radarthekat

cropr said:

jameskatt2 said:

Apple Messages is one Apple service that is extremely sticky.

One reason is that it works on all of your Apple devices - iPhones, iPads, Macs. If you call or video-call a person with your iPhone to their iPhone, they can seamlessly answer on the iPhone, iPad, or Mac.  Apple's system will route through the internet and will do it with end-to-end encryption. You can't do that why any other messaging system.  

This is only true if you live in a country with a considerable iPhone market share.  In my home country  iMessage is nothing more than a simple SMS texting app.  The chance that my correspondents do not have an iPhone is too high, so I don't bother to use the additional features iMessage have on top of a normal SMS service.

Likewise, in much of the world Amazon's Anytime messaging service will not be able to provide the commerce capabilities that make it profitable to Amazon.  I'm living in the Philippines and pretty much only us expats even know Amazon exists.  There are copycat online marketplaces left and right, however.  

XStylus said:

Hooooooly crap am I glad to have read this article. I was just about to make a very expensive mistake. Was about to retire my Galaxy S5 and jump ship to an iPhone. Not anymore.

You'll have an easier time prying away a gun from a young Charlton Heston than foisting an un-adblockable device upon me. I'd rather suffer the throes of internet withdraw than put up with a toxic cesspool of distraction engineered, attention hijacking, consciousness derailing, apoplecticly infuriating internet advertising. HELL. NO.

What you're really saying is that you don't want to use Safari, because in Safari on iOS you'll still have all the ad-blocking capability, plus the world's faster mobile browser.  But instead, you'll accept an Android phone, with its lack of privacy controls (relative to iPhone), poorer security, far more malware, and general inability to be updated beyond the major Android release each handset ships with.  Okay.  Enjoy. 

It's Apple earnings time.  Let's run the mind experiment again.  Maybe some analyst somewhere will finally gain some perspective.

Apple Mind Experiment

A mind experiment that should be performed by these analysts who see themselves as capable of running the show better than Cook would be to imagine the company as merely a black box.  Inside the box, out of sight and unnamed, resides a management team.  The company makes some products and plays in some markets, of which you are not aware.  You also don’t see the stock price.  And you aren’t aware that there was a CEO who died and was replaced with another member of the management team. 

The only information you’re given is the financial metrics, total revenues and profits, cash and cash equivalents, etc, but nothing about the stock performance, with the provided financial numbers presented for each of the last five years.  Next to this information you are given the same information about other companies.  You don’t know that these other companies are Google and Amazon, or take your pick of companies to compare against.  

Your job is to determine, with just the pertinent business metrics you’ve been handed, which company you would want to own a portion of; company X (AAPL), company Y (GOOGL), or company Z (AMZN).  

Pretty sure most would laugh company Z right out of the competition.  

And you’d likely think of company X that it must have some pretty great management and must be in some great lines of business, which go together, as it’s management that determines what businesses a company plays in.  You’d think whomever these guys are, the decisions they made over the five years, whether some were mistakes and others were great, in aggregate turned out pretty darned well.  And it’s therefore likely this same management is making good decisions today and will continue to do so in the future, with vastly more information and expertise in their field than those outside the company who so easily second-guess them.  

This is the mind experiment I want Wall St. to run through its collective skull.

Now imagine if Apple forced the issue by ending its reporting of unit sales numbers for individual products. If the company reported revenue in three categories (hardware, software, services) and total profit and gross margins for the entire company, not broken out. The stock might take an initial huge hit (which the company could take advantage of with a big buyback sweep) but after things settle down the analysts would be forced to focus their attention on what’s actually important about a business; how, in aggregate, through whatever set of decisions management has made, the company is doing in terms of revenues and earnings. Would Apple still get a multiple in the teens versus the 26x multiple assigned to CLX, a maker of bleach? Or the 27x multiple assigned to KO, a maker of soft drinks. By the way, something on the order of 80-90% of the population of the world who’s ever going to drink soft drinks already does, and so KO and PEP are in exactly the position the analysts dread Apple to be in; they are reliant upon repeat annual consumption by existing customers and their ability to convert customers from the competition’s brand. And yet, there it is, a 27+ multiple on KO.  So if you want to really address what the fanboys are all about, you’ll run the mind experiment and then address these comparisons.

So many articles about Apple's earnings refer to growth, and mention prominently any decline in growth, and attribute that to saturated markets.  That's fine, big companies have declining growth rates in saturated markets.  The trouble is, a leveling out for Apple, versus any other maturing company on the planet, somehow in analyst's minds implies the end of the company. They believe, for some reason, that ongoing replacement sales and capturing customers from the competition are unworthy of any multiple on the stock. They must think the company in this scenario is worth zero, because not one of them will put forth a reasoned valuation relative to other businesses whose business has leveled off after a period of growth. BMW still sells cars at premium prices even in a world automobile market that isn't growing at the rate Apple's markets are still growing. Coach and other high-end fashion products companies still sell their wares at premium prices even in a world where functionally equivalent handbags sell at $40 at the local Sears. But they seem to believe they can second guess the future of Apple. And then they attribute to us investors all the wrong motivations for our angst. It's not about whether we think the iPad should have, or shouldn't have a USB port; it's that we see a very viable and valuable business, one that any of Apple's competitors would jump to switch places with, and we see that the value of that business and its future prospects are given short shrift by the very community (analysts) who are supposed to shed light on the topic.

polymnia said:

If I lost a client, I don't think I'd choose to air all this publicly. I'd rather update my portfolio to show new prospects what I did for my (soon-to-be) former client. There have to be lots of bit players in the tech world who'd love to work with the firm that engineered the graphics hardware that powered the first 10 years of iPhone's success. 

