Its absolutely incredible how year after year, Apple convinces people to continually upgrade their devices, as well as drive new customers to there business.
An important metric to note from there release however is that 66% of sales came from international markets.
That important metric actually understates their sales due to the strength of the US Dollar this last year. On a constant-currency basis, it is about 15% higher. Just goes to show the 'real' results are even more impressive.
>That important metric actually understates their sales due to the strength of the US Dollar this last year.
Maybe sales were over-stated in the decade prior due to weakness in the US dollar? I don't understand the meaning of picking a favourable exchange rate to normalize the earnings.
For all we know, it's high dollar from here to eternity.
I believe FreedomToCreate was expressing surprise not only at the frequency with which Apple customers upgrade their gear, but rather the fact that such expensive hardware should be upgraded so frequently at all when the advantages are incremental.
The reason for this is that, while Apple gets incrementally better, it at least does not tend to get worse. Compare with Windows 10.
Superficially, Apple tech is also a status symbol, especially among the young--but that is not to say that the cool kids do not buy Android phones, Kindles or Chromebooks. Less superficially, the target market of Apple is the luxury/privileged--and this segment of society does not consider advantages of upgrading and neither do they consider cost. It is the same segment of society (or at least significantly overlaps with the same segment) that will order avant-garde splats of "exotic modern art" food for exorbitant prices where others would consider frugality or nutritional benefit. It is the same market that all marketing targets: the clueless and impressionable.
I am not saying Apple devices are bad, I am saying they are heavily marked up far beyond the value that OS X and its exclusive applications add, and ergo the majority of its buyers are sufficiently well-off that they can afford to have the most fashionable computer. There is very little fashionable about having something from the previous season, let alone 2012 (despite the fact that a MBP from this year will probably still be sufficient for a web developer in a typical situation).
Of course, I am going to get lambasted if I do not also mention that OS X is (arguably) well-designed in terms of user interface. I say arguably because, personally, I do not see this glistening advantage--but I'm a developer, I want a command line and a modern web browser. What I do see is more effort put into the actual polish of the UI than Microsoft seems to invest in their OS.
It's no different to Chrome vs Firefox. Chrome is building up quite an impressive market share, despite the fact that its peers (excluding IE, as always, because apparently implementing the flexible box model was too difficult) can do most of the same things that Chrome can do.
In a similar vein, Chromium (FOSS Chrome) is readily available to use (yes, yes, dev builds, but they are remarkably stable and I've yet to experience an issue with a Chromium dev build) yet nobody uses it. While obviously discoverability is an issue (since Chromium does not advertise that it can be easily installed) I imagine that if you offered Apple hardware at a lower price without branding, it would sit in the branded Apple hardware's shadow. Especially given the angst already present among cool kids about phones which seem to imitate the iPhone's physical product design)
Well, this has been thoroughly anecdotal and I don't usually like to do that, but hey ho. If it's of value for someone to read and expand upon or criticise, why not post it
I did not mean to imply that all Apple customers are luxury market. I have an iPhone and I only just scrape by. But I bought an iPhone 5 refurb rather than the iPhone 6--primarily because, despite having long fingers, I detest big phones.
Totally agree that Apple is selling affordable luxuries. Which is why I disagreed with this:
> It is the same segment of society (or at least significantly overlaps with the same segment) that will order avant-garde splats of "exotic modern art" food for exorbitant prices
I question your value definition.
1) Apple products work well together.
2) iOS doesn't always play well with others (I understand receiving texts on Android devices from Apple devices is annoying).
3) Apple as a brand has value.
All of these may also contribute to a fourth consideration of resale value.
Jeep is a good comparison. Jeep's vehicles are probably not much different than other car makers, but there is a huge and well established aftermarket parts business. Jeeps hold value well in the used market.
I would be interested in the used value of Apple vs comparable Android products.
I find a dumb phone meets my personal needs, so I have little interaction with either product.
Edit: I agree that people in general upgrade their devices more often than they need to based on their use case. It would be interesting to know if Apple owners do so more often than Android owners.
Is it incredible? Do their competitors have systemic problems getting their customers to upgrade? I don't see that. If anything, I still see plenty of iPhone 4s and 5c models and content customers.
Are you kidding? I think Apple has definitely proven it understands the upgrade cycle for products better than anyone--they perfectly the mid-cycle upgrade that the phone companies invented in the early 2000s (that's the S line), while doing what Motorola, Samsung, etc never could--consistently reduce hardware BOM by ~50% per generation.
They nailed the product planning, they just missed the collapse of oil and the high dollar.
You can call it perfect, but it doesn't mean it's so. What kind of numbers are you seeing on upgrades that "proves" they're having some kind of special activity here?
Somehow Jobs was able to turn the brand into a fashion item, up there with certain watches etc, back during the iPod.
Then again i can't help but wonder if he got help by Apple computers being a de-facto standard in media production.
I seem to recall that the first time i heard about iPod was because some artist or actor was seen with some white wires dangling from his ears. And that was back when you needed a Firewire card and third party software to get it working on anything but a Mac.
And as best i recall it was not in the tech section or some such.
I don't understand why design-focus isn't enough of an explanation for Apple's success. Sell the most powerful product humanity has ever seen (the computer) and put human factors at the heart of the product process. That's it.
No one else did that. Every other computer company allowed other motivations to trump human factors.
These days it's standard practice... although, few people know how to tell a good designer from a bad one, so they hire bad ones who do crap work and the institution never really trusts them and project managers end up running the show, mostly by allowing powerful employees to put their pork barrel projects on the schedule.
Steve Jobs could tell good designers from bad ones, he provided a wall of protection and power around them, and he fought like hell to keep the company solvent until the rest of the organization started to trust them. That's why they have devices people want to re-purchase year after year.
I do think it’s fashion, but it’s fashion combined with technical depth and sophistication. Usually technology that’s just plain stylish (instead of, say, kitschy or flashy) tends to be technologically quite poor, especially when it comes to software, but also when it comes to component quality.
Apple manages to provide a complete and round packet. Sure, some aspects are better or more pronounced than others, but it’s not very uneven.
The point is that although they posted a record quarter, it is hardly better than 1 year ago. Their revenue one year ago was substantially higher than 2 years ago.
> Luca Maestri, Apple’s chief financial officer, said the company is feeling the effects of a "very different" economic environment around the world. Apple is beginning to see "softness" in China, particularly in Hong Kong, he said.
Weakness of the Yuan affects the revenue number by the size of the China market but shouldn't by itself impact the raw number of phones sold (Apple pays for the phones parts and labor mostly with Yuan).
That's the part that scares me a bit. Not for Apple's sake but as a confirmation of the general global economic slowdown we are likely in right now. The recovery has hit a bump it might appear.
Superficially it looks like revenue growth has slowed down quite a bit. But the Reuters article mentions that "the strong U.S. dollar ... knocked about $5 billion off the company's revenue":
That makes quite a difference (and illustrates that it can be pretty hard to figure out growth numbers for a multinational corporation, even one that has a super-simple product line like Apple's).
It's actually pretty easy, count units sold. They sold 74.779 million iPhones this holiday quarter and 74.468 million last year. Basically the same number. It shows that sales growth has stopped after a decade of hyper growth. It's still a heck of a lot of phones though.
It's pretty hard to analyze a decade-long trend by just comparing the 2 most recent years. It could be that growth has stopped, or it could be that growth is continuing, but that 2015 was an outlier. We won't actually know until next year.
I was just doing a fingers and thumbs count of different iPhones, and I make 28 current models here in NZ (6s, 6 and 5s, colour options and storage options). I know this is still a pretty simple product line for that much revenue, but I do think that the "simplicity" is mainly marketing.
Just yesterday I read an NYTimes article announcing how Apple is beyond their growth phase.
> Investors have long relied on Apple to deliver one crucial attribute: growth. Now they are beginning to wonder whether Apple’s days as a growth stock are coming to an end.
Exchange rates are killing them. The strong USD is cutting into profits in a major way. With iPad, Mac and now iPhone showing flat (and negative) growth I would expect a fairly flat stock price for the time being. When/If the USD begins to lose value to other currencies I'd call that a good time to consider to build a position in AAPL.
I don't have a position but was hoping for a big win this quarter. AAPL exemplifies a lot of the issues many companies are having because of exchange rates and I do not expect the broader market to do much better for awhile.
Especially with so much foreign debt in USD, a lot of companies are going to have a hard time paying off bonds and loans, hurting their ability to grow.
The largest quarterly profit ever recorded by any company wasn't enough of a big win? I don't want to soapbox too much, but there is something deeply wrong with capitalism when you can be more profitable than any corporation that has ever existed and it seems like a letdown.
> Especially with so much foreign debt in USD, a lot of companies are going to have a hard time paying off bonds and loans, hurting their ability to grow.
All the tech companies that have had big bond issues recently (Apple, Microsoft, etc.) are doing it because it's literally cheaper than repatriating their actual foreign earnings to the United States. As long as those foreign earnings continue to exist, borrowing money is arguably a better way to finance their day-to-day operations, especially when interest rates don't seem likely to climb much in the intermediate future.
They aren't growing is the problem. But more importantly when you look at their numbers in China you can see the global slowdown. It's bad for all global companies.
