If office tanks, all of Microsoft goes with it. Windows as well.
And really, all there is to Office is Excel. Nothing about anything else in that suite is worth anything to anyone. Word. SUCKS. PowerPoint. SUCKS. The only reason they get used is because they’re already on the computers they use for Excel.
If Apple made Numbers on par with Excel and perhaps (less importantly) improved pages a little, they would absolutely CRUSH office. And Windows. And MSFT. It’s gotta happen at some point right?
Apple's desperation to keep feature parity between iWork on iOS and desktop means it'll never come close to "CRUSH"ing Office. Office is horrible, I hate using it - but sometimes Pages and most of the time Numbers just doesn't cut it for real work. Light high-school or home stuff fine, but anything remotely complex and Numbers balks or simply doesn't have the required functionality. Excel supports 1 million rows, Numbers 65k. You get remotely close to 65k - essentially anything over 20k - rows in Numbers and it's just laughably slow to a point of being unusable. Pages still doesn't support documents with mixed landscape and portrait pages. You can't even have mixed fonts or styles in table titles. It's in a different league to Word. All of this is due to iOS compatibility. iWork used to be more powerful back in iWork '09, when iOS support didn't exist. Half the features vanished when iOS support was announced.
Microsoft has a P/E ratio of 45 and Apple has a P/E ratio of 15.
Apple and Microsoft have similar margins and Apple had better growth in 2018. Apple makes 2.5x more revenue and 3x more profits. So, why are Microsoft shares valued at 3x Apple’s? Because investors are morons.
In reality Microsoft is worth ⅓ the value of Apple.
Because Microsoft is diversified with recurring revenue streams which Wall Street loves. With Apple if iPhone sneezes the entire company gets a cold.
So when did the iPhone sneeze? I must have missed that. The only thing I’ve heard are the predictions of analysts based on supply chain reports which Tim Cook has consistently advised against using to provide meaningful data about Apple. So remind me, when did the iPhone sneeze and give the entire company a cold? In your wet dreams?
Reality doesn't matter. It's about perception. The iPhone is approximately 66% of Apple's gross revenue. And Apple announcing that they're no longer going to break out iPhone units sales is sending the message, correct or not, that they expect declines in unit sales. Wall Street doesn't like a lack of transparency and in that regard, I don't blame them. Combine that with the insanity of believing supplier chain complaints and that's a recipe for killing the stock and that's if the stock is not being manipulated.
Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?
On the Mac side, Apple's price hikes combined with the inability to replace the battery, memory and storage as well as the fact that so many people don't really need a computer anymore is going to continue to affect sales, but the Mac is only about 10% of Apple now anyway. Apple probably thought they could replace Mac sales with iPad sales, but that's only about 8% of Apple. While I realize that Apple has never wanted to be the low-end, low-margin provider, I think the high salaries paid to Apple managers and executives has completely warped their perception of what most people are willing and able to spend, especially for a machine that can't be upgraded after purchase. A 15" MBP now starts at $2400 and tops out at $6700. That's ludicrous. The MBA starts at $1000 at tops out at $2600. The Mini tops out at $4300. $5K for the 27" 5K Retina iMac (topping out at $13,200)? IMO, this is either desperation to keep revenue high or unbelievable arrogance.
There is of course, the third option: you have the details wrong.
Let's begin with the most obvious stumble (the real drop off the cliff is that Apple actually sells phones at a range of prices, but that's so obvious it doesn't really need covering):
Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?
Er, no. Apple doesn't expect that because no one has ever done that. What happens is that on each new release, Apple gets picks up customers from other platforms, but also gets a massive boost from people with folk with much iPhones much older than two years. I have just replaced my iPhone 6s, which means I missed out on the 7 and the X. The assumption that Apple thinks folk update their phone every two years is laughable. Which brings me to your other point:
Yes, the price. And here again, the problem is narrow thinking. Saying that no one would buy a $1000 phone is a bit like saying no one would buy a house for $300,000 or a $30,000 car. Clearly they will, because I've seen houses and cars that cost several times that amount. So how do they do it? Well, I'm going to clue you in, but you have to keep it under your hat because I'm thinking of taking out a patent on the whole idea.
Ready?
This is going to amaze you, but people don't hand over the whole amount for houses and cars all at once. They pay it off in chunks. Buying a $1000 iPhone (which, by the way, is not the most expensive smart phone on the market) is best done on the Apple payment scheme: they throw in AppleCare and you can change the phone after a year if you want. Oh, and it's interest free, so if you're paying the whole cost up front then you're doing it wrong.
But that's kind of an aside. The point is that folk have been saying Apple gear is insanely expensive for as long as I can remember, and for as long as I can remember, they've been shifting it. So that leads me to believe that Apple understands basic economic theory better than anyone here who comments on it. All this braying about Apple pricing always misses one vital piece of information: Apple's demand curve.
This little bit of paper sitting on Tim Cook's desk will show you is that the demand for Apple kit is comparatively inelastic: movements in price have fairly negligible effects on demand. If they increase the price, the sales will not drop significantly.
But far more importantly, dropping the price will not actually produce a significant increase in sales, and this increase may not be enough to cover the price drop.
So why is Apple's demand inelastic? Simply because the combination of hardware and software is perceived as unique in a very crowded market.
The details aren't wrong. You are interpreting things wrong.
There are pricing ceilings on everything. Financing (including interest free) also has ceilings, or do you think someone will be willing to take on financing to pay for a phone over 5 years when it will be upgraded before it is paid off?
The increasing cost of iPhones (and every other phone in the same price band) is taking users one step further up to their individual ceilings.
You are taking his 1,000 dollar point completely out of context. He is speaking in general terms. We already know people buy 1,000 dollar phones every year. The point is those people aren't most people and three or four years of flat sales is telling in itself.
The higher the price the harder the sale in high numbers, even with financing and upgrade options but that ceiling becomes ever nearer or you are hitting it. And if the cheaper options mean sacfricing features or getting an older iPhone, then the sale is equally hard.
People argued that users were on longer upgrade cycles (provoked in part by pricing itself) and that is probably another reason while sales flattened, but how many people do you think are still using iPhone 6?
But that argument doesn't take into account the vast potential pool of Android users that are there for the taking, right? 80% of the market. 1,000 dollar Android phones sell in the millions even while they are a fraction of the 80%. Why isn't Apple able to take a slice of that premium Android Pie (sic)? Why aren't people switching from Android in enough numbers to move the Apple needle off 'flat'? It's clearly not price for those users. It's value (among other things). The longer upgrade cycle really isn't doing much except allowing Apple tread water.
Apple is on an 's' cycle - through its own choice - which only makes the sale look worse when compared to rival flagships that are pushing the pedal to the metal. So while Apple takes a breather on innovation and brings the A12 and little else to the table while still including a 5W charger in the box, others are innovating on everything and showing no signs of slowing down. That means 'new' tech is flowing down the lines into the middle ground at an incredible pace and upping the value proposition of those phones.
How can you say that movements in price have a 'fairly negligible effect on demand? Apple doesn't break down unit sales on price.
Price is the number one factor for most people when it comes to buying a Phone. The iPhone X hit new price highs for Apple. It was the 'most popular' 2018 iPhone for Q1, 2 and 3. But Q4? Estimates said demand for the 'most popular' iPhone dropped off sharply in Q4. Far more quickly than any other Apple flagship from previous years in the same quarter. But 'most popular' isn't truly quantifiable is it?
That inelastic demand you are referring too is new found. From 2015, and really means FLAT but that inelasticity is shorn up at the other end of the spectrum. The middle and the low end. If Apple hadn't widened its spread in 2017, do you think things would have remained flat or that demand would have dropped? There was no such inelasticity in demand up to 2015.
You say that if they increase the price, 'sales will not drop significantly'. Given that prices on the new phones have inched up with regards to last year, shouldn't we be holding off on that kind of affirmative conclusion until at least September next year? Or are you happy to take Apple's traditional blowout quarter and use it as a guide for the whole year? No one can possibly know -today- if what you are claiming will prove true or not.
Price elasticity doesn't state that there isn't a ceiling on price. All it says is that some products are relatively unaffected by price changes when compared to others, and nothing you've said actually disproves that. This is why Apple can increase the price of the phone and knows that the amount of sales that they will lose will more than make up for the increase in revenue.
Secondly, as I pointed out in my post, the whole argument falls flat because Apple sells phones at various price points.
You are taking his 1,000 dollar point completely out of context.
He said folk will not upgrade a $1000 every two years. There's no context.
That inelastic demand you are referring too is new found. From 2015, and really means FLAT but that inelasticity is shorn up at the other end of the spectrum. The middle and the low end. If Apple hadn't widened its spread in 2017, do you think things would have remained flat or that demand would have dropped? There was no such inelasticity in demand up to 2015.
Price inelasticity is new found? Nope. Apple products have always been considered irreplaceable by the most valuable and price insensitive areas of the population, and Apple tends to leave everyone else to the Android manufacturers. Can't say that's right or wrong, but they seem to make a lot more money than everyone else. So in general, Apple products, across the whole range enjoy greater price elasticity than the competition, which is why the competition fights like dogs at the lower end of the market, and Apple would rather not.
But let's go back to the real point here. The problem you have is the one I have highlighted again and again. Apple sells a range of phones at a range of prices. But oddly enough, everyone always homes in on the most expensive flagship phone as if this is the only one available. Even Gruber has stated that the XR is better deal because it's almost as good and way cheaper. Apple has even said that the XR is it's best selling phone. So the problem isn't that Apple's phones are too expensive. The problem is that folk want the top of the range phone, but want to tell Apple how much they want to pay for it.
Ah, do want to look at one more point:
You say that if they increase the price, 'sales will not drop significantly'. Given that prices on the new phones have inched up with regards to last year, shouldn't we be holding off on that kind of affirmative conclusion until at least September next year? Or are you happy to take Apple's traditional blowout quarter and use it as a guide for the whole year? No one can possibly know -today- if what you are claiming will prove true or not.
Riigggghty-ho then. So what you're basically asking us to wait long enough to give you a better chance of being right. Got it.
Well, we could do that, but I'm not sure I see the point. Because the thing about Apple is that it will not stick doggedly to its plans in the face of changing conditions. They never have. They won't keep increasing the price of the phone until they are not bringing in enough revenue to make up for the loss in sales units. The fact is they make these adjustments all the time, but because you're so focussed on the phone at the very top of the range, you completely miss that folk are buying the cheaper phones too.
I am certainly not asking anyone to wait for a better chance of being right. I have been proven right already. Flat sales says a lot. The market has spoken. Growth ended in 2015.
That in spite of Apple widening its model spread and now releasing three new models each year.
I have never focussed solely on the premium priced phones and was probably the first person here to highlight the shift in business model as a result of the 2017 iPhone refresh. To the point that I praised Apple for trying that option. All increasing prices has done is increase ASP, (which the vast majority of buyers have no interest in anyway) and help to stifle growth which remains flat.
"He said folk will not upgrade a $1000 every two years. There's no context."
This is what he really said:
"Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?"
There is plenty of context there if you had wished to see it.
OK let's see that context then:
The key point of the "context" is that sentence: "Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?"
Otherwise why they keep launching iPhones at $1000 range?
Because they can !.. Because they are Apple and they can do that!... They can control the upper end of the competition that way. They give the competition a false target to struggle with, they throw a bait in front of the competition to keep them busy devouring. While the competition lay out the blueprints of 16-camera OLED phones, Apple silently launches a 1-camera state-of-the art LCD iPhone ! And novices like you jump over that 16-camera beast like a thing and applaud the "innovation"! Your reading of contexts is totally wrong because you are new to Apple culture. Think about these to understand the context instead of obsessing yourself with high-prices: why Apple has put the same A11 in the 8 series and the same A12 in the XR? The context lies there...
Please take a look a the 'old' P20 Pro and tell me how it compares to the 'new' XR. When you are done with that, move onto the Mate 20 Pro.
How will you squeeze x3 or x5 optical zoom out of that state of the art machine? Have you seen why those phones are leading the pack in so many areas? You do realise that the top players mix and match OLED and LCD at the top end too, don't you?
Pricing is one of the biggest reasons Apple is flat on unit sales. No one is 'obsessed' with it but to ignore it wouldn't make a lot of sense.
Microsoft has a P/E ratio of 45 and Apple has a P/E ratio of 15.
Apple and Microsoft have similar margins and Apple had better growth in 2018. Apple makes 2.5x more revenue and 3x more profits. So, why are Microsoft shares valued at 3x Apple’s? Because investors are morons.
In reality Microsoft is worth ⅓ the value of Apple.
Because Microsoft is diversified with recurring revenue streams which Wall Street loves. With Apple if iPhone sneezes the entire company gets a cold.
So when did the iPhone sneeze? I must have missed that. The only thing I’ve heard are the predictions of analysts based on supply chain reports which Tim Cook has consistently advised against using to provide meaningful data about Apple. So remind me, when did the iPhone sneeze and give the entire company a cold? In your wet dreams?
