AAPL - Apple Inc.

[Liberty]

Something I wrote somewhere else. Just cut & pasting it here:

 

So I was just thinking about the Apple Watch, and realized how it’ll help make the iPhone stickier in a very specific way: Replacement cycles for the iPhone and the Watch will rarely perfectly overlap. If someone has a Watch and they like it, they need an iPhone, so if their iPhone needs replacement, there’s very little chances that they’ll switch to a different ecosystem. And if they like the Watch and it becomes a part of their life, not only will they need to stick with the iPhone, but there’s very little reason for them to replace the Apple Watch with a smartwatch from another company since it won’t work nearly as well with the iPhone, which brings us back to the beginning of the cycle. Rinse and repeat. Extracting yourself from the ecosystem would be easier if the Watch and phone were always replaced at the same time, but since they probably will rarely be, it adds friction because you have to give up that other thing.

[rkbabang]

Something I wrote somewhere else. Just cut & pasting it here:

 

So I was just thinking about the Apple Watch, and realized how it’ll help make the iPhone stickier in a very specific way: Replacement cycles for the iPhone and the Watch will rarely perfectly overlap. If someone has a Watch and they like it, they need an iPhone, so if their iPhone needs replacement, there’s very little chances that they’ll switch to a different ecosystem. And if they like the Watch and it becomes a part of their life, not only will they need to stick with the iPhone, but there’s very little reason for them to replace the Apple Watch with a smartwatch from another company since it won’t work nearly as well with the iPhone, which brings us back to the beginning of the cycle. Rinse and repeat. Extracting yourself from the ecosystem would be easier if the Watch and phone were always replaced at the same time, but since they probably will rarely be, it adds friction because you have to give up that other thing.

 

No argument there.  And the more money they spend on the watch + band the more sticky the iPhone will be.

 

[Liberty]

http://www.wsj.com/articles/apple-pay-plans-to-launch-in-canada-this-fall-1429280816

 

Apparently Apple Pay is coming to Canada in the fall.

[tengen]

http://www.wsj.com/articles/apple-pay-plans-to-launch-in-canada-this-fall-1429280816

 

Apparently Apple Pay is coming to Canada in the fall.

 

Maybe. :-) Here's a WSJ blog article that doesn't require you to subscribe: http://blogs.wsj.com/canadarealtime/2015/04/17/canadian-lenders-fret-about-apple-pay/

[Liberty]

http://www.apple.com/watch/films/

 

Nice new batch of ads for the Watch.

[Liberty]

Interesting. They found a sensor that could detect blood oxygen levels in the Watch teardown..

 

http://9to5mac.com/2015/04/24/apple-watch-blood-oxygen/

 

Either it’s not accurate enough yet and they won’t turn it on on this generation of the Watch, or they’re waiting on some FDA approval and will later enable it by software. Either way, very cool.

 

Doesn't look like the fake 'gate' scandal about the Watch will be about water-resistance... I wonder what it'll be this time.

 

http://www.macrumors.com/2015/04/24/apple-watch-waterproof-new-test/

[kfh227]

Something I wrote somewhere else. Just cut & pasting it here:

 

So I was just thinking about the Apple Watch, and realized how it’ll help make the iPhone stickier in a very specific way: Replacement cycles for the iPhone and the Watch will rarely perfectly overlap. If someone has a Watch and they like it, they need an iPhone, so if their iPhone needs replacement, there’s very little chances that they’ll switch to a different ecosystem. And if they like the Watch and it becomes a part of their life, not only will they need to stick with the iPhone, but there’s very little reason for them to replace the Apple Watch with a smartwatch from another company since it won’t work nearly as well with the iPhone, which brings us back to the beginning of the cycle. Rinse and repeat. Extracting yourself from the ecosystem would be easier if the Watch and phone were always replaced at the same time, but since they probably will rarely be, it adds friction because you have to give up that other thing.

 

Smartphones are going to become commodities.  When the watches cost $20 and smartphones cost $40 there will not be anything sticky about them.  This whole ecosystem dependency is a myth.

