That is very likely but you can't have your cake and eat it all the time.

    If Apple has most of the profits you may ask yourself why there are gazillions of phones out there that are not made by Apple? What's the point? Well services is one answer, as are accessories etc but if you make a few million off your business you should be happy, that's the point of doing business. And for every unit sold, it is one sale that didn't go to your competitor. That should make most people happy on a business level. They can aspire to having most of the profits but just making money is what's all about, even if in percentage terms it's only a small part of the pie.

    As I said before, iPhone got off to a flying start but the market has matured since then. Competitors now often exceed Apple in many areas, areas where Apple is perceived to be better but actually isn't.

    We are now in the comfort zone. Most people can be happy with any modern phone.

    If I were Google, I'd be preparing to hit Apple on its home territory with a joint venture ad campaign with the goal of changeing perceptions. Get a select group of Android vendors together and 'sell' the features in a string of very short ads and pit them directly against the iPhone.

    It would be so easy. Cheap, as costs would be shared and the ads would be devastatingly short. No smugness, just the facts and straight to the point. It's more than enough to sow a seed of doubt.

    Two phones charging from zero. Unplug them after the same period of time. Which had charged more?

    Fingerprint scanner. Show what gestures can do on a scanner. Which phone can do more?

    Curved screens?

    Dual lens? Full manual camera control?

    OLED displays?

    Power?

    Graphics?

    Micro SD?

    Price?

    Choice?

    Etc

    It would have the same purpose (awareness) as the Mac vs PC campaign but with the boot on the other foot. Letting people know that perceptions of Android and Android phones may be based on information that currently isn't true or not completely true.

    Such an ad campaign could be supplemented by each individual manufacturer to highlight their own devices' strong points.

    Google is currently pushing the Android brand in some markets but in a non aggressive way.

    I don't think it would be difficult at all to cause serious disruption in the mindset of many iPhone users in the same way that the Mac vs PC campaign likely worked on PC users.

    If such a campaign were to emerge and have even a modicum of success, how would Apple react?

    More phone models? Faster release cycles? Cheaper phones? Ignore the situation?

    The point of this post is that the stool may have three legs but only one is a big earnings driver. Another has potential but potential that an only be realised fully by gaining volume sales. The other (software) isn't likely to do much in the short term.









    You are using the tree model:  Where Apple stands on a solid trunk of IPhone hardware sales and all else branch from that trunk. 
    .... All a competitor has to do is take an ax to that trunk and the whole tree comes crashing down.

    I am using the 3 legged stool model where Apple stands on 3 separate trunks, where each support the other.
    .... It is far harder to chop into all three legs at once.... 

    You want Apple to stand on its hardware and you marginalize Apple software.  Yet, without the Mac OS and IOS (and Watch OS), plus extensions such Safari, Maps, Health, etc., etc., etc., there simply would be no Apple.  They could not compete against the low cost hardware manufacturers -- or even the high end ones.

    You also trivialize Apple's services.   They go far beyond just the hardware service and support that you mention.  Apple entered the services market with the IPod when they introduced a viable downloadable digitial music business called ITunes.  Without ITunes the IPod would have been just another MP3 player.  A similar paradigm is evolving now with Apple TV where Apple is revolutionizing the TV industry from cable driven channels to internet driven Apps.  Then we get into ICloud & related functions which enables Apple to drive a multitude of services such as:  Find My Phone, Apple Music, ICloud pictures, automatic backups, FaceTIme, IMsg, Health, etc., etc., etc....

    Using the 3 legged stool model, Apple can use the other 2 legs to support the development and expansion of new products in the other leg.  A good example is Apple Maps:  the Maps themselves are a service which involves Apple software and hardware and strengthens the overall product line.  Without Apple Maps we would be reliant on Google Maps and enabling them to follow and track our every movement.    
    I know what you are saying but I don't see the software side as a solid leg and the services leg is still weak and limited in scope due to market share. If services are the future (be they music, support, maps etc), you need to be able to sell into the biggest market possible but Apple's share of the smartphone market is small and the proportion of users actually generating revenue through servicesis a subset of that market. Given this, the most logical step would be to change tactics and increase the potential market you can sell to.