As for bonds, I meant by foreign companies. Many bonds have been written with USD which are now becoming painful to payoff as their own currencies are not valued well against the USD.
Ah, I'm sorry, I misunderstood your post. But even so I'm not clear on why the indebtedness of foreign companies affects Apple all that much, except that it's a signal of the health of the global economy.
> The largest quarterly profit ever recorded by any company wasn't enough of a big win? I don't want to soapbox too much, but there is something deeply wrong with capitalism when you can be more profitable than any corporation that has ever existed and it seems like a letdown.
Of course it can. They didn't meet revenue estimates and advised that the current quarter is going to be much worse than expected. Wall Street [typically] values companies based on future expected earnings and there is constant pressure to increase growth. The same compound math that gives quickly growing companies lofty valuations works in reverse when your revenues are declining.
When you have $200 billion dollars lying around, you can do multiple things simultaneously.
When you have $200 billion dollars lying around and your business is dramatically undervalued, it would be practically criminal not to buy some of it back, to save on dividend payments if for no other reason.
> When you have $200 billion dollars lying around and your business is dramatically undervalued, it would be practically criminal not to buy some of it back, to save on dividend payments if for no other reason.
Who's to say Apple is undervalued? It's one of the most widely held companies and they have been so for several years. Tim Cook doesn't know what's going to happen in China. Their US sales were down in Q4 2015 and they are forecasting global sales to be down in Q1 2016. They may have been spending billions buying back shares at an all time high.
It's hard to imagine a scenario where Apple has peaked. Even replacement sales would sustain a healthy business, and they have extremely high satisfaction and retention rates.
People value what Apple offers. A global depression could hurt the company badly. Anything short of that should allow them to keep making money. A bad Apple quarter is still lots and lots of money.
> It's hard to imagine a scenario where Apple has peaked. Even replacement sales would sustain a healthy business, and they have extremely high satisfaction and retention rates.
It's not that hard, their largest growth market (by far) is a huge question mark. It's tough to rely on a single product that is expected to be replaced every year. There will be a ton of pressure on the iPhone 7.
Apple's services revenue is growing every year. As long as their installed base keeps growing or even remains stable they can make money off of their existing customers. They aren't in the position of other phone manufacturers or computer manufacturers - with decreasing margins and only being able to make money at the point of sale.
It was reported that the average selling price of iPhones was up by $3 and would have been up by $80 if it weren't for currency fluctuations.
If you google "is apple undervalued," you'll find a litany of articles arguing that very point. One of the clearest indicators is the P to E ratio. Alphabet PE: 35, Apple: 11 (currently)
2008, Apple was trading at $12 (split-adjusted) and nearly every careful observer of the company knew that was stupidly low based on the trajectory of the iPhone.
Relying on the stock price as a valid indicator of the value of a company is a fool's errand, regardless of the "sophisticated people" trading it.
Well Apple dont need to pay dividends, it never was a dividends stock until recently. The whole notion of buying back stock just to save a few dividends sounds silly to me.
I really wish someone enlighten me why, why spend 183 billion on share buyback and dividends when it has nearly no use for the stock price, and no real use for the company long term etc.
Apple bought 10 companies last year mostly small companies. The age of spending money buying large companies and creating non focused conglomerates is dead.
GE, for example, has been busy making itself smaller over the past couple of years. Google split itself up to become more focused and Sony just announced the creation of a separate PlayStation division.
GE is imploding from what I can tell. Their medical imaging and drug systems are an absolute shambles. Staff are walking out and not coming back. They aren't controlling what's happening, they are in some sort of death spiral as far as I can tell. Australasian former GE customer here.
They said today that revenues are going to be down in Q1 2016 and they haven't done that since 2003.
Buybacks may or may not be smart. They bought a ton of stock last year when the shares were 20% higher than today. That's a rather expensive way to make your EPS.
For not knowing how Apple's business works they sure got close! It was on the low-end of Apple's guidance as well, are you sure Apple knows how Apple works? What about the downgraded estimates for Q1?
I put faith in their meaning because Apple is valued based on them.
Apple's value is not based on them. Apple's short term stock price is affected by them, but you only have to look back over the past couple of years to see that the price doesn't reflect the value.
> They didn't meet revenue estimates and advised that the current quarter is going to be much worse than expected.
I do find it fascinating how the market works to adjust to new knowledge. The expectation or estimates of someone may not even have a bearing on what actually will happen.
You could almost see it as a delusion suffered by someone to have an estimate/expectation - as it will never be exactly reality - but it turns into an actual market event.
>I don't want to soapbox too much, but there is something deeply wrong with capitalism when you can be more profitable than any corporation that has ever existed and it seems like a letdown.
Why is this a surprise, let alone a knock against capitalism?
Share price at any given moment is based on available information, meaning the current price is based on expected phone sales, exchange rates, revenue, profits, etc. Those expectations were high going into earnings.
Current stock prices reflect the expected future cash flows and the cost of capital.
When new information changes the expectation of future cash flows -- like, say, a quarterly report that indicates growth is slower than estimated -- you'd expect the price to drop.
No one is saying that Apple didn't make a lot of money. No one said they aren't a great company. They're saying "the picture of the future just changed a bit."
So, what's wrong with capitalism? What's irrational here?
The iPhone 6 lists at 459 British pounds which even with the historically low exchange rate is still $100 premium over the US version. Ditto the euro, Australian dollar, etc. It's not such a surprise that they were able to make loads of $$ in foreign markets back when the exchange rates vs USD were much less even.
US shelf prices don't include the sales tax, but UK prices for consumers include VAT. At the current VAT rate of 20%, that's 16⅔% of the price, or about £76.50, which in US currency is… $109.
This is such a horror when shopping in the US. Why bother putting a price tag on things when the price you pay is different. How would a tourist know what the tax is when it changes multiple times over a car journey? It seems archaic.
Because it's the right thing to do you know exactly what you pay in tax which means you are more likely to hold the government accountable for that money as well as being able to actually lobby for lower taxation.
Since sales tax is applied on both state and local government levels it also simplifies pricing both nation wide and even state wide.
Walmart for example sets a price for product A that price is the same across all states (for this example I don't know if Walmart has regional prices to adjust for cost of living but I don't think so).
45 states have sales taxes these come at different rates, about 40 states also allow for local sale taxes meaning that local county can set up it's own additional sales tax this means that the end price is different between states and even within states with local sales tax collection.
As a consumer you know exactly what you are paying if the product costs 100$ then you pay 100$ for that product and you pay additional tax for the sale when you know your state taxes you 8% and your local county taxes you additional 4% you can hold them responsible for what your taxes are being used for, you can lobby for lower sale taxes and you can always move to a jurisdiction with lower sales tax.
The way the sales tax is collected also allows for more convenient exemption from sales tax especially in non B2B purchases a sales tax exemption certificate can be filled at any purchase and they will not charge you sales tax.
You can literally go online print the exemption certificate for your state e.g. http://www.tax.ohio.gov/portals/0/forms/fill-in/sales_and_us... go to a shop pay the sticker price and fill it out and the store will not collect the sales tax on that sale.
Compared to how annoying it is to get VAT refunded and just how many caveats there are for getting your VAT back it's 100 times better.
I get how it would be extremely difficult for the US to have the true pricing on items, with sales tax being different even within the same state!!!
In countries, where sales tax is federal and it's a flat 10% everywhere, I'm eternally grateful that I don't have to do mental gymnastics to figure how how much something will actually cost.
There aren't that many countries with sales tax, most of them use VAT which is considerably worse than sales tax as far as tax burden distribution goes.
VAT is added to the price of the goods and is an intrinsic part of their price which means when they are resold VAT affects the final resell price even tho it's only collected on the initial sale.
Say a car costs 50K, US uses sales tax Atlantia uses VAT both countries tax at 10% in the US one buys a car pays 50K for the car and 5K in additional sales taxes, a person in Atlantia pays 55K "sticker price" which includes VAT both paid 55K.
Both of them decide to sell the car after 2 years the resell price in both countries is calculated based on 50% of the original sticker price so in the US the car is sold for 25K and in Atlantia the car is sold for 27.5K.
Additionally since sales tax in most us states (iirc all but like 2 or 3) is only applied to tangible goods this means that most services tend also be considerably cheaper to the end consumer than in countries with VAT/GST.
That situation has never really affected me - but then the most expensive thing I've resold is my Macbook.
But when I'm reselling something, I'm looking to capture as much as my cost (how much I paid for it) as possible, including the GST. You could even consider this that I'm just a middleman who is passing on the GST to the 'end consumer'.
The record results include one not so happy metric: "Apple iPhone Sales Grow at Slowest Rate Ever, Company sees revenue in current quarter declining at the steepest pace in 15 years" (From: http://www.wsj.com/articles/apple-reports-slowing-growth-in-... )
iPhone sales are basically flat from last year, growing at about 0.4%. This isn't just an Apple phenomenon either. As with desktops/laptops several years ago, and tablets over the last couple years, we're getting to the point that it doesn't make sense to upgrade your phone every year or two. As long as your phone still works and does what you need it to, anyway.