Reality doesn't matter. It's about perception. The iPhone is approximately 66% of Apple's gross revenue. And Apple announcing that they're no longer going to break out iPhone units sales is sending the message, correct or not, that they expect declines in unit sales. Wall Street doesn't like a lack of transparency and in that regard, I don't blame them. Combine that with the insanity of believing supplier chain complaints and that's a recipe for killing the stock and that's if the stock is not being manipulated.
Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?
On the Mac side, Apple's price hikes combined with the inability to replace the battery, memory and storage as well as the fact that so many people don't really need a computer anymore is going to continue to affect sales, but the Mac is only about 10% of Apple now anyway. Apple probably thought they could replace Mac sales with iPad sales, but that's only about 8% of Apple. While I realize that Apple has never wanted to be the low-end, low-margin provider, I think the high salaries paid to Apple managers and executives has completely warped their perception of what most people are willing and able to spend, especially for a machine that can't be upgraded after purchase. A 15" MBP now starts at $2400 and tops out at $6700. That's ludicrous. The MBA starts at $1000 at tops out at $2600. The Mini tops out at $4300. $5K for the 27" 5K Retina iMac (topping out at $13,200)? IMO, this is either desperation to keep revenue high or unbelievable arrogance.
There is of course, the third option: you have the details wrong.
Let's begin with the most obvious stumble (the real drop off the cliff is that Apple actually sells phones at a range of prices, but that's so obvious it doesn't really need covering):
Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?
Er, no. Apple doesn't expect that because no one has ever done that. What happens is that on each new release, Apple gets picks up customers from other platforms, but also gets a massive boost from people with folk with much iPhones much older than two years. I have just replaced my iPhone 6s, which means I missed out on the 7 and the X. The assumption that Apple thinks folk update their phone every two years is laughable. Which brings me to your other point:
Yes, the price. And here again, the problem is narrow thinking. Saying that no one would buy a $1000 phone is a bit like saying no one would buy a house for $300,000 or a $30,000 car. Clearly they will, because I've seen houses and cars that cost several times that amount. So how do they do it? Well, I'm going to clue you in, but you have to keep it under your hat because I'm thinking of taking out a patent on the whole idea.
Ready?
This is going to amaze you, but people don't hand over the whole amount for houses and cars all at once. They pay it off in chunks. Buying a $1000 iPhone (which, by the way, is not the most expensive smart phone on the market) is best done on the Apple payment scheme: they throw in AppleCare and you can change the phone after a year if you want. Oh, and it's interest free, so if you're paying the whole cost up front then you're doing it wrong.
But that's kind of an aside. The point is that folk have been saying Apple gear is insanely expensive for as long as I can remember, and for as long as I can remember, they've been shifting it. So that leads me to believe that Apple understands basic economic theory better than anyone here who comments on it. All this braying about Apple pricing always misses one vital piece of information: Apple's demand curve.
This little bit of paper sitting on Tim Cook's desk will show you is that the demand for Apple kit is comparatively inelastic: movements in price have fairly negligible effects on demand. If they increase the price, the sales will not drop significantly.
But far more importantly, dropping the price will not actually produce a significant increase in sales, and this increase may not be enough to cover the price drop.
So why is Apple's demand inelastic? Simply because the combination of hardware and software is perceived as unique in a very crowded market.
The details aren't wrong. You are interpreting things wrong.
There are pricing ceilings on everything. Financing (including interest free) also has ceilings, or do you think someone will be willing to take on financing to pay for a phone over 5 years when it will be upgraded before it is paid off?
The increasing cost of iPhones (and every other phone in the same price band) is taking users one step further up to their individual ceilings.
You are taking his 1,000 dollar point completely out of context. He is speaking in general terms. We already know people buy 1,000 dollar phones every year. The point is those people aren't most people and three or four years of flat sales is telling in itself.
The higher the price the harder the sale in high numbers, even with financing and upgrade options but that ceiling becomes ever nearer or you are hitting it. And if the cheaper options mean sacfricing features or getting an older iPhone, then the sale is equally hard.
People argued that users were on longer upgrade cycles (provoked in part by pricing itself) and that is probably another reason while sales flattened, but how many people do you think are still using iPhone 6?
But that argument doesn't take into account the vast potential pool of Android users that are there for the taking, right? 80% of the market. 1,000 dollar Android phones sell in the millions even while they are a fraction of the 80%. Why isn't Apple able to take a slice of that premium Android Pie (sic)? Why aren't people switching from Android in enough numbers to move the Apple needle off 'flat'? It's clearly not price for those users. It's value (among other things). The longer upgrade cycle really isn't doing much except allowing Apple tread water.
Apple is on an 's' cycle - through its own choice - which only makes the sale look worse when compared to rival flagships that are pushing the pedal to the metal. So while Apple takes a breather on innovation and brings the A12 and little else to the table while still including a 5W charger in the box, others are innovating on everything and showing no signs of slowing down. That means 'new' tech is flowing down the lines into the middle ground at an incredible pace and upping the value proposition of those phones.
How can you say that movements in price have a 'fairly negligible effect on demand? Apple doesn't break down unit sales on price.
Price is the number one factor for most people when it comes to buying a Phone. The iPhone X hit new price highs for Apple. It was the 'most popular' 2018 iPhone for Q1, 2 and 3. But Q4? Estimates said demand for the 'most popular' iPhone dropped off sharply in Q4. Far more quickly than any other Apple flagship from previous years in the same quarter. But 'most popular' isn't truly quantifiable is it?
That inelastic demand you are referring too is new found. From 2015, and really means FLAT but that inelasticity is shorn up at the other end of the spectrum. The middle and the low end. If Apple hadn't widened its spread in 2017, do you think things would have remained flat or that demand would have dropped? There was no such inelasticity in demand up to 2015.
You say that if they increase the price, 'sales will not drop significantly'. Given that prices on the new phones have inched up with regards to last year, shouldn't we be holding off on that kind of affirmative conclusion until at least September next year? Or are you happy to take Apple's traditional blowout quarter and use it as a guide for the whole year? No one can possibly know -today- if what you are claiming will prove true or not.
Price elasticity doesn't state that there isn't a ceiling on price. All it says is that some products are relatively unaffected by price changes when compared to others, and nothing you've said actually disproves that. This is why Apple can increase the price of the phone and knows that the amount of sales that they will lose will more than make up for the increase in revenue.
Secondly, as I pointed out in my post, the whole argument falls flat because Apple sells phones at various price points.
You are taking his 1,000 dollar point completely out of context.
He said folk will not upgrade a $1000 every two years. There's no context.
That inelastic demand you are referring too is new found. From 2015, and really means FLAT but that inelasticity is shorn up at the other end of the spectrum. The middle and the low end. If Apple hadn't widened its spread in 2017, do you think things would have remained flat or that demand would have dropped? There was no such inelasticity in demand up to 2015.
Price inelasticity is new found? Nope. Apple products have always been considered irreplaceable by the most valuable and price insensitive areas of the population, and Apple tends to leave everyone else to the Android manufacturers. Can't say that's right or wrong, but they seem to make a lot more money than everyone else. So in general, Apple products, across the whole range enjoy greater price elasticity than the competition, which is why the competition fights like dogs at the lower end of the market, and Apple would rather not.
But let's go back to the real point here. The problem you have is the one I have highlighted again and again. Apple sells a range of phones at a range of prices. But oddly enough, everyone always homes in on the most expensive flagship phone as if this is the only one available. Even Gruber has stated that the XR is better deal because it's almost as good and way cheaper. Apple has even said that the XR is it's best selling phone. So the problem isn't that Apple's phones are too expensive. The problem is that folk want the top of the range phone, but want to tell Apple how much they want to pay for it.
Ah, do want to look at one more point:
You say that if they increase the price, 'sales will not drop significantly'. Given that prices on the new phones have inched up with regards to last year, shouldn't we be holding off on that kind of affirmative conclusion until at least September next year? Or are you happy to take Apple's traditional blowout quarter and use it as a guide for the whole year? No one can possibly know -today- if what you are claiming will prove true or not.
Riigggghty-ho then. So what you're basically asking us to wait long enough to give you a better chance of being right. Got it.
Well, we could do that, but I'm not sure I see the point. Because the thing about Apple is that it will not stick doggedly to its plans in the face of changing conditions. They never have. They won't keep increasing the price of the phone until they are not bringing in enough revenue to make up for the loss in sales units. The fact is they make these adjustments all the time, but because you're so focussed on the phone at the very top of the range, you completely miss that folk are buying the cheaper phones too.
I am certainly not asking anyone to wait for a better chance of being right. I have been proven right already. Flat sales says a lot. The market has spoken. Growth ended in 2015.
That in spite of Apple widening its model spread and now releasing three new models each year.
I have never focussed solely on the premium priced phones and was probably the first person here to highlight the shift in business model as a result of the 2017 iPhone refresh. To the point that I praised Apple for trying that option. All increasing prices has done is increase ASP, (which the vast majority of buyers have no interest in anyway) and help to stifle growth which remains flat.
"He said folk will not upgrade a $1000 every two years. There's no context."
This is what he really said:
"Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?"
There is plenty of context there if you had wished to see it.
OK let's see that context then:
The key point of the "context" is that sentence: "Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?"
Otherwise why they keep launching iPhones at $1000 range?
Because they can !.. Because they are Apple and they can do that!... They can control the upper end of the competition that way. They give the competition a false target to struggle with, they throw a bait in front of the competition to keep them busy devouring. While the competition lay out the blueprints of 16-camera OLED phones, Apple silently launches a 1-camera state-of-the art LCD iPhone ! And novices like you jump over that 16-camera beast like a thing and applaud the "innovation"! Your reading of contexts is totally wrong because you are new to Apple culture. Think about these to understand the context instead of obsessing yourself with high-prices: why Apple has put the same A11 in the 8 series and the same A12 in the XR? The context lies there...
Please take a look a the 'old' P20 Pro and tell me how it compares to the 'new' XR. When you are done with that, move onto the Mate 20 Pro.
How will you squeeze x3 or x5 optical zoom out of that state of the art machine? Have you seen why those phones are leading the pack in so many areas? You do realise that the top players mix and match OLED and LCD at the top end too, don't you?
Pricing is one of the biggest reasons Apple is flat on unit sales. No one is 'obsessed' with it but to ignore it wouldn't make a lot of sense.
In so many areas. Yes. To every country what it deserves ! Exynos to lower races, Snapdragon to higher races. Omitting that, you must go waaay back to the ABC of rational thinking before opining on technology matters...
Apple buying up all the shares will not make it a private company, because shareholders do not 'own' the company. All that a share gives you is a right to a proportion of any dividend. People buy shares to get a dividend, or to sell the share at a later date for profit. No company in its right mind would sell chunks of company ownership because that would give people who have no business running a business a say in how that business is run. And folk wouldn't want a piece of the company because then they might be liable for stuff that is essentially out of their control.
apple sure don’t need outside investors to fund ny project like many company.
Absolutely not, no way. Apple is way too expensive to buy itself out and go private.
For many, Apple's biggest attraction has been its horde of cash... They do have a nice operating profit. But that's at far more risk from competition or a manufacturing/design error than a Microsoft. (MS screws up all the time but all they have to do publish another update -- but Apple has a "--Gate" with every new release and nobody knows if or when one of them is going to stick.)
Product wise Apple has always had all over Microsoft. But Microsoft has always had a better business model.
Microsoft has a P/E ratio of 45 and Apple has a P/E ratio of 15.
Apple and Microsoft have similar margins and Apple had better growth in 2018. Apple makes 2.5x more revenue and 3x more profits. So, why are Microsoft shares valued at 3x Apple’s? Because investors are morons.
In reality Microsoft is worth ⅓ the value of Apple.
Because Microsoft is diversified with recurring revenue streams which Wall Street loves. With Apple if iPhone sneezes the entire company gets a cold.
So when did the iPhone sneeze? I must have missed that. The only thing I’ve heard are the predictions of analysts based on supply chain reports which Tim Cook has consistently advised against using to provide meaningful data about Apple. So remind me, when did the iPhone sneeze and give the entire company a cold? In your wet dreams?
Reality doesn't matter. It's about perception. The iPhone is approximately 66% of Apple's gross revenue. And Apple announcing that they're no longer going to break out iPhone units sales is sending the message, correct or not, that they expect declines in unit sales. Wall Street doesn't like a lack of transparency and in that regard, I don't blame them. Combine that with the insanity of believing supplier chain complaints and that's a recipe for killing the stock and that's if the stock is not being manipulated.
Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?
On the Mac side, Apple's price hikes combined with the inability to replace the battery, memory and storage as well as the fact that so many people don't really need a computer anymore is going to continue to affect sales, but the Mac is only about 10% of Apple now anyway. Apple probably thought they could replace Mac sales with iPad sales, but that's only about 8% of Apple. While I realize that Apple has never wanted to be the low-end, low-margin provider, I think the high salaries paid to Apple managers and executives has completely warped their perception of what most people are willing and able to spend, especially for a machine that can't be upgraded after purchase. A 15" MBP now starts at $2400 and tops out at $6700. That's ludicrous. The MBA starts at $1000 at tops out at $2600. The Mini tops out at $4300. $5K for the 27" 5K Retina iMac (topping out at $13,200)? IMO, this is either desperation to keep revenue high or unbelievable arrogance.