    If one leg gives way the stool will fall.

    A lot of people refuse to admit it but iPhone, for all its prestige, just isn't years ahead of its competitors. It's actually behind its competitors in many areas. Selling a premium phone at a premium price in those conditions is a fragile situation to be in. I'm sure there is enough inertia there to make iPhone 8 a success but it will probably do little to increase the amount of people to sell services to.
    You're stuck on the failing tree trunk model:
    "I don't see the software side as a solid leg" 
    No?   Try selling an IPhone without IOS or a Mac without MacOS or an Apple Watch without Watch OS.  (It could be done.  There are alternatives out there for each:  Android, Windows and Android Wear.)  But, in truth, none of those Apple's hardware products would survive and neither would Apple.   Software is an essential leg of the stool.  Take it away and the stool falls.  The same with services.

    "If services are the future".
    They are not THE future, they are a part of the future.   Just as the IPod would not have survived without Itunes, the IPhone cannot survive without the myriad of services that support it.   Some of those services generate revenue directly, others do not.   But, they all contribute to the health of the organism and help keep the stool from toppling over.

    Yes, hardware is the central focus.  But it simply cannot exist on its own.  Somebody will chop that tree down.
    I'd join in at the end of your discussion to say IMHO software is the keystone, all else follows and the higher quality the better.  That has been the reason for Apple's success.  Software as in operating systems and solid everyday apps and some awesome pro end apps (I'll not get into my bing back Aperture rant here lol) .

    Note I stress quality hardware follows on from great software very closely, I always believed that.

    I cannot help remember back to the days when DeskTop Publishing was in its pre-birth days.  I was with a UK company, in charge of the Apple side, that had secured the European distribution for the then unheard of (outside of the West Coast of the USA) Adobe PostScript and Aldus PageMaker.  Both in beta forms.  The head of that division over the next year or two became a great evangelist for DTP and the company secured many more European distribution agreements related to DTP.  Macs, LaswerWriters and Pagemaker flew off the shelves.   However the head of the company, a long time Apple devotee, had by then become firmly of the opinion that software was the key driver of innovation and hardware was fast approaching becoming a vanilla, disposable commodity.  Of course this coincided with Aldus brining out a PC version and the software folks had their spreadsheets firmly set to maximum growth and if that meant screwing Apple so be it.  They almost succeeded too as we all now know looking back.  Apple's downward slide began when PCs started taking over the DTP hallowed ground.  It is of great personal relief that we find ourselves where we do today, with the balance restored where both the best operating systems and hardware dominate.
    GeorgeBMac
  • Reply 52 of 54
    avon b7avon b7 Posts: 7,624member
    avon b7 said:
    avon b7 said:
    avon b7 said:
    avon b7 said:
    avon b7 said:
    Ebonydog said:
    Ireland, anyone who was an Apple fan in the 90s can tell you why it matters. Back then Apple had similar advantages to what they have now: elegant design, solid hardware, even an ecosystem of more refined apps and fewer viruses. But they nearly died due to falling market share, which could be attributed to high prices and a lack of vision and discipline on Apples part. The result was a mass migration by developers to the Windows world (Adobe and others used to be Mac only). Yes market share, revenue and profit aren't everything, but they do afford a company the ability to be innovative and daring – the very qualities you want to talk about. Back to the story, what are we seeing in the Chinese market for Apple? Like Apple of the 90s, a lack of vision and high prices. it looks to me like the market is growing at an astonishing rate, and Apple isn't offering enough to justify the high prices. It isn't so much that Apple sales are slowing, it's that they are missing out on a huge wave of opportunity. That's cause for concern.
    That's basically my opinion too. Every sale to Android is a lost sale to Apple. [...]