It's hard to draw strong conclusions here because China's launch was bumped up 2 weeks from 2014 which put them into the September quarter (+22% growth). Granted that's only a week of prior quarter but they sold 13 million phones that week.
If you move 3-4 million phones for China launch from prior quarter to holiday and suddenly growth in the holiday quarter doesn't look all that anemic (or the previous quarter as spectacular).
The revenue growth for the two quarters combined is 9.2%.
> we're getting to the point that it doesn't make sense to upgrade your phone every year or two
The biggest reason for this (in the US at least) is the decline of 2-year mobile phone contracts over the last year. Many people are rethinking their upgrade cycle now that cellphones are a direct expense instead of being subsidized by the carrier.
Absolutely. Even though most carriers are doing something like T-Mobile is with their 2 year payoff period for phones with no interest, people see that their cell phone bill can be less each month if they don't upgrade. On the high end for the iPhone 6s Pro with 128GB ($229 up front plus $30/month for 2 years) or a Galaxy Note 5 ($0 up front plus $29/month for 2 years), people see that they can save quite a bit of money by keeping their phone longer.
Yup- and this is key. You didn't have a choice before, at least not with the big carriers. They were going to take you for a full subsidy/installment/whatever phone plan, whether or not you reaped the rewards of it. As such, it was silly to not sign a new contract and pay a couple hundred for a new $800 phone every 2 years.
Even back into the turn of the century, if you bought an unlocked phone off eBay, you were paying full whack for your rate plan, even though you didn't use a subsidy. I even had Cingular once try to tell me I was under contract, simply because I had signed up less than 2 years ago -- even though there was no contract (I paid for my own phone).
Then a couple of years ago, they started offering "BYOD" pricing plans, so I paid my $300ish ETF, got my iPhone unlocked, and "saved" $15/mo. It was roughly breakeven.
Now I just pay full price for my phone if and when I want a new one. It helps me recognize the full cost of what I'm buying, and it means I'm not tied to a carrier.
Exactly. Remember when your phone only worked on a specific carrier so even if you paid it off and got it unlocked you couldn't take it to the carrier of your choice (or any other carrier at all)? shudder Never again.
You make a very interesting point here. My thinking was that the yearly upgrade programs such as AT&T's "Next" would drive even more growth as consumers upgraded their phone every 12 or 18 months. It would seem that these programs might not be so popular after all.
It sure looks like Apple is planning for a future where everyone is paying $25/mo forever to lease the latest handset that tickles their fancy, with the carrier being a swappable option.
I think the intent behind "Next" program is to mainly mitigate loss of subsidy, rather than drive growth. ATT makes no money selling these phones; they make money on smartphone data plan. If vast majority of your clients are already on smartphone data plan, then there's not much incentive to keep the subsidy.
"Dumb phones".. There are phones out there like the Moto G that are pretty darn nice phones for less than $200. Heck, the Moto G is even waterproof! The camera, screen, etc isn't the most amazing, but it works really well.
$200 is still pretty expensive, if you just need phone call and maybe text messaging.
I wouldn't expect a huge number of people to go back to "dumb phones" though. Even if their carrier won't subsidise it or provide a payment plan, people will buy new smart phones, because they're use to having the features. Upgrades will just be less frequent.
Growth is about to be stalling with smart phones and you talk about a dumb phones comeback.
...to me what this means is that smart phone companies are about to start shriveling up and dying while other companies that are able to would have to take a hit on their margins.
Why would someone who wants and could now afford a cheap smartphone by a dumb phone???
I dont understand why you would think smart phones would make a comeback.
Nothing was ever subsidized by the carrier, it was just amortized over those two years. The difference of off contract was exactly the price of a phone over a two year period. Which is why they started that ATT Next nonsense to get people locked into renting their phones.
Some carriers had no difference between on and off contract. With those, if you didn't upgrade your phone every two years you were leaving money on the table.
This sounds reasonable but in my experience I have noticed that the price of the monthly phone payments have often been more than the discount given for the previously offered non-subsidy plan.
This has been the case for T-Mobile and Sprint, at least in the scenarios that I have looked at.
Quite a few carriers in the US charged the same rate whether you got a phone with them or not for years. I think Verizon was the last holdout to give a discount if you bought your own device outright.
I think the biggest thing, and one that a lot of people are missing, is that the 6/6S phones caused a one-time burst of switchers who were only on Android because they wanted big phones and they previously couldn't get them from Apple. (Evidence: a year after the 6's release, this happened: https://theoverspill.wordpress.com/2015/09/01/premium-androi...) Now 1.5 years into the 6/6S cycle, almost all of them have switched, and iOS-vs-Android market share (in saturated markets) has reached a new steady-state.
Actaully didnt APple come up with their own upgrade cycle with the new phone they released last year? I think that way of having people upgrade like that was a bad idea on their part since in my view you could get a better deal on a phone via your carrier even though the intention seems good getting a new phone from them
Meanwhile those of us with normal-sized hands and pockets long for the days when you could safely grip and operate your phone with one hand.
I've never been an iPhone guy because I largely prefer Android-style notifications and deep Google integration and that is a major selling point to me. Right now the Nexus 5x is looking pretty nice.
To each his own. I prefer to type with both hands in landscape on a screen I can see. When listening to podcasts I use the headphone remote. Hopefully the rumored small iphone will become reality.
I have some big hands and even then I feel uncomfortable using my 6, I was so used to the 5S size and now the 6 keeps sliding through my hand, I can't completely use it single-handed, etc.
And I can reach all of the corners with the thumb while holding it, it just doesn't feel comfortable.
I beg to differ. The reason it doesn't make sense to upgrade your phone every year is because of lack of innovation. What am I really getting, a faster processor? I'll live another year without it.
This is what happens when you turn over leadership of a company to a supply chain guy from a creative genius. Sure they can make bigger, better, fast, more and make record money, but the creative soul of the company is gone. RIP Steve.
I am still waiting Apple to enter the low cost phone arena. There is plenty of profit and certainly market for them to do a near original sized iPhone but with modern electronics for around three hundred or less. It might never see the shores of the US but I do think there is a lot of market out there for it world wide.
I own a Moto G 3rd Gen. Swift, waterproof, stong-glass, bloat-free, removable battery, memory-upgradable, £150. Does the job I need it to do and, I'd imagine, the job most others need also. (I don't work for Moto, nor even remotely related to them).
I've been wondering what on earth iPhone and Sammy users are doing with their £400-£600 modern icon-ophones
Are people just in a trance?
(This from a renowned gadget freak who used to trade in smartphones every 3 months)
I'm exactly the same. I have a moto x play (mainly for the much bigger battery). £200ish when I bought it. Works great, really happy with it.
I've owned every model of the iPhone (some twice for loss/damage) up until the 6. The battery life just isn't acceptable for me (i'm a heavy user, granted, but apple hasn't made any improvements in that area for a long time - whatever power savings they've done has been put into making the device thinner).
And, the phone does exactly what I need for 1/3rd the cost. Plus I don't have to pay another £100+ for a decent amount of storage.
I think Apple (and other high end smartphones) are going to be really stuck with this. Even if they don't switch to Android, people just aren't going to switch phones as much as they did before. They don't offer anything compelling.
Given the value I've got out of my iPhones I done see them as being expensive. Heck, my daughter is still using my 3GS. The length and depth of support, consistent hardware and software quality, app availability and longevity of the devices have been excellent, so I've never had any reason to switch to anything else. Every year has been touted as the time Android catches up, but it just vever happens. Having said that the most recent Galaxy's and the Moto G seem like good options. But I'm still concerned about software updates and app quality and availability. Maybe when my 3GS packs in, a Moto G or something like it might be in my daughters future, but it's just as likely she'll inherit another of our hand-me-down iPhones.
Yeah, I would say people haven't gotten enough time to sense that a $200 phone beats the pants off of a $750 one if you consider price, battery life and what it does objectively. Just a year or so ago $200 phones could be dinged in some way or the other - bad camera, bad battery life, low durability, slower performance etc.
I wonder how planned obsolescence plays into this though. If every two years your phone is going to become dog slow or is not getting updates anymore you will have to upgrade. Good old days of Windows where you could run the same hardware for 3 different OS releases and upgrade the CPU/GPU for the 4th one! :(
I have a Nexus 4 which is experiencing battery swelling. Apparently that's a common problem for them.
I don't think, though, that it's an example of "planned obsolescence"... I suspect that phone performance multiple years out just isn't a design consideration, overlooked in a way similar to what was going on in the stylized "real estate prices can't drop" belief model.
When it's not considered, it's pretty likely to be terrible.
When people start keeping their phones for several years, they'll get upset about aging issues, and graceful aging will become a design consideration.
Yeah for the prices they are selling the Nexus/Moto G type devices it makes somewhat sense that durability beyond 2 years wasn't their design concern.
Still leaves open the part about software updates and slowdowns due to updates. Apple for e.g. has better hardware quality than most but the slow downs due to major OS updates and withholding features from older devices definitely helps them with people upgrading every two years.
It's interesting iPad sales are down 25% year over year. That continues to be the biggest shock to me about Apple's product line, although that writing has been on the wall since 2013/2014.