There is of course, the third option: you have the details wrong.
Let's begin with the most obvious stumble (the real drop off the cliff is that Apple actually sells phones at a range of prices, but that's so obvious it doesn't really need covering):
Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?
Er, no. Apple doesn't expect that because no one has ever done that. What happens is that on each new release, Apple gets picks up customers from other platforms, but also gets a massive boost from people with folk with much iPhones much older than two years. I have just replaced my iPhone 6s, which means I missed out on the 7 and the X. The assumption that Apple thinks folk update their phone every two years is laughable. Which brings me to your other point:
Yes, the price. And here again, the problem is narrow thinking. Saying that no one would buy a $1000 phone is a bit like saying no one would buy a house for $300,000 or a $30,000 car. Clearly they will, because I've seen houses and cars that cost several times that amount. So how do they do it? Well, I'm going to clue you in, but you have to keep it under your hat because I'm thinking of taking out a patent on the whole idea.
Ready?
This is going to amaze you, but people don't hand over the whole amount for houses and cars all at once. They pay it off in chunks. Buying a $1000 iPhone (which, by the way, is not the most expensive smart phone on the market) is best done on the Apple payment scheme: they throw in AppleCare and you can change the phone after a year if you want. Oh, and it's interest free, so if you're paying the whole cost up front then you're doing it wrong.
But that's kind of an aside. The point is that folk have been saying Apple gear is insanely expensive for as long as I can remember, and for as long as I can remember, they've been shifting it. So that leads me to believe that Apple understands basic economic theory better than anyone here who comments on it. All this braying about Apple pricing always misses one vital piece of information: Apple's demand curve.
This little bit of paper sitting on Tim Cook's desk will show you is that the demand for Apple kit is comparatively inelastic: movements in price have fairly negligible effects on demand. If they increase the price, the sales will not drop significantly.
But far more importantly, dropping the price will not actually produce a significant increase in sales, and this increase may not be enough to cover the price drop.
So why is Apple's demand inelastic? Simply because the combination of hardware and software is perceived as unique in a very crowded market.
The details aren't wrong. You are interpreting things wrong.
There are pricing ceilings on everything. Financing (including interest free) also has ceilings, or do you think someone will be willing to take on financing to pay for a phone over 5 years when it will be upgraded before it is paid off?
The increasing cost of iPhones (and every other phone in the same price band) is taking users one step further up to their individual ceilings.
You are taking his 1,000 dollar point completely out of context. He is speaking in general terms. We already know people buy 1,000 dollar phones every year. The point is those people aren't most people and three or four years of flat sales is telling in itself.
The higher the price the harder the sale in high numbers, even with financing and upgrade options but that ceiling becomes ever nearer or you are hitting it. And if the cheaper options mean sacfricing features or getting an older iPhone, then the sale is equally hard.
People argued that users were on longer upgrade cycles (provoked in part by pricing itself) and that is probably another reason while sales flattened, but how many people do you think are still using iPhone 6?
But that argument doesn't take into account the vast potential pool of Android users that are there for the taking, right? 80% of the market. 1,000 dollar Android phones sell in the millions even while they are a fraction of the 80%. Why isn't Apple able to take a slice of that premium Android Pie (sic)? Why aren't people switching from Android in enough numbers to move the Apple needle off 'flat'? It's clearly not price for those users. It's value (among other things). The longer upgrade cycle really isn't doing much except allowing Apple tread water.
Apple is on an 's' cycle - through its own choice - which only makes the sale look worse when compared to rival flagships that are pushing the pedal to the metal. So while Apple takes a breather on innovation and brings the A12 and little else to the table while still including a 5W charger in the box, others are innovating on everything and showing no signs of slowing down. That means 'new' tech is flowing down the lines into the middle ground at an incredible pace and upping the value proposition of those phones.
How can you say that movements in price have a 'fairly negligible effect on demand? Apple doesn't break down unit sales on price.
Price is the number one factor for most people when it comes to buying a Phone. The iPhone X hit new price highs for Apple. It was the 'most popular' 2018 iPhone for Q1, 2 and 3. But Q4? Estimates said demand for the 'most popular' iPhone dropped off sharply in Q4. Far more quickly than any other Apple flagship from previous years in the same quarter. But 'most popular' isn't truly quantifiable is it?
That inelastic demand you are referring too is new found. From 2015, and really means FLAT but that inelasticity is shorn up at the other end of the spectrum. The middle and the low end. If Apple hadn't widened its spread in 2017, do you think things would have remained flat or that demand would have dropped? There was no such inelasticity in demand up to 2015.
You say that if they increase the price, 'sales will not drop significantly'. Given that prices on the new phones have inched up with regards to last year, shouldn't we be holding off on that kind of affirmative conclusion until at least September next year? Or are you happy to take Apple's traditional blowout quarter and use it as a guide for the whole year? No one can possibly know -today- if what you are claiming will prove true or not.
Price elasticity doesn't state that there isn't a ceiling on price. All it says is that some products are relatively unaffected by price changes when compared to others, and nothing you've said actually disproves that. This is why Apple can increase the price of the phone and knows that the amount of sales that they will lose will more than make up for the increase in revenue.
Secondly, as I pointed out in my post, the whole argument falls flat because Apple sells phones at various price points.
You are taking his 1,000 dollar point completely out of context.
He said folk will not upgrade a $1000 every two years. There's no context.
That inelastic demand you are referring too is new found. From 2015, and really means FLAT but that inelasticity is shorn up at the other end of the spectrum. The middle and the low end. If Apple hadn't widened its spread in 2017, do you think things would have remained flat or that demand would have dropped? There was no such inelasticity in demand up to 2015.
Price inelasticity is new found? Nope. Apple products have always been considered irreplaceable by the most valuable and price insensitive areas of the population, and Apple tends to leave everyone else to the Android manufacturers. Can't say that's right or wrong, but they seem to make a lot more money than everyone else. So in general, Apple products, across the whole range enjoy greater price elasticity than the competition, which is why the competition fights like dogs at the lower end of the market, and Apple would rather not.
But let's go back to the real point here. The problem you have is the one I have highlighted again and again. Apple sells a range of phones at a range of prices. But oddly enough, everyone always homes in on the most expensive flagship phone as if this is the only one available. Even Gruber has stated that the XR is better deal because it's almost as good and way cheaper. Apple has even said that the XR is it's best selling phone. So the problem isn't that Apple's phones are too expensive. The problem is that folk want the top of the range phone, but want to tell Apple how much they want to pay for it.
Ah, do want to look at one more point:
You say that if they increase the price, 'sales will not drop significantly'. Given that prices on the new phones have inched up with regards to last year, shouldn't we be holding off on that kind of affirmative conclusion until at least September next year? Or are you happy to take Apple's traditional blowout quarter and use it as a guide for the whole year? No one can possibly know -today- if what you are claiming will prove true or not.
Riigggghty-ho then. So what you're basically asking us to wait long enough to give you a better chance of being right. Got it.
Well, we could do that, but I'm not sure I see the point. Because the thing about Apple is that it will not stick doggedly to its plans in the face of changing conditions. They never have. They won't keep increasing the price of the phone until they are not bringing in enough revenue to make up for the loss in sales units. The fact is they make these adjustments all the time, but because you're so focussed on the phone at the very top of the range, you completely miss that folk are buying the cheaper phones too.
I am certainly not asking anyone to wait for a better chance of being right. I have been proven right already. Flat sales says a lot. The market has spoken. Growth ended in 2015.
That in spite of Apple widening its model spread and now releasing three new models each year.
I have never focussed solely on the premium priced phones and was probably the first person here to highlight the shift in business model as a result of the 2017 iPhone refresh. To the point that I praised Apple for trying that option. All increasing prices has done is increase ASP, (which the vast majority of buyers have no interest in anyway) and help to stifle growth which remains flat.
"He said folk will not upgrade a $1000 every two years. There's no context."
This is what he really said:
"Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?"
There is plenty of context there if you had wished to see it.
OK let's see that context then:
The key point of the "context" is that sentence: "Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?"
Otherwise why they keep launching iPhones at $1000 range?
Because they can !.. Because they are Apple and they can do that!... They can control the upper end of the competition that way. They give the competition a false target to struggle with, they throw a bait in front of the competition to keep them busy devouring. While the competition lay out the blueprints of 16-camera OLED phones, Apple silently launches a 1-camera state-of-the art LCD iPhone ! And novices like you jump over that 16-camera beast like a thing and applaud the "innovation"! Your reading of contexts is totally wrong because you are new to Apple culture. Think about these to understand the context instead of obsessing yourself with high-prices: why Apple has put the same A11 in the 8 series and the same A12 in the XR? The context lies there...
Please take a look a the 'old' P20 Pro and tell me how it compares to the 'new' XR. When you are done with that, move onto the Mate 20 Pro.
How will you squeeze x3 or x5 optical zoom out of that state of the art machine? Have you seen why those phones are leading the pack in so many areas? You do realise that the top players mix and match OLED and LCD at the top end too, don't you?
Pricing is one of the biggest reasons Apple is flat on unit sales. No one is 'obsessed' with it but to ignore it wouldn't make a lot of sense.
Pricing?? Wtf. That is completey made up. Apple is totally fine, man. Hauwei is not an issue for Apple. Samsung is not an issue. Google Pixel is not an issue. Android vendors eat each other. Spec wars are good for the consumer. LG and Motorola say hi. Enjoy the race to the bottom.
Anyway, the narrative that apple is to expensive and needs to this and that is a story the old as the company. All the hot takes of doom and gloom are hilarious.
Microsoft has a P/E ratio of 45 and Apple has a P/E ratio of 15.
Apple and Microsoft have similar margins and Apple had better growth in 2018. Apple makes 2.5x more revenue and 3x more profits. So, why are Microsoft shares valued at 3x Apple’s? Because investors are morons.
In reality Microsoft is worth ⅓ the value of Apple.
Because Microsoft is diversified with recurring revenue streams which Wall Street loves. With Apple if iPhone sneezes the entire company gets a cold.
So when did the iPhone sneeze? I must have missed that. The only thing I’ve heard are the predictions of analysts based on supply chain reports which Tim Cook has consistently advised against using to provide meaningful data about Apple. So remind me, when did the iPhone sneeze and give the entire company a cold? In your wet dreams?
Reality doesn't matter. It's about perception. The iPhone is approximately 66% of Apple's gross revenue. And Apple announcing that they're no longer going to break out iPhone units sales is sending the message, correct or not, that they expect declines in unit sales. Wall Street doesn't like a lack of transparency and in that regard, I don't blame them. Combine that with the insanity of believing supplier chain complaints and that's a recipe for killing the stock and that's if the stock is not being manipulated.
Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?
On the Mac side, Apple's price hikes combined with the inability to replace the battery, memory and storage as well as the fact that so many people don't really need a computer anymore is going to continue to affect sales, but the Mac is only about 10% of Apple now anyway. Apple probably thought they could replace Mac sales with iPad sales, but that's only about 8% of Apple. While I realize that Apple has never wanted to be the low-end, low-margin provider, I think the high salaries paid to Apple managers and executives has completely warped their perception of what most people are willing and able to spend, especially for a machine that can't be upgraded after purchase. A 15" MBP now starts at $2400 and tops out at $6700. That's ludicrous. The MBA starts at $1000 at tops out at $2600. The Mini tops out at $4300. $5K for the 27" 5K Retina iMac (topping out at $13,200)? IMO, this is either desperation to keep revenue high or unbelievable arrogance.
There is of course, the third option: you have the details wrong.
Let's begin with the most obvious stumble (the real drop off the cliff is that Apple actually sells phones at a range of prices, but that's so obvious it doesn't really need covering):
Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?
Er, no. Apple doesn't expect that because no one has ever done that. What happens is that on each new release, Apple gets picks up customers from other platforms, but also gets a massive boost from people with folk with much iPhones much older than two years. I have just replaced my iPhone 6s, which means I missed out on the 7 and the X. The assumption that Apple thinks folk update their phone every two years is laughable. Which brings me to your other point:
Yes, the price. And here again, the problem is narrow thinking. Saying that no one would buy a $1000 phone is a bit like saying no one would buy a house for $300,000 or a $30,000 car. Clearly they will, because I've seen houses and cars that cost several times that amount. So how do they do it? Well, I'm going to clue you in, but you have to keep it under your hat because I'm thinking of taking out a patent on the whole idea.
Ready?
This is going to amaze you, but people don't hand over the whole amount for houses and cars all at once. They pay it off in chunks. Buying a $1000 iPhone (which, by the way, is not the most expensive smart phone on the market) is best done on the Apple payment scheme: they throw in AppleCare and you can change the phone after a year if you want. Oh, and it's interest free, so if you're paying the whole cost up front then you're doing it wrong.
