johnny Posted September 15, 2015 Share Posted September 15, 2015 Indians?? ^ India is probably Apple's least successful major market, in terms of market share. Link to comment Share on other sites More sharing options...
portfolio14 Posted September 15, 2015 Share Posted September 15, 2015 I thought AAPL was not predictable, but I have changed my mind. I now think this trend is very clear: smartphones and tablet devices will only get used by an ever increasing number of people. Therefore, the question is: which smartphones and tablets will those people buy? I now think the probability some company will come up with a product which might put together software, hardware, and design better than the iPhone is very small indeed. Add to that the value of their so-called “eco-system”, with iTunes, the iPad, the iWatch, Apple TV, etc., and the probability of switching from the iPhone to another smartphone seems even smaller. In other words, imo predictable growth ahead for AAPL. I have just opened a 9% position. Cheers, Gio Welcome on board! Thing to watch out: Apple will stop growing if the upgrade cycle gets longer. The good news is it's already priced as if it wouldn't grow. Upgrade cycle: it's not a matter of of "if". It's a matter of "when". Link to comment Share on other sites More sharing options...
giofranchi Posted September 15, 2015 Share Posted September 15, 2015 Another angle I've thought about: The smartphone is becoming ever more relevant and necessary in life. The value it provides is constantly increasing. This means that having to pay premium price for the iPhone over competitors will matter less and less to the average consumer moving forward. Also the monthly payments strategy just announced could be very useful! See the pdf in attachment. Cheers, GioApple_Shares_Could_Rally_50%_on_New_iPhone_Plan.pdf Link to comment Share on other sites More sharing options...
giofranchi Posted September 15, 2015 Share Posted September 15, 2015 Thing to watch out: Apple will stop growing if the upgrade cycle gets longer. The good news is it's already priced as if it wouldn't grow. Upgrade cycle: it's not a matter of of "if". It's a matter of "when". Well, until now they have done a pretty good job! The recently announced introduction of the 3D technology is just another example. That “when” might be years away… Just think about medical devices and the constant monitoring of health parameters, which could save lives and make people live better and longer lives… Apple has barely scratched the surface! My idea is not only that ever more people will use smartphones and tablets, but also that they’ll keep asking for better, more sophisticated, more complete and technologically advanced products. Until smartphones and tablets are replaced by some other devices we have not even started conceiving today, it is very difficult imo to see why the trend of “better products, more widely used” should stop. Cheers, Gio Link to comment Share on other sites More sharing options...
giofranchi Posted September 15, 2015 Share Posted September 15, 2015 Basically, my idea is the following: 1) If they keep growing, and keep defending high net margins successfully, Apple is the best business in the world today: and I definitely want to own the best business in the world! ;) 2) If I am wrong about growth and net margins, the low multiple I paid yesterday should make for a sufficient margin of safety, and hopefully I won’t lose much money. Cheers, Gio Link to comment Share on other sites More sharing options...
ZenaidaMacroura Posted September 15, 2015 Share Posted September 15, 2015 I thought AAPL was not predictable, but I have changed my mind. I now think this trend is very clear: smartphones and tablet devices will only get used by an ever increasing number of people. Therefore, the question is: which smartphones and tablets will those people buy? I now think the probability some company will come up with a product which might put together software, hardware, and design better than the iPhone is very small indeed. Add to that the value of their so-called “eco-system”, with iTunes, the iPad, the iWatch, Apple TV, etc., and the probability of switching from the iPhone to another smartphone seems even smaller. In other words, imo predictable growth ahead for AAPL. I have just opened a 9% position. Cheers, Gio Welcome on board! Thing to watch out: Apple will stop growing if the upgrade cycle gets longer. The good news is it's already priced as if it wouldn't grow. Upgrade cycle: it's not a matter of of "if". It's a matter of "when". A lot of the phone upgrade plans (including Apple's own plan) are trying to prompt yearly upgrade (up from the 2 year subsidy model). I'm not so sure we'll see Iphone upgrade cycle increasing in the foreseeable future. Link to comment Share on other sites More sharing options...
johnny Posted September 15, 2015 Share Posted September 15, 2015 There are two big factors that are going to keep the phone replacement cycle where it is now for quite a while: 1. We are still on the steep part of the hardware improvement curve. As long as each generation of the A chip is able to throw up 50-100% performance gains, it is going to make the experience of owning a 4 year old phone punishing. 2. The phone is a very high-visibility status signal. As long as older models of a phone are readily discernible from current models, there will be a lot of latent psychological pressure to upgrade, even when the specs don't necessarily motivate. The two-year upgrade cycle has, I suspect, already created a reasonably strong norm in America and I suspect that most people under 30 will feel very uncomfortable using the same phone for 25 months as a result. Link to comment Share on other sites More sharing options...