I keep wondering when the desktop/laptop form factor is finally going to die. I thought tablets would do it but that's obviously wrong. Phones, surprisingly, seem to be continuing to eat away at the desktop use cases, which is expected, but I wasn't expecting them to be carrying the brunt of it, and there are ergonomic limits to how far that can go.
VR is the obvious candidate to take out desktops. The solitary nature of desktop activities fits VR well. That's my new operating hypothesis: in 10 years it will basically be phones+VR, probably with TVs still strong.
VR will eat some of TV, but it can't really compete with TV's ambient nature. AR could, and will eventually kill TV, but I am skeptical it will make a dent in the home in this decade, because that's how long it will take to get miniaturization where it needs to be for home use.
Yes but that doesn't apply to tablets unless you use a bluetooth keyboard. At that point you have a laptop in a strange formfactor and an OS that isn't optimised for this particular usecase.
Ever see someone working with "documents?" They have multiple windows open, but Excel spreadsheets, etc. the business market is a big chunk of what's left of the laptop/desktop market, and it's not amenable to tablets.
For now, while the apps that require heavy lifting outclass the horsepower of most laptops. But the list of things high-end laptops cannot handle is growing shorter every day. There will likely always be specialty activities, but there's also the concept of using the laptop as a thin client connected remotely to the cloud where the heavy lifting happens.
IMO, we’re seeing a very slow divergence from iOS-for-pocket-devices and iOS-for-tablets. You can see that today with multitasking support. Someday the “Springboard” desktop for iPads has to evolve away from the iPhone and vice versa.
I’ll bet a sandwich that Xcode for iPad is coming within two years. That won't mean anything to the consumer market, of course, but it will be remembered as the point where tablet computing got Real.
Young would-be developers who grew up on touchscreens, and find the notion of pushing around a pointer — instead of directly manipulating things — to be archaic and silly.
> Phones, surprisingly, seem to be continuing to eat away at the desktop use cases, which is expected, but I wasn't expecting them to be carrying the brunt of it, and there are ergonomic limits to how far that can go.
I'm curious as to how the ergonomics of extended coding sessions on an iPad would work out. Hunching over a touch screen for eight hours a day seems like it could get horribly uncomfortable.
Is anyone out there using an Android tablet for full time coding work?
You wouldn't need to be hunched over a touch screen though. bluetooth keyboard that either acts as a stand itself(like what Apple and Microsoft make for their respective devices), or a separate keyboard and stand. In that regard, it's not different than the ergonomics of a laptop, and people have been doing extended typing sessions on those for years.
> Phones, surprisingly, seem to be continuing to eat away at the desktop use cases
It's only surprising if we look at smartphones as phones... really they're just PCs, personal computers, the most portable version.
All other computing is either enterprise computers (in my experience, veeeery low-frequency, low-value business. Most people in offices are on computers with $150 of hardware that's years old and more than good enough for internet, email, office and basic database/administrative packages) and gaming (mostly separated into a console industry).
What's left really are students and some professionals who work from home. But I've got plenty of working friends who simply don't use computers anymore at home.
IMO it's foolish to think the laptop form factor is going anywhere, barring a fundamental shift in UX. Anything that requires productivity, e.g. content creation, is better done with a keyboard and some kind of instrument more precise than a finger. Any work involving accumulation of material from multiple sources (e.g. research) i.e. multitasking, is going to benefit from a larger screen form factor.
It's no surprise that mobile is eating consumption use cases as it means people can consume wherever they find themselves. But for the most part tablet UIs are just scaled up versions of phone UIs, even though individual apps may show more content laid out better with the additional real estate, multitasking and input don't work quite as well as laptops.
> Anything that requires productivity, e.g. content creation, is better done with a keyboard and some kind of instrument more precise than a finger.
That demands a clarification because I write computer programs, which I consider to be 'productive', and I hardly need a pointing device. I wonder if people were equally sceptical of mice catching on.
> Any work involving accumulation of material from multiple sources (e.g. research) i.e. multitasking, is going to benefit from a larger screen form factor.
Give me multitasking, sure, but I very, very rarely have multiple windows of separate applications showing; I might just have a weird workflow, but it just doesn't demand it, and I like having individual windows maximised. Maybe I (think I) find it less distracting.
Yes you are an outlier. If I'm working on a web app, I will probably have Visual Studio running, the browser, the browser debugger window, maybe Fiddler and Slack. I work okay with two monitors but when space allows I've worked with three and even four.
How do you get to "almost certainly"? What makes you think people want to wear a VR headset to get real work done? It's not even established what the effects of long-term VR usage are.
They said laptops wouldn't be as necessary. They were right. Lots of people who needed a laptop now only need a tablet or a phone. The laptop and the desktop were never in danger of going away, though, even in 2012.
I still can't believe that there are people who actually think VR is going to be used by anyone besides people who play video games. I've used an Oculus, and I've used a Vive, and I've used a Google Cardboard, and I've tried all sorts of neat demos.
I fully believe a photorealistic experience can be had, and I fully believe that that experience will be able to exist at a reasonable price point, but I don't believe normal people will be interested in such an experience.
As a medium, it's not nice to use with other people, which is a huge part of the way we consume our media. I don't believe that normal people are going to ever socialize by looking at each others avatars. If you consider interacting with someone's avatar socializing, you should understand that is why people make jokes at the expense of World of Warcraft players. Once the novelty wears off, people aren't going to find it interesting.
If you haven't read 'Rainbow's End' by Vernor Vinge, you should. Great look at how near-future technology might mingle with our lives, particularly the AR/VR aspect of it.
I was just discussing with my wife how noticeable it is that we loathe calling people except for a select few individuals. It is widely recognized younger generations prefer to text. However if their friends could have a visible presence next to them, I think there's something to be said for experiencing something and having that person "next to" you, even if virtually.
A recent A16Z podcast touched on this with telepresence/VR at a basketball game, and how even just having a basic VR representation of someone you were watching with seated next to you helped dramatically to improve immersion.
VR could be huge in simulated travel, much bigger than video games. What if, during your lunch break, you could book an hour with a camera-equipped Segway in Hong Kong and a take a look around the night market?
International tourism is available to only a very small percentage of the world's population. VR could be an interesting substitute that gives a travel-like experience to millions/billions of people.
iPad sales slowed down because once you've bought one the need to upgrade is pretty low. You don't drop them like phones so the break-factor is low. I'm still happy using an iPad 2 - it's plenty fast for web browsing and YouTube.
also, it's less important/less used than my laptop or phone, so that further makes the $600 upgrade a lower priority
Still, reading on an ipad is the best electronic reading experience imo. Kindle would beat it if you could display pdfs or math books reasonably. But an ipad beats the crap out of android for battery life; not necessarily screen-on time, but the silent drain when you leave it shut in your bag. When I leave my ipad in my backpack for a week, 1-2% battery is gone. My android tablet would drain in a week.
Or, well, maybe the desktop/laptop will just keep going strong.
Nothing compares to dual screens + real life at the same time. I want natural light AND big screen estate!
Walk into any office in the universe. Lots of PCs that aren't going anywhere.
Desktop/laptop is disappearing from marginal computer users, and the slowdown in technology drove a product with a 33 month service life in 2000 to a 60-72 month life today.
iPads still sell several times more than macs - which are the number one notebook sold. For both it's simply the same effect: the market is saturated, people don't buy a new iPad or a new Macbook every 2 years. For phones this also seems more and more likely to come. For the first phones every bit of performance of a new generation made a big difference, now it doesn't matter as much anymore.
I am no apple fanboy ... but this is no news. They only way people could possibly consume more iPhones is if Apple grinds them to a paste and sell them as dietary supplements. Or label them as statins.
Every person in the world that wants iPhone - already has one. With lack of killer apps in the last 2-3 years we are in mature market already.
I was litereally just walking down the street 5 minutes ago and this lady behind me kept saying out loud "FUCK YOU APPLE!!!"
I stopped and looked at her and she had the new Macbook Air -- and she was holding the charging cord and she was pissed off because "apple changed the fucking charger AGAIN!!!" and was lamenting that the lew cable isnt a standard USB connector and she was in a lurch with no ability to charge her machine because the new cable was not compatible with anything her or her friends had on hand.
Don't put too much weight on this data point as the loudest voices during tough Apple times are the most likely to go right out and buy iWhatever 7 the second it is release.
"I think it's dumb that Apple made my $999 pair of Beats useless when they removed my headphone jack, but... iPhone 7, man, gotta have it."
Because physically removing the headphone jack from the phones in people's pockets is something Apple are going to do? Because a lightning to headphone jack adapter is not a thing that's possible?
New MacBook Air in my hand. It's plugs match my 2011 version exactly, and also match a 2013 MacBook that's here too. Tell her to try again. I find USB fits on the third try.
Consumers have increasingly wised up to the two year more significant hardware update (and number increment), it would be more interesting to see sales later this year when iPhone 7 is released because in 2014/2015 there were all these reports about iPhone 6 being the fastest adopted and best selling iPhone yet.
Apple might start having to upgrade its computers to drive sales. The Mac "Pro" is an astounding 2+ years without an upgrade (I think the imacs are faster now...). The mac mini has gone 460 days without refresh. They do refresh their notebooks more frequently and I know i-devices drive a lot of their revenue, but charging full price for last years technology has to be holding back some sales.