    I will never pay more than 500 dollars for a new phone as, for me, I can get all I need for less than 300. This from an ex iPhone user.
    Is every sale to Honda a loss of sale to Mercedes? Not really. Mercedes doesn't chase the low-end, it works to beat its competitors in the high-end. So does Apple -- it doesn't worry about trying to capture all the budget Android crap phones out there.

    If you won't spend more than 300 or 500 on a smartphone, you're simply not in Apple's target market. That's fine, you don't need to be. They aren't after market share at the cost of profit share. The profit on the hardware outweighs any would-be gain on the services.
    Car Analogies don't work very well. Mercedes isn't limited to luxury cars. They have runaround city cars too and its typical to see Mercedes as taxis where I live, something that normally surprises people when they visit.

    The analogy might work better if Mercedes could generate revenue streams from every user, every day out of its cars. Google just needs Google Search on the device to start generating income. Add in Chrome and Google's other services and those streams become relevant just through the volume spread. If Apple wants to move into mores services areas it would be far better positioned to do so through volume. The SE is the first serious attempt to go there without hurting its highest hardware earners. The problem is that size does matter, as Apple saw with it last earnings call.
    Regardless of the analogy used, the point remains the same -- Apple's doesn't chase market share at the cost of significant profit share. They make more on the hardware than they do on the services, so it doesn't make much sense to sell cheaper hardware to peddle services if it brings in less overall profit. Maybe it will someday, but not today where the iphone commands significantly more profit than cheap Androids. 
    Right now, as in 'today', you are right but if you want services to become an income driver it makes sense to get some volume spread. 'Someday' will have to come sooner rather than later in that case. 

    Some Android hardware already pushes Apple neck and neck (some have exceeded Apple for a while).

    Android itself has also become a very solid platform.

    Even if services are just envisaged as a plus and all your efforts go into premium hardware at premium prices, you should look at what happened to Pioneer's TV division.

    Things become commodity very quickly. It's very hard to make money on premium or luxury goods when they are, first and foremost, just tools. And tools that do not hold their value over time. Nobody buys a phone as a fashion statement alone. That is secondary. It's a communication tool first and then a consumption tool and then a productivity tool. The fashion statement is there but down the list and anyone who thinks its trendy today to have an iPhone, could think different tomorrow.

    Apple has positioned itself purposefully and cornered itself knowingly. It could be a strategic gamble to milk the cow before breaking out into the lower tiers because if the next cow to milk is the services cow, you will need volume.

    And what would happen if someone delivers on the battery life/charging issue?

    Huawei is already spanking Apple on fast charging.

    If someone makes a breakthrough in how long charges last while not radically increasing weight, it would be tempting even to Apple's most fervent users, which are actually a minority. Most people I know are simply 'happy' with their iPhones. They could probably be just as happy with an Android phone. If Apple were to make the battery breakthrough, the impact would be minor as most people simply can't afford an iPhone (or premium Android phone) anyway. I will add that I have yet to find one single iDevice user that hasn't complained about the 16GB versions of their equipment. And they complain a lot about the hassle of not having space for anything and the lack of SD storage.

    That's a lot of potentially disgruntled users I guess.

    This has been an interesting back and forth.  But, I don't see the problem ...
    Apple is a hardware company
    Apple is a software company
    Apple is a services company

    Each feeds and supports the other.   Perhaps the analogy might be to a three legged stool.   It works great.   But you need all three legs.
    I'm not sure if it's still a software company (in a revenue sense) as much of its software is now not driving earnings and the likes of Logic, FCPX etc are more niche products. The rest is included with the system or free.

