michael scrip

hammerd2 said:

Wow, this guy must have been up half the night burning the midnight oil, tapping away at his calculator, checking inventory and sales channels, etc to have generated such specific numbers. 

So in 2 weeks' time when Apple give their forward guidance - free of charge - which will either prove correct or conservative, how long will it take these guys to chunter on before coming out with their new predictions that are pretty much identical ?

Plus... I would imagine Apple know EXACTLY how many iPhones get sold every single day.

I bet there is a counter on Tim Cook's desk that counts up every time a new iPhone gets activated on Apple's servers.  (over 800,000 times a day this quarter)

Meanwhile... Munster is out there sniffing the dirt for answers... "estimating" iPhone sales across the entire planet.

djsherly said:

quadra 610 said:

What's more, is that their streaming business model is actually sustainable. 

 Curious about this. Outwardly it differs very little from Spotify. In fact Spotify can arguably be more expensive. What makes it sustainable?

There are 70-75 million people using Spotify... but only 20-25 million pay for it.  The rest is supposed to be funded by advertising.

But ads simply don't cover all the free customers.

Spotify has to PAY fractions of a cent for EVERY song played... whether it's a free user or a paid customer.  And the more free customers they get.... the more Spotify has to pay. It doesn't scale well. In short... the free customers are basically killing them.

Spotify could be getting up to $250 million a month in revenue from 25 million paid subscribers at $10 a month.  But not all subscribers pay $10... students can pay $5 a month and there are probably lots of $0.99 three-month trials.  So their revenue is less than $250 million a month.

That would probably be sustainable on its own... if it wasn't for the 50 million free customers.  

Spotify still has to pay license fees for all those free customers.  They're paying music license fees for 75 million users' streams even though they're only getting paid for 25 million. (plus whatever the ad revenue is)

There have always been more free Spotify users than paid customers... and Spotify hasn't make a profit in 8 years.  I'm not sure what the proper free/paid customer mix would be... as I don't know their expenses.  But as of right now... it's clear that the free customers aren't helping.

On the other hand... Apple Music is all paid customers.  Apple pays music license fees for 10 million users' streams... but they're also getting revenue from 10 million users. And when Apple Music gains new customers... they also get new revenue.

Granted... some of those are part of a family plan... so the revenue per Apple Music user might be as low as $1.67 per month.  But Apple is still being paid something.  

Worst case... if all of Apple Music's users were family plan members at $1.67 a month... that's $16,700,000 a month in revenue.  Best case... $100,000,000 a month in revenue.  It's somewhere between the two... likely leaning more towards the latter.  

So how much does Apple pay per month in music licensing fees for 10 million users? I would hope it's less than their revenue. Knowing Apple... they probably wouldn't even enter this market if they couldn't make money at it.  Or at least break even.  But we don't know for sure.

However... Spotify has always paid more in music license fees than they get from revenue.  

Spotify is essentially paying people to use their service.

That is not sustainable.

And while Apple offers a free 3-month free trial... in which Apple pays license fees with no return in revenue... I don't think it affects Apple Music's operational sustainability. Apple will let you listen for free... but only for a short time. The hope is that you'll become a paying customer.  If you don't... Apple doesn't have to pay for you anymore.

But as long as Spotify has a free tier... it will hurt their sustainability.

foggyhill said:

DanW13 said:

The best thing Tim Cook & Co. could have done was to pull all sales of iPhones from AT&T, Verizon, T-Mobile and anywhere else iPhones were sold and managed to bring that all under one roof (Apple Stores) and also to offer their own upgrade program, now the iPhone won't be in any more competition with likes of Samsung phones and others so that alone should increase sales of iPhones thru out the US perhaps 5 fold if not more. Regarding the article, Fantastic...best article I've read in a long while and it gets rather tiring reading all at they read and the tripe about Apple this, Apple that, Apple won't this or Apple won't that or Apple can't do this, that or the other....Good God how do their editors allow such to be published ?? It gets so old that sure some will eventually believe some of hate filled articles floating around the WWW but I hope more people believe what they read and Sell Sell Sell as Cramer would Demand them to do knowing that the stock is about to Crash & Burn and leaves more shares for smart people to Buy Buy Buy...I'm a Apple Shareholder and will continue to be a Apple Shareholder, The way I see Apple is that folk's should Buy it for Looks, Buy it for life !! 

 I think in the future, Apple will taking care of financing the phones (directly or in arrangements with third party financial institutions).
If they can make the phones a service, instead of a something you buy, they would set long term.

Apple has already started down the road of offering financing for phones... but do you think Apple would ever become an MVNO?  Maybe like Google Fi?

I doubt Apple wants to build their own cell towers around the world.  I think they already said they don't want to be in that game.  

But I could see a time where you make one "Apple payment" which includes the phone and service.  They could even offer packages to include Apple Music, iCloud storage, etc.

koop said:

It's clear past decisions have allowed Apple to maximize their revenue and profits. They are a highly efficient company that makes a very large amount of money in the market. 

As an investor, i'd probably be less fixated on that however. The current stock price already reflects these realities, and has already rewarded those who had the foresight to invest years ago. What the stock price will respond to is if Apple is shepherding new product categories, and diversifying for long term growth. Nobody is saying the iPhone is dying tomorrow, but there's a ceiling and growth will come from other opportunities. It's easy to say how Apple has captured the smartwatch market or the tablet market, but it's misleading because relative to the success of the iPhone, those are small potatoes to Apple itself, and those markets are simply too small or contracting in the the case of the tablet. Apple can dominate small markets all day if they want, but that's not going to make investors feel better. I also don't think a car is the answer but that's another argument for another time. I'd look at what Facebook did with Oculus, I think that has the potential to be a massive market, and Apple isn't particularly interested. Just a thought. 

It's fun to crap on Samsung when trying to shrug off investment worries, but the stock market would be a much simpler place if it were just "your numbers vs my numbers" game between competitors. Apple still hasn't convinced the market their company is worth more than it is right now, and I agree.

Since you're an investor... maybe you can answer this:

If you could pull all your money out of Apple... who would you put it in instead?

Apple makes a lot of money by selling tons of high-margin products.  But it apparently it doesn't move their stock price up.

So who would move the stock price up?

AppleInsider said:

Virtually all of the established PC makers seemed to be evaluating how to get out of the business, even as Apple's premium-class Mac sales gained significant new ground. 

That's something I was thinking about the other day.

Apple has been selling Macs for over 30 years. But how many PC manufacturers have come and gone during that time?

Either they go out of business... or they are in bad enough shape that they get acquired by another (possibly failing) PC maker.  Hell... I remember when HP was talking about getting out of the PC business because they couldn't make money. And they were one of the big ones!  Times are tough when you sell a commodity item.  There are dozens of companies making very similar PCs with little differentiation. And they are all competing (price dropping) with each other.  No one wins.

Then there's Apple... who is the only maker of the Macintosh.  Sure they don't sell the volume of all Windows PC makers combined... but Apple sells more than enough.

And the same thing is happening in smartphones... except there are hundreds of Android phone makers.  They're all fighting with each other to sell you an "Android phone" while slashing prices to unsustainable levels. No one wins.

Then there's Apple... who is the only maker of the iPhone.  Sure they don't sell the volume of all Android OEMs combined... but Apple sells more than enough.

And if you think about it... no one is really competing with Apple since they cannot sell the same things Apple is selling.  They'll sell you an Android phone or Windows laptop.... but that doesn't mean a lot if you're looking for an iPhone or Mac laptop.