But that's kind of an aside. The point is that folk have been saying Apple gear is insanely expensive for as long as I can remember, and for as long as I can remember, they've been shifting it. So that leads me to believe that Apple understands basic economic theory better than anyone here who comments on it. All this braying about Apple pricing always misses one vital piece of information: Apple's demand curve.
This little bit of paper sitting on Tim Cook's desk will show you is that the demand for Apple kit is comparatively inelastic: movements in price have fairly negligible effects on demand. If they increase the price, the sales will not drop significantly.
But far more importantly, dropping the price will not actually produce a significant increase in sales, and this increase may not be enough to cover the price drop.
So why is Apple's demand inelastic? Simply because the combination of hardware and software is perceived as unique in a very crowded market.
The details aren't wrong. You are interpreting things wrong.
There are pricing ceilings on everything. Financing (including interest free) also has ceilings, or do you think someone will be willing to take on financing to pay for a phone over 5 years when it will be upgraded before it is paid off?
The increasing cost of iPhones (and every other phone in the same price band) is taking users one step further up to their individual ceilings.
You are taking his 1,000 dollar point completely out of context. He is speaking in general terms. We already know people buy 1,000 dollar phones every year. The point is those people aren't most people and three or four years of flat sales is telling in itself.
The higher the price the harder the sale in high numbers, even with financing and upgrade options but that ceiling becomes ever nearer or you are hitting it. And if the cheaper options mean sacfricing features or getting an older iPhone, then the sale is equally hard.
People argued that users were on longer upgrade cycles (provoked in part by pricing itself) and that is probably another reason while sales flattened, but how many people do you think are still using iPhone 6?
But that argument doesn't take into account the vast potential pool of Android users that are there for the taking, right? 80% of the market. 1,000 dollar Android phones sell in the millions even while they are a fraction of the 80%. Why isn't Apple able to take a slice of that premium Android Pie (sic)? Why aren't people switching from Android in enough numbers to move the Apple needle off 'flat'? It's clearly not price for those users. It's value (among other things). The longer upgrade cycle really isn't doing much except allowing Apple tread water.
Apple is on an 's' cycle - through its own choice - which only makes the sale look worse when compared to rival flagships that are pushing the pedal to the metal. So while Apple takes a breather on innovation and brings the A12 and little else to the table while still including a 5W charger in the box, others are innovating on everything and showing no signs of slowing down. That means 'new' tech is flowing down the lines into the middle ground at an incredible pace and upping the value proposition of those phones.
How can you say that movements in price have a 'fairly negligible effect on demand? Apple doesn't break down unit sales on price.
Price is the number one factor for most people when it comes to buying a Phone. The iPhone X hit new price highs for Apple. It was the 'most popular' 2018 iPhone for Q1, 2 and 3. But Q4? Estimates said demand for the 'most popular' iPhone dropped off sharply in Q4. Far more quickly than any other Apple flagship from previous years in the same quarter. But 'most popular' isn't truly quantifiable is it?
That inelastic demand you are referring too is new found. From 2015, and really means FLAT but that inelasticity is shorn up at the other end of the spectrum. The middle and the low end. If Apple hadn't widened its spread in 2017, do you think things would have remained flat or that demand would have dropped? There was no such inelasticity in demand up to 2015.
You say that if they increase the price, 'sales will not drop significantly'. Given that prices on the new phones have inched up with regards to last year, shouldn't we be holding off on that kind of affirmative conclusion until at least September next year? Or are you happy to take Apple's traditional blowout quarter and use it as a guide for the whole year? No one can possibly know -today- if what you are claiming will prove true or not.
Price elasticity doesn't state that there isn't a ceiling on price. All it says is that some products are relatively unaffected by price changes when compared to others, and nothing you've said actually disproves that. This is why Apple can increase the price of the phone and knows that the amount of sales that they will lose will more than make up for the increase in revenue.
Secondly, as I pointed out in my post, the whole argument falls flat because Apple sells phones at various price points.
You are taking his 1,000 dollar point completely out of context.
He said folk will not upgrade a $1000 every two years. There's no context.
That inelastic demand you are referring too is new found. From 2015, and really means FLAT but that inelasticity is shorn up at the other end of the spectrum. The middle and the low end. If Apple hadn't widened its spread in 2017, do you think things would have remained flat or that demand would have dropped? There was no such inelasticity in demand up to 2015.
Price inelasticity is new found? Nope. Apple products have always been considered irreplaceable by the most valuable and price insensitive areas of the population, and Apple tends to leave everyone else to the Android manufacturers. Can't say that's right or wrong, but they seem to make a lot more money than everyone else. So in general, Apple products, across the whole range enjoy greater price elasticity than the competition, which is why the competition fights like dogs at the lower end of the market, and Apple would rather not.
But let's go back to the real point here. The problem you have is the one I have highlighted again and again. Apple sells a range of phones at a range of prices. But oddly enough, everyone always homes in on the most expensive flagship phone as if this is the only one available. Even Gruber has stated that the XR is better deal because it's almost as good and way cheaper. Apple has even said that the XR is it's best selling phone. So the problem isn't that Apple's phones are too expensive. The problem is that folk want the top of the range phone, but want to tell Apple how much they want to pay for it.
Ah, do want to look at one more point:
You say that if they increase the price, 'sales will not drop significantly'. Given that prices on the new phones have inched up with regards to last year, shouldn't we be holding off on that kind of affirmative conclusion until at least September next year? Or are you happy to take Apple's traditional blowout quarter and use it as a guide for the whole year? No one can possibly know -today- if what you are claiming will prove true or not.
Riigggghty-ho then. So what you're basically asking us to wait long enough to give you a better chance of being right. Got it.
Well, we could do that, but I'm not sure I see the point. Because the thing about Apple is that it will not stick doggedly to its plans in the face of changing conditions. They never have. They won't keep increasing the price of the phone until they are not bringing in enough revenue to make up for the loss in sales units. The fact is they make these adjustments all the time, but because you're so focussed on the phone at the very top of the range, you completely miss that folk are buying the cheaper phones too.
I am certainly not asking anyone to wait for a better chance of being right. I have been proven right already. Flat sales says a lot. The market has spoken. Growth ended in 2015.
That in spite of Apple widening its model spread and now releasing three new models each year.
I have never focussed solely on the premium priced phones and was probably the first person here to highlight the shift in business model as a result of the 2017 iPhone refresh. To the point that I praised Apple for trying that option. All increasing prices has done is increase ASP, (which the vast majority of buyers have no interest in anyway) and help to stifle growth which remains flat.
"He said folk will not upgrade a $1000 every two years. There's no context."
This is what he really said:
"Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?"
There is plenty of context there if you had wished to see it.
OK let's see that context then:
The key point of the "context" is that sentence: "Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?"
Otherwise why they keep launching iPhones at $1000 range?
Because they can !.. Because they are Apple and they can do that!... They can control the upper end of the competition that way. They give the competition a false target to struggle with, they throw a bait in front of the competition to keep them busy devouring. While the competition lay out the blueprints of 16-camera OLED phones, Apple silently launches a 1-camera state-of-the art LCD iPhone ! And novices like you jump over that 16-camera beast like a thing and applaud the "innovation"! Your reading of contexts is totally wrong because you are new to Apple culture. Think about these to understand the context instead of obsessing yourself with high-prices: why Apple has put the same A11 in the 8 series and the same A12 in the XR? The context lies there...
Please take a look a the 'old' P20 Pro and tell me how it compares to the 'new' XR. When you are done with that, move onto the Mate 20 Pro.
How will you squeeze x3 or x5 optical zoom out of that state of the art machine? Have you seen why those phones are leading the pack in so many areas? You do realise that the top players mix and match OLED and LCD at the top end too, don't you?
Pricing is one of the biggest reasons Apple is flat on unit sales. No one is 'obsessed' with it but to ignore it wouldn't make a lot of sense.
Flat sales doesn't seem to have impacted revenue, which is the metric that companies are actually interested in, not to mention margin.
If office tanks, all of Microsoft goes with it. Windows as well.
And really, all there is to Office is Excel. Nothing about anything else in that suite is worth anything to anyone. Word. SUCKS. PowerPoint. SUCKS. The only reason they get used is because they’re already on the computers they use for Excel.
If Apple made Numbers on par with Excel and perhaps (less importantly) improved pages a little, they would absolutely CRUSH office. And Windows. And MSFT. It’s gotta happen at some point right?
Exactly.
IBM and MS created the computer Dark Ages sucking out all fun, enthusiasm and creativity of its users.
Microsoft has a P/E ratio of 45 and Apple has a P/E ratio of 15.
Apple and Microsoft have similar margins and Apple had better growth in 2018. Apple makes 2.5x more revenue and 3x more profits. So, why are Microsoft shares valued at 3x Apple’s? Because investors are morons.
In reality Microsoft is worth ⅓ the value of Apple.
Because Microsoft is diversified with recurring revenue streams which Wall Street loves. With Apple if iPhone sneezes the entire company gets a cold.
So when did the iPhone sneeze? I must have missed that. The only thing I’ve heard are the predictions of analysts based on supply chain reports which Tim Cook has consistently advised against using to provide meaningful data about Apple. So remind me, when did the iPhone sneeze and give the entire company a cold? In your wet dreams?
Reality doesn't matter. It's about perception. The iPhone is approximately 66% of Apple's gross revenue. And Apple announcing that they're no longer going to break out iPhone units sales is sending the message, correct or not, that they expect declines in unit sales. Wall Street doesn't like a lack of transparency and in that regard, I don't blame them. Combine that with the insanity of believing supplier chain complaints and that's a recipe for killing the stock and that's if the stock is not being manipulated.
Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?
On the Mac side, Apple's price hikes combined with the inability to replace the battery, memory and storage as well as the fact that so many people don't really need a computer anymore is going to continue to affect sales, but the Mac is only about 10% of Apple now anyway. Apple probably thought they could replace Mac sales with iPad sales, but that's only about 8% of Apple. While I realize that Apple has never wanted to be the low-end, low-margin provider, I think the high salaries paid to Apple managers and executives has completely warped their perception of what most people are willing and able to spend, especially for a machine that can't be upgraded after purchase. A 15" MBP now starts at $2400 and tops out at $6700. That's ludicrous. The MBA starts at $1000 at tops out at $2600. The Mini tops out at $4300. $5K for the 27" 5K Retina iMac (topping out at $13,200)? IMO, this is either desperation to keep revenue high or unbelievable arrogance.
There is of course, the third option: you have the details wrong.
Let's begin with the most obvious stumble (the real drop off the cliff is that Apple actually sells phones at a range of prices, but that's so obvious it doesn't really need covering):
Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?
Er, no. Apple doesn't expect that because no one has ever done that. What happens is that on each new release, Apple gets picks up customers from other platforms, but also gets a massive boost from people with folk with much iPhones much older than two years. I have just replaced my iPhone 6s, which means I missed out on the 7 and the X. The assumption that Apple thinks folk update their phone every two years is laughable. Which brings me to your other point:
Yes, the price. And here again, the problem is narrow thinking. Saying that no one would buy a $1000 phone is a bit like saying no one would buy a house for $300,000 or a $30,000 car. Clearly they will, because I've seen houses and cars that cost several times that amount. So how do they do it? Well, I'm going to clue you in, but you have to keep it under your hat because I'm thinking of taking out a patent on the whole idea.
Ready?
This is going to amaze you, but people don't hand over the whole amount for houses and cars all at once. They pay it off in chunks. Buying a $1000 iPhone (which, by the way, is not the most expensive smart phone on the market) is best done on the Apple payment scheme: they throw in AppleCare and you can change the phone after a year if you want. Oh, and it's interest free, so if you're paying the whole cost up front then you're doing it wrong.
But that's kind of an aside. The point is that folk have been saying Apple gear is insanely expensive for as long as I can remember, and for as long as I can remember, they've been shifting it. So that leads me to believe that Apple understands basic economic theory better than anyone here who comments on it. All this braying about Apple pricing always misses one vital piece of information: Apple's demand curve.
This little bit of paper sitting on Tim Cook's desk will show you is that the demand for Apple kit is comparatively inelastic: movements in price have fairly negligible effects on demand. If they increase the price, the sales will not drop significantly.
But far more importantly, dropping the price will not actually produce a significant increase in sales, and this increase may not be enough to cover the price drop.
So why is Apple's demand inelastic? Simply because the combination of hardware and software is perceived as unique in a very crowded market.
The details aren't wrong. You are interpreting things wrong.
There are pricing ceilings on everything. Financing (including interest free) also has ceilings, or do you think someone will be willing to take on financing to pay for a phone over 5 years when it will be upgraded before it is paid off?
The increasing cost of iPhones (and every other phone in the same price band) is taking users one step further up to their individual ceilings.
You are taking his 1,000 dollar point completely out of context. He is speaking in general terms. We already know people buy 1,000 dollar phones every year. The point is those people aren't most people and three or four years of flat sales is telling in itself.
