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« I Dream. No I Still Dream the iDream. Shouldn’t Apple Give Us the iCamera Now? | Main | iPhone X: Now the pain »

September 06, 2017

Comments

Tomi T Ahonen

Hi Asko

I deleted your post and you know why. I'll be happy to discuss the issue but don't link to trolling sites

Tomi Ahonen :-)

E.Casais

The comparative evaluation is interesting, but remains speculative till Apple officially unveils its forthcoming products.

As for peak Apple, I will just remind a comment I put here (http://communities-dominate.blogs.com/brands/2014/05/lets-do-the-big-mobile-numbers-blog-where-are-we-in-mobile-stats-in-2014the-mobile-subscription-rate-is-at-or-very-very-nea.html?cid=6a00e0097e337c883301a3fd092ad3970b#comment-6a00e0097e337c883301a3fd092ad3970b) more than three years ago:

"I have always stated that Apple will remain safe and hugely profitable till the medium-term, and that the point where it may start to decline (but not collapse) is when its employees move to the new fancy headquarters."

No elaborate analysis, just applying an empirical observation made by others regarding a variety of large corporations.

Apple employees started moving to the new fancy headquarters in April 2017; accordingly, peak Apple should be upon us.

Tomi T Ahonen

Hi E

LOL, so it was you who made that very interesting observation of connecting the move to new corp HQ to the peak in their position. I remember the original comment. I was reminded of it a few weeks ago when the news broke that Apple employees are unhappy at their new HQ. And I was reminded of your comment (but didn't remember who it was here on the blog). haha, yes VERY astute observation indeed and it may well turn out to be the perfect canary in the coal mine, to pinpoint the start of the peak...

Tomi Ahonen :-)

Greg

We know more about this iPhone announcement than any previous due to the accidental HomePod firmware release (with debugging enabled and only intended for Apple employee beta-testing).

Apple is again splitting a product line into consumer and pro as with their desktops (iMac vs Mac Pro), laptops (MacBook vs MacBook Pro), and now iPads (iPad and iPad Pro). iPhone Pro, anyone? Apple has been doing this ever since Jobs returned 20 years ago and slashed the number of products offered. Ever since, Apple has been careful when adding and transitioning products (such as MacBook Air effectively replacing MacBook).

iPad Pro has allowed Apple to lower the price of iPad. Will be interesting to see if iPhone drops from its $649 price with the introduction of a higher price tier. The iPhone Pro also allows Apple to introduce premium technology earlier in manufacturing without requiring a 200 million component order.

"All prices that I talk about on this blog are the real price, not the fake subsidised price distortion that is still in use in some countries like the USA" - while it may still be possible to buy a phone on 2-year contract here in the US, we're now mostly buying phones in installments without risk of a costly Early Termination Fee. We're now paying less and getting more (unlimited, though T-Mobile and others throttle video). Federal Reserve Chairman Janet Yellen even noted how this has been a significant effect on inflation:

"Twice, she mentioned factors that seem to be temporarily depressing inflation measures. A pricing war among mobile phone service providers has led to falling prices for cellphone plans, and prescription drug prices have made what appears to be a one-time drop." - https://www.nytimes.com/2017/06/14/upshot/janet-yellen-and-the-case-of-the-missing-inflation.html

John F

@ Tomi

Tomi, comparing Apple with Nokia, whom even in their peak and best times were not even close to Apple and coming back to the Camera tells me that like many before you, many more that have passionately argued Apple doom, there is a gap in properly understanding Apple.

Apple's net cash and free cash flow is bigger than that of Amazon, Alphabet and Facebook combined.

Close to 850 billion in value and with cash in had above 150 billion, you are talking a trillion dollars, it's simply unimaginable

I would strongly recommend you to read Horace Dediu's post and insightful closing comment.

http://www.asymco.com/2017/07/14/other-products/

Now, I have to give you thumbs up for this temporary decision to let finance into play, when discussing Apple it is necessary as there is no separation possible, later, I will come back with more thoughts.