 

So long as Apple keeps telling itself that they can charge outrageous sums for their toys, they will not be building a company for the future.  Steve Jobs death will prove to be the death of this company.  It has no vision.  The current CEO is just trying to maintain what Jobs left him.  Luckily, with the cash pile that Apple has, the next CEO will be able to do something for the future via acquisition.

 

The future in personal computer technology is going to be Google and Microsoft.  It's just a matter of time till our phones plug into dumb terminals (thin clients) and laptops fade away from the landscape.  And those dumb terminals will use open technology, not closed (like what Apple is).

[kfh227]

http://www.wsj.com/articles/apple-pay-plans-to-launch-in-canada-this-fall-1429280816

 

Apparently Apple Pay is coming to Canada in the fall.

 

When that news first broke (this isn't news BTW), many large companies in Canada said that they will not be supporting Apple Pay.  I forget the rational.  Probably security or money flow related.

[Liberty]

The cycle of life.

[cubsfan]

Something I wrote somewhere else. Just cut & pasting it here:

 

So I was just thinking about the Apple Watch, and realized how it’ll help make the iPhone stickier in a very specific way: Replacement cycles for the iPhone and the Watch will rarely perfectly overlap. If someone has a Watch and they like it, they need an iPhone, so if their iPhone needs replacement, there’s very little chances that they’ll switch to a different ecosystem. And if they like the Watch and it becomes a part of their life, not only will they need to stick with the iPhone, but there’s very little reason for them to replace the Apple Watch with a smartwatch from another company since it won’t work nearly as well with the iPhone, which brings us back to the beginning of the cycle. Rinse and repeat. Extracting yourself from the ecosystem would be easier if the Watch and phone were always replaced at the same time, but since they probably will rarely be, it adds friction because you have to give up that other thing.

 

Smartphones are going to become commodities.  When the watches cost $20 and smartphones cost $40 there will not be anything sticky about them.  This whole ecosystem dependency is a myth.

 

So long as Apple keeps telling itself that they can charge outrageous sums for their toys, they will not be building a company for the future.  Steve Jobs death will prove to be the death of this company.  It has no vision.  The current CEO is just trying to maintain what Jobs left him.  Luckily, with the cash pile that Apple has, the next CEO will be able to do something for the future via acquisition.

 

The future in personal computer technology is going to be Google and Microsoft.  It's just a matter of time till our phones plug into dumb terminals (thin clients) and laptops fade away from the landscape.  And those dumb terminals will use open technology, not closed (like what Apple is).

 

Pretty bold statements about a one of the best companies around. I think I'll stay long Apple.

[Liberty]

Kfh, if you want to have this discussion multiple times vicariously, read this thread from the start.

[Liberty]

The first experiences with the Apple Watch are starting to roll in. This is an interesting one.

 

http://log.ericalba.org/post/117307478867/some-things-ive-done-with-apple-watch-in-the-last

 

[plato1976]

The Galaxy is more a mystery to me.

I cannot imagine one would like to buy a Galaxy at twice the price of oneplus or other chinese brands for almost the same user experience (if not worse)

 

I was discussing this the other day, I just cannot understand how they keep margins so high. Of course, its their customers that allow them to do so but I really cannot figure out why. Same goes for Samsung Galaxy high end phones/tablet lines.

 

How can people continue spending sums that almost equal their monthly salary just on a phone??

[Liberty]

http://www.apple.com/pr/library/2015/04/27Apple-Expands-Capital-Return-Program-to-200-Billion.html

 

Apple Expands Capital Return Program to $200 Billion

 

Apple® today announced that its Board of Directors has authorized an increase of more than 50 percent to the Company’s program to return capital to shareholders. Under the expanded program, Apple plans to utilize a cumulative total of $200 billion of cash by the end of March 2017.

 

As part of the revised program, the Board has increased its share repurchase authorization to $140 billion from the $90 billion level announced last year. In addition, the Company expects to continue to net-share-settle vesting restricted stock units.