undervalued Posted September 15, 2015 Share Posted September 15, 2015 I think there will be less people buying iphones this year around after carriers no longer subsidize them. Our income stay flat, phone plan stays flat, and iphone price increase. Instead of $200 (with subsidy), it is now $32 * 12 = $384. Almost double the cost. I guess we'll see what happens. Link to comment Share on other sites More sharing options...
innerscorecard Posted September 15, 2015 Share Posted September 15, 2015 US carriers still subsidize phones, just in different ways now, rather than through the old contract plans. Look at T-Mobile's promotional pricing for iPhone 6s for just one example. Link to comment Share on other sites More sharing options...
dwy000 Posted September 15, 2015 Share Posted September 15, 2015 It will be interesting to see what Apple does with all the old phones that get turned in under the plan for replacement. Most of the carriers (and I assume Apple) can justify the early upgrades because of the high residual value of the 1 year old phone you have to turn in. Apple may end up in the circumstance where it is dumping a ton of 1-2 year old phones on the market in order to upgrade to the newest model. Other things being equal, by shortening the upgrade cycle, either people are paying more for phones or the sellers are getting less (because the old ones aren't worth as much). Somebody has to eat the difference. With a ton of 1 year old phones hitting the market, you have to assume the value of those will drop - which makes upgrades more expensive for phone sellers or the price differential to the buyer that much more. Link to comment Share on other sites More sharing options...
Liberty Posted September 15, 2015 Share Posted September 15, 2015 I think there will be less people buying iphones this year around after carriers no longer subsidize them. Our income stay flat, phone plan stays flat, and iphone price increase. Instead of $200 (with subsidy), it is now $32 * 12 = $384. Almost double the cost. I guess we'll see what happens. The word "subsidy" when applied to phones is misleading anyway. There was never a real subsidy, the price was just amortized over X months after an upfront cost. The new model often means that there's no upfront cost, and the phone is still paid in installements, so if anything, it might be a positive. Link to comment Share on other sites More sharing options...
adesigar Posted September 16, 2015 Share Posted September 16, 2015 I think there will be less people buying iphones this year around after carriers no longer subsidize them. Our income stay flat, phone plan stays flat, and iphone price increase. Instead of $200 (with subsidy), it is now $32 * 12 = $384. Almost double the cost. I guess we'll see what happens. The word "subsidy" when applied to phones is misleading anyway. There was never a real subsidy, the price was just amortized over X months after an upfront cost. The new model often means that there's no upfront cost, and the phone is still paid in installements, so if anything, it might be a positive. Whats so misleading? Don't look at it from the carriers point of view. Look at it from the customers point of view. Phones (iPhone/galaxy) were available for $200 every 2 years in exchange for being locked into a data plan. The plan would cost $30 per month or $720 for 24 months. Total cost for 24 months was 720+200 = 920. Now phones cost 650 and you still have to pay for data at $30 per 2GB. You just have the freedom to jump around. Most people don't really care about switching carriers because they have a preferred carrier and stick it. Link to comment Share on other sites More sharing options...
giofranchi Posted September 16, 2015 Share Posted September 16, 2015 The two-year upgrade cycle has, I suspect, already created a reasonably strong norm in America and I suspect that most people under 30 will feel very uncomfortable using the same phone for 25 months as a result. Not only! Don’t forget that those who’ll be over 40 in a few years were below 30 when Apple first introduced the iPhone and the iPad… They are used to having the latest devices, and I suspect they won’t change this habit just because they are 10-15 years older… Especially if Apple starts to upgrade the iPhone and the iPad with an eye towards business and healthcare. (Business is clearly a market in which Apple has still lots of room to grow, and I guess the new iPad is a step in that direction) Cheers, Gio Link to comment Share on other sites More sharing options...
giofranchi Posted September 16, 2015 Share Posted September 16, 2015 "Apple expects China soon to become a bigger market for its products than America." http://www.economist.com/news/special-report/21663328-booming-middle-class-creating-worlds-most-dynamic-consumer-market-wild-wild?fsrc=scn/tw/te/pe/ed/thewildwildeast Cheers, Gio Link to comment Share on other sites More sharing options...
giofranchi Posted September 16, 2015 Share Posted September 16, 2015 Whats so misleading? Don't look at it from the carriers point of view. Look at it from the customers point of view. Phones (iPhone/galaxy) were available for $200 every 2 years in exchange for being locked into a data plan. The plan would cost $30 per month or $720 for 24 months. Total cost for 24 months was 720+200 = 920. Now phones cost 650 and you still have to pay for data at $30 per 2GB. You just have the freedom to jump around. Most people don't really care about switching carriers because they have a preferred carrier and stick it. Well, the “$200 every 2 years in exchange for being locked into a data plan” option is still available, isn’t it? If so, consumers have two possible alternatives instead of one. What's not to like? Cheers, Gio Link to comment Share on other sites More sharing options...
