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Steve's Jobs; successor Tim Cook has faced fire for his company's slipping margin.  (Source: Reuters)
Apple no longer commands the "cool" clout it once did

Apple, Inc. (AAPL) under Steve Jobs established itself as perhaps the most coveted OEM in the smartphone industry.  The late Apple CEO and cofounder, and his trusted legion of executives squeezed suppliers tighter than perhaps any company before boosting Apple's margins to gaudy heights.  And on the carrier side, carriers like Sprint Nextel Corp. (S) were willing to spend billions ($15.5B USD, to be precise), mortgaging their future to get access to the iPhone.

But Apple's ability to squeeze partners on both sides of its product chain may be coming to a close.  After a quarter of record profits, but a disappointing slip in margins, investors have sent Apple stock on a humbling plunge from a height of $705 USD/share to around $450 USD/share in recent weeks.  And Apple's partners are taking note.

A year ago, Apple enjoyed a 44.7 percent margin, but in the last quarter that figure had slid to 38.6 percent.  Apple managed a record profit, but only by growing sales volume.

The biggest threat to Apple's empire may come from carriers moving away from a model of subsidies.  Due to the iPhone popularity, carriers are willing to pay Apple a subsidy of around $400 USD per iPhone, plus a small cut of on-going monthly service revenue.  Other premium phones from Apple's rivals typically command around $250 to $300 USD.

But the last American carrier to get the iPhone -- T-Mobile USA -- will be phasing out subsidies just as it begins to carry the iPhone.  T-Mobile USA's deal with Apple has not been made public, but is rumored to be more favorable for the carrier than similar deals with AT&T, Inc. (T) and Sprint -- and less favorable for Apple.

T-Mobile wide
T-Mobile won't be subsidizing the iPhone. [Image Source: Flickr]

An entry-level 16 GB iPhone 5 costs $649.99 USD without subsidies.  Flagship Android phones and Windows Phones cost hundreds less unsubsidized.  Some fear customers will bail on the iPhone once carriers start passing the costs on to the consumers by cutting subsidies.

Both AT&T and Verizon Wireless, America's largest carriers have warmed to the idea of unsubsidized handsets after initially scoffing at the idea.

Comments AT&T CEO Randall Stephenson, "That's something we've looked at on several occasions. I kind of like that idea.  It's something we're going to be watching."

And Lowell McAdam, CEO of Verizon Wireless -- a joint subsidiary Verizon Communications Inc. (VZ) and Vodafone Group Plc. (LON:VOD) -- seemingly went back on previous comments, remarking, "[The strategy is] very intriguing."

Interesting, indeed.  Carriers may be experiencing a bit of envy that T-Mobile is not suffering the same exploitive terms they agreed to, to get the iPhone.  Down the road they will likely look to renegotiate more favorable terms.

Harvard Business School Professor David Yoffie, who specializes in corporate competition, warns that while Apple's is coming down to Earth, it's still a power player.  He tells Reuters, "Even though they're not gaining share, they're such a large piece of the market and such a driver of customer volume into their stores that people can't walk away yet.  Over the longer term, clearly there will be more and more pressure on Apple if they don't find new ways to innovate."

In other words Apple may be feeling the heat, but it's still got more cash than any other phone OEM, has superior contracts, and the biggest single-handset sales in the industry -- for now.

Source: Reuters



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RE: Get ready 4 it
By retrospooty on 1/29/2013 2:55:20 PM , Rating: 2
Yup... Any minute now I am sure. LOL.

I have been saying this supply price thing would happen for a while. The other thing is the sweetheart deals Apple was making with carriers. Carriers were paying a steep premium price for iPhones when no real competition was available. Now that the competition has surpassed them, they wont be getting those deals anymore. The carriers have better options. Sprint is a good example of this. They dont expect to make a single dollar from the iPhone deal until 6 years after the first phone was sold.


RE: Get ready 4 it
By Shig on 1/29/2013 3:12:02 PM , Rating: 3
They still got 100 billion to blow on lawyers and lawsuits.


RE: Get ready 4 it
By Shadowself on 1/29/2013 3:20:32 PM , Rating: 2
$137+ Billion, actually.


RE: Get ready 4 it
By Tony Swash on 1/29/13, Rating: -1
RE: Get ready 4 it
By 91TTZ on 1/29/2013 6:05:41 PM , Rating: 3
Apple's problem is that while the ASP has remained the same, demand is decreasing. Their market share is slipping while Samsung's is increasing.

Tablets are also becoming commodity items so the profit is drying up quickly.


RE: Get ready 4 it
By TakinYourPoints on 1/29/13, Rating: -1
RE: Get ready 4 it
By ComputerJuice on 1/29/2013 8:44:42 PM , Rating: 2
High price market maybe. owns the high end market? what. ever.


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 9:02:59 AM , Rating: 1
It is certainly a higher end device than something like the now overpriced GS3 if we're looking at things like performance, display quality, build quality (even Android Authority destroyed a GS3 before they could make a crack in the iPhone 5), and battery life.

