madan

lorin schultz said:

radarthekat said:

lorin schultz said:

To pick a nit:

Consistent gross margins don't tell me anything about changes to the affordability of products. One doesn't need to be a financial analyst to figure out that the price of a 15" MacBook Pro is substantially higher, even after inflation, than it was five years ago. If the reason for that isn't growing margins, then obviously costs have also increased. Maybe Apple has a problem with cost control and/or spending decisions?

Or maybe the ratio of costs to selling prices have remained steady for cutting edge technologies.  If it were milk or toasters we were talking about then I could understand your implication that input costs should not be increasing and perhaps even be going down.  But Apple is doing the same thing today as it was doing 10, 15, 20 years ago; developing new products with increasing performance and capabilities.  Seems that will always remain the same percentage of total costs.  

I hear you, except that price increases are accelerating compared to the past. Why are costs so much higher lately than they used to be?

It may well be that this is just how much it costs to make fancy-pants computers now. I'm neither qualified nor adequately informed to offer an opinion about what Apple should or could do. All I'm saying is the current approach is moving the income level required to be an Apple user even higher. Our middle-class household can no longer afford the products we used to buy on a three-year cycle. Maybe I need to just accept that and walk away. I hope not, though.

Soli said:

madan said:

Soli said:

madan said:

Soli said:

MacPro said:

I think this particular Samsung department will fold.

ߤ㠎ice!

I'm not a Samsung proponent at all and they can be pretty scummy but it's important to note that the same S-AMOLED screen in the X and XS/Max were touted * in this exact way * by Samsung about 5 years ago.  Most Apple fans poo-pooed it as inferior to IPS...until Samsung made it ready for prime time and Apple decided to jump ship from the IPS LCD in previous iPhones.

95% of phone/tablet screens come from Samsung.  They're very good at that.  Instead of mocking the technology, we should just realize that it needs more "time in the oven", so to speak, before Apple comes up with their own foldable concept.  A lot of bad AMOLEDs shipped for android before Samsung perfected the process and created a great screen.  A great screen...that current iPhones use to best effect.

Apple isn't stupid.  LG still isn't ready to create small AMOLEDs.  Samsung will be a partner for a while and if this technology becomes available for future products...Apple will use it.

1) Apple didn't move to OLED because Samsung phones were popular. They moved to OLED when newer technologies used with OLED made it possible for them to create the iPhone X.

2) As you note, most OLEDs come from Samsung and Samsung used most OLEDs which is why it was never going to be viable "5 years ago' for Apple to use OLEDs along their iPhone line.

3) Note that Apple used OLED displays in their Apple Watch over 3 years ago because it made the most sense for a variety of battery life and aesthetic reasons. Luckily, being such a small display and having a near existent volume compared to the iPhone in 2015 there was more than enough supply for Apple.

4) I also assume Samsung will be a core supplier for a fair while, if not indefinitely as one of several, as they have more experience with the tech and the foundries to make them now, but just like other components that Apple contracted Samsung manufacturer they will surely be marginalized as time goes on (just as new components from Samsung will likely get contracted out).

5) It wouldn't be smart for Apple to get beholden to a single vendor. This isn't an Apple v Samsung issue. It's an Apple as a client losing negotiating control from a contractor. The same applies for all contractors, even though not all are as reputable as others in certain arms of their business practices.

1. Did you even read what I posted?  Apple didn't move to AMOLED because Samsung presented it FIVE years ago.  They moved to it when it was ready and better than IPS LCD.  My point is clear...if this foldable screen does the same, Apple will move to that too.


2. Thanks for repeating my point.  That's exactly what I said.  Twice.


3. OLED made the most sense for the watch due to battery, size and shaping concerns.  I never referred to the watch.  I referred to the iPhone.  The article is about a PHONE/TABLET screen.

4.  Apple will continue to use Samsung as long as they have the best components.  The reason they moved to TSMC is because they had a functional 7 nm process and because they design their own SoC.  CPU & GPU.  They don't design their own screens.  And from the looks of it, since there aren't any rumors abounding about that possibility, they don't look like they will for any time.  Which means that the company capable of producing the best product, will get Apple's business.  And for the foreseeable future...that's Samsung.

5.  No one said they should.

Thanks for the 0 calorie reply.

Oh, I read what you wrote, which is I why I made a detailed reply pointing out issues with your premise.