Plus Ecc memory and dual graphic cards for the pro. Bu if your software is multi-core I guess its the way to go, but if your just using 4 cores, the iMac 5k is pretty competetive if not faster[1] and significantly cheeper.
I think the biggest thing Apple could do here is to change their app store policies to (re-)motivate existing developers and attract new ones. Letting prospective buyers test-drive apps, upgrade pricing, and better discovery come to mind. I have both a Mini and a Pro with Pencil and I love the hardware. The software is the problem though. Few apps make use of all the possibilities; existing apps will also have to be (re)written and possibly reconceived for the different form factors. It's a good sign that Phil Schiller is overseeing the app stores now, hopefully something will change this year.
Re: iPhone
Here, the obvious thing to do seems to produce a new 5S-sized model. 60 percent of 5S or older install base have not upgraded? Maybe there is a reason… Also, they could always try to go "down-market" and produce a greater variety like with the iPod to take further share from Google. I don't see the end of growth in this market, by far.
Re: currency effect
True, stronger dollar affects revenue or unit sales (where prices have been adapted) relative to previous years. But one could also argue that the years 2009-2014 were special in that the US weakened the dollar through QE, and perhaps Apple (and other US companies) enjoyed "backwinds" then rather than "headwinds" now. It looks whiny to me to say "look ma, 100 then is only 85 now". As someone said, "if my aunt had balls, she'd be my uncle". Macro gives and macro takes.
Also, the 214bn cash bandied about should be posed against the debt they took on to pay for the buybacks. So enterprise value not quite as low as suggested but I agree it's an undervalued company.
The problem with iPad is that tablet is a tough form factor, and many users aren't big app users -- they are web and media consumers.
The price point for a device that works for those users is heading south of $100, while iPad has a 3x entry price.
My wife happily uses our iPad 2. I have about 3,000 users of iPad 3's at work who aren't clamor I for new stuff -- it's almost like a thin client lifecycle.
Every product has a cycle. The iPhone is mature now. It basically does everything I need it to do. Only a radical change in what the product _is_ will make any difference from herein. Can't see it. Time to move on.
The watch is still an iPhone accessory. That's going to take time to mature, and will eventually be a mass market product (or more likely the non-Apple equivalents if Apple don't figure it out). Too many technical problems for the time being, but things will improve.
In the meantime, Apple desperately need their next big thing, and it seemed incredibly obvious to me even years ago that a full TV was a no-brainer. TV interfaces suck, I mean they are just _awful_, have you used a modern TV? If you don't own one, try out the controls next time you're at a friend's house. Be prepared to feel alternating waves of anger and despair. It's so so bad, if modern TVs were websites they'd have flashing GIFs and a sign saying "Welcome to our homepage!" Actually, it's worse than that. It's like using a broken flash animation over a dial-up connection with the latency of relayed semaphore.
The fact that Apple _haven't_ yet launched a full TV makes me think they have completely lost the plot. Steve talked about it on many occasions, and he was absolutely spot-on (as usual) in his analysis of current products, so where the heck is it? The market is there, the disruption potential is unbelievably huge, the timing is perfect. Tim had it right when he predicted "apps" (interactive channels) would be the future of TV, but not in the ludicrous form of a mac mini intruding into my living room with cables hanging out the back of a TV, especially if it's wall-mounted. If there's one thing the consumer world does not need, it's more stupid third-party boxes plugged into the back of TVs.
Modern TV UIs are utter, utter, garbage. They're the dumb phones of the contemporary consumer electronics landscape. This is exactly the type of market Apple usually walk into and completely monopolise. How on earth have they not done this yet? Who doesn't want control of the biggest screens in the house? That are increasingly going to integrate with mobiles? That connect to Games Consoles, which you could... replace. I mean, for the love of god, the potential is ludicrous, what on earth is wrong with them?
It seems that Apple bet a lot on the TV in the past few release cycles, but that the cable/network execs derailed that plan. In the bay area there were a bunch of Apple TV billboards put up, only to hear within a week that Apple was "frustrated with negotiations over its TV service[1]. There seemed to have been big launch plans that were shelved when Apple couldn't pull all the content producers on board for a grand debut.
Seems Apple didn't quite get their way this round, and as a result there are a lot of stale products out there.
I can't tell if you're kidding, but the billboards are for the new Apple TV that came out late 2015, and they have nothing to do with that rumor article. Similar themed TV ads are still running.
> In the meantime, Apple desperately need their next big thing,
Why 'desperately'? They have a product line that generates a billion dollars in profit every five days. They have over $200 billion of cash on hand. That doesn't sound like a desperate situation.
Because they are heavily over-reliant on a single product that is highly vulnerable to market shifts, and has seemingly little room left for growth. It takes time to gain traction in a new market, so their NBT should be here by now.
Modern TVs are garbage, but the cable box from my provider is orders of magnitude worse. A proper Apple TV might work for cord cutters, but it will never be sufficient for Cable & Satellite subscriptions. There you have a horrible, laggy interface foisted upon you.
100% agree, without consider another market is IMO a no brainer: Gaming!
They have the biggest AppStore out there and yet they waited many years to let people playing with it on tv in a indecent way!
I'm not saying that a powerful AppleTV an improved AppStore market can replace PS/XBONE but has a great potential to compete with WII as iPhone did with Gamboy.
Talking about Nintendo. I don't yet understand why they bought Beats.
I would bought Nintendo or steal a contract from them to license their titles (Mario, Zelda etc... will run perfectly on a iOS TV device)!
Beats was a profitable, high margin business, the gaming industry - not so much. But with gaming moving toward mobile, why risk actually going into the gaming industry where success or failure is based on luck when they get a 30% cut of all money spent on iOS without any risk?
After Apple strong armed the record labels into giving up DRM, the content providers would not be crazy to do their utmost to sabotage an Apple play for ownership of the living room.
Imagine the money to be made when you can exclusively license major releases to specific brands of equipment in specific countries. The mechanism is there in HDMI to say "this Blu-Ray only works on Samsung TVs that are less than 6 months old." Imagine what Samsung would pay a studio for that! The mechanism is there to use computer vision to make sure you are actually watching ads. The networks must be salivating. Every copyright owner wants their own subscription service and player and geographical exclusive deals.
Apple would serve its customers, the consumers. The MPAA's members know that. Apple TV may be allowed to exist now, but not for long.
> The mechanism is there in HDMI to say "this Blu-Ray only works on Samsung TVs that are less than 6 months old." Imagine what Samsung would pay a studio for that!
Imagine what I and probably several other potential viewers would pay for that. Not a cent.
The current movie and film situation already is pretty bad, unlike music which I can buy anywhere without DRM. I happily pay for things I enjoy and usually buy 10-20 albums monthly + streaming for preview purposes. With movies these days, I mostly can't buy them.
Furthermore I don't see how the end of DRM has been any problem for the music industry. If they made a mistake it was probably the shift to streaming.
Not sure if Apple would see much of a return from this though. Thus not sure if it will happen. TV lifecycles are long; each replaced just under a decade. It's a tough business with low returns on invested capital.
The other issue is content. Would make sense for them to partner up with Netflix. Netflix has streaming rights (don't know how precisely streaming is defined in their contracts), and Apple knows how to make consumer devices that users want and will pay for.
Would be good to see an improved version of the Apple TV box (sans wires).
TV is not the next big thing. They are low margin, bulky, and on a very long replacement cycle. I've read 7 years. In most developing markets, cheap tablets are the main source of viewing video.
Once you get a HDTV, you keep it until it breaks - hence the failure of every new TV technology since HD.
The TV as a product category basically does not exist anymore. Instead it has splintered into three categories: panels, computers, and services.
The panel manufacturers are now building computers into all their panels. Unfortunately, they suck at software and do not have any services.
The service providers are also building computers into their service boxes. They are much better at software, and obviously have services.
Apple is a computer maker who is trying to become a service provider. Unfortunately for Apple, the existing service providers are not as dumb as the music industry was and will not give Apple their lunch.
Panels are a commodity with low margins and slow replacement rates. Which is why neither Apple nor service providers are trying to sell panels.
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[ 44.5 ms ] story [ 4447 ms ] threadAn important metric to note from there release however is that 66% of sales came from international markets.
Maybe sales were over-stated in the decade prior due to weakness in the US dollar? I don't understand the meaning of picking a favourable exchange rate to normalize the earnings.
For all we know, it's high dollar from here to eternity.
The reason for this is that, while Apple gets incrementally better, it at least does not tend to get worse. Compare with Windows 10.
Superficially, Apple tech is also a status symbol, especially among the young--but that is not to say that the cool kids do not buy Android phones, Kindles or Chromebooks. Less superficially, the target market of Apple is the luxury/privileged--and this segment of society does not consider advantages of upgrading and neither do they consider cost. It is the same segment of society (or at least significantly overlaps with the same segment) that will order avant-garde splats of "exotic modern art" food for exorbitant prices where others would consider frugality or nutritional benefit. It is the same market that all marketing targets: the clueless and impressionable.