The iPhone also makes up over half of mobile smartphone traffic, app downloads, and Google mobile revenue (even over their own Android) despite there being more Android devices out there. That sort of usage doesn't come from a low end Samsung Prevail running Gingerbread that you picked up for nothing at Boost Mobile, let alone the even lower end Android-running featurephones out there.

I'd put it in the high end category for sure. Given that the iPhone also sells more than the high end GS2/GS3/GN2 combined, which by turn outsell anything by LG, HTC, or Motorola, then yeah, "owning it" that part of the market doesn't seem like a stretch either.

So yeah. What. Ever.


RE: Get ready 4 it
By 91TTZ on 1/31/2013 10:21:01 AM , Rating: 2
But Apple itself is bowing down to those pressures. When it became obvious that lower-priced tablets were the "sweet spot" in the market, analysts predicted that their sales would climb while the higher-end device sales would fall.

Apple said that they had no intention of coming out with a device to meet that lower price-point.

However, they eventually saw the writing on the wall and quickly came out with the iPad mini that was much less expensive than the original iPads.

It turns out that the analysts were right and the iPad mini is outselling their full-size iPad4 by about 4 to 1, bringing their overall profit per device down.

http://www.patentlyapple.com/patently-apple/2013/0...

Again, it's not like they're in trouble right now, but the writing is on the wall. The future will see a further decline in profits for mobile devices. Mobile will become more widespread and cheaper. Like I said, they'll become commodity devices.


RE: Get ready 4 it
By Tony Swash on 1/29/13, Rating: -1
RE: Get ready 4 it
By StormyKnight on 1/29/2013 11:15:07 PM , Rating: 2
You mean most profitable behind Exxon/Mobil and Chevron, right?

http://money.cnn.com/magazines/fortune/fortune500/...


RE: Get ready 4 it
By Tony Swash on 1/30/13, Rating: -1
RE: Get ready 4 it
By retrospooty on 1/30/2013 8:51:50 AM , Rating: 2
I dont see anyone implying that Apple is in any serioud financial trouble. The point being made is that while Google is firing on all pistons, Apple is fluttering. The largest improvement to the iPhone since its initial release in 2007 was a 4 inch screen and 4G... Things the competition had 2 years earlier. Of course, 2 years ago, the iPhone was easily the best thing out and now it isn't. What you are seeing is the beginning of a shift. I know you will remain in denial on that, but at least get straight what is going on.

http://www.thestreet.com/story/11825709/1/is-googl...


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 9:11:54 AM , Rating: 1
Do you even read your own links?

quote:
I hold shares of both Google and Apple, but I haven't been adding to my Google holdings lately. I've bought more Apple. Because when everyone tells you nothing can go wrong, something always does.


He also mentions the same things I have, how Apple's PE is insanely low, a mere 10 compared to Microsoft's 15 and Google's 22 despite continued rapid sales growth and a massive cash hoard, and that the stock is currently undervalued (I stopped shorting it last month).

However, for no reason other than your gut instinct they have "peaked".

All businesses peak, no question, but I don't presume to know when that will happen. People have been saying the same about Apple and Microsoft for decades, and making such calls is a fool's game, especially when reality continues to point the other way.


RE: Get ready 4 it
By Tony Swash on 1/30/13, Rating: -1
RE: Get ready 4 it
By retrospooty on 1/30/2013 10:40:12 AM , Rating: 3
Way to take one sentence out of context and ignore the entire point. Your slipping dood.


RE: Get ready 4 it
By Cheesew1z69 on 1/30/2013 11:30:58 AM , Rating: 3
The constant knob slobbing of Apple is pathetic and embarrassing to watch.


RE: Get ready 4 it
By maugrimtr on 1/31/2013 5:20:48 AM , Rating: 1
Oversimplifying things won't get you anywhere, Tony.

He's not purchasing Google stock because its price point mirrors Apple's from last Spring - it assumes Google's performance will continue perfectly which is questionable. Google's performance in 2012 was exceptional seeing unexpected successes in all of its markets - the decline in price per click is already priced into the stock - everyone and their dog new this would fall as mobile dominated online habits, competition reared its head, and pervasive push towards legislating/regulation personal tracking continues towards its inexorable conclusion.

Apple stock meanwhile has taken a beating as its bubble deflated. Unless Q1 results are an utter disaster, the price is now more realistic and is far more likely to increase (perhaps even inflate insanely if people are feeling particularly emotional).

Any rational investor would be tentatively holding Google shares and buying into Apple. The irrational investors will pump up Apple's price and not back out until it collapses as they did earlier in the year but the rest of us will go back to shorting it for another windfall.

Apple had its best year alright - falling market share, falling margins, increased competition, no sign of innovative new niches to expand into, etc. Stop pinning all of your justifications on a single year's "fluttering" performance and focus on the question of greater concern to investors. What will Apple be doing 2-5 years from now? Will it have lost even more market share? Will the market become saturated? What happens when US telecoms remove smartphone subsidies and customers see the iPhones real price to them? What the heck are they doing in Asia? How will Windows 8 and BlackBerry 10 change the equation for business users?