PS: Obviously Apple does design their own screens, or are you actually trying to argue that Samsung came up with the notch and chin-less design for the iPhone X which they then shared with Apple? What you're probably referring to is Apple designing their own OLED display tech for the current lot of devices, but you'd still need to modify that statement to denote Apple is rumoured to be designing their own display tech -and- that they also designed their own tech to make Samsung's middling display tech function at Apple-level standards.

Mike Wuerthele said:

madan said:

Mike Wuerthele said:

madan said:

Marginal analysis has a lot of flaws that weren't taken into account in this article. For starters, MA assumes that items of comparable cost are taken into account, then the margins should match. Except that the average starting phone price today is higher, vis a vis salary increases, than the original iPhone-iPhone 5. Additionally, the average starting price for an Apple computer is also higher, for some models, vis a vis salary increases, than comparable models of just 3 years past. (ie: Mini, Air...et al.). That is, unless you think pv money conversions should increase by 50% on just a scant 4.5 years? No, of course not. That is going to leave a relative sense of increased cost (and rightly so), when people have to dip into their own pocketbooks more, to reach for the same class products, even if such products were proportionately profitable to Apple. This cognitive dissonance makes sense, because Apple is in fact choosing a higher economic target market (or in the iPhone X-XS case...shifting the market). Moreover, remember that as a whole, percentages represent disparities linearly. A constant percentage on higher sales will produce more money. A constant percentage on higher cost products will produce higher profits. If you price all your products 50% more expensive, even at comparable profit percentages, you'll make more money. IE: 40% profit off a Mac Mini (for example only, since the markup for the Mini is much higher than 40%), that costs 500 dollars, is approximately 200 profit. A 40% profit off a 700 Mac Mini will produce 280 dollars in profit. Shifting the market towards the higher price, forces customers to choose between the Apple product/ecosystem and an increased 80 profit increase (which is a relative 40% increase over the last profit... or a shift to a competing Windows platform. If Toyota kept their Camries profits at a constant 15% but raised the price from 25550 to 30550, their profits would increase, even as their marginal analysis would remain constant. Remember that iMacs were initially sub-1000 machines. Minis were significantly cheaper just a scant few years ago and apple laptops like the Air cost only 1000, compared to almost a 20% increase today. These are all intentional choices by Apple. Not accidental. Apple isn't a money-grubbing enemy but they're not cherubs. They're more expensive...and they know it. Food for thought.

Here's the thing, right? We've got equivalent profit margins, but in the heady Jobs days, Services wasn't even a thing and contributed far, far less to the company's bottom line as a proportion to the whole. So, we're actually dealing with lower hardware margins than in the late Jobs era, offset by much, much higher contributions from Services to maintain the percentages. This whole thing is just another another bogus and logically fallacious "this never would have happened if Steve was alive" thing.

And, nobody said that Apple was angelic, or inexpensive.

I don't doubt that the stores and services/support or free OS all contribute to costs.

But unless you can conclusively prove that those costs offset an average 40% price increase across the board for most of their products over the past five years alone, I'm going to assume that their price increases are a conscious effort to undermine the public perception that their growth has slowed.

Which it has.

Of course hardware growth has slowed. The entire smartphone and computing market in all aspects is contracting. Notably, however, depending on segment, Apple's either holding its own with no loss of ground, or slowing less than everybody else from a units shipped perspective.

Mike Wuerthele said:

madan said:

Mike Wuerthele said:

madan said:

Marginal analysis has a lot of flaws that weren't taken into account in this article. For starters, MA assumes that items of comparable cost are taken into account, then the margins should match. Except that the average starting phone price today is higher, vis a vis salary increases, than the original iPhone-iPhone 5. Additionally, the average starting price for an Apple computer is also higher, for some models, vis a vis salary increases, than comparable models of just 3 years past. (ie: Mini, Air...et al.). That is, unless you think pv money conversions should increase by 50% on just a scant 4.5 years? No, of course not. That is going to leave a relative sense of increased cost (and rightly so), when people have to dip into their own pocketbooks more, to reach for the same class products, even if such products were proportionately profitable to Apple. This cognitive dissonance makes sense, because Apple is in fact choosing a higher economic target market (or in the iPhone X-XS case...shifting the market). Moreover, remember that as a whole, percentages represent disparities linearly. A constant percentage on higher sales will produce more money. A constant percentage on higher cost products will produce higher profits. If you price all your products 50% more expensive, even at comparable profit percentages, you'll make more money. IE: 40% profit off a Mac Mini (for example only, since the markup for the Mini is much higher than 40%), that costs 500 dollars, is approximately 200 profit. A 40% profit off a 700 Mac Mini will produce 280 dollars in profit. Shifting the market towards the higher price, forces customers to choose between the Apple product/ecosystem and an increased 80 profit increase (which is a relative 40% increase over the last profit... or a shift to a competing Windows platform. If Toyota kept their Camries profits at a constant 15% but raised the price from 25550 to 30550, their profits would increase, even as their marginal analysis would remain constant. Remember that iMacs were initially sub-1000 machines. Minis were significantly cheaper just a scant few years ago and apple laptops like the Air cost only 1000, compared to almost a 20% increase today. These are all intentional choices by Apple. Not accidental. Apple isn't a money-grubbing enemy but they're not cherubs. They're more expensive...and they know it. Food for thought.

Here's the thing, right? We've got equivalent profit margins, but in the heady Jobs days, Services wasn't even a thing and contributed far, far less to the company's bottom line as a proportion to the whole. So, we're actually dealing with lower hardware margins than in the late Jobs era, offset by much, much higher contributions from Services to maintain the percentages. This whole thing is just another another bogus and logically fallacious "this never would have happened if Steve was alive" thing.

And, nobody said that Apple was angelic, or inexpensive.

I don't doubt that the stores and services/support or free OS all contribute to costs.

But unless you can conclusively prove that those costs offset an average 40% price increase across the board for most of their products over the past five years alone, I'm going to assume that their price increases are a conscious effort to undermine the public perception that their growth has slowed.

Which it has.

Of course hardware growth has slowed. The entire smartphone and computing market in all aspects is contracting. Notably, however, depending on segment, Apple's either holding its own with no loss of ground, or slowing less than everybody else from a units shipped perspective.

Mike Wuerthele said:

madan said:

Marginal analysis has a lot of flaws that weren't taken into account in this article. For starters, MA assumes that items of comparable cost are taken into account, then the margins should match. Except that the average starting phone price today is higher, vis a vis salary increases, than the original iPhone-iPhone 5. Additionally, the average starting price for an Apple computer is also higher, for some models, vis a vis salary increases, than comparable models of just 3 years past. (ie: Mini, Air...et al.). That is, unless you think pv money conversions should increase by 50% on just a scant 4.5 years? No, of course not. That is going to leave a relative sense of increased cost (and rightly so), when people have to dip into their own pocketbooks more, to reach for the same class products, even if such products were proportionately profitable to Apple. This cognitive dissonance makes sense, because Apple is in fact choosing a higher economic target market (or in the iPhone X-XS case...shifting the market). Moreover, remember that as a whole, percentages represent disparities linearly. A constant percentage on higher sales will produce more money. A constant percentage on higher cost products will produce higher profits. If you price all your products 50% more expensive, even at comparable profit percentages, you'll make more money. IE: 40% profit off a Mac Mini (for example only, since the markup for the Mini is much higher than 40%), that costs 500 dollars, is approximately 200 profit. A 40% profit off a 700 Mac Mini will produce 280 dollars in profit. Shifting the market towards the higher price, forces customers to choose between the Apple product/ecosystem and an increased 80 profit increase (which is a relative 40% increase over the last profit... or a shift to a competing Windows platform. If Toyota kept their Camries profits at a constant 15% but raised the price from 25550 to 30550, their profits would increase, even as their marginal analysis would remain constant. Remember that iMacs were initially sub-1000 machines. Minis were significantly cheaper just a scant few years ago and apple laptops like the Air cost only 1000, compared to almost a 20% increase today. These are all intentional choices by Apple. Not accidental. Apple isn't a money-grubbing enemy but they're not cherubs. They're more expensive...and they know it. Food for thought.

Here's the thing, right? We've got equivalent profit margins, but in the heady Jobs days, Services wasn't even a thing and contributed far, far less to the company's bottom line as a proportion to the whole. So, we're actually dealing with lower hardware margins than in the late Jobs era, offset by much, much higher contributions from Services to maintain the percentages. This whole thing is just another another bogus and logically fallacious "this never would have happened if Steve was alive" thing.

And, nobody said that Apple was angelic, or inexpensive.