But it I suppose there are lots of stake-holders whose compensation is tied to stock performance. They are thinking short term, when a long view is probably better for the company as a whole. 

Then again, I'm a glass-half-full kinda guy. 

In the United States, a publicly held company must disclose any adverse material change in their business, in a timely manner.  I'd guess that same rule would exist in the U.K.  So Imagination would not have been able to just sit on the fact their largest source of revenue has given notice to decline to renew its contract.

"accelerate the path to cars being appliances that solve people's problems."

Then go back to Apple and build this...

The car of the future is already here.  It's called a Smartphone.  Think about it.  If you were to clear the slate, look at the modern world and ask yourself, how would I design a transportation system given existing and soon-to-come technologies, like autonomous driving, real-time availability scheduling. Route optimization, etc, no way you'd conclude there should be a car, or two, in every garage.  You'd create a technology/software infrastructure to allow individuals to call up the transportation they need (car, truck, van, etc) on-demand.  And it would show up wherever they are, or wherever they are going to be, when it's needed.  You'd be able to schedule transportation in advance, like the airport shuttles of yesteryear that you'd schedule a week in advance. Über pretty much killed that business, I expect.  

Or schedule recurring transportation, such as to take the kids to soccer practice and back.  In this case the transportation technology system might suggest a shared van service, that knows the schedules for local after school sports practice and offers up and constructs pick-up and drop-off routes based upon participation; a regular route to gather up the kids and deliver them.  Accommodation for security will be considered when children are being transported without accompanying parents, such as real-time tracking and a constant open line of communication, both audio and video streaming from the vehicle to parent's smartphones. 

The specific vehicle that arrives can be determined by number of passengers, whether you'll be transporting something large or just yourself, etc.  The notion of owning, maintaining, accommodating parking requirements of, insuring, etc, a personal vehicle, for many people, has already begun to feel like 'the old paridigm.'  

To create this infrastructure, you need route optimization software, that incorporates the real-time whereabouts of all vehicles in a local fleet. You need scheduling software.  You need to deal with remaining charge/range of each vehicle out in service to know when a vehicle can accommodate an additional requested or scheduled route without running out of juice.  You need to accommodate stand-by, where the vehicle drops someone off at a location and is requested to stand-by for an indeterminate time while the person goes into a store or bank to run an errand.  In short, you need a very sophisticated set of interacting technologies to accommodate smooth operation of a transportation network that provides near immediate responsiveness to a population's constantly fluctuating needs.

If I were Tim Cook, this is exactly the way I'd envision the future, and this is what I'd set out to create.  It's not so much about constructing vehicles yourself, but about getting sign-in from all vehicle manufacturers such that their vehicles can work within the envisioned transportation network.  And that means that people who do own vehicles could lend them into their local autonomous transportation fleet in order to earn money (this has already been suggested by Musk and makes sense for a maker of vehicles to accommodate, as it helps him sell more Teslas direct to consumers).  It means that new rental fleets will simply be staged in large metro areas, with one or more depots that the vehicles come back to for recharging, maintenance, cleaning, etc.  And that means that there's a path forward for the rental companies, because they already have staging areas for their existing fleets.  The big picture can be accommodated during a transition phase from the world we have today to a world where almost all transportation is shared and autonomous.  

Extend this to trucking, inter-city bussing, etc, and the whole thing becomes a future that Apple could play a major role in developing.  Without ever producing, on their own, a single vehicle.

Also key to this is that everything Apple needs to do to revolutionize transportation does not require Apple to do any work on autonomous driving, nor does Apple need to build a single vehicle model.  Nope, Apple will want to own the end user interaction used to summon and schedule transportation, and it'll want to own the route optimization algorithms and server side scheduling and dispatch.  And take a cut of every ride.  

There will need to be some tech in each car to pick up the user interaction that began on a rider's smartphone or Watch, once the car arrives to pick up the rider.  The car will need a voice interface to interact with the rider.  The car will need to constantly ping its whereabouts to the dispatch and scheduling servers, along with its charge level, so that the dispatch system can determine its next pick up and determine when it needs to exit the active fleet and return to a nearby depot for recharging or maintenance.  The car will need to contain sensors, like internal cameras, to monitor for left-behind packages, spilled coffee, etc, and report appropriately to riders or to dispatch.  The car will need streaming audio/video capabilities to stream to parents when children are riding without adult accompaniment.  All of this can be designed as a set of interfaces that automakers can implement in order to be compatible with Apple's dispatch and routing servers, and the vehicles might also be required to utilize Apple's mapping infrastructure.  

Once verified as able to serve a ride request, the car is handed details on the location of the rider, and the rider's destination, and it can then utilize its own autonomous driving capabilities to serve the request.  And all of this can integrate both driverless and human driven vehicles into the same service.  So as vehicles are developed that are licensed for autonomous operation, these can be added to an existing Uber-like fleet of human driven vehicles, both serving together to form a centrally requested and directed/dispatched swarm serving a metrolitan area.  Eventually, the human driven vehicles would all be replaced with autonomous vehicles, and the future will have arrived.