Honestly, you are such a fanboi that I love you. I need people like you so my shorts are profitable. Carry on!


RE: Get ready 4 it
By retrospooty on 1/31/2013 7:25:21 AM , Rating: 2
ROFL +1


RE: Get ready 4 it
By 91TTZ on 1/31/2013 10:23:30 AM , Rating: 1
Do you intentionally ignore reality or are you just too stupid to see it?

You routinely ignore any valid points people bring up and just respond with Apple propaganda.


RE: Get ready 4 it
By Cheesew1z69 on 1/31/2013 10:40:01 AM , Rating: 2
quote:
Do you intentionally ignore reality or are you just too stupid to see it?
Both it seems...


RE: Get ready 4 it
By retrospooty on 1/31/2013 1:50:06 PM , Rating: 2
"You routinely ignore any valid points people bring up and just respond with Apple propaganda."

LOL, I know... Although I don't think he is an Apple shill like Tony. He is more debating to try and prove he is not wrong than to propagandize Apple. Either way its equally pointless.


RE: Get ready 4 it
By retrospooty on 1/29/2013 4:36:37 PM , Rating: 2
Yup... plenty cash to throw their crumby influence all over the industry for years and years to come.


RE: Get ready 4 it
By TakinYourPoints on 1/29/13, Rating: -1
RE: Get ready 4 it
By retrospooty on 1/29/2013 6:36:11 PM , Rating: 2
"Carriers will keep paying what they have for iPhones "

Wanna bet?

The market is growing significantly faster than iPhone sales are and those really bad deals that alot of carriers took wont happen anymore. It simply wont.

I dont want to get into another endless debate with you on this. Lets just wait until the next deal is up with Verizon, or ATT and see what is announced. I know Sprint isnt up for a while.


RE: Get ready 4 it
By TakinYourPoints on 1/29/2013 6:55:12 PM , Rating: 1
The problem with your argument is that the exploding market is in the low end, not the iPhone/GS3/GN2 high end.

There is little to no crossover between the two markets, not unless people stop buying high end phones.


RE: Get ready 4 it
By retrospooty on 1/29/2013 7:32:31 PM , Rating: 2
you seem to think that Apple is sealed in a bubble of white light, somehow invincible because they're Apple.you seem to also not want to wake up to the fact that people see there are better phones out there. You seem to not be aware of the points in the article above. Whatever, I'm not going to try to convince you, just wait and see. Apple sales will start to decline, unless of course they come out with a exciting new product or dramatically upgrade the current iPhone. what you are seeing now is the peak.


RE: Get ready 4 it
By TakinYourPoints on 1/29/2013 8:21:28 PM , Rating: 1
Again, the iPhone 5 is selling 40% faster than the 4S, a phone that outsold the GS2, GS3, and GN2 combined, and sold over twice as fast as any of them.

I don't understand why you're speaking in hypotheticals when reality is pointing the other way. Living in a fantasy world seems pointless.


RE: Get ready 4 it
By retrospooty on 1/29/2013 9:22:39 PM , Rating: 2
What you are seeing now is the peak.


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 9:30:18 AM , Rating: 2
You will have seen the peak when there is a big YoY decline. The acceleration in sales we continue to see is quite the opposite.

It'll happen someday and we'll know when it does, but we're not there yet. Trying to call a top or bottom in stocks or whatever almost always makes one look foolish, especially when you're making that call counter to the trend.


RE: Get ready 4 it
By ritualm on 1/30/2013 7:44:37 PM , Rating: 3
Why do you need to see evidence of a big year-over-year decline to determine if a product has peaked? It's already happened - you're just too ignorant, thick and dense to see it.

Yep, Tony Swash 2.0.


RE: Get ready 4 it
By TakinYourPoints on 1/31/2013 5:34:44 PM , Rating: 2
How has it already happened? Selling faster than ever signifies a peak?

Ok....


RE: Get ready 4 it
By Reclaimer77 on 1/29/2013 8:24:19 PM , Rating: 2
lol dudes name should be "DeflectingYourPoints". My BS tank is full for the day, I can't take any more of him. Good luck!

Retro I don't know how you do it lol.


RE: Get ready 4 it
By TakinYourPoints on 1/29/13, Rating: 0
RE: Get ready 4 it
By Reclaimer77 on 1/29/2013 8:39:02 PM , Rating: 1
Riiight, cause taking some ancient discussion a billion light years out of context is proof someone is lying lol.

Do you see how absurd you are? Anyone who doesn't kiss Apple's ass is treated as the enemy by you.


RE: Get ready 4 it
By TakinYourPoints on 1/29/2013 8:48:05 PM , Rating: 2
What is out of context? Your statements are absolute in both cases. You can't say "Apple forces separate purchases for iPhone and iPad apps" without being called out on it. That is absolutely false since pricing is in developers hands, plus apps are mostly universal now since those sell better. Its even worse considering that the sequels to the apps you used in your ancient link are (drumroll) universal.

You definitely can't say "I called OS X a 'walled garden', sure, so have others. I never implied app restrictions" when you previously said "Not just anyone can write apps for OSX and sell them, as is the case with Windows."