Tomi T Ahonen

Hi Greg and John

Greg - great points and yeah, clearly I'm no Apple Analyst haha. I don't have the bandwidth to try to follow everything Apple does, so yes, the moment I read your words it made sense, this is typical Apple (of recent years) and yes, this signals a split into the consumer product line and the pro product line. (haha, isn't that AGAIN just like Nokia with E-Series for enterprise and N-series for consumer smartphones...).

You're right in that this type of split introduces for Apple the chance to 'put more daylight' between the product tiers. The pro line can go higher, and the consumer line prices can be lowered, and these should be relatively safely insulated not to destroy one another... Top features appear mostly on the pro line first, then later brought into the consumer ('discount product') line. All makes sense. And haha, wasn't it THIS blog who argued for such a split in Apple iPhone product line to BEGIN WITH at the start of this decade and that I've repeatedly said, Apple doesn't have enough distinction between the price tiers (the 'nano' discount iPhone is still priced too high).

I'd like to see the low end prices of the entry-level iPhone lowered, while the top end is raised. I am afraid that Apple will barely do that at the low end while massively jacking up the high end. But we'll see soon enough.

On the gradual end to handset subsidies, yeah, that is a good trend but I've been calling for it for my whole professional life, so it will have been a VERY long time coming, when it finally is completed...

John - haha, so you seem to suggest initially in your first response, that just because Apple's numbers are bigger than anyone before, therefore they are immune to the rules of economy that applied to all before it. I'll await your detailed response but if you only go by 'look how big those numbers are now' - that is a sure recipe for disaster to follow. As to the Asymco blog, it is a must-read on anything Horace writes, thanks. Yeah, already read that...

On predicting doom for Apple - I have done no such thing. I said repeatedly for 10 YEARS that Apple is SAFE to be profitable serving its iSheep and nobody will take them or their loyalty. EVERY year, EVERY quarter, I say Apple is safe. They are making the biggest profits of the smartphone industry and IN THIS BLOG I clearly said that would continue to as close as forever, as can possibly be reasonably argued into the future. I never once said Apple was doomed. So don't lump me with the idiots who proclaim that. I have NEVER ONCE said Apple was doomed on this site. Not in its existence of 12 years. Not in any of my books written before this blog was up, either. I love Apple. Apple will be there and profitable. I just think the INVESTORS who have recently been fed a pack of lies, THEY are about to be fleeced... I never once said Apple was doomed. Where have I said that, ever? Even when I wrote the bombshell blog that Apple market share had peaked - I said Apple cannot lose this war, they will only lose the peak level of the market share. That as long as Apple serves those of its fans who love Apple then Apple can - into perpetuity - make hugely profitable business out of the iSheep. That has been EXACTLY the same story on this blog for the full 10 years of the existence of the iPhone, at every single news from Antennagate to Galaxy's Explod-a-pants.

So feel free to frown upon the clueless idiots who proclaim Apple's doom. But I've never said that anywhere.

PS on 'not understanding Apple' - can you point to one instance John, where I said 'Apple has to do this' and Apple hasn't also done it? There are MANY things I have WISHED Apple did (from QWERTY keyboards to microSD to removable batteries to the iCamera) but EVERY time I said 'Apple has to do this' from adding 3G and MMS support to the original iPhone, to now phablets, increased prices to $1,000 and NFC support - every thing I said Apple has to do, it has done. So where am I somehow 'not understanding Apple'?