I am not saying Apple devices are bad, I am saying they are heavily marked up far beyond the value that OS X and its exclusive applications add, and ergo the majority of its buyers are sufficiently well-off that they can afford to have the most fashionable computer. There is very little fashionable about having something from the previous season, let alone 2012 (despite the fact that a MBP from this year will probably still be sufficient for a web developer in a typical situation).
Of course, I am going to get lambasted if I do not also mention that OS X is (arguably) well-designed in terms of user interface. I say arguably because, personally, I do not see this glistening advantage--but I'm a developer, I want a command line and a modern web browser. What I do see is more effort put into the actual polish of the UI than Microsoft seems to invest in their OS.
It's no different to Chrome vs Firefox. Chrome is building up quite an impressive market share, despite the fact that its peers (excluding IE, as always, because apparently implementing the flexible box model was too difficult) can do most of the same things that Chrome can do.
In a similar vein, Chromium (FOSS Chrome) is readily available to use (yes, yes, dev builds, but they are remarkably stable and I've yet to experience an issue with a Chromium dev build) yet nobody uses it. While obviously discoverability is an issue (since Chromium does not advertise that it can be easily installed) I imagine that if you offered Apple hardware at a lower price without branding, it would sit in the branded Apple hardware's shadow. Especially given the angst already present among cool kids about phones which seem to imitate the iPhone's physical product design)
Well, this has been thoroughly anecdotal and I don't usually like to do that, but hey ho. If it's of value for someone to read and expand upon or criticise, why not post it
[0]: http://www.phonearena.com/news/Apples-iOS-eats-into-Androids...
> It is the same segment of society (or at least significantly overlaps with the same segment) that will order avant-garde splats of "exotic modern art" food for exorbitant prices
Those are unaffordable luxuries.
Jeep is a good comparison. Jeep's vehicles are probably not much different than other car makers, but there is a huge and well established aftermarket parts business. Jeeps hold value well in the used market.
I would be interested in the used value of Apple vs comparable Android products.
I find a dumb phone meets my personal needs, so I have little interaction with either product.
Edit: I agree that people in general upgrade their devices more often than they need to based on their use case. It would be interesting to know if Apple owners do so more often than Android owners.
They nailed the product planning, they just missed the collapse of oil and the high dollar.
Then again i can't help but wonder if he got help by Apple computers being a de-facto standard in media production.
I seem to recall that the first time i heard about iPod was because some artist or actor was seen with some white wires dangling from his ears. And that was back when you needed a Firewire card and third party software to get it working on anything but a Mac.
And as best i recall it was not in the tech section or some such.
No one else did that. Every other computer company allowed other motivations to trump human factors.
These days it's standard practice... although, few people know how to tell a good designer from a bad one, so they hire bad ones who do crap work and the institution never really trusts them and project managers end up running the show, mostly by allowing powerful employees to put their pork barrel projects on the schedule.
Steve Jobs could tell good designers from bad ones, he provided a wall of protection and power around them, and he fought like hell to keep the company solvent until the rest of the organization started to trust them. That's why they have devices people want to re-purchase year after year.
Apple manages to provide a complete and round packet. Sure, some aspects are better or more pronounced than others, but it’s not very uneven.
> Luca Maestri, Apple’s chief financial officer, said the company is feeling the effects of a "very different" economic environment around the world. Apple is beginning to see "softness" in China, particularly in Hong Kong, he said.
http://www.bloomberg.com/news/articles/2016-01-26/apple-fore...
https://finance.yahoo.com/news/apple-sells-fewer-iphones-exp...
That makes quite a difference (and illustrates that it can be pretty hard to figure out growth numbers for a multinational corporation, even one that has a super-simple product line like Apple's).
Year on year revenue was only up 2%, but look at the "in constant currency" section. If there was no currency change, it would have been up 8%.
> Investors have long relied on Apple to deliver one crucial attribute: growth. Now they are beginning to wonder whether Apple’s days as a growth stock are coming to an end.
http://www.nytimes.com/2016/01/25/technology/looking-for-sig...
$74.6 billion ---> $75.9 billion is not huge but it's noteworthy they've maintained positive numbers.
http://www.nytimes.com/2016/01/27/technology/apple-earnings-...
Yes, and they just advised that the current quarter is going to be less than Q1 2015. The NYT was correct.
I don't have a position but was hoping for a big win this quarter. AAPL exemplifies a lot of the issues many companies are having because of exchange rates and I do not expect the broader market to do much better for awhile.
Especially with so much foreign debt in USD, a lot of companies are going to have a hard time paying off bonds and loans, hurting their ability to grow.
The largest quarterly profit ever recorded by any company wasn't enough of a big win? I don't want to soapbox too much, but there is something deeply wrong with capitalism when you can be more profitable than any corporation that has ever existed and it seems like a letdown.
> Especially with so much foreign debt in USD, a lot of companies are going to have a hard time paying off bonds and loans, hurting their ability to grow.
All the tech companies that have had big bond issues recently (Apple, Microsoft, etc.) are doing it because it's literally cheaper than repatriating their actual foreign earnings to the United States. As long as those foreign earnings continue to exist, borrowing money is arguably a better way to finance their day-to-day operations, especially when interest rates don't seem likely to climb much in the intermediate future.
As for bonds, I meant by foreign companies. Many bonds have been written with USD which are now becoming painful to payoff as their own currencies are not valued well against the USD.
Ah, I'm sorry, I misunderstood your post. But even so I'm not clear on why the indebtedness of foreign companies affects Apple all that much, except that it's a signal of the health of the global economy.
Estimation of ROI potential decreases, usually dramatically, when a company is suspected of having plateaued...
Of course it can. They didn't meet revenue estimates and advised that the current quarter is going to be much worse than expected. Wall Street [typically] values companies based on future expected earnings and there is constant pressure to increase growth. The same compound math that gives quickly growing companies lofty valuations works in reverse when your revenues are declining.
Apple continues to do the smart thing given the situation: buy AAPL.
As opposed to investing in more R&D? Or, perhaps acquiring start ups with exciting new products or technologies?
When you have $200 billion dollars lying around and your business is dramatically undervalued, it would be practically criminal not to buy some of it back, to save on dividend payments if for no other reason.
Who's to say Apple is undervalued? It's one of the most widely held companies and they have been so for several years. Tim Cook doesn't know what's going to happen in China. Their US sales were down in Q4 2015 and they are forecasting global sales to be down in Q1 2016. They may have been spending billions buying back shares at an all time high.
People value what Apple offers. A global depression could hurt the company badly. Anything short of that should allow them to keep making money. A bad Apple quarter is still lots and lots of money.
It's not that hard, their largest growth market (by far) is a huge question mark. It's tough to rely on a single product that is expected to be replaced every year. There will be a ton of pressure on the iPhone 7.
It was reported that the average selling price of iPhones was up by $3 and would have been up by $80 if it weren't for currency fluctuations.
You must know something that millions of other sophisticated people don't.
Relying on the stock price as a valid indicator of the value of a company is a fool's errand, regardless of the "sophisticated people" trading it.
I really wish someone enlighten me why, why spend 183 billion on share buyback and dividends when it has nearly no use for the stock price, and no real use for the company long term etc.
GE, for example, has been busy making itself smaller over the past couple of years. Google split itself up to become more focused and Sony just announced the creation of a separate PlayStation division.
Buybacks may or may not be smart. They bought a ton of stock last year when the shares were 20% higher than today. That's a rather expensive way to make your EPS.
I put faith in their meaning because Apple is valued based on them.
I do find it fascinating how the market works to adjust to new knowledge. The expectation or estimates of someone may not even have a bearing on what actually will happen.
You could almost see it as a delusion suffered by someone to have an estimate/expectation - as it will never be exactly reality - but it turns into an actual market event.
I used to think the same thing, but realized I was looking at it incorrectly.
A companies stock prices has a certain level of earnings growth built in. If future sales don't hit those assumptions, then stock falls.
Yes, the biggest quarterly profit is great, but that's yesterday's news. The market is always looking forward.
Why is this a surprise, let alone a knock against capitalism?
Share price at any given moment is based on available information, meaning the current price is based on expected phone sales, exchange rates, revenue, profits, etc. Those expectations were high going into earnings.
Really?
Current stock prices reflect the expected future cash flows and the cost of capital.
When new information changes the expectation of future cash flows -- like, say, a quarterly report that indicates growth is slower than estimated -- you'd expect the price to drop.
No one is saying that Apple didn't make a lot of money. No one said they aren't a great company. They're saying "the picture of the future just changed a bit."
So, what's wrong with capitalism? What's irrational here?
The entire price difference is VAT.
Since sales tax is applied on both state and local government levels it also simplifies pricing both nation wide and even state wide.
Walmart for example sets a price for product A that price is the same across all states (for this example I don't know if Walmart has regional prices to adjust for cost of living but I don't think so).
45 states have sales taxes these come at different rates, about 40 states also allow for local sale taxes meaning that local county can set up it's own additional sales tax this means that the end price is different between states and even within states with local sales tax collection.
As a consumer you know exactly what you are paying if the product costs 100$ then you pay 100$ for that product and you pay additional tax for the sale when you know your state taxes you 8% and your local county taxes you additional 4% you can hold them responsible for what your taxes are being used for, you can lobby for lower sale taxes and you can always move to a jurisdiction with lower sales tax.