Context doesn't help you. You didn't imply anything, you were quite explicit.

Again, keep dodging. Why did you come back anyway?


RE: Get ready 4 it
By Reclaimer77 on 1/29/2013 9:04:30 PM , Rating: 2
Uhhh I never said "Apple forces" that did I? I said "you have to". Which you then corrected "not all the time". *jackoff hand sign* wow you really hit that out of the park didn't you?

So when you make absolute statements about Android not having tablet apps, a false statement, it's fine. When I make an absolute statement about iOS apps behaving a certain way, then the knives come out.

quote:
plus apps are mostly universal now since those sell better.


So what? The situation still existed. Do you not get the point? God who the hell taught you to argue. You can't wipe out history just because parts of it didn't match your world view.

quote:
"Not just anyone can write apps for OSX and sell them (on the iTunes store), as is the case with Windows."


Again, context. Anyone who wasn't a crazy iTard with a kneejerk reaction knows what I meant. Microsoft doesn't have to "approve" the sale of Windows programs. Apple does. That's just how they roll.

So if that's not a 'closed garden', fine. But it's not exactly an open field. What the hell do you call Gatekeeper by the way?? It's just another way Apple is moving OS X to a totally closed garden.

http://www.theverge.com/2012/7/27/3186875/mac-app-...

Oh look another "liar" and "dodger"! Go flame him!!


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 8:50:34 AM , Rating: 2
You from earlier:
quote:
Having to buy the same app twice is just another money whoring scheme by Apple.


Way to backpedal, and no it isn't, its an option that developers have, and nearly all of them sell universal apps by now. Why do you hate options?

quote:
You can't wipe out history just because parts of it didn't match your world view.


And you can't invent history, especially since most apps were already universal to begin with. You're trying to invent a reason why rescaled phone apps on Android tablets are a good thing, and really stretching logic in the process.

I also didn't go far enough in the example I gave with Infinity Blade 2 being universal. I checked and some of the apps in the ancient link you posted like Infinity Blade 1 actually went universal, not just their sequels. Funny.

Are you actually in favor of a restrictive policy where developers are forced to sell their apps either universal or not? Apple is hands off, developers choose how they want to price their applications. Most are universal since it leads to more sales, despite the fact that creating two different and optimized UIs with much higher resolution assets is extra work for them. The market spoke and they priced accordingly.

Are you a socialist?

quote:
So when you make absolute statements about Android not having tablet apps, a false statement, it's fine.


Its fine because it is objectively true, the number of tablet optimized applications for Android is demonstrably low. How many aren't just rescaled phone apps? How many take complete advantage of the Nexus 10 2560x1600 resolution? Not even a tiny fraction compared to iPad apps that are built specifically for 10" and 2560x1536, which is all of them.

Are single column phone applications resized for a tablet acceptable when you can have two or three panes that take advantage of all that extra space?

Even cross-platform apps like Netflix or Yelp are completely different between iOS and Android on tablets, night and day difference in UI and quality. Its like talking about the difference in quality of applications for Windows and Ubuntu.

On the other hand, Apple enforcing multiple purchases of separate tablet or phone apps on iOS is demonstrably false. Again, its all up to the developer. Apparently you hate developers having any choices at all because you don't believe in capitalism.

quote:
Microsoft doesn't have to "approve" the sale of Windows programs. Apple does. That's just how they roll.


No they don't. Like, not in the slightest, not ever.

The app store is one method to install applications, and it is far from the only one. I have exactly two purchases from the Mac app store, the rest of them I've downloaded straight from developers or from other storefronts like Steam. It isn't even the most popular method of buying applications, for most people its mainly a way to install OS X updates.

As for Gatekeeper, its just a whitelist for developers that anybody can get on, it isn't just for applications sold through the Mac app store. If you ship an application with malware then you get taken off Gatekeeper, that's all. Nothing else about the application matters (content, purpose, etc) in terms of getting whitelisted.

And if you want to skip Gatekeeper it is really simple, it works just like UAC in Windows where you click a dialogue box to install and you're done. Hell, you can turn it off completely in settings as well, just like UAC. If you want to download and deliberately install a known trojan for whatever reason, you're free to do so, nobody is stopping you.


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 9:54:19 AM , Rating: 2
And look, what is passe on iOS is happening with Android apps right now: https://play.google.com/store/apps/details?id=com....

Oh no, developers are deciding to charge more for an HD tablet version! Quick, time to enforce your personal pricing standards!

For a tea partier you sure don't seem to respect the free market very much.


RE: Get ready 4 it
By retrospooty on 1/29/2013 9:04:36 PM , Rating: 2
"Retro I don't know how you do it lol."

Slow at work lately ;)

The question I ask myself is why... At one point it seemed like a debate, now it just seems like a repetitive loop of denial.