    I'm also not sure if it's a services company  - yet. It's clear that that area is growing (and rapidly) but many of those services are reliant (in the long term) on volume. Ever since they put the focus on AppleCare a few years ago, that particular revenue stream sky rocketed but there can be no more AppleCare contracts sold than units sold. Service and support contracts are also limited. The App Store revenues and music are also limited although at least they are more dynamic than both AppleCare or services and support. People have access to AppStore purchases at any time whereas every individual mac sale provides a window of opportunity for AppleCare that lasts one year. Support services are static in the same way. Apple does offer a pay-as-you-go service where you pay to get potential solutions to your problem but it's not an earner. It also has business contracts but Apple is still not an enterprise company. So the only way to truly open the services nut is to sell more hardware or open up part of your services platform to non-Apple hardware.

    That leaves hardware, which today at least, basically means iPhone.

    iPhone hit the ground running (once price was adjusted) and has evolved nicely as an earner, to the point of overshadowing everything else. It has inertia and iPhone 8 will see that continue in all likelihood.

    But all markets have a saturation point and the question is, are we there, has it passed or is it coming?

    My thinking is that in the developed world we have reached saturation for smartphones. Everyone who needs one, has one. There is not much room for growth in new users as an industry. There is room for new iPhone users by getting Android users to switch but there are also iPhone users that move to Android, so to really increase sales the only thing left is to move into the mid tier and get a bigger slice of the market. Some will counter that the mid tier is already covered by SE but as the last earnings call made clear, large screens are very much in demand (and always have been) but Apple is only there with high-end products. They will also argue that there is no money there but isn't that what services (or inkjet cartridge sales if we put things into a different context) are all about? They will also argue that an Apple large screen mid tier phone would eat away at its high end lines.

    That is very likely but you can't have your cake and eat it all the time.

    If Apple has most of the profits you may ask yourself why there are gazillions of phones out there that are not made by Apple? What's the point? Well services is one answer, as are accessories etc but if you make a few million off your business you should be happy, that's the point of doing business. And for every unit sold, it is one sale that didn't go to your competitor. That should make most people happy on a business level. They can aspire to having most of the profits but just making money is what's all about, even if in percentage terms it's only a small part of the pie.

    As I said before, iPhone got off to a flying start but the market has matured since then. Competitors now often exceed Apple in many areas, areas where Apple is perceived to be better but actually isn't.

    We are now in the comfort zone. Most people can be happy with any modern phone.

    If I were Google, I'd be preparing to hit Apple on its home territory with a joint venture ad campaign with the goal of changeing perceptions. Get a select group of Android vendors together and 'sell' the features in a string of very short ads and pit them directly against the iPhone.

    It would be so easy. Cheap, as costs would be shared and the ads would be devastatingly short. No smugness, just the facts and straight to the point. It's more than enough to sow a seed of doubt.

    Two phones charging from zero. Unplug them after the same period of time. Which had charged more?

    Fingerprint scanner. Show what gestures can do on a scanner. Which phone can do more?

    Curved screens?

    Dual lens? Full manual camera control?

    OLED displays?

    Power?

    Graphics?

    Micro SD?

    Price?

    Choice?

    Etc

    It would have the same purpose (awareness) as the Mac vs PC campaign but with the boot on the other foot. Letting people know that perceptions of Android and Android phones may be based on information that currently isn't true or not completely true.

    Such an ad campaign could be supplemented by each individual manufacturer to highlight their own devices' strong points.

    Google is currently pushing the Android brand in some markets but in a non aggressive way.

    I don't think it would be difficult at all to cause serious disruption in the mindset of many iPhone users in the same way that the Mac vs PC campaign likely worked on PC users.

    If such a campaign were to emerge and have even a modicum of success, how would Apple react?

    More phone models? Faster release cycles? Cheaper phones? Ignore the situation?

    The point of this post is that the stool may have three legs but only one is a big earnings driver. Another has potential but potential that an only be realised fully by gaining volume sales. The other (software) isn't likely to do much in the short term.









    You are using the tree model:  Where Apple stands on a solid trunk of IPhone hardware sales and all else branch from that trunk. 
    .... All a competitor has to do is take an ax to that trunk and the whole tree comes crashing down.