The way the sales tax is collected also allows for more convenient exemption from sales tax especially in non B2B purchases a sales tax exemption certificate can be filled at any purchase and they will not charge you sales tax.
You can literally go online print the exemption certificate for your state e.g. http://www.tax.ohio.gov/portals/0/forms/fill-in/sales_and_us... go to a shop pay the sticker price and fill it out and the store will not collect the sales tax on that sale. Compared to how annoying it is to get VAT refunded and just how many caveats there are for getting your VAT back it's 100 times better.
In countries, where sales tax is federal and it's a flat 10% everywhere, I'm eternally grateful that I don't have to do mental gymnastics to figure how how much something will actually cost.
VAT is added to the price of the goods and is an intrinsic part of their price which means when they are resold VAT affects the final resell price even tho it's only collected on the initial sale. Say a car costs 50K, US uses sales tax Atlantia uses VAT both countries tax at 10% in the US one buys a car pays 50K for the car and 5K in additional sales taxes, a person in Atlantia pays 55K "sticker price" which includes VAT both paid 55K.
Both of them decide to sell the car after 2 years the resell price in both countries is calculated based on 50% of the original sticker price so in the US the car is sold for 25K and in Atlantia the car is sold for 27.5K.
Additionally since sales tax in most us states (iirc all but like 2 or 3) is only applied to tangible goods this means that most services tend also be considerably cheaper to the end consumer than in countries with VAT/GST.
But when I'm reselling something, I'm looking to capture as much as my cost (how much I paid for it) as possible, including the GST. You could even consider this that I'm just a middleman who is passing on the GST to the 'end consumer'.
https://en.m.wikipedia.org/wiki/Double_Irish_arrangement
Free click-through-Google link to read: https://www.google.com/search?q=Apple+iPhone+Sales+Grow+at+S...
iPhone sales are basically flat from last year, growing at about 0.4%. This isn't just an Apple phenomenon either. As with desktops/laptops several years ago, and tablets over the last couple years, we're getting to the point that it doesn't make sense to upgrade your phone every year or two. As long as your phone still works and does what you need it to, anyway.
If you move 3-4 million phones for China launch from prior quarter to holiday and suddenly growth in the holiday quarter doesn't look all that anemic (or the previous quarter as spectacular).
The revenue growth for the two quarters combined is 9.2%.
The biggest reason for this (in the US at least) is the decline of 2-year mobile phone contracts over the last year. Many people are rethinking their upgrade cycle now that cellphones are a direct expense instead of being subsidized by the carrier.
Even back into the turn of the century, if you bought an unlocked phone off eBay, you were paying full whack for your rate plan, even though you didn't use a subsidy. I even had Cingular once try to tell me I was under contract, simply because I had signed up less than 2 years ago -- even though there was no contract (I paid for my own phone).
Then a couple of years ago, they started offering "BYOD" pricing plans, so I paid my $300ish ETF, got my iPhone unlocked, and "saved" $15/mo. It was roughly breakeven.
Now I just pay full price for my phone if and when I want a new one. It helps me recognize the full cost of what I'm buying, and it means I'm not tied to a carrier.
http://www.apple.com/shop/iphone/iphone-upgrade-program
(Oh yeah, with free AppleCare+ insurance)
It sure looks like Apple is planning for a future where everyone is paying $25/mo forever to lease the latest handset that tickles their fancy, with the carrier being a swappable option.
I wouldn't expect a huge number of people to go back to "dumb phones" though. Even if their carrier won't subsidise it or provide a payment plan, people will buy new smart phones, because they're use to having the features. Upgrades will just be less frequent.
No ones going back to dump phones
I dont understand why you would think smart phones would make a comeback.
I'd be surprised to find there was no carrier profit built into this.
http://articles.latimes.com/2012/feb/10/business/la-fi-iphon...
This has been the case for T-Mobile and Sprint, at least in the scenarios that I have looked at.
Add mild economic slowdown and strong dollar, result: flat growth.
I've never been an iPhone guy because I largely prefer Android-style notifications and deep Google integration and that is a major selling point to me. Right now the Nexus 5x is looking pretty nice.
A friend of mine that works at Google -- and received a free Nexus 5x for Christmas -- told me the n5x is a pretty lousy phone.
I Googled around, and sure enough, it looks like a lemon.
And I can reach all of the corners with the thumb while holding it, it just doesn't feel comfortable.
And twice the RAM (1 GB iPhone 6 vs. 2 GB iPhone 6s) and a faster CPU and other goodies.
I bought a 6s and love it (since I upgraded from a 5) but if I already had a 6 I wouldn't have upgraded.
This is what happens when you turn over leadership of a company to a supply chain guy from a creative genius. Sure they can make bigger, better, fast, more and make record money, but the creative soul of the company is gone. RIP Steve.
Some of my favorites:
* https://twitter.com/asymco/status/692106160376303616
* https://twitter.com/asymco/status/692108871012343808
* https://twitter.com/asymco/status/692111023197798401
http://images.apple.com/pr/pdf/q1fy16supplementalmaterial.pd...
Japan has the biggest in percentage drop. China and Europe are up.
I own a Moto G 3rd Gen. Swift, waterproof, stong-glass, bloat-free, removable battery, memory-upgradable, £150. Does the job I need it to do and, I'd imagine, the job most others need also. (I don't work for Moto, nor even remotely related to them).
I've been wondering what on earth iPhone and Sammy users are doing with their £400-£600 modern icon-ophones
Are people just in a trance?
(This from a renowned gadget freak who used to trade in smartphones every 3 months)
I've owned every model of the iPhone (some twice for loss/damage) up until the 6. The battery life just isn't acceptable for me (i'm a heavy user, granted, but apple hasn't made any improvements in that area for a long time - whatever power savings they've done has been put into making the device thinner).
And, the phone does exactly what I need for 1/3rd the cost. Plus I don't have to pay another £100+ for a decent amount of storage.
I think Apple (and other high end smartphones) are going to be really stuck with this. Even if they don't switch to Android, people just aren't going to switch phones as much as they did before. They don't offer anything compelling.
Same problem has happened with PC/Mac/iPad.
I wonder how planned obsolescence plays into this though. If every two years your phone is going to become dog slow or is not getting updates anymore you will have to upgrade. Good old days of Windows where you could run the same hardware for 3 different OS releases and upgrade the CPU/GPU for the 4th one! :(
I don't think, though, that it's an example of "planned obsolescence"... I suspect that phone performance multiple years out just isn't a design consideration, overlooked in a way similar to what was going on in the stylized "real estate prices can't drop" belief model.
When it's not considered, it's pretty likely to be terrible. When people start keeping their phones for several years, they'll get upset about aging issues, and graceful aging will become a design consideration.
Still leaves open the part about software updates and slowdowns due to updates. Apple for e.g. has better hardware quality than most but the slow downs due to major OS updates and withholding features from older devices definitely helps them with people upgrading every two years.
Nothing much but the camera was a nice upgrade from my moto g 2nd gen.
I keep wondering when the desktop/laptop form factor is finally going to die. I thought tablets would do it but that's obviously wrong. Phones, surprisingly, seem to be continuing to eat away at the desktop use cases, which is expected, but I wasn't expecting them to be carrying the brunt of it, and there are ergonomic limits to how far that can go.
VR is the obvious candidate to take out desktops. The solitary nature of desktop activities fits VR well. That's my new operating hypothesis: in 10 years it will basically be phones+VR, probably with TVs still strong.
VR will eat some of TV, but it can't really compete with TV's ambient nature. AR could, and will eventually kill TV, but I am skeptical it will make a dent in the home in this decade, because that's how long it will take to get miniaturization where it needs to be for home use.
Besides, as far as programming goes, I'm happy I got all the power I can find to iterate quickly, and tablet != power.
If you need more power, you remotely connect to a server that has as much power as you need.
(I say this as I'm currently on my laptop ssh'd into a Unix server to run cadence)
I’ll bet a sandwich that Xcode for iPad is coming within two years. That won't mean anything to the consumer market, of course, but it will be remembered as the point where tablet computing got Real.
Who is asking for it?
Also wake me up when iOS isn't an absolutely fascist walled garden.
I'm curious as to how the ergonomics of extended coding sessions on an iPad would work out. Hunching over a touch screen for eight hours a day seems like it could get horribly uncomfortable.
Is anyone out there using an Android tablet for full time coding work?
It's only surprising if we look at smartphones as phones... really they're just PCs, personal computers, the most portable version.
All other computing is either enterprise computers (in my experience, veeeery low-frequency, low-value business. Most people in offices are on computers with $150 of hardware that's years old and more than good enough for internet, email, office and basic database/administrative packages) and gaming (mostly separated into a console industry).
What's left really are students and some professionals who work from home. But I've got plenty of working friends who simply don't use computers anymore at home.
It's no surprise that mobile is eating consumption use cases as it means people can consume wherever they find themselves. But for the most part tablet UIs are just scaled up versions of phone UIs, even though individual apps may show more content laid out better with the additional real estate, multitasking and input don't work quite as well as laptops.
That demands a clarification because I write computer programs, which I consider to be 'productive', and I hardly need a pointing device. I wonder if people were equally sceptical of mice catching on.