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 9:33:41 AM , Rating: 2
http://xkcd.com/386/

And yes, your denial that anyone in their right mind could possibly choose higher quality hardware, better support, and better applications over giant screens, SD cards, and widgets is pretty amazing (and repetitive!). ;)

Not everyone values the same things, get over it! :)


RE: Get ready 4 it
By retrospooty on 1/30/2013 9:55:20 AM , Rating: 2
Sigh... OK. I give. I post reasons why I think the article above has its points and you bring back the same tired debate we have been having for months. Whatever. Time will tell.

I stand by this... Apple sales will start to decline, unless of course they come out with a exciting new product or dramatically upgrade the current iPhone. (meaning more than the incrementals they have done since 2000)

My "gut" feeling? Apple isnt in the same denial as you are, and they see this coming where you dont and the next 2 years we will see a change in Apple's model.


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 10:01:08 AM , Rating: 2
I'm not in any sort of denial, I myself have complained about numerous things I don't like about the iOS UI in specific detail, particularly things like the Podcasts and Game Center apps.

I'm certain that Apple is working on improving the iOS UI, there is no question about that. The point I've always made is that the quality of their hardware and strong third party developer support have been more than enough to counterbalance those negatives for me.

As I always say, there are pros and cons to every platform. Tradeoffs. If we're talking about awesome UIs then Windows Phone 8 is way the hell up there. The tradeoff of course is weak third party support (sadly since the SDK is so good) and hardware that doesn't yet match up with other high end devices. It doesn't mean that people shouldn't get WP8 devices, they're good products and totally deserve to compete.

I've said over and over again, the things Android devices have are great, but again, there are tradeoffs. Its all about which negatives one is willing to accept for the positives. Choices! :)


RE: Get ready 4 it
By retrospooty on 1/30/2013 10:06:28 AM , Rating: 2
I post reasons why I think the article above has its points and you bring back the same tired debate we have been having for months. Whatever. Time will tell.


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 10:22:26 AM , Rating: 2
The reasons are based on presumption and gut feeling rather than actual sales figures and current trends, that's the problem I have with it.

I couldn't care less about the "spirit" or whether or not I philosophically agree or disagree with something, not if it flies in the face of reality.

The real headline being repeatedly ignored in these threads is reduced margins due to increased manufacturing costs for new product lines, something that happens with every new major revision. Somehow this is being twisted as "iPhone sales are dropping" when they're selling products faster than they ever have. Its a completely false conclusion.

The rest of the rapidly increasing overall market doesn't really matter as its mostly in the low end. Its a segment that doesn't include the GS3, the GN2, the Droid DNA, the RAZR MAXX, and it doesn't do anything to boost Android's share of mobile internet traffic or other things that a high end device gets used for.

When YoY trends for Apple's gross revenue actually reverse, then you'll have something to talk about. Until then there is no peak to speak of, not yet.

"Time will tell" indeed, and you should let it. :)


RE: Get ready 4 it
By ktemple on 1/30/2013 10:33:04 AM , Rating: 2
Well to be fair, most of this talk is really just poorly-worded speculation that a sales decrease is imminent. What they're trying to say is that the iPhone is about to have this reckoning -- not dissolution, just... abrupt humility. And to be honest, unless Apple does something drastic, it's probably true.


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 11:15:21 AM , Rating: 2
That sort of speculation on success or failure doesn't really interest me no matter what platform or ecosystem we're talking about. I never once speculated about Android failing in the market because it was as flawed as it was for so long, that Microsoft would fail at making a game console work, or that Amazon would fail with e-readers (still my favorite tech gadget!). People have speculated demise for Apple for over a decade (the iPod is a fad, the Mac is a fad, the iPad is a fad, etc). I can't count the number of times I've heard someone say that the company has peaked. Its just a pointless exercise IMO, wait until its actually peaked!

And if we are speculating about drastic changes then I'd guess that Scott Forstall's departure from Apple is a very positive thing for the iOS UI. He might be the guy that put a full fledged OS into a phone but many of its current negative attributes like skeuomorphism are his. But again, speculation, hypotheticals, meh, not my thing.

I'd rather get excited or disappointed once something actually happens :)


RE: Get ready 4 it
By ktemple on 1/30/2013 11:31:54 AM , Rating: 2
That's no fun, really. Speculation is fun. And lucrative if you're great at it!


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 11:51:44 AM , Rating: 2
I'd say I'm 70% technical when it comes to trading. When I rode Apple down last year it was mostly based on technical analysis.

Some fundamental analysis is good, everything else is noise that is only sometimes useful as a contrarian indicator. ;)


RE: Get ready 4 it
By retrospooty on 1/30/2013 11:37:02 AM , Rating: 2
"People have speculated demise for Apple for over a decade "

No-one is saying Apple is doomed. At least not me, or anyone I have seen here. Let me take a different angle and put it another way... When looking at Apple's place in the market and clout when making deals, with suppliers and carriers.

iPhone 2007-2010. No competition at all. Nothing in the league. (BB sales are still strong and growing, but that is how sales lags tech. People take a long time to get on and off after tech changes. )

iPhone 2011. Android is starting to sell strong, but its still not in the same league with IOS or iPhone.

iPhone 2012. Android as a platform is dramatically outselling iPhone, even doing well on the high end with a few devices like the GS3 and Note2 that are by your own insistence, still not up to par.

iPhone 2013. Look at the latest 5 inch Android 1080p superphones and JB 4.2 and tell me anything in the past is the same as today?