I even correctly called the NEED for an iPhone before anyone had seen it - and the exact REASON that Apple gave for the iPhone (iPod market share threatened by Sony Walkman type musicphones). So literally, LONGER than the iPhone has existed as a product, I have given CORRECT iPhone analysis on this blog. The REST of Apple, well, I am not an Apple analyst, I am a mobile industry analyst. So while yes we can talk about the profits and economic viability of the whole company here now in this thread, I really don't care one iota about how much cash Apple is sitting on. I WOULD think that some investors might be worried, that why is Apple not doing anything with all that cash it has squirrelled away, but that is honestly not my concern. Nokia once stood on the largest pile of cash ever accumulated in the mobile industry - and look what good that did to them? Much of that cash was still at hand when the Elop collapse started. It did no good then either..

But that is then the realm of the Wall Street analyst types, who like to do that kind of technical analysis, and like I said, I'll allow it in this thread. But history tells us John, history tells us that the previous guy who sat on the LARGEST PILE OF CASH in this industry that had EVER BEEN COLLECTED BY ANYONE. That company was Nokia and exactly the time scale that I discussed in the above. Your example only UNDERLINES my point. There is a threat that Apple is going to experience the same reaction by its investors as Nokia saw from 2005 to 2015..

I'm awaiting your longer detailed analysis John, and all, pls keep the comments coming. This is a good start for us :-)

Tomi Ahonen :-)

Tester

Well, it seems the iFans are again suffering from comprehension failure, not that this surprises me.

I agree that the biggest threat in all this is not that declining sales would harm Apple's bottom line.
The real threat is that the investors might perceive an inevitable realignment as a sign of failure (as most of these people are too stupid to do real business, it sometimes looks.)

But what will happen if the stock price falls? This will inevitably attract some scavenger 'investors' which are not interested in keeping it alive, but instead draining it of its assets (remember the large pile of cash Apple sits on?) This has ruined more than one otherwise healthy company in the past and ended more than one CEO's career.

Apple's biggest problem is exactly that 'they cannot do wrong' attitude perpetuated by its supporters. That will inevitably lead to unrealistic expectations and once those are not met, all bets at the stock market will be off.

Johnnie Hougaard Nielsen

A risk with Apple going after increasing profits on a dwindling market share is coming to a point where app makers treat iOS as a secondary platform, delaying launches and updates, and carefully weighting whether their market is people who view high price as an attractive feature.

Apple already struggles for market share in most of south/central America, Africa, and large asian countries like Indonesia (3.09%), India (2.61%) and Pakistan (3.85%). Being strongest in USA, Canada, northern Europe, Australia and Japan reveals a low penetration in lots of emerging and already quite strong markets. The status of being an aspirational brand cracks real fast if locally important apps are not present on a minor platform. The US echo chamber is becoming less and less important in the world economy.

tz

And then there's antitrust. The EU fined Google over 2 billion Euros IIRC.
In the USA, because of their getting politcal - basically throwing Trump supporters off their platforms - conservatives are calling for Anti-Trust investigations. Google dominates search and Ads. Facebook with social. But Apple is the other half of the Duopoly with Android/Google.
They seem to both hate free speech and Trump. Bad idea even if true, or at least lay low. Instead I expect the DoJ Anti-Trust division to do to Google, Apple, Facebook what they did to IBM in the 1970's and Microsoft with their browser when they specifically targeted Netscape.
Apple may be broken up or ordered to add alternatives to iTunesAppStore.
Between Apple and Google, they control over 95% of the market. Apple might be the premium alternative, but they are even more exclusionary.
Somehow a billion in lobbying has less effect when they are publically calling on Trump to be impeached if not assassinated constantly and publicly.

Then there's the Tech bubble, often known as FANG or FAANG (facebook Apple Amazon Netflix Google) which is over-valued and when that collpses, shareholders will start asking questions, but not financial ones. They will demand management changes if only for that reason. 1999 valuations were not sustainable - Microsoft was a very profitable company too, but it collapsed over 50%.

Which is another unrecognized problem with Apple. If the share price collapses by 50% just because of the market and nothing that Apple did or did not do, they are sitting on 250 BILLION in cash. There WILL be demans to use that cash to buy back stock or otherwise prop up the share price, not to do R&D or make products better. That will bail out shareholders, who then might take the profits and run, leaving a low share price without that cash cushion.