    I am using the 3 legged stool model where Apple stands on 3 separate trunks, where each support the other.
    .... It is far harder to chop into all three legs at once.... 

    You want Apple to stand on its hardware and you marginalize Apple software.  Yet, without the Mac OS and IOS (and Watch OS), plus extensions such Safari, Maps, Health, etc., etc., etc., there simply would be no Apple.  They could not compete against the low cost hardware manufacturers -- or even the high end ones.

    You also trivialize Apple's services.   They go far beyond just the hardware service and support that you mention.  Apple entered the services market with the IPod when they introduced a viable downloadable digitial music business called ITunes.  Without ITunes the IPod would have been just another MP3 player.  A similar paradigm is evolving now with Apple TV where Apple is revolutionizing the TV industry from cable driven channels to internet driven Apps.  Then we get into ICloud & related functions which enables Apple to drive a multitude of services such as:  Find My Phone, Apple Music, ICloud pictures, automatic backups, FaceTIme, IMsg, Health, etc., etc., etc....

    Using the 3 legged stool model, Apple can use the other 2 legs to support the development and expansion of new products in the other leg.  A good example is Apple Maps:  the Maps themselves are a service which involves Apple software and hardware and strengthens the overall product line.  Without Apple Maps we would be reliant on Google Maps and enabling them to follow and track our every movement.    
    I know what you are saying but I don't see the software side as a solid leg and the services leg is still weak and limited in scope due to market share. If services are the future (be they music, support, maps etc), you need to be able to sell into the biggest market possible but Apple's share of the smartphone market is small and the proportion of users actually generating revenue through servicesis a subset of that market. Given this, the most logical step would be to change tactics and increase the potential market you can sell to.

    If one leg gives way the stool will fall.

    A lot of people refuse to admit it but iPhone, for all its prestige, just isn't years ahead of its competitors. It's actually behind its competitors in many areas. Selling a premium phone at a premium price in those conditions is a fragile situation to be in. I'm sure there is enough inertia there to make iPhone 8 a success but it will probably do little to increase the amount of people to sell services to.
    You're stuck on the failing tree trunk model:
    "I don't see the software side as a solid leg" 
    No?   Try selling an IPhone without IOS or a Mac without MacOS or an Apple Watch without Watch OS.  (It could be done.  There are alternatives out there for each:  Android, Windows and Android Wear.)  But, in truth, none of those Apple's hardware products would survive and neither would Apple.   Software is an essential leg of the stool.  Take it away and the stool falls.  The same with services.

    "If services are the future".
    They are not THE future, they are a part of the future.   Just as the IPod would not have survived without Itunes, the IPhone cannot survive without the myriad of services that support it.   Some of those services generate revenue directly, others do not.   But, they all contribute to the health of the organism and help keep the stool from toppling over.

    Yes, hardware is the central focus.  But it simply cannot exist on its own.  Somebody will chop that tree down.
    I am talking about software as a revenue driver.

    As a lot of it comes Included in the price of the hardware, it is the hardware that drives earnings although the hardware itself would be less valuable without the software. Currently Apple has very little in software to drive earnings.

    That's why, on a monetary level, software is a weak leg.

    'Services' while nice earners, are not a driving force yet.

    I agree that quality software is a basic requirement, though.
    edited February 2017
  • Reply 53 of 54
    avon b7 said:
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    Ebonydog said:
    Ireland, anyone who was an Apple fan in the 90s can tell you why it matters. Back then Apple had similar advantages to what they have now: elegant design, solid hardware, even an ecosystem of more refined apps and fewer viruses. But they nearly died due to falling market share, which could be attributed to high prices and a lack of vision and discipline on Apples part. The result was a mass migration by developers to the Windows world (Adobe and others used to be Mac only). Yes market share, revenue and profit aren't everything, but they do afford a company the ability to be innovative and daring – the very qualities you want to talk about. Back to the story, what are we seeing in the Chinese market for Apple? Like Apple of the 90s, a lack of vision and high prices. it looks to me like the market is growing at an astonishing rate, and Apple isn't offering enough to justify the high prices. It isn't so much that Apple sales are slowing, it's that they are missing out on a huge wave of opportunity. That's cause for concern.
    That's basically my opinion too. Every sale to Android is a lost sale to Apple. [...]