Whether you agree or not, Todays Android superphones are way the hell better than 2012's. When making deals, it matters. THe market sees Samsung outselling Apple, and Android outselling IOS 5 to 1 and climbing. High end Low end or not, these things all factor in and Apple will have trouble making those same deals.

Dont say trends aren't agreeing, because today's trends, sales and profits are made on last years products, and designs and deals made years ago. If you dont see that changing then you are kind of blind.


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 11:48:57 AM , Rating: 2
quote:
The market sees Samsung outselling Apple


True if you are including low end devices, and in the context of the paragraph you are clearly talking about superphones like the GS3 and GN2.

We'll have to agree to disagree about the significance of the low end. They don't help carriers sell data plans, and that's what phone companies are in it for these days.

ktemple put it very well in another post here. Carriers want to sell data, this era's SMS is data, and expensive data plans are sold by high end phones. Obviously carriers also like selling numerous low end phones, profit is profit, but when over half of mobile data still comes from iOS you can be sure that carriers will continue to court the iPhone in order to sell those data plans.

What will change this is if low end devices end up using similarly profitable data plans, but that seems to be a completely different market segment.


RE: Get ready 4 it
By retrospooty on 1/30/2013 12:32:05 PM , Rating: 2
When I say super phones, I am talking about the latest 1080 p Android super phones. Not that it's really part of my point but those low end phones do sell data plans, many of them are free with a 2 year plan... And to be clear, I'm not saying Apple is going to be in trouble, just not as profitable as today.. Right now they are ridiculously profitable in a record breaking way. They will very likely go down to merely extremely profitable.


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 1:56:59 PM , Rating: 2
If you're limited to 1080p phones then the number is even smaller, a niche of a niche compared to those other high end and low end devices. They're pretty statistically irrelevant.

quote:
those low end phones do sell data plans, many of them are free with a 2 year plan


That doesn't account for the numerous Android phones that are on unsubsidized or prepaid plans. That is a huge market for them, not to mention an often touted advantage of the platform.

This metric is important, iPhone users rack up the highest carrier bills: http://allthingsd.com/20130130/wireless_bills_by_o...

The article makes mention of this:
quote:
“We think it has to do with their data plans and carriers, rather than their usage habits,” CIRP co-founder Michael Levin explained. “They are all on expensive data plans, unlike Android users, some of which are on prepaid or unsubsidized plans with regional carriers.”


Given that iOS makes up well over half of mobile internet traffic and app downloads, I'm not so sure about usage habits not being a factor. They are clearly being used for internet and apps, otherwise you wouldn't be seeing iPhones with 4GB+ plans, nor would you see sales figures like this: http://images.eurogamer.net/2013/articles/1/5/5/2/...

In any case, as long as iPhone users keep racking up big data plans and overages, carriers will keep bending over backwards to keep them.


RE: Get ready 4 it
By retrospooty on 1/30/2013 2:42:05 PM , Rating: 2
So to you it's as if nothing at all has changed in the past 2 years, and it's business as usual. Okay well, good luck with that. I don't know what else to say , we will have to wait see what will happens.

I still say if Apple keeps on the same course their market will erode somewhat. Of course if they get innovative again that could always change.


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 6:13:18 PM , Rating: 2
No, I'm not saying that at all, there is clearly more competition and an expanding market out there that is being led by the low end. I never denied that.

Again, until there is functional and practical crossover between devices like the iPhone and the very-cheap Android devices that make up the bulk of its installed base, it won't mean very much.

What's important is that iOS makes up the majority of mobile internet traffic, mobile ad revenue for developers and for Google, developer profits, and is installed on the majority of high end hardware (again, sells more than the entire Galaxy series combined, makes up 80% of AT&T's sales, 60% of Verizon's sales, etc).

It leads all of these metrics by a significant margin despite Android being on 5x as many devices. Its the result of iOS only being on high end hardware that is actually used for mobile internet and applications while Android is installed on pretty much anything, thus diluting those usage figures.

Again: http://allthingsd.com/20130130/wireless_bills_by_o...
http://images.eurogamer.net/2013/articles/1/5/5/2/...

The expansion of the overall market is great, and that's clearly a big and important change. However, we're a very long way before we can even consider erosion of the high end space that Apple works in. I don't believe its even a possibility until mobile hardware has plateaued for several years, thus allowing for cheap Boost Mobile priced giveaway devices to catch up with and be as capable as the high end.

We're nowhere near a ceiling for that just yet. It seems just as likely as netbooks eroding the sales of $1200+ notebooks, quite honestly. Again, different and discreet markets.

Where Android is exploding does not cross over with markets occupied by devices like the iPhone, GS3, or Droid DNA, they are very separate things. The expansion of both also does not mean that there is a reduction in the other.

They all expand together.