LongAAPL1997

Thank Jobs that Apple does not listen to these analysts.

john F.

@Tester

But what will happen if the stock price falls?

You should be more informed before saying such things, it makes it clear that you do not follow the company and its market performance and you are just talking nonsense

Fom 97 to 56

From 134 to 91 ....

Those 2 brutal falls happened in the last 4 years, apply % and see the number.

Luckily for you, financial data is available, it's factual and you will be able to educate yourself so next time
you say something, do it using facts and figures, you might have room to maneuver when discussing if iOS
or android is better or not for your needs.

There is no room when commenting apple's financial results, as you can see there have been 2 huge falls, so the question you asked shows you have no clue.

LongAAPL1997

It is ridiculous to compare Nokia to Apple. Nokia has never been what Apple is. Apple is stronger than ever and in the best position than ever. Every single star is aligned for the superior future. Competition is really doomed. Let's take an example. The European regulation GDPR. Apple is the only company that is aligned with that.Everybody else will be in deep s**t. Second example is that Apple just added the languages to Siri what they need in the India. So India is going to be awesome market for iPhone.

LongAAPL1997

"But what will happen if the stock price falls?"

Clever people gets to buy more AAPL. I love those discount days.

Winter

Remember, the stock price is the discounted value of all future profits, corrected for risks.

Apple share prices depend on investors expecting a certain growth in profits at low risks. If either expectation changes for the bad, the stock price can fall very fast.

Reports of decreasing unit sales infallibly increase the risks of a decline in future incomes, even if the profits grow as expected. This results solely from the fact that the income growth has to come from fewer consumers, which is necessarily more volatile.

I expect that, when stock prices fall, Tim Cook will be replace by an ex MS manager "to turn Apple around".

Tester

I see that some people still believe in magic when it comes to Apple's economic future.
And that's precisely the problem here - if that magic's results are priced into the stock, the realization that there is no magic will inevitably make it take a deep plunge.

Abdul Muis

@Jim Glue

Apple buying it's own stock can have many reason... It could also means that apple don't want their share price going down, or converting the short time investor with long time (https://www.fool.com/investing/2017/09/06/apple-inc-just-raised-5-billion-more-in-debt.aspx).

Abdul Muis

@Tomi

I think your prediction on Apple doomsday scenario is not "brave" enough. Microsoft can survive now because it's monopoly and considered De Facto in OS. Apple iPhone is NOT monopoly.

But I think as a company Apple will not die (or in zombie state) like blackberry. Because Apple have multiple good product (unlike BB).

The problem of peak iPhone will be investor rage over management, and there will be office political war & shake up.

LongAAPL1997

"I think your prediction on Apple doomsday scenario is not "brave" enough."

It does not have to be because yours is stupid enough. Unfortunately we are stuck hearing your whining next 30 years and more. Apple will be around and even bigger than ever. Going after Tim Cook is just bat grazy because is the best CEO in the world. He is constantly preparing Apple for the future. He has done remarkable work during the last 20 years.

bjarneh

Interesting read. I love how you manage to cram in that "Elop is the worst CEO of all time" into most of your writing :-)

Following Jobs is not easy though; but that watch never made much sense, a pulse/smart watch that requires charging every night; with a touch screen to small to be useful..

Obviously you will fail in the long run if market share keeps dropping; these are technology products after all. "Being cool" does not matter to much if developers stop targeting your platform, which they might if market share gets small enough; just look at BlackBerry

LongAAPL1997

"Apple's biggest problem is exactly that 'they cannot do wrong' attitude"

Apple does not have that attitude. They know that they can do wrong. The Thing is that if something goes wrong they learn about it and will correct it. They have the stamina. Everyone in the Apple leadership has said this
So many times that you should start to listen and learn yourself. We know this, Apple knows this but you don't.

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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