The higher the price the harder the sale in high numbers, even with financing and upgrade options but that ceiling becomes ever nearer or you are hitting it. And if the cheaper options mean sacfricing features or getting an older iPhone, then the sale is equally hard.
People argued that users were on longer upgrade cycles (provoked in part by pricing itself) and that is probably another reason while sales flattened, but how many people do you think are still using iPhone 6?
But that argument doesn't take into account the vast potential pool of Android users that are there for the taking, right? 80% of the market. 1,000 dollar Android phones sell in the millions even while they are a fraction of the 80%. Why isn't Apple able to take a slice of that premium Android Pie (sic)? Why aren't people switching from Android in enough numbers to move the Apple needle off 'flat'? It's clearly not price for those users. It's value (among other things). The longer upgrade cycle really isn't doing much except allowing Apple tread water.
Apple is on an 's' cycle - through its own choice - which only makes the sale look worse when compared to rival flagships that are pushing the pedal to the metal. So while Apple takes a breather on innovation and brings the A12 and little else to the table while still including a 5W charger in the box, others are innovating on everything and showing no signs of slowing down. That means 'new' tech is flowing down the lines into the middle ground at an incredible pace and upping the value proposition of those phones.
How can you say that movements in price have a 'fairly negligible effect on demand? Apple doesn't break down unit sales on price.
Price is the number one factor for most people when it comes to buying a Phone. The iPhone X hit new price highs for Apple. It was the 'most popular' 2018 iPhone for Q1, 2 and 3. But Q4? Estimates said demand for the 'most popular' iPhone dropped off sharply in Q4. Far more quickly than any other Apple flagship from previous years in the same quarter. But 'most popular' isn't truly quantifiable is it?
That inelastic demand you are referring too is new found. From 2015, and really means FLAT but that inelasticity is shorn up at the other end of the spectrum. The middle and the low end. If Apple hadn't widened its spread in 2017, do you think things would have remained flat or that demand would have dropped? There was no such inelasticity in demand up to 2015.
You say that if they increase the price, 'sales will not drop significantly'. Given that prices on the new phones have inched up with regards to last year, shouldn't we be holding off on that kind of affirmative conclusion until at least September next year? Or are you happy to take Apple's traditional blowout quarter and use it as a guide for the whole year? No one can possibly know -today- if what you are claiming will prove true or not.
Price elasticity doesn't state that there isn't a ceiling on price. All it says is that some products are relatively unaffected by price changes when compared to others, and nothing you've said actually disproves that. This is why Apple can increase the price of the phone and knows that the amount of sales that they will lose will more than make up for the increase in revenue.
Secondly, as I pointed out in my post, the whole argument falls flat because Apple sells phones at various price points.
You are taking his 1,000 dollar point completely out of context.
He said folk will not upgrade a $1000 every two years. There's no context.
That inelastic demand you are referring too is new found. From 2015, and really means FLAT but that inelasticity is shorn up at the other end of the spectrum. The middle and the low end. If Apple hadn't widened its spread in 2017, do you think things would have remained flat or that demand would have dropped? There was no such inelasticity in demand up to 2015.
Price inelasticity is new found? Nope. Apple products have always been considered irreplaceable by the most valuable and price insensitive areas of the population, and Apple tends to leave everyone else to the Android manufacturers. Can't say that's right or wrong, but they seem to make a lot more money than everyone else. So in general, Apple products, across the whole range enjoy greater price elasticity than the competition, which is why the competition fights like dogs at the lower end of the market, and Apple would rather not.
But let's go back to the real point here. The problem you have is the one I have highlighted again and again. Apple sells a range of phones at a range of prices. But oddly enough, everyone always homes in on the most expensive flagship phone as if this is the only one available. Even Gruber has stated that the XR is better deal because it's almost as good and way cheaper. Apple has even said that the XR is it's best selling phone. So the problem isn't that Apple's phones are too expensive. The problem is that folk want the top of the range phone, but want to tell Apple how much they want to pay for it.
Ah, do want to look at one more point:
You say that if they increase the price, 'sales will not drop significantly'. Given that prices on the new phones have inched up with regards to last year, shouldn't we be holding off on that kind of affirmative conclusion until at least September next year? Or are you happy to take Apple's traditional blowout quarter and use it as a guide for the whole year? No one can possibly know -today- if what you are claiming will prove true or not.
Riigggghty-ho then. So what you're basically asking us to wait long enough to give you a better chance of being right. Got it.
Well, we could do that, but I'm not sure I see the point. Because the thing about Apple is that it will not stick doggedly to its plans in the face of changing conditions. They never have. They won't keep increasing the price of the phone until they are not bringing in enough revenue to make up for the loss in sales units. The fact is they make these adjustments all the time, but because you're so focussed on the phone at the very top of the range, you completely miss that folk are buying the cheaper phones too.
I am certainly not asking anyone to wait for a better chance of being right. I have been proven right already. Flat sales says a lot. The market has spoken. Growth ended in 2015.
That in spite of Apple widening its model spread and now releasing three new models each year.
I have never focussed solely on the premium priced phones and was probably the first person here to highlight the shift in business model as a result of the 2017 iPhone refresh. To the point that I praised Apple for trying that option. All increasing prices has done is increase ASP, (which the vast majority of buyers have no interest in anyway) and help to stifle growth which remains flat.
"He said folk will not upgrade a $1000 every two years. There's no context."
This is what he really said:
"Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?"
There is plenty of context there if you had wished to see it.
OK let's see that context then:
The key point of the "context" is that sentence: "Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?"
Otherwise why they keep launching iPhones at $1000 range?
Because they can !.. Because they are Apple and they can do that!... They can control the upper end of the competition that way. They give the competition a false target to struggle with, they throw a bait in front of the competition to keep them busy devouring. While the competition lay out the blueprints of 16-camera OLED phones, Apple silently launches a 1-camera state-of-the art LCD iPhone ! And novices like you jump over that 16-camera beast like a thing and applaud the "innovation"! Your reading of contexts is totally wrong because you are new to Apple culture. Think about these to understand the context instead of obsessing yourself with high-prices: why Apple has put the same A11 in the 8 series and the same A12 in the XR? The context lies there...
Please take a look a the 'old' P20 Pro and tell me how it compares to the 'new' XR. When you are done with that, move onto the Mate 20 Pro.
How will you squeeze x3 or x5 optical zoom out of that state of the art machine? Have you seen why those phones are leading the pack in so many areas? You do realise that the top players mix and match OLED and LCD at the top end too, don't you?
Pricing is one of the biggest reasons Apple is flat on unit sales. No one is 'obsessed' with it but to ignore it wouldn't make a lot of sense.
Flat sales doesn't seem to have impacted revenue, which is the metric that companies are actually interested in, not to mention margin.
You enjoy your unit sales while you can.
But that leads onto what markets love so much: YoY.
If unit sales remain flat with some of the current headwinds, how will Apple's iPhone business be interpreted in terms of YoY revenue growth?
And what would happen if sales end up less than flat? Is that not a realistic possibility?
Microsoft has a P/E ratio of 45 and Apple has a P/E ratio of 15.
Apple and Microsoft have similar margins and Apple had better growth in 2018. Apple makes 2.5x more revenue and 3x more profits. So, why are Microsoft shares valued at 3x Apple’s? Because investors are morons.
In reality Microsoft is worth ⅓ the value of Apple.
Because Microsoft is diversified with recurring revenue streams which Wall Street loves. With Apple if iPhone sneezes the entire company gets a cold.
So when did the iPhone sneeze? I must have missed that. The only thing I’ve heard are the predictions of analysts based on supply chain reports which Tim Cook has consistently advised against using to provide meaningful data about Apple. So remind me, when did the iPhone sneeze and give the entire company a cold? In your wet dreams?
Reality doesn't matter. It's about perception. The iPhone is approximately 66% of Apple's gross revenue. And Apple announcing that they're no longer going to break out iPhone units sales is sending the message, correct or not, that they expect declines in unit sales. Wall Street doesn't like a lack of transparency and in that regard, I don't blame them. Combine that with the insanity of believing supplier chain complaints and that's a recipe for killing the stock and that's if the stock is not being manipulated.
Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?
On the Mac side, Apple's price hikes combined with the inability to replace the battery, memory and storage as well as the fact that so many people don't really need a computer anymore is going to continue to affect sales, but the Mac is only about 10% of Apple now anyway. Apple probably thought they could replace Mac sales with iPad sales, but that's only about 8% of Apple. While I realize that Apple has never wanted to be the low-end, low-margin provider, I think the high salaries paid to Apple managers and executives has completely warped their perception of what most people are willing and able to spend, especially for a machine that can't be upgraded after purchase. A 15" MBP now starts at $2400 and tops out at $6700. That's ludicrous. The MBA starts at $1000 at tops out at $2600. The Mini tops out at $4300. $5K for the 27" 5K Retina iMac (topping out at $13,200)? IMO, this is either desperation to keep revenue high or unbelievable arrogance.
There is of course, the third option: you have the details wrong.
Let's begin with the most obvious stumble (the real drop off the cliff is that Apple actually sells phones at a range of prices, but that's so obvious it doesn't really need covering):
Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?
Er, no. Apple doesn't expect that because no one has ever done that. What happens is that on each new release, Apple gets picks up customers from other platforms, but also gets a massive boost from people with folk with much iPhones much older than two years. I have just replaced my iPhone 6s, which means I missed out on the 7 and the X. The assumption that Apple thinks folk update their phone every two years is laughable. Which brings me to your other point:
Yes, the price. And here again, the problem is narrow thinking. Saying that no one would buy a $1000 phone is a bit like saying no one would buy a house for $300,000 or a $30,000 car. Clearly they will, because I've seen houses and cars that cost several times that amount. So how do they do it? Well, I'm going to clue you in, but you have to keep it under your hat because I'm thinking of taking out a patent on the whole idea.
Ready?
This is going to amaze you, but people don't hand over the whole amount for houses and cars all at once. They pay it off in chunks. Buying a $1000 iPhone (which, by the way, is not the most expensive smart phone on the market) is best done on the Apple payment scheme: they throw in AppleCare and you can change the phone after a year if you want. Oh, and it's interest free, so if you're paying the whole cost up front then you're doing it wrong.
But that's kind of an aside. The point is that folk have been saying Apple gear is insanely expensive for as long as I can remember, and for as long as I can remember, they've been shifting it. So that leads me to believe that Apple understands basic economic theory better than anyone here who comments on it. All this braying about Apple pricing always misses one vital piece of information: Apple's demand curve.
This little bit of paper sitting on Tim Cook's desk will show you is that the demand for Apple kit is comparatively inelastic: movements in price have fairly negligible effects on demand. If they increase the price, the sales will not drop significantly.
But far more importantly, dropping the price will not actually produce a significant increase in sales, and this increase may not be enough to cover the price drop.
So why is Apple's demand inelastic? Simply because the combination of hardware and software is perceived as unique in a very crowded market.
The details aren't wrong. You are interpreting things wrong.
There are pricing ceilings on everything. Financing (including interest free) also has ceilings, or do you think someone will be willing to take on financing to pay for a phone over 5 years when it will be upgraded before it is paid off?
The increasing cost of iPhones (and every other phone in the same price band) is taking users one step further up to their individual ceilings.
You are taking his 1,000 dollar point completely out of context. He is speaking in general terms. We already know people buy 1,000 dollar phones every year. The point is those people aren't most people and three or four years of flat sales is telling in itself.
The higher the price the harder the sale in high numbers, even with financing and upgrade options but that ceiling becomes ever nearer or you are hitting it. And if the cheaper options mean sacfricing features or getting an older iPhone, then the sale is equally hard.
People argued that users were on longer upgrade cycles (provoked in part by pricing itself) and that is probably another reason while sales flattened, but how many people do you think are still using iPhone 6?
But that argument doesn't take into account the vast potential pool of Android users that are there for the taking, right? 80% of the market. 1,000 dollar Android phones sell in the millions even while they are a fraction of the 80%. Why isn't Apple able to take a slice of that premium Android Pie (sic)? Why aren't people switching from Android in enough numbers to move the Apple needle off 'flat'? It's clearly not price for those users. It's value (among other things). The longer upgrade cycle really isn't doing much except allowing Apple tread water.
Apple is on an 's' cycle - through its own choice - which only makes the sale look worse when compared to rival flagships that are pushing the pedal to the metal. So while Apple takes a breather on innovation and brings the A12 and little else to the table while still including a 5W charger in the box, others are innovating on everything and showing no signs of slowing down. That means 'new' tech is flowing down the lines into the middle ground at an incredible pace and upping the value proposition of those phones.
How can you say that movements in price have a 'fairly negligible effect on demand? Apple doesn't break down unit sales on price.
Price is the number one factor for most people when it comes to buying a Phone. The iPhone X hit new price highs for Apple. It was the 'most popular' 2018 iPhone for Q1, 2 and 3. But Q4? Estimates said demand for the 'most popular' iPhone dropped off sharply in Q4. Far more quickly than any other Apple flagship from previous years in the same quarter. But 'most popular' isn't truly quantifiable is it?