> Any work involving accumulation of material from multiple sources (e.g. research) i.e. multitasking, is going to benefit from a larger screen form factor.
Give me multitasking, sure, but I very, very rarely have multiple windows of separate applications showing; I might just have a weird workflow, but it just doesn't demand it, and I like having individual windows maximised. Maybe I (think I) find it less distracting.
Whether the result will usurp mouse+keyboard remains to be seen, but I suspect it will. Body tracking just has more bandwidth.
Hindsight is 20/20: I remember a time (2012-ish) when a lot of people were banging on the "post-PC world" drum and anointed the iPad as the harbinger.
I fully believe a photorealistic experience can be had, and I fully believe that that experience will be able to exist at a reasonable price point, but I don't believe normal people will be interested in such an experience.
As a medium, it's not nice to use with other people, which is a huge part of the way we consume our media. I don't believe that normal people are going to ever socialize by looking at each others avatars. If you consider interacting with someone's avatar socializing, you should understand that is why people make jokes at the expense of World of Warcraft players. Once the novelty wears off, people aren't going to find it interesting.
It's not great for text either, and I don't think it will ever be better than a 4k monitor for text... Always bet on text. http://graydon2.dreamwidth.org/193447.html
I agree that AR could be huge. But VR gets way too much hype.
I was just discussing with my wife how noticeable it is that we loathe calling people except for a select few individuals. It is widely recognized younger generations prefer to text. However if their friends could have a visible presence next to them, I think there's something to be said for experiencing something and having that person "next to" you, even if virtually.
A recent A16Z podcast touched on this with telepresence/VR at a basketball game, and how even just having a basic VR representation of someone you were watching with seated next to you helped dramatically to improve immersion.
International tourism is available to only a very small percentage of the world's population. VR could be an interesting substitute that gives a travel-like experience to millions/billions of people.
Still, reading on an ipad is the best electronic reading experience imo. Kindle would beat it if you could display pdfs or math books reasonably. But an ipad beats the crap out of android for battery life; not necessarily screen-on time, but the silent drain when you leave it shut in your bag. When I leave my ipad in my backpack for a week, 1-2% battery is gone. My android tablet would drain in a week.
Desktop/laptop is disappearing from marginal computer users, and the slowdown in technology drove a product with a 33 month service life in 2000 to a 60-72 month life today.
It's not dead, just not growing in sales.
The grand piano didn't die when the keytar was invented, I don't think laptop/desktop machine form factors are in terrible danger either.
Every person in the world that wants iPhone - already has one. With lack of killer apps in the last 2-3 years we are in mature market already.
Well not really. India is still an untapped market although most Indians cannot afford one right now but they will in the future.
Apple is going to open its exclusive stores in India this year.
http://www.reuters.com/article/us-apple-india-retail-idUSKCN...
I stopped and looked at her and she had the new Macbook Air -- and she was holding the charging cord and she was pissed off because "apple changed the fucking charger AGAIN!!!" and was lamenting that the lew cable isnt a standard USB connector and she was in a lurch with no ability to charge her machine because the new cable was not compatible with anything her or her friends had on hand.
"I think it's dumb that Apple made my $999 pair of Beats useless when they removed my headphone jack, but... iPhone 7, man, gotta have it."
[1]http://barefeats.com/imac5k.html
I think the biggest thing Apple could do here is to change their app store policies to (re-)motivate existing developers and attract new ones. Letting prospective buyers test-drive apps, upgrade pricing, and better discovery come to mind. I have both a Mini and a Pro with Pencil and I love the hardware. The software is the problem though. Few apps make use of all the possibilities; existing apps will also have to be (re)written and possibly reconceived for the different form factors. It's a good sign that Phil Schiller is overseeing the app stores now, hopefully something will change this year.
Re: iPhone
Here, the obvious thing to do seems to produce a new 5S-sized model. 60 percent of 5S or older install base have not upgraded? Maybe there is a reason… Also, they could always try to go "down-market" and produce a greater variety like with the iPod to take further share from Google. I don't see the end of growth in this market, by far.
Re: currency effect
True, stronger dollar affects revenue or unit sales (where prices have been adapted) relative to previous years. But one could also argue that the years 2009-2014 were special in that the US weakened the dollar through QE, and perhaps Apple (and other US companies) enjoyed "backwinds" then rather than "headwinds" now. It looks whiny to me to say "look ma, 100 then is only 85 now". As someone said, "if my aunt had balls, she'd be my uncle". Macro gives and macro takes.
Also, the 214bn cash bandied about should be posed against the debt they took on to pay for the buybacks. So enterprise value not quite as low as suggested but I agree it's an undervalued company.
The price point for a device that works for those users is heading south of $100, while iPad has a 3x entry price.
My wife happily uses our iPad 2. I have about 3,000 users of iPad 3's at work who aren't clamor I for new stuff -- it's almost like a thin client lifecycle.
The watch is still an iPhone accessory. That's going to take time to mature, and will eventually be a mass market product (or more likely the non-Apple equivalents if Apple don't figure it out). Too many technical problems for the time being, but things will improve.
In the meantime, Apple desperately need their next big thing, and it seemed incredibly obvious to me even years ago that a full TV was a no-brainer. TV interfaces suck, I mean they are just _awful_, have you used a modern TV? If you don't own one, try out the controls next time you're at a friend's house. Be prepared to feel alternating waves of anger and despair. It's so so bad, if modern TVs were websites they'd have flashing GIFs and a sign saying "Welcome to our homepage!" Actually, it's worse than that. It's like using a broken flash animation over a dial-up connection with the latency of relayed semaphore.
The fact that Apple _haven't_ yet launched a full TV makes me think they have completely lost the plot. Steve talked about it on many occasions, and he was absolutely spot-on (as usual) in his analysis of current products, so where the heck is it? The market is there, the disruption potential is unbelievably huge, the timing is perfect. Tim had it right when he predicted "apps" (interactive channels) would be the future of TV, but not in the ludicrous form of a mac mini intruding into my living room with cables hanging out the back of a TV, especially if it's wall-mounted. If there's one thing the consumer world does not need, it's more stupid third-party boxes plugged into the back of TVs.
Modern TV UIs are utter, utter, garbage. They're the dumb phones of the contemporary consumer electronics landscape. This is exactly the type of market Apple usually walk into and completely monopolise. How on earth have they not done this yet? Who doesn't want control of the biggest screens in the house? That are increasingly going to integrate with mobiles? That connect to Games Consoles, which you could... replace. I mean, for the love of god, the potential is ludicrous, what on earth is wrong with them?
Seems Apple didn't quite get their way this round, and as a result there are a lot of stale products out there.
[1]http://www.businessinsider.com/apple-is-frustrated-with-its-...
Why 'desperately'? They have a product line that generates a billion dollars in profit every five days. They have over $200 billion of cash on hand. That doesn't sound like a desperate situation.
Not Nicholas Carr, btw?
They have the biggest AppStore out there and yet they waited many years to let people playing with it on tv in a indecent way!
I'm not saying that a powerful AppleTV an improved AppStore market can replace PS/XBONE but has a great potential to compete with WII as iPhone did with Gamboy.
Talking about Nintendo. I don't yet understand why they bought Beats.
I would bought Nintendo or steal a contract from them to license their titles (Mario, Zelda etc... will run perfectly on a iOS TV device)!
Beats was a profitable, high margin business, the gaming industry - not so much. But with gaming moving toward mobile, why risk actually going into the gaming industry where success or failure is based on luck when they get a 30% cut of all money spent on iOS without any risk?
Imagine the money to be made when you can exclusively license major releases to specific brands of equipment in specific countries. The mechanism is there in HDMI to say "this Blu-Ray only works on Samsung TVs that are less than 6 months old." Imagine what Samsung would pay a studio for that! The mechanism is there to use computer vision to make sure you are actually watching ads. The networks must be salivating. Every copyright owner wants their own subscription service and player and geographical exclusive deals.
Apple would serve its customers, the consumers. The MPAA's members know that. Apple TV may be allowed to exist now, but not for long.
Imagine what I and probably several other potential viewers would pay for that. Not a cent.
The current movie and film situation already is pretty bad, unlike music which I can buy anywhere without DRM. I happily pay for things I enjoy and usually buy 10-20 albums monthly + streaming for preview purposes. With movies these days, I mostly can't buy them.
Furthermore I don't see how the end of DRM has been any problem for the music industry. If they made a mistake it was probably the shift to streaming.
The other issue is content. Would make sense for them to partner up with Netflix. Netflix has streaming rights (don't know how precisely streaming is defined in their contracts), and Apple knows how to make consumer devices that users want and will pay for.
Would be good to see an improved version of the Apple TV box (sans wires).
Once you get a HDTV, you keep it until it breaks - hence the failure of every new TV technology since HD.
The panel manufacturers are now building computers into all their panels. Unfortunately, they suck at software and do not have any services.
The service providers are also building computers into their service boxes. They are much better at software, and obviously have services.
Apple is a computer maker who is trying to become a service provider. Unfortunately for Apple, the existing service providers are not as dumb as the music industry was and will not give Apple their lunch.
Panels are a commodity with low margins and slow replacement rates. Which is why neither Apple nor service providers are trying to sell panels.