 

http://www.apple.com/pr/library/2015/04/27Apple-Reports-Record-Second-Quarter-Results.html

 

61.2m iPhones! GM at 40.8%.

 

Only 20% of iPhone base has upgraded to iPhone 6 and 6 Plus. iPhone ASP $659, increase of $62 YoY

 

Apple® today announced financial results for its fiscal 2015 second quarter ended March 28, 2015. The Company posted quarterly revenue of $58 billion and quarterly net profit of $13.6 billion, or $2.33 per diluted share. These results compare to revenue of $45.6 billion and net profit of $10.2 billion, or $1.66 per diluted share, in the year-ago quarter. Gross margin was 40.8 percent compared to 39.3 percent in the year-ago quarter. International sales accounted for 69 percent of the quarter’s revenue.

 

Dividend increased to 52 cents.

[innerscorecard]

Looks like the narrative of gross margin collapse that people thought was sure to happen has been proven wrong. It's been a long time with these high gross margins. I can only see it going higher if Apple Watch really takes off (so that Apple Watch fixed costs that make Apple Watch margins artificially low right now are proportionally less), as well.

[krazeenyc]

http://www.apple.com/pr/library/2015/04/27Apple-Expands-Capital-Return-Program-to-200-Billion.html

 

Apple Expands Capital Return Program to $200 Billion

 

Apple® today announced that its Board of Directors has authorized an increase of more than 50 percent to the Company’s program to return capital to shareholders. Under the expanded program, Apple plans to utilize a cumulative total of $200 billion of cash by the end of March 2017.

 

As part of the revised program, the Board has increased its share repurchase authorization to $140 billion from the $90 billion level announced last year. In addition, the Company expects to continue to net-share-settle vesting restricted stock units.

 

http://www.apple.com/pr/library/2015/04/27Apple-Reports-Record-Second-Quarter-Results.html

 

61.2m iPhones! GM at 40.8%.

 

Only 20% of iPhone base has upgraded to iPhone 6 and 6 Plus. iPhone ASP $659, increase of $62 YoY

 

Apple® today announced financial results for its fiscal 2015 second quarter ended March 28, 2015. The Company posted quarterly revenue of $58 billion and quarterly net profit of $13.6 billion, or $2.33 per diluted share. These results compare to revenue of $45.6 billion and net profit of $10.2 billion, or $1.66 per diluted share, in the year-ago quarter. Gross margin was 40.8 percent compared to 39.3 percent in the year-ago quarter. International sales accounted for 69 percent of the quarter’s revenue.

 

Dividend increased to 52 cents.

 

Product mix is a huge factor, more iPhones, more people buying 128GB, and less iPads is leading to > gross margins.

[Liberty]

Looks like the narrative of gross margin collapse that people thought was sure to happen has been proven wrong. It's been a long time with these high gross margins. I can only see it going higher if Apple Watch really takes off, as well.

 

Yep. Margins should be a bit lower in the next quarter or two because the Watch will take a bit of time to ramp up and get better yield and product mix that matches demand more closely (and for gold Edition to ship -- even if it's only 1 or 2 percent, it could represent a significant chunk of revenue for that product), and because Apple overall is fairly seasonal and loses leverage at this time of year.

 

I think that once the Watch is more mature, gross margins on it should be higher than company average. I wouldn't be surprised to see them above 50-60% when you include accessories (bands).

[innerscorecard]

Haha, I actually edited my post before I saw your reply, as I got to listen to more of the call and saw the statement about Apple Watch margins currently actually being lower than Apple's average.

[Liberty]

From twitter: "Apple had a better March quarter this year than it had a holiday quarter in 2013. March is the new Christmas."

[DCG]

Anyone on here actually buying (or bought) an Apple watch?

[innerscorecard]

Anyone on here actually buying (or bought) an Apple watch?

 

I have not because they sold out. But I did try one on the first day they were available. I simply don't like blindly buying products I haven't had the chance to try. The software was easier to use and more intuitive than I thought, but the watch was somewhat thicker than I would like. I may buy one in the coming months when they are instantly available. Sport, of course. Or I might wait for Apple Watch 2. Depends.