That inelastic demand you are referring too is new found. From 2015, and really means FLAT but that inelasticity is shorn up at the other end of the spectrum. The middle and the low end. If Apple hadn't widened its spread in 2017, do you think things would have remained flat or that demand would have dropped? There was no such inelasticity in demand up to 2015.
You say that if they increase the price, 'sales will not drop significantly'. Given that prices on the new phones have inched up with regards to last year, shouldn't we be holding off on that kind of affirmative conclusion until at least September next year? Or are you happy to take Apple's traditional blowout quarter and use it as a guide for the whole year? No one can possibly know -today- if what you are claiming will prove true or not.
Price elasticity doesn't state that there isn't a ceiling on price. All it says is that some products are relatively unaffected by price changes when compared to others, and nothing you've said actually disproves that. This is why Apple can increase the price of the phone and knows that the amount of sales that they will lose will more than make up for the increase in revenue.
Secondly, as I pointed out in my post, the whole argument falls flat because Apple sells phones at various price points.
You are taking his 1,000 dollar point completely out of context.
He said folk will not upgrade a $1000 every two years. There's no context.
That inelastic demand you are referring too is new found. From 2015, and really means FLAT but that inelasticity is shorn up at the other end of the spectrum. The middle and the low end. If Apple hadn't widened its spread in 2017, do you think things would have remained flat or that demand would have dropped? There was no such inelasticity in demand up to 2015.
Price inelasticity is new found? Nope. Apple products have always been considered irreplaceable by the most valuable and price insensitive areas of the population, and Apple tends to leave everyone else to the Android manufacturers. Can't say that's right or wrong, but they seem to make a lot more money than everyone else. So in general, Apple products, across the whole range enjoy greater price elasticity than the competition, which is why the competition fights like dogs at the lower end of the market, and Apple would rather not.
But let's go back to the real point here. The problem you have is the one I have highlighted again and again. Apple sells a range of phones at a range of prices. But oddly enough, everyone always homes in on the most expensive flagship phone as if this is the only one available. Even Gruber has stated that the XR is better deal because it's almost as good and way cheaper. Apple has even said that the XR is it's best selling phone. So the problem isn't that Apple's phones are too expensive. The problem is that folk want the top of the range phone, but want to tell Apple how much they want to pay for it.
Ah, do want to look at one more point:
You say that if they increase the price, 'sales will not drop significantly'. Given that prices on the new phones have inched up with regards to last year, shouldn't we be holding off on that kind of affirmative conclusion until at least September next year? Or are you happy to take Apple's traditional blowout quarter and use it as a guide for the whole year? No one can possibly know -today- if what you are claiming will prove true or not.
Riigggghty-ho then. So what you're basically asking us to wait long enough to give you a better chance of being right. Got it.
Well, we could do that, but I'm not sure I see the point. Because the thing about Apple is that it will not stick doggedly to its plans in the face of changing conditions. They never have. They won't keep increasing the price of the phone until they are not bringing in enough revenue to make up for the loss in sales units. The fact is they make these adjustments all the time, but because you're so focussed on the phone at the very top of the range, you completely miss that folk are buying the cheaper phones too.
I am certainly not asking anyone to wait for a better chance of being right. I have been proven right already. Flat sales says a lot. The market has spoken. Growth ended in 2015.
That in spite of Apple widening its model spread and now releasing three new models each year.
I have never focussed solely on the premium priced phones and was probably the first person here to highlight the shift in business model as a result of the 2017 iPhone refresh. To the point that I praised Apple for trying that option. All increasing prices has done is increase ASP, (which the vast majority of buyers have no interest in anyway) and help to stifle growth which remains flat.
"He said folk will not upgrade a $1000 every two years. There's no context."
This is what he really said:
"Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?"
There is plenty of context there if you had wished to see it.
OK let's see that context then:
The key point of the "context" is that sentence: "Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?"
Otherwise why they keep launching iPhones at $1000 range?
Because they can !.. Because they are Apple and they can do that!... They can control the upper end of the competition that way. They give the competition a false target to struggle with, they throw a bait in front of the competition to keep them busy devouring. While the competition lay out the blueprints of 16-camera OLED phones, Apple silently launches a 1-camera state-of-the art LCD iPhone ! And novices like you jump over that 16-camera beast like a thing and applaud the "innovation"! Your reading of contexts is totally wrong because you are new to Apple culture. Think about these to understand the context instead of obsessing yourself with high-prices: why Apple has put the same A11 in the 8 series and the same A12 in the XR? The context lies there...
Please take a look a the 'old' P20 Pro and tell me how it compares to the 'new' XR. When you are done with that, move onto the Mate 20 Pro.
How will you squeeze x3 or x5 optical zoom out of that state of the art machine? Have you seen why those phones are leading the pack in so many areas? You do realise that the top players mix and match OLED and LCD at the top end too, don't you?
Pricing is one of the biggest reasons Apple is flat on unit sales. No one is 'obsessed' with it but to ignore it wouldn't make a lot of sense.
Flat sales doesn't seem to have impacted revenue, which is the metric that companies are actually interested in, not to mention margin.
You enjoy your unit sales while you can.
But that leads onto what markets love so much: YoY.
If unit sales remain flat with some of the current headwinds, how will Apple's iPhone business be interpreted in terms of YoY revenue growth?
And what would happen if sales end up less than flat? Is that not a realistic possibility?
All of those are possibilities, and yet, Apple still hasn't reduced iPhone prices, which is always on the table, is still generating massive profits, and still has that massive cash stockpile.
But that leads onto what markets love so much: YoY.
If unit sales remain flat with some of the current headwinds, how will Apple's iPhone business be interpreted in terms of YoY revenue growth?
And what would happen if sales end up less than flat? Is that not a realistic possibility?
You can say that Apple shares have intrinsic value because of its dividends but no speculation value (except maybe from shorting) and hence are of no intrest to the gamblers on the stock market.
All of those are possibilities, and yet, Apple still hasn't reduced iPhone prices, which is always on the table, is still generating massive profits, and still has that massive cash stockpile.
What will Huawei do when they hit headwinds?
Please take a look a the 'old' P20 Pro and tell me how it compares to the 'new' XR. When you are done with that, move onto the Mate 20 Pro.
How will you squeeze x3 or x5 optical zoom out of that state of the art machine? Have you seen why those phones are leading the pack in so many areas? You do realise that the top players mix and match OLED and LCD at the top end too, don't you?
Pricing is one of the biggest reasons Apple is flat on unit sales. No one is 'obsessed' with it but to ignore it wouldn't make a lot of sense.
In so many areas. Yes. To every country what it deserves ! Exynos to lower races, Snapdragon to higher races. Omitting that, you must go waaay back to the ABC of rational thinking before opining on technology matters...
With the market speaking so loudly for itself, 'opining' isn't really necessary. Ignore it if you wish.
How does being locked out of one of the world's largest smartphone markets count as a headwind in your book?
Why not try applying that kind of headwind to Apple and then comparing the two to see who comes off better?
Huawei will possibly ship over 200,000,000 handsets and bring in over $100 billion in revenue this year. And handsets aren't even its core business. While Huawei does do consumer electronics just like Apple, its reach into core critical technologies (like 5G) goes far deeper than Apple's.
Take the recently announced Ascend processors as one example of their plans:
The range will span from HPC use cases and scale through varying layers right down to 'nano' chips for use in small devices. All designed in house. I believe the 910 will see densities never before seen at 7nm.
Meanwhilr Apple has a very healthy and stable PC business.
Then it has a psychotically great and stable phone business.
Then it has has an amazing wearables business.
Then it has an pustsnding services business.
It also boasys a second second to none retail business where it not only profits off its own products, but third party offerings as well.
The iBooks, iTunes, and App Store business are the stuff Microsoft can only dream of.
The idea that MS is even mentioned in the same sentence as Apple is laughable.
If office tanks, all of Microsoft goes with it. Windows as well.
Apple would be fine for a very long time if any number of its businesses went through through a severe famine - and that’s not due to its savings. THats due to cash flow. Apples business is heavily diversified and healthy on all points. Not the same for ms, which bleeds money on pet projects to project the illusion of diversification and relevance.
Its hilarious to see how the the stock market is manipulated. One moment, it makes sense and logic rules the day. The next, it’s 2+2=-22.
I give this s week before people realize there is no actual money in this error.
Its similar to google when people were giving google free money for no reason. It was a terrible investment. A company good at selling online ads. Then blew money like toilet paper on everything else. They would have tanked had an ignorant public not been so naive as to throw money at them.
Tjrn you hsve apple. They could go private and still hand the free money people a big blow. But they’re public and it’s like people don’t know what’s actually available to them.
In reality, Apple is worth over twice what it was a couple months ago.
No no other company has ever created and sustained their type of growth with their type of reliability and trust factor with how they handle business - never going in blind. Never taking stupid risks, but calculated ones. And having it pay off.
Lets see see how this plays out by next Friday.
Going to be a a fun ride.
Can Apple buy itself and go private?
apple sure don’t need outside investors to fund ny project like many company.
No. It can't buy itself and in doing so make itself private.
Yup.
Apple buying up all the shares will not make it a private company, because shareholders do not 'own' the company. All that a share gives you is a right to a proportion of any dividend. People buy shares to get a dividend, or to sell the share at a later date for profit. No company in its right mind would sell chunks of company ownership because that would give people who have no business running a business a say in how that business is run. And folk wouldn't want a piece of the company because then they might be liable for stuff that is essentially out of their control.
However, the share price does influence the perceived worth of the company and so a high share price is very valuable if you want to sell your company to a group of investors. Likewise, shareholders can try to influence how the business is run by clubbing together and getting the directors to do something. If it works it's not because the shareholders are the owners, it is because the publicity fallout from this sort of thing will get the board to change their minds.
However, if you look at some building societies, they are actually owned by the members, and even then they can't influence the board into doing stuff they want doing.
So what is the point of Apple retiring the shares? Cost of equity.
The reason for selling shares in the first place is to raise capital. If you're already sitting on a mountain of cash then it there is no need to sell shares in your company. If, like Apple, you have shares in the field AND a mountain of capital, then those shares are actually costing you money because you are expected to pay a dividend on them.
So it could be Apple is retiring shares because they don't need the capital and the shares are costing them money they don't need to spend.
Any good college level Business Law text will tell you that common shareholders are owners of a respective portion of the corporation and they do have a say in the management of the corporation via (and solely) through their right to vote their shares towards the election of the board of directors. The same text will tell you that owners of a corporation are only liable up to the total value of their shares as opposed to a sole proprietorship or partnership where the owners can be liable beyond the value of their company.
How does being locked out of one of the world's largest smartphone markets count as a headwind in your book?
Why not try applying that kind of headwind to Apple and then comparing the two to see who comes off better?
Huawei will possibly ship over 200,000,000 handsets and bring in over $100 billion in revenue this year. And handsets aren't even its core business. While Huawei does do consumer electronics just like Apple, its reach into core critical technologies (like 5G) goes far deeper than Apple's.
Take the recently announced Ascend processors as one example of their plans:
The range will span from HPC use cases and scale through varying layers right down to 'nano' chips for use in small devices. All designed in house. I believe the 910 will see densities never before seen at 7nm.
Locked out; sad. Huawei should have thought about that before they were caught spying.
China is an authoritarian government ruled by a President for life, that not only spies on its citizens at every juncture in their lives, they also mete out social scores that determine how you can interact in everyday life. Then of course, there is that fact that they are placing communist party members into the homes of the Uyghur minorities; how fucked up is that to have to house a fucking spy.
"China’s Ambassador to the U.S. has threatened retaliation if Washington sanctions Beijing over human rights abuses in the Xinjiang Uyghur Autonomous Region (XUAR), drawing condemnation from observers who say officials responsible for the violations must be held to account for their actions.
Beginning in April 2017, Uyghurs accused of harboring “strong religious views” and “politically incorrect” ideas have been jailed or detained in political re-education camps throughout the XUAR, where members of the ethnic group have long complained of pervasive discrimination, religious repression, and cultural suppression under Chinese rule."
Huawei isn't doing anything close to $500 ASP on phones, so no, not anywhere close to $100B revenue either.
Apple at 200 million phones and an ASP over $700 would be at least $140B in revenue in a year, and of course, that's only 60% of their revenue.
Microsoft has a P/E ratio of 45 and Apple has a P/E ratio of 15.
Apple and Microsoft have similar margins and Apple had better growth in 2018. Apple makes 2.5x more revenue and 3x more profits. So, why are Microsoft shares valued at 3x Apple’s? Because investors are morons.
In reality Microsoft is worth ⅓ the value of Apple.
Because Microsoft is diversified with recurring revenue streams which Wall Street loves. With Apple if iPhone sneezes the entire company gets a cold.
So when did the iPhone sneeze? I must have missed that. The only thing I’ve heard are the predictions of analysts based on supply chain reports which Tim Cook has consistently advised against using to provide meaningful data about Apple. So remind me, when did the iPhone sneeze and give the entire company a cold? In your wet dreams?