    I will never pay more than 500 dollars for a new phone as, for me, I can get all I need for less than 300. This from an ex iPhone user.
    Is every sale to Honda a loss of sale to Mercedes? Not really. Mercedes doesn't chase the low-end, it works to beat its competitors in the high-end. So does Apple -- it doesn't worry about trying to capture all the budget Android crap phones out there.

    If you won't spend more than 300 or 500 on a smartphone, you're simply not in Apple's target market. That's fine, you don't need to be. They aren't after market share at the cost of profit share. The profit on the hardware outweighs any would-be gain on the services.
    Car Analogies don't work very well. Mercedes isn't limited to luxury cars. They have runaround city cars too and its typical to see Mercedes as taxis where I live, something that normally surprises people when they visit.

    The analogy might work better if Mercedes could generate revenue streams from every user, every day out of its cars. Google just needs Google Search on the device to start generating income. Add in Chrome and Google's other services and those streams become relevant just through the volume spread. If Apple wants to move into mores services areas it would be far better positioned to do so through volume. The SE is the first serious attempt to go there without hurting its highest hardware earners. The problem is that size does matter, as Apple saw with it last earnings call.
    Regardless of the analogy used, the point remains the same -- Apple's doesn't chase market share at the cost of significant profit share. They make more on the hardware than they do on the services, so it doesn't make much sense to sell cheaper hardware to peddle services if it brings in less overall profit. Maybe it will someday, but not today where the iphone commands significantly more profit than cheap Androids. 
    Right now, as in 'today', you are right but if you want services to become an income driver it makes sense to get some volume spread. 'Someday' will have to come sooner rather than later in that case. 

    Some Android hardware already pushes Apple neck and neck (some have exceeded Apple for a while).

    Android itself has also become a very solid platform.

    Even if services are just envisaged as a plus and all your efforts go into premium hardware at premium prices, you should look at what happened to Pioneer's TV division.

    Things become commodity very quickly. It's very hard to make money on premium or luxury goods when they are, first and foremost, just tools. And tools that do not hold their value over time. Nobody buys a phone as a fashion statement alone. That is secondary. It's a communication tool first and then a consumption tool and then a productivity tool. The fashion statement is there but down the list and anyone who thinks its trendy today to have an iPhone, could think different tomorrow.

    Apple has positioned itself purposefully and cornered itself knowingly. It could be a strategic gamble to milk the cow before breaking out into the lower tiers because if the next cow to milk is the services cow, you will need volume.

    And what would happen if someone delivers on the battery life/charging issue?

    Huawei is already spanking Apple on fast charging.

    If someone makes a breakthrough in how long charges last while not radically increasing weight, it would be tempting even to Apple's most fervent users, which are actually a minority. Most people I know are simply 'happy' with their iPhones. They could probably be just as happy with an Android phone. If Apple were to make the battery breakthrough, the impact would be minor as most people simply can't afford an iPhone (or premium Android phone) anyway. I will add that I have yet to find one single iDevice user that hasn't complained about the 16GB versions of their equipment. And they complain a lot about the hassle of not having space for anything and the lack of SD storage.

    That's a lot of potentially disgruntled users I guess.

    This has been an interesting back and forth.  But, I don't see the problem ...
    Apple is a hardware company
    Apple is a software company
    Apple is a services company

    Each feeds and supports the other.   Perhaps the analogy might be to a three legged stool.   It works great.   But you need all three legs.
    I'm not sure if it's still a software company (in a revenue sense) as much of its software is now not driving earnings and the likes of Logic, FCPX etc are more niche products. The rest is included with the system or free.