If you want a netbook, you'll get a netbook, if you want a real laptop, you'll get a real laptop. The same thing applies with smartphones. It isn't a zero sum game since there's so little crossover.


RE: Get ready 4 it
By retrospooty on 1/30/2013 8:02:29 PM , Rating: 2
In the high end space is where Apple has been caught up with and surpassed... But I'm not going to debate it any further... Your mind is like a clenched fist. You won't pry it open a tiny crack, so we'll just have to wait and see.


RE: Get ready 4 it
By TakinYourPoints on 1/31/2013 5:42:08 PM , Rating: 2
quote:
In the high end space is where Apple has been caught up with and surpassed


No it hasn't. Where does this idea come from? If you say something then back it up.

Facts:

- The iPhone sells more than the GS2/GS3/GN2 combined, which by turn sell far more than other high end smartphones by LG/HTC/Motorola

- Over half of global internet traffic comes from iOS

- Google makes most of their mobile ad revenue from Android

- The majority of app downloads and usage come from iOS.

You'll see a shift in those figures when Android catches up in the high end space. Right now the expansion in the market on the Android side is primarily in the low end, which is why you see Android installed on more devices but lower "high end" style usage.

quote:
Your mind is like a clenched fist.


Yes, its like when I argue with a religious person trying to convince me that evolution isn't real but they can't give me any hard evidence that its really all the doing of a man in the sky.


RE: Get ready 4 it
By ritualm on 1/30/2013 7:51:07 PM , Rating: 2
The high-end smartphone market is smaller than that of the middle and low-end. The only part of your post that is remotely true is carriers use iPhone-derived revenue to subsidize everything else, because it has been shown and proven - time and time again - that Apple users are willing to pay for the same things that they could have gotten for less/free elsewhere.

Every other point from yours truly makes no sense.


RE: Get ready 4 it
By Decom on 2/11/2013 10:12:04 AM , Rating: 2
And now we have this little nugget to take away from Tony/Takin :-

Just in from the "Customer Loyalty Engagement Index 2013"
from Forbes.

http://www.forbes.com/sites/marketshare/2013/02/05...

Some relevant points:

i) Samsung (taking the #1 spot from Apple in Smartphones),

ii) Amazon (which took the #1 spot from Apple in Tablets) and kept its #1 ranking for its Kindle E-readers


RE: Get ready 4 it
By ktemple on 1/30/2013 9:39:19 AM , Rating: 2
I think the answer is "unfettered denial." You clearly weren't prepared to argue with this TakinYourPoints person. I signed up for an account just to comment on how thoroughly you are getting whooped on here. I love arguing and I know a defeat when I see one.

And before you accuse me of any Apple fanaticism, I sold my iPhone and iPad 2 and am now using a Galaxy Note with CyanogenMod 10.1.


RE: Get ready 4 it
By retrospooty on 1/30/2013 9:47:52 AM , Rating: 2
/facepalm

LOL... OK. ;) No-one saw right through that.


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 9:51:24 AM , Rating: 2
I think its because most of these people are married to a single platform while I use pretty much all of them. They also can't comprehend the idea of someone with an informed opinion actually liking an Apple product for completely practical reasons.

Painting someone as an "iZombie" or "iTard" is much easier for them to deal with than actual thought.


RE: Get ready 4 it
By retrospooty on 1/30/2013 10:03:27 AM , Rating: 1
What does that have to do with anything? I see why you like Apple. FFS, you have told me dozens of times. I get it... And I am certainly not married to Android. As I have mentioned for me, its the best thing out right now with the most benefit to how I operate. I will drop Android like a clingy bitch the second something better comes out.

What we were talking about initially is the points in the article above, how Apple is no longer the best phone on the market and their stranglehold on suppliers and carriers cannot continue. You AGAIN turned it back in to "yes it is the best phone on the market". Fine whatever. We disagree on that point.

What we can at least agree on is that there is a certain amount of perception that the iPhone is no longer king of the hill and the points in the article above are at least worth something. Apple doesnt have the clout with suppliers and carriers it did over the past few years.


RE: Get ready 4 it
By ktemple on 1/30/2013 10:17:09 AM , Rating: 2
That's true. But I think it's less about whether or not it's the best phone and more about the fact that Android has finally become a viable option in recent years. Honestly, until ICS, iOS vs Android was like an adult vs a child in everyone's mind except Android fans'. Now it's adult vs adult and it's blowing people's minds, and dropping Apple's stock price.


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 10:51:54 AM , Rating: 2
ktemple - Competition is way better than it used to be and there are other very viable choices, absolutely. I was cheerleading for Windows Phone long before it was cool. JB is much better than the disaster 2.x. Viable competition is good, but how much it will cut into iPhone sales remains to be seen.

Right now Apple and Samsung seem to be succeeding at the expense of LG, Motorola, HTC, RIM, and Nokia, which implies that there's enough room for at least two big players out there. The low end is obviously up for grabs, and Samsung is doing awesome there too.