Reality doesn't matter. It's about perception. The iPhone is approximately 66% of Apple's gross revenue. And Apple announcing that they're no longer going to break out iPhone units sales is sending the message, correct or not, that they expect declines in unit sales. Wall Street doesn't like a lack of transparency and in that regard, I don't blame them. Combine that with the insanity of believing supplier chain complaints and that's a recipe for killing the stock and that's if the stock is not being manipulated.
Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?
On the Mac side, Apple's price hikes combined with the inability to replace the battery, memory and storage as well as the fact that so many people don't really need a computer anymore is going to continue to affect sales, but the Mac is only about 10% of Apple now anyway. Apple probably thought they could replace Mac sales with iPad sales, but that's only about 8% of Apple. While I realize that Apple has never wanted to be the low-end, low-margin provider, I think the high salaries paid to Apple managers and executives has completely warped their perception of what most people are willing and able to spend, especially for a machine that can't be upgraded after purchase. A 15" MBP now starts at $2400 and tops out at $6700. That's ludicrous. The MBA starts at $1000 at tops out at $2600. The Mini tops out at $4300. $5K for the 27" 5K Retina iMac (topping out at $13,200)? IMO, this is either desperation to keep revenue high or unbelievable arrogance.
There is of course, the third option: you have the details wrong.
Let's begin with the most obvious stumble (the real drop off the cliff is that Apple actually sells phones at a range of prices, but that's so obvious it doesn't really need covering):
Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?
Er, no. Apple doesn't expect that because no one has ever done that. What happens is that on each new release, Apple gets picks up customers from other platforms, but also gets a massive boost from people with folk with much iPhones much older than two years. I have just replaced my iPhone 6s, which means I missed out on the 7 and the X. The assumption that Apple thinks folk update their phone every two years is laughable. Which brings me to your other point:
Yes, the price. And here again, the problem is narrow thinking. Saying that no one would buy a $1000 phone is a bit like saying no one would buy a house for $300,000 or a $30,000 car. Clearly they will, because I've seen houses and cars that cost several times that amount. So how do they do it? Well, I'm going to clue you in, but you have to keep it under your hat because I'm thinking of taking out a patent on the whole idea.
Ready?
This is going to amaze you, but people don't hand over the whole amount for houses and cars all at once. They pay it off in chunks. Buying a $1000 iPhone (which, by the way, is not the most expensive smart phone on the market) is best done on the Apple payment scheme: they throw in AppleCare and you can change the phone after a year if you want. Oh, and it's interest free, so if you're paying the whole cost up front then you're doing it wrong.
But that's kind of an aside. The point is that folk have been saying Apple gear is insanely expensive for as long as I can remember, and for as long as I can remember, they've been shifting it. So that leads me to believe that Apple understands basic economic theory better than anyone here who comments on it. All this braying about Apple pricing always misses one vital piece of information: Apple's demand curve.
This little bit of paper sitting on Tim Cook's desk will show you is that the demand for Apple kit is comparatively inelastic: movements in price have fairly negligible effects on demand. If they increase the price, the sales will not drop significantly.
But far more importantly, dropping the price will not actually produce a significant increase in sales, and this increase may not be enough to cover the price drop.
So why is Apple's demand inelastic? Simply because the combination of hardware and software is perceived as unique in a very crowded market.
The details aren't wrong. You are interpreting things wrong.
There are pricing ceilings on everything. Financing (including interest free) also has ceilings, or do you think someone will be willing to take on financing to pay for a phone over 5 years when it will be upgraded before it is paid off?
The increasing cost of iPhones (and every other phone in the same price band) is taking users one step further up to their individual ceilings.
You are taking his 1,000 dollar point completely out of context. He is speaking in general terms. We already know people buy 1,000 dollar phones every year. The point is those people aren't most people and three or four years of flat sales is telling in itself.
The higher the price the harder the sale in high numbers, even with financing and upgrade options but that ceiling becomes ever nearer or you are hitting it. And if the cheaper options mean sacfricing features or getting an older iPhone, then the sale is equally hard.
People argued that users were on longer upgrade cycles (provoked in part by pricing itself) and that is probably another reason while sales flattened, but how many people do you think are still using iPhone 6?
But that argument doesn't take into account the vast potential pool of Android users that are there for the taking, right? 80% of the market. 1,000 dollar Android phones sell in the millions even while they are a fraction of the 80%. Why isn't Apple able to take a slice of that premium Android Pie (sic)? Why aren't people switching from Android in enough numbers to move the Apple needle off 'flat'? It's clearly not price for those users. It's value (among other things). The longer upgrade cycle really isn't doing much except allowing Apple tread water.
Apple is on an 's' cycle - through its own choice - which only makes the sale look worse when compared to rival flagships that are pushing the pedal to the metal. So while Apple takes a breather on innovation and brings the A12 and little else to the table while still including a 5W charger in the box, others are innovating on everything and showing no signs of slowing down. That means 'new' tech is flowing down the lines into the middle ground at an incredible pace and upping the value proposition of those phones.
How can you say that movements in price have a 'fairly negligible effect on demand? Apple doesn't break down unit sales on price.
Price is the number one factor for most people when it comes to buying a Phone. The iPhone X hit new price highs for Apple. It was the 'most popular' 2018 iPhone for Q1, 2 and 3. But Q4? Estimates said demand for the 'most popular' iPhone dropped off sharply in Q4. Far more quickly than any other Apple flagship from previous years in the same quarter. But 'most popular' isn't truly quantifiable is it?
That inelastic demand you are referring too is new found. From 2015, and really means FLAT but that inelasticity is shorn up at the other end of the spectrum. The middle and the low end. If Apple hadn't widened its spread in 2017, do you think things would have remained flat or that demand would have dropped? There was no such inelasticity in demand up to 2015.
You say that if they increase the price, 'sales will not drop significantly'. Given that prices on the new phones have inched up with regards to last year, shouldn't we be holding off on that kind of affirmative conclusion until at least September next year? Or are you happy to take Apple's traditional blowout quarter and use it as a guide for the whole year? No one can possibly know -today- if what you are claiming will prove true or not.
Price elasticity doesn't state that there isn't a ceiling on price. All it says is that some products are relatively unaffected by price changes when compared to others, and nothing you've said actually disproves that. This is why Apple can increase the price of the phone and knows that the amount of sales that they will lose will more than make up for the increase in revenue.
Secondly, as I pointed out in my post, the whole argument falls flat because Apple sells phones at various price points.
You are taking his 1,000 dollar point completely out of context.
He said folk will not upgrade a $1000 every two years. There's no context.
That inelastic demand you are referring too is new found. From 2015, and really means FLAT but that inelasticity is shorn up at the other end of the spectrum. The middle and the low end. If Apple hadn't widened its spread in 2017, do you think things would have remained flat or that demand would have dropped? There was no such inelasticity in demand up to 2015.
Price inelasticity is new found? Nope. Apple products have always been considered irreplaceable by the most valuable and price insensitive areas of the population, and Apple tends to leave everyone else to the Android manufacturers. Can't say that's right or wrong, but they seem to make a lot more money than everyone else. So in general, Apple products, across the whole range enjoy greater price elasticity than the competition, which is why the competition fights like dogs at the lower end of the market, and Apple would rather not.
But let's go back to the real point here. The problem you have is the one I have highlighted again and again. Apple sells a range of phones at a range of prices. But oddly enough, everyone always homes in on the most expensive flagship phone as if this is the only one available. Even Gruber has stated that the XR is better deal because it's almost as good and way cheaper. Apple has even said that the XR is it's best selling phone. So the problem isn't that Apple's phones are too expensive. The problem is that folk want the top of the range phone, but want to tell Apple how much they want to pay for it.
Ah, do want to look at one more point:
You say that if they increase the price, 'sales will not drop significantly'. Given that prices on the new phones have inched up with regards to last year, shouldn't we be holding off on that kind of affirmative conclusion until at least September next year? Or are you happy to take Apple's traditional blowout quarter and use it as a guide for the whole year? No one can possibly know -today- if what you are claiming will prove true or not.
Riigggghty-ho then. So what you're basically asking us to wait long enough to give you a better chance of being right. Got it.
Well, we could do that, but I'm not sure I see the point. Because the thing about Apple is that it will not stick doggedly to its plans in the face of changing conditions. They never have. They won't keep increasing the price of the phone until they are not bringing in enough revenue to make up for the loss in sales units. The fact is they make these adjustments all the time, but because you're so focussed on the phone at the very top of the range, you completely miss that folk are buying the cheaper phones too.
I am certainly not asking anyone to wait for a better chance of being right. I have been proven right already. Flat sales says a lot. The market has spoken. Growth ended in 2015.
That in spite of Apple widening its model spread and now releasing three new models each year.
I have never focussed solely on the premium priced phones and was probably the first person here to highlight the shift in business model as a result of the 2017 iPhone refresh. To the point that I praised Apple for trying that option. All increasing prices has done is increase ASP, (which the vast majority of buyers have no interest in anyway) and help to stifle growth which remains flat.
"He said folk will not upgrade a $1000 every two years. There's no context."
This is what he really said:
"Declines in iPhone sales wouldn't surprise me one bit. At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices. Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?"
There is plenty of context there if you had wished to see it.
OK let's see that context then:
The key point of the "context" is that sentence: "Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?"
Otherwise why they keep launching iPhones at $1000 range?
Because they can !.. Because they are Apple and they can do that!... They can control the upper end of the competition that way. They give the competition a false target to struggle with, they throw a bait in front of the competition to keep them busy devouring. While the competition lay out the blueprints of 16-camera OLED phones, Apple silently launches a 1-camera state-of-the art LCD iPhone ! And novices like you jump over that 16-camera beast like a thing and applaud the "innovation"! Your reading of contexts is totally wrong because you are new to Apple culture. Think about these to understand the context instead of obsessing yourself with high-prices: why Apple has put the same A11 in the 8 series and the same A12 in the XR? The context lies there...
Please take a look a the 'old' P20 Pro and tell me how it compares to the 'new' XR. When you are done with that, move onto the Mate 20 Pro.
How will you squeeze x3 or x5 optical zoom out of that state of the art machine? Have you seen why those phones are leading the pack in so many areas? You do realise that the top players mix and match OLED and LCD at the top end too, don't you?
Pricing is one of the biggest reasons Apple is flat on unit sales. No one is 'obsessed' with it but to ignore it wouldn't make a lot of sense.
Flat sales doesn't seem to have impacted revenue, which is the metric that companies are actually interested in, not to mention margin.
You enjoy your unit sales while you can.
But that leads onto what markets love so much: YoY.
If unit sales remain flat with some of the current headwinds, how will Apple's iPhone business be interpreted in terms of YoY revenue growth?
And what would happen if sales end up less than flat? Is that not a realistic possibility?
All of those are possibilities, and yet, Apple still hasn't reduced iPhone prices, which is always on the table, is still generating massive profits, and still has that massive cash stockpile.
What will Huawei do when they hit headwinds?
I fear Cook will hold out with high prices until it's too late, a-la Apple circa 1996. The massive profits will only decline if unit sales start to fall, because Cook will attempt to raise prices to compensate resulting in further sale declines.
apple sure don’t need outside investors to fund ny project like many company.
Absolutely not, no way. Apple is way too expensive to buy itself out and go private.
For many, Apple's biggest attraction has been its horde of cash... They do have a nice operating profit. But that's at far more risk from competition or a manufacturing/design error than a Microsoft. (MS screws up all the time but all they have to do publish another update -- but Apple has a "--Gate" with every new release and nobody knows if or when one of them is going to stick.)
Product wise Apple has always had all over Microsoft. But Microsoft has always had a better business model.
I’ll clarify what the MS business model is; it is to get a monopoly in a major segment of personal computing and exploit that monopoly. Bill Gates spoke about a natural PC OS monopoly in the 80s and MS has it on the desktop with Windows. That led to the MS Office monopoly and now that supports subscriptions to Office. The financial analysts understand this. They know that MS has desktop monopolies in big companies (including the ones they work for) and in government. - Now to Microsoft’s screw ups. They are sometimes terrible. Here are just a few of them.
* But very important; many companies and governments are locked into MS products no matter how bad the products can be. For the enterprise, overall, Mac OS or Linux are not replacements for Windows and the MS ecosystem. - MS may sometimes release junk but companies/government are dependent on MS products. That = monopoly and that = a steady stream of $.
** The appeal of Apple’s products is not understood by most financial analysts. Add to that the horde of uninformed Apple haters who don’t have a clue of the preferences of Apple product buyers which keeps the theme of much of tech journalism; spreading ignorance about Apple and its customers. - A US financial network, CNBC, will often have talking heads who claim that Apple is doomed because everyone is going to switch to cheap Android phones and watches. This has a 10 year old level of understanding of Apple tech and its customers but it doesn’t matter. Ignorance makes money with views of tech journalist articles/videos and with the shorting of Apple stock.
apple sure don’t need outside investors to fund ny project like many company.
Absolutely not, no way. Apple is way too expensive to buy itself out and go private.