[DCG]

It will be interesting to see where they can go with the form factor in future models. With the iPhone it was obvious that they will get larger screens, but with the watch, it can get thinner, but what else?

[Liberty]

It will be interesting to see where they can go with the form factor in future models. With the iPhone it was obvious that they will get larger screens, but with the watch, it can get thinner, but what else?

 

Form factor probably won't change a lot because wrists are wrists. It'll get thinner for sure, but a lot of people seem to think it feels pretty good as it is, so it's not like a cellphone from the early 90s or anything.

 

Most of the changes will be about aesthetics: More new bands, more finishes, maybe more metal types (titanium?). I can imagine limited time offer bands coming out and selling really well.

 

Biggest changes will probably be internal, with more sensors, more battery life, faster SoC, maybe upgredeability of the Sx chip, etc. And of course, software improvements and more native apps after the SDK comes out.

[rkbabang]

It will be interesting to see where they can go with the form factor in future models. With the iPhone it was obvious that they will get larger screens, but with the watch, it can get thinner, but what else?

 

Form factor probably won't change a lot because wrists are wrists. It'll get thinner for sure, but a lot of people seem to think it feels pretty good as it is, so it's not like a cellphone from the early 90s or anything.

 

Most of the changes will be about aesthetics: More new bands, more finishes, maybe more metal types (titanium?). I can imagine limited time offer bands coming out and selling really well.

 

Biggest changes will probably be internal, with more sensors, more battery life, faster SoC, maybe upgredeability of the Sx chip, etc. And of course, software improvements and more native apps after the SDK comes out.

 

I wonder if most people will opt for the sport simply because the internals are not upgradable.  I can't see spending a lot of money (up to $17K) for something that will be obsolete in a year and a half.  The Watch 2 will be faster, have longer battery life, thinner, have more sensors, and do a lot more.  When you buy a Rolex you know that it is something that can last a lifetime and can be left to your children and grandchildren.  You'd have to be pretty rich to blow that kind of money on something you know that you will want to replace in a few years.  I know most people don't buy $17K watches, but even the stainless version will fall into this category for a lot of people (most people?).  It is tough for me to predict these types of things since I can't go by my own opinions/habits.  I've never owned a smartphone nor spent more than $80 on a watch.

 

 

[Liberty]

I wonder if most people will opt for the sport simply because the internals are not upgradable.  I can't see spending a lot of money (up to $17K) for something that will be obsolete in a year and a half.  The Watch 2 will be faster, have longer battery life, thinner, have more sensors, and do a lot more.  When you buy a Rolex you know that it is something that can last a lifetime and can be left to your children and grandchildren.  You'd have to be pretty rich to blow that kind of money on something you know that you will want to replace in a few years.  I know most people don't buy $17K watches, but even the stainless version will fall into this category for a lot of people (most people?).  It is tough for me to predict these types of things since I can't go by my own opinions/habits.  I've never owned a smartphone nor spent more than $80 on a watch.

 

There are many interesting dynamics at play.

 

Part of the role of the Edition is to make the stainless steel watch seem less expensive. I bet that more people would have opted for the Sport if the Stainless Watch had been the most expensive model. This is a known effect; restaurants often have something ridiculously expensive on the menu to make you feel like you are picking something in the middle.

 

Also, the gold Edition sold out in China within moment of being launched for pre-order. Culture matters. Nobody had been able to see one in person yet. Sometimes, making an obscene purchase is the point. Veblen goods and all that. And the Watch will have a different upgrade cycle than the phone. I suspect most people will keep their Watches 4-5 years, kind of like iPads, and not 2-3 years like iPhones (though they might buy different bands in between).

 

The final split in units might be something like 1-2% edition, 60-70% sport, and the rest stainless. But the revenue and margin ratios will be very different, with the edition punching way above its unit weight (obviously, if each one costs 20-30x more). Gross margins on the gold Edition could easily be in the 80-90% range, IMO.