    I'm also not sure if it's a services company  - yet. It's clear that that area is growing (and rapidly) but many of those services are reliant (in the long term) on volume. Ever since they put the focus on AppleCare a few years ago, that particular revenue stream sky rocketed but there can be no more AppleCare contracts sold than units sold. Service and support contracts are also limited. The App Store revenues and music are also limited although at least they are more dynamic than both AppleCare or services and support. People have access to AppStore purchases at any time whereas every individual mac sale provides a window of opportunity for AppleCare that lasts one year. Support services are static in the same way. Apple does offer a pay-as-you-go service where you pay to get potential solutions to your problem but it's not an earner. It also has business contracts but Apple is still not an enterprise company. So the only way to truly open the services nut is to sell more hardware or open up part of your services platform to non-Apple hardware.

    That leaves hardware, which today at least, basically means iPhone.

    iPhone hit the ground running (once price was adjusted) and has evolved nicely as an earner, to the point of overshadowing everything else. It has inertia and iPhone 8 will see that continue in all likelihood.

    But all markets have a saturation point and the question is, are we there, has it passed or is it coming?

    My thinking is that in the developed world we have reached saturation for smartphones. Everyone who needs one, has one. There is not much room for growth in new users as an industry. There is room for new iPhone users by getting Android users to switch but there are also iPhone users that move to Android, so to really increase sales the only thing left is to move into the mid tier and get a bigger slice of the market. Some will counter that the mid tier is already covered by SE but as the last earnings call made clear, large screens are very much in demand (and always have been) but Apple is only there with high-end products. They will also argue that there is no money there but isn't that what services (or inkjet cartridge sales if we put things into a different context) are all about? They will also argue that an Apple large screen mid tier phone would eat away at its high end lines.

    That is very likely but you can't have your cake and eat it all the time.

    If Apple has most of the profits you may ask yourself why there are gazillions of phones out there that are not made by Apple? What's the point? Well services is one answer, as are accessories etc but if you make a few million off your business you should be happy, that's the point of doing business. And for every unit sold, it is one sale that didn't go to your competitor. That should make most people happy on a business level. They can aspire to having most of the profits but just making money is what's all about, even if in percentage terms it's only a small part of the pie.

    As I said before, iPhone got off to a flying start but the market has matured since then. Competitors now often exceed Apple in many areas, areas where Apple is perceived to be better but actually isn't.

    We are now in the comfort zone. Most people can be happy with any modern phone.

    If I were Google, I'd be preparing to hit Apple on its home territory with a joint venture ad campaign with the goal of changeing perceptions. Get a select group of Android vendors together and 'sell' the features in a string of very short ads and pit them directly against the iPhone.

    It would be so easy. Cheap, as costs would be shared and the ads would be devastatingly short. No smugness, just the facts and straight to the point. It's more than enough to sow a seed of doubt.

    Two phones charging from zero. Unplug them after the same period of time. Which had charged more?

    Fingerprint scanner. Show what gestures can do on a scanner. Which phone can do more?

    Curved screens?

    Dual lens? Full manual camera control?

    OLED displays?

    Power?

    Graphics?

    Micro SD?

    Price?

    Choice?

    Etc

    It would have the same purpose (awareness) as the Mac vs PC campaign but with the boot on the other foot. Letting people know that perceptions of Android and Android phones may be based on information that currently isn't true or not completely true.

    Such an ad campaign could be supplemented by each individual manufacturer to highlight their own devices' strong points.

    Google is currently pushing the Android brand in some markets but in a non aggressive way.

    I don't think it would be difficult at all to cause serious disruption in the mindset of many iPhone users in the same way that the Mac vs PC campaign likely worked on PC users.

    If such a campaign were to emerge and have even a modicum of success, how would Apple react?