For many, Apple's biggest attraction has been its horde of cash... They do have a nice operating profit. But that's at far more risk from competition or a manufacturing/design error than a Microsoft. (MS screws up all the time but all they have to do publish another update -- but Apple has a "--Gate" with every new release and nobody knows if or when one of them is going to stick.)
Product wise Apple has always had all over Microsoft. But Microsoft has always had a better business model.
I’ll clarify what the MS business model is; it is to get a monopoly in a major segment of personal computing and exploit that monopoly. Bill Gates spoke about a natural PC OS monopoly in the 80s and MS has it on the desktop with Windows. That led to the MS Office monopoly and now that supports subscriptions to Office. The financial analysts understand this. They know that MS has desktop
monopolies in big companies (including the ones they work for) and in
government.
I would agree that in the 80's and 90's MS business practices make Office very popular. But I don't think that 20 years later it's the reason still popular. You just have to see the alternatives, including iWorks, and you'll see why still the best suite of business applications in the market. Even Apple have made something as good as MS Office.
- Now to Microsoft’s screw ups. They are sometimes terrible. Here are just a few of them.
And there are many others, same as MS and every other company.
*
But very important; many companies and governments are locked into MS
products no matter how bad the products can be. For the enterprise,
overall, Mac OS or Linux are not replacements for Windows and the MS
ecosystem. - MS may sometimes release junk but companies/government are dependent on MS products. That = monopoly and that = a steady stream of $.
Companies and goverment are "locked" with MS products because at many times it's the best option. Neither Apple, Google or other company have an ecosystem as strong as MS. If MS releases junk as you said, Google or Apple could took advantage of it. For example, looks how iPhone and iPad did. But a part from that, neither desktops or server solutions for Apple have been able to enter the enterprise. Maybe MS is doing something right, don't you think?
**
The appeal of Apple’s products is not understood by most financial
analysts. Add to that the horde of uninformed Apple haters who don’t
have a clue of the preferences of Apple product buyers which keeps the
theme of much of tech journalism; spreading ignorance about Apple and
its customers. - A US financial network, CNBC, will often have
talking heads who claim that Apple is doomed because everyone is going
to switch to cheap Android phones and watches. This has a 10 year old
level of understanding of Apple tech and its customers but it doesn’t
matter. Ignorance makes money with views of tech journalist articles/videos and with the shorting of Apple stock.
There are articles for about MS, Google, FB and many other tech companies about how they are doomed for different reasons. It's not only for Apple.
9secondkox2 said: Azure is lame. As is the rest of Microsoft’s portfolio not named Office. They’re actually good at that.
Outside of people giving them money, Office is really Microsoft’s business. Once that cracks, they’re in worse trouble than if iPhone does for Apple.
But, most of the corporate world runs off lame, and I think it would take a miracle to break the grip of Office.
Rayz2016 said: Secondly, as I pointed out in my post, the whole argument falls flat because Apple sells phones at various price points.
But, that range has dramatically narrowed and moved up in price by a good bit. The only way to get a lower priced phone now, is to buy a model from years back (which will limit your useful lifetime).
cornchip said: And really, all there is to Office is Excel. Nothing about anything else in that suite is worth anything to anyone. Word. SUCKS. PowerPoint. SUCKS. The only reason they get used is because they’re already on the computers they use for Excel.
If Apple made Numbers on par with Excel and perhaps (less importantly) improved pages a little, they would absolutely CRUSH office. And Windows. And MSFT. It’s gotta happen at some point right?
Sure, they suck. But, what has ever stopped the corporate world from using completely sucky stuff because other corporations use the same sucky stuff? It's the same in other industries as well. For example, what CAD program does nearly every company use, despite only rather recently adding functionality (2014, I think) that I was using in far better CAD programs in the late 90s? Or, how many big corporations use/used Lotus Notes for email? Or... how many companies use Windows when Macs have been better for decades?
avon b7 said: Pricing is one of the biggest reasons Apple is flat on unit sales. No one is 'obsessed' with it but to ignore it wouldn't make a lot of sense.
Yep, rightly or wrongly, Cook wants to keep the ASP up and the quarterly profits climbing... and he's willing to trade off other things to get that. And, it will keep working... until it doesn't anymore. My hunch is that we're getting pretty near that point, and that isn't counting on things like economic collapse.
bb-15 said: I’ll clarify what the MS business model is; it is to get a monopoly in a major segment of personal computing and exploit that monopoly.
How does being locked out of one of the world's largest smartphone markets count as a headwind in your book?
Why not try applying that kind of headwind to Apple and then comparing the two to see who comes off better?
Huawei will possibly ship over 200,000,000 handsets and bring in over $100 billion in revenue this year. And handsets aren't even its core business. While Huawei does do consumer electronics just like Apple, its reach into core critical technologies (like 5G) goes far deeper than Apple's.
Take the recently announced Ascend processors as one example of their plans:
The range will span from HPC use cases and scale through varying layers right down to 'nano' chips for use in small devices. All designed in house. I believe the 910 will see densities never before seen at 7nm.
Locked out; sad. Huawei should have thought about that before they were caught spying.
China is an authoritarian government ruled by a President for life, that not only spies on its citizens at every juncture in their lives, they also mete out social scores that determine how you can interact in everyday life. Then of course, there is that fact that they are placing communist party members into the homes of the Uyghur minorities; how fucked up is that to have to house a fucking spy.
"China’s Ambassador to the U.S. has threatened retaliation if Washington sanctions Beijing over human rights abuses in the Xinjiang Uyghur Autonomous Region (XUAR), drawing condemnation from observers who say officials responsible for the violations must be held to account for their actions.
Beginning in April 2017, Uyghurs accused of harboring “strong religious views” and “politically incorrect” ideas have been jailed or detained in political re-education camps throughout the XUAR, where members of the ethnic group have long complained of pervasive discrimination, religious repression, and cultural suppression under Chinese rule."
Huawei isn't doing anything close to $500 ASP on phones, so no, not anywhere close to $100B revenue either.
Apple at 200 million phones and an ASP over $700 would be at least $140B in revenue in a year, and of course, that's only 60% of their revenue.
Nice try though.
Caught spying? No. In fact they have denied everything thrown at them and are still waiting to see actual evidence of the accusations.
On the other hand, the US has been caught spying, many times, and on its, erm, allies! I wonder how Merkel feels when the US urges her to not allow Huawei to bid for 5G tenders, knowing that she herself was a victim of US spying. And thanks to Snowden, we also know Huawei was also in the sights of US spying activities.
You consistently equate China to Huawei. Huawei is a Chinese company, not China.
Comments
How will you squeeze x3 or x5 optical zoom out of that state of the art machine? Have you seen why those phones are leading the pack in so many areas? You do realise that the top players mix and match OLED and LCD at the top end too, don't you?
Pricing is one of the biggest reasons Apple is flat on unit sales. No one is 'obsessed' with it but to ignore it wouldn't make a lot of sense.
Bollocks, it’s actually the exact opposite: https://www.investopedia.com/ask/answers/042015/what-rights-do-all-common-shareholders-have.asp
Anyway, the narrative that apple is to expensive and needs to this and that is a story the old as the company. All the hot takes of doom and gloom are hilarious.
You enjoy your unit sales while you can.
If unit sales remain flat with some of the current headwinds, how will Apple's iPhone business be interpreted in terms of YoY revenue growth?
And what would happen if sales end up less than flat? Is that not a realistic possibility?
What will Huawei do when they hit headwinds?
How does being locked out of one of the world's largest smartphone markets count as a headwind in your book?
Why not try applying that kind of headwind to Apple and then comparing the two to see who comes off better?
Huawei will possibly ship over 200,000,000 handsets and bring in over $100 billion in revenue this year. And handsets aren't even its core business. While Huawei does do consumer electronics just like Apple, its reach into core critical technologies (like 5G) goes far deeper than Apple's.
Take the recently announced Ascend processors as one example of their plans:
https://www.datacenterdynamics.com/news/connect-2018-huawei-introduce-ai-chip-range-called-ascend/
The range will span from HPC use cases and scale through varying layers right down to 'nano' chips for use in small devices. All designed in house. I believe the 910 will see densities never before seen at 7nm.
https://mybroadband.co.za/news/technology/279227-huawei-as5cend-910-ai-chip-unveiled-the-greatest-computing-density-on-a-single-chip.html
Nice general write up here:
https://www.sdxcentral.com/articles/analysis/huawei-shakes-up-ai-status-quo-huawei-connect-2018/2018/10/
China is an authoritarian government ruled by a President for life, that not only spies on its citizens at every juncture in their lives, they also mete out social scores that determine how you can interact in everyday life. Then of course, there is that fact that they are placing communist party members into the homes of the Uyghur minorities; how fucked up is that to have to house a fucking spy.
https://www.rfa.org/english/news/uyghur/sanctions-11292018165248.html
"China’s Ambassador to the U.S. has threatened retaliation if Washington sanctions Beijing over human rights abuses in the Xinjiang Uyghur Autonomous Region (XUAR), drawing condemnation from observers who say officials responsible for the violations must be held to account for their actions.
Beginning in April 2017, Uyghurs accused of harboring “strong religious views” and “politically incorrect” ideas have been jailed or detained in political re-education camps throughout the XUAR, where members of the ethnic group have long complained of pervasive discrimination, religious repression, and cultural suppression under Chinese rule."
Huawei isn't doing anything close to $500 ASP on phones, so no, not anywhere close to $100B revenue either.
Apple at 200 million phones and an ASP over $700 would be at least $140B in revenue in a year, and of course, that's only 60% of their revenue.
Nice try though.
Bill Gates spoke about a natural PC OS monopoly in the 80s and MS has it on the desktop with Windows. That led to the MS Office monopoly and now that supports subscriptions to Office.
The financial analysts understand this. They know that MS has desktop monopolies in big companies (including the ones they work for) and in government.
- Now to Microsoft’s screw ups. They are sometimes terrible. Here are just a few of them.
https://arstechnica.com/gadgets/2018/10/microsoft-suspends-distribution-of-latest-windows-10-update-over-data-loss-bug/
https://arstechnica.com/gadgets/2018/11/microsoft-explains-one-azure-authentication-outage-as-another-one-happens/ ;* But very important; many companies and governments are locked into MS products no matter how bad the products can be. For the enterprise, overall, Mac OS or Linux are not replacements for Windows and the MS ecosystem.
- MS may sometimes release junk but companies/government are dependent on MS products.
That = monopoly and that = a steady stream of $.
** The appeal of Apple’s products is not understood by most financial analysts. Add to that the horde of uninformed Apple haters who don’t have a clue of the preferences of Apple product buyers which keeps the theme of much of tech journalism; spreading ignorance about Apple and its customers.
- A US financial network, CNBC, will often have talking heads who claim that Apple is doomed because everyone is going to switch to cheap Android phones and watches. This has a 10 year old level of understanding of Apple tech and its customers but it doesn’t matter.
Ignorance makes money with views of tech journalist articles/videos and with the shorting of Apple stock.
Here is a list from Apple,
https://www.theverge.com/2018/10/23/18016512/apple-icloud-find-my-iphone-service-disruption-outage
https://arstechnica.com/information-technology/2017/11/macos-bug-lets-you-log-in-as-admin-with-no-password-required/
And there are many others, same as MS and every other company.
Companies and goverment are "locked" with MS products because at many times it's the best option. Neither Apple, Google or other company have an ecosystem as strong as MS. If MS releases junk as you said, Google or Apple could took advantage of it. For example, looks how iPhone and iPad did. But a part from that, neither desktops or server solutions for Apple have been able to enter the enterprise. Maybe MS is doing something right, don't you think?There are articles for about MS, Google, FB and many other tech companies about how they are doomed for different reasons. It's not only for Apple.
But, that range has dramatically narrowed and moved up in price by a good bit. The only way to get a lower priced phone now, is to buy a model from years back (which will limit your useful lifetime).
Sure, they suck. But, what has ever stopped the corporate world from using completely sucky stuff because other corporations use the same sucky stuff?
It's the same in other industries as well. For example, what CAD program does nearly every company use, despite only rather recently adding functionality (2014, I think) that I was using in far better CAD programs in the late 90s? Or, how many big corporations use/used Lotus Notes for email? Or... how many companies use Windows when Macs have been better for decades?
Yep, rightly or wrongly, Cook wants to keep the ASP up and the quarterly profits climbing... and he's willing to trade off other things to get that. And, it will keep working... until it doesn't anymore. My hunch is that we're getting pretty near that point, and that isn't counting on things like economic collapse.
Embrace. Extend. Extinguish.
On the other hand, the US has been caught spying, many times, and on its, erm, allies! I wonder how Merkel feels when the US urges her to not allow Huawei to bid for 5G tenders, knowing that she herself was a victim of US spying. And thanks to Snowden, we also know Huawei was also in the sights of US spying activities.
You consistently equate China to Huawei. Huawei is a Chinese company, not China.
As for revenues, wrong again:
https://www.cnbc.com/2018/11/30/huawei-says-it-will-hit-100-billion-in-revenue-for-2018.html