As for stock price, I've said this many times but technical reasons aside (everybody owned AAPL and it doubled in less than a year, low PE be damned) the stock got clobbered by reduced margins on new products in the holiday quarter. Every year their net profit increased during the holiday quarter. This year they release multiple new products in the Fall/Winter rather than Spring/Summer, along with the lower margins that come with them (or a complete lack of product when there were no iMacs to buy for a month).

So now you have 13BN net profit in the same respective 2011/2012 quarters despite gross revenue increasing from 45BN to 55BN. Its the first time their net profit flatlined during the holidays (hell, they doubled every other year) and the stock got clobbered.

Funny enough, unlike most of the haters here I actually profited from a short AAPL position about 45% by selling call option spreads against it in August, September, and October.

Sell when people are calling $1000 per share, buy when there's doom and gloom. :)


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 10:27:02 AM , Rating: 2
quote:
Apple doesnt have the clout with suppliers and carriers it did over the past few years.


Money talks. "Perception" means nothing to carriers if it is still selling over twice as fast as the also-extremely-popular GS3. If next year Apple sells fewer iPhones than they did the year before, then there will be something to talk about and I'll be right there with you. Until then their leverage (and btw the iPhone costs carriers about the same as a GS3) will remain.


RE: Get ready 4 it
By retrospooty on 1/30/2013 10:32:52 AM , Rating: 2
OK, you win. Financial sites all over the web and the aricle above are all just being rediculous. Apple making deals with no viable competition vs. Apple with a very strong competitor is exactly the same.

Nothing to see here.


RE: Get ready 4 it
By ktemple on 1/30/2013 10:35:46 AM , Rating: 2
Previously, there was no such thing as a phone that was "also-extremely-popular." I think ultimately that is what this discussion is all about.


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 11:02:17 AM , Rating: 2
Certainly. The thing is that it has yet to really impact iPhone sales. It may eventually, but current trends aren't pointing to that. The iPhone 4S outsold the extremely popular GS2, GS3, and GN2 combined, and it sold 30 million units in half the time the GS3 did. The iPhone 5 is selling about 40% faster than the 4S did. Enough people continue to find value in their hardware, customer support, and 3rd party ecosystem.

Whether or not we eventually see fewer iPhones sold remains to be seen, but right now it seems that both the iPhone and popular Galaxy phones are coexisting very nicely. Other companies (HTC, LG, Motorola, RIM, Nokia) are bearing most of the pain at the expense of them.

The biggest threat would be if there was a huge shift to cheaper, lower end devices. Of course, this would affect the high end GS3 and Droid DNA style market as well. It seems unlikely though, there are enough people on every mobile OS (even Blackberry :) ) that see the value in higher end devices to keep them going.


RE: Get ready 4 it
By ktemple on 1/30/2013 11:26:36 AM , Rating: 2
Wouldn't the biggest threat really be if someone else delivered a superior value proposition to the iOS ecosystem? Of course, your position is that this isn't likely, but the whole concern in this discussion and these articles has always been that an upset in this specific area is now perceivable where it wasn't in the past.

This all started because the WSJ reported on the component order cuts, but it's sparked an underlying sentiment that was already there. I do agree that it would take a lot more than what Android is currently doing to usurp iOS with respect to its value proposition, but the concern here has been that Apple is being viewed as relatively stagnant and Android is being viewed as rapidly-improving. Obviously if that dynamic persists, something's going to happen to Apple's revenues, and the times will have changed whether Apple's margins recover or not..


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 11:57:10 AM , Rating: 2
I think your scenario will come if the similar practical utility and user experience you get in a high end device came at a MUCH lower price.

I'm talking Boost Mobile giveaway featurephone prices here.

In that case it wouldn't only be the iPhone in trouble, it would also be devices like the GS3, the Droid DNA, etc etc. I think we're a ways from that happening, not until we've seen a plateauing with mobile hardware for a few years.


RE: Get ready 4 it
By ktemple on 1/30/2013 2:15:48 PM , Rating: 2
You're probably right:

http://www.dailytech.com/TMobile+Offering+iPhones+...

+

http://www.dailytech.com/Google+Officially+Announc...

==

A world where people buy cheaper phones that are at the very least the functional equivalent of the high end, and pay lower monthly rates. Super-hyper profit margins and literally magic ethereal revenue streams disappear (but the only one who had those to lose was Apple).

I did this myself over a year ago by buying a used high-end phone for half the price and getting half-priced non-contract service from the AT&T-tower-based Straight Talk. AT&T is still making a little money off of me though haha, which was never part of my problem so that's fine.

AT&T has been interested in this non-subsidized T-Mobile model for some time and will be watching this closely. The Verizon CEO initially said a few weeks ago that it was a terrible idea and has recently retracted that and stated that he finds the strategy intruiging and will keep an eye on it.


RE: Get ready 4 it
By TakinYourPoints on 1/30/2013 6:18:19 PM , Rating: 2
I agree. We'll see when "good enough" makes expensive devices like the iPhone 5 and GS3 decline in sales. I think there's still a ways to go before people ditch subsidies en masse because the high end continues to be worth it for many.

Off topic, glad you registered, its actually been really good bouncing posts back and forth with you. Cheers.


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