    More phone models? Faster release cycles? Cheaper phones? Ignore the situation?

    The point of this post is that the stool may have three legs but only one is a big earnings driver. Another has potential but potential that an only be realised fully by gaining volume sales. The other (software) isn't likely to do much in the short term.









    You are using the tree model:  Where Apple stands on a solid trunk of IPhone hardware sales and all else branch from that trunk. 
    .... All a competitor has to do is take an ax to that trunk and the whole tree comes crashing down.

    I am using the 3 legged stool model where Apple stands on 3 separate trunks, where each support the other.
    .... It is far harder to chop into all three legs at once.... 

    You want Apple to stand on its hardware and you marginalize Apple software.  Yet, without the Mac OS and IOS (and Watch OS), plus extensions such Safari, Maps, Health, etc., etc., etc., there simply would be no Apple.  They could not compete against the low cost hardware manufacturers -- or even the high end ones.

    You also trivialize Apple's services.   They go far beyond just the hardware service and support that you mention.  Apple entered the services market with the IPod when they introduced a viable downloadable digitial music business called ITunes.  Without ITunes the IPod would have been just another MP3 player.  A similar paradigm is evolving now with Apple TV where Apple is revolutionizing the TV industry from cable driven channels to internet driven Apps.  Then we get into ICloud & related functions which enables Apple to drive a multitude of services such as:  Find My Phone, Apple Music, ICloud pictures, automatic backups, FaceTIme, IMsg, Health, etc., etc., etc....

    Using the 3 legged stool model, Apple can use the other 2 legs to support the development and expansion of new products in the other leg.  A good example is Apple Maps:  the Maps themselves are a service which involves Apple software and hardware and strengthens the overall product line.  Without Apple Maps we would be reliant on Google Maps and enabling them to follow and track our every movement.    
    I know what you are saying but I don't see the software side as a solid leg and the services leg is still weak and limited in scope due to market share. If services are the future (be they music, support, maps etc), you need to be able to sell into the biggest market possible but Apple's share of the smartphone market is small and the proportion of users actually generating revenue through servicesis a subset of that market. Given this, the most logical step would be to change tactics and increase the potential market you can sell to.

    If one leg gives way the stool will fall.

    A lot of people refuse to admit it but iPhone, for all its prestige, just isn't years ahead of its competitors. It's actually behind its competitors in many areas. Selling a premium phone at a premium price in those conditions is a fragile situation to be in. I'm sure there is enough inertia there to make iPhone 8 a success but it will probably do little to increase the amount of people to sell services to.
    You're stuck on the failing tree trunk model:
    "I don't see the software side as a solid leg" 
    No?   Try selling an IPhone without IOS or a Mac without MacOS or an Apple Watch without Watch OS.  (It could be done.  There are alternatives out there for each:  Android, Windows and Android Wear.)  But, in truth, none of those Apple's hardware products would survive and neither would Apple.   Software is an essential leg of the stool.  Take it away and the stool falls.  The same with services.

    "If services are the future".
    They are not THE future, they are a part of the future.   Just as the IPod would not have survived without Itunes, the IPhone cannot survive without the myriad of services that support it.   Some of those services generate revenue directly, others do not.   But, they all contribute to the health of the organism and help keep the stool from toppling over.

    Yes, hardware is the central focus.  But it simply cannot exist on its own.  Somebody will chop that tree down.
    I am talking about software as a revenue driver.

    As a lot of it comes Included in the price of the hardware, it is the hardware that drives earnings although the hardware itself would be less valuable without the software. Currently Apple has very little in software to drive earnings.

    That's why, on a monetary level, software is a weak leg.

    'Services' while nice earners, are not a driving force yet.

    I agree that quality software is a basic requirement, though.
    You're correct that Apple doesn't charge for their software.   But, as I pointed out, without it they wouldn't be able to sell their hardware.   It would just be an 'also ran' in a crowded field.
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