johnny Posted September 16, 2015 Share Posted September 16, 2015 Phones (iPhone/galaxy) were available for $200 every 2 years in exchange for being locked into a data plan. The plan would cost $30 per month or $720 for 24 months. Total cost for 24 months was 720+200 = 920. Sorry, but there was -never- a mainstream iPhone contract that broke down with numbers like that. The initial desperation of carriers to offer iPhones was precisely because carriers knew that iPhone had a way higher ARPU than non-iPhones, and they were willing to put $400-500 upfront to get customers on data plans. For example, when the iPhone 3G came out, the cheapest plan offered by AT&T was $70/month. It included 450 minutes of anytime minutes (everybody remember those?) Now, if you want an iPhone from T-mobile, you can pay $50/month for service, and get the phone for $20/month. Only this time there is $0 up-front, and you won't be throttled until 10GB of monthly data usage (whereas AT&T would start to rate you down at 3-5G). The true total cost of iPhone ownership hasn't changed. If anything, the total cost of ownership is a bit lower. There is just a little more pricing transparency. The funny thing is that this pricing transparency has been pushed by the participants that have the most to lose from simplicity and transparency: the commodity service providers. I think the excitement in carrier circles about "ending subsidies" will prove out to be a little sad and desperate. When you have business problems it is more comforting to convince yourself that they are all due to one little policy under your control than to consider they may reflect a fundamental, irreversible, structural change. U.S. customers, for better or for worse, make tend to make their decisions based on what monthly costs are going to be. The median iPhone buyer is not looking at the new iPhone and thinking "Wow, $700 is probably too much for me." They're thinking "I can easily afford $25 a month for a few months". This may be a seemingly weak year for iPhone sales, but that is probably a result of the S year. 2016 will be the real moment of truth for the carriers' subsidy strategy. And I think it is pretty clear how that will shake out. Link to comment Share on other sites More sharing options...
Liberty Posted September 16, 2015 Share Posted September 16, 2015 What's misleading is that a subsidy is generally not something that is paid back. If the government gives a subsidy to the oil industry, that's different from a loan. What carriers are doing is offering financing, which people pay back over the life of the contract. And many people get screwed because if you keep the phone longer than your contract, your monthly fee doesn't usually go down so you keep paying for something that you've already paid for. Whoever started calling it a subsidy was probably trying to fool people into thinking they were getting something for free, which definitely wasn't the case. Link to comment Share on other sites More sharing options...
DeepSouth Posted September 16, 2015 Share Posted September 16, 2015 The funny thing is that this pricing transparency has been pushed by the participants that have the most to lose from simplicity and transparency: the commodity service providers. The pricing transparency has been pushed by T-Mobile, the carrier with the most incentive to gain customers (they need to scale to increase ROIC/hit FCF breakeven) and the carrier least burdened by legacy costs/obligations/margins. ATT and VZ are forced to adapt due to customer churn. Link to comment Share on other sites More sharing options...
johnny Posted September 16, 2015 Share Posted September 16, 2015 I think that is a mischaracterization. For at least the past year AT&T and V have been bragging in their investor communications about how many customers they've been moving off of subsidy plans. If T-mobile was simply forcing them to offer no-sub pricing, I think they'd at least be indifferent to the mix, no? I get the sense that they all genuinely believe this is a winning move, not one simply forced by a crazy competitor. Link to comment Share on other sites More sharing options...
Liberty Posted September 16, 2015 Share Posted September 16, 2015 With iOS 9 about to come out, here's a few good reviews for those who are interested: http://arstechnica.com/apple/2015/09/ios-9-thoroughly-reviewed/ https://www.macstories.net/stories/ios-9-review/ http://www.imore.com/ios-9-review Interestingly, iOS 8 now has 87% adoption among the iOS ecosystem (and this is considered a slow release for Apple because of some unfortunate bug and space issues at launch), a year after release. On the Android side, Jelly Bean, which first came out in the summer of 2012, still has almost 1/3 of the installed base: https://developer.android.com/about/dashboards/index.html Link to comment Share on other sites More sharing options...
Liberty Posted September 16, 2015 Share Posted September 16, 2015 More for entertainment than anything, but here's Tim Cook being interviewed by Stephen Colbert: https://www.youtube.com/watch?v=zuY0hXkqTWA Link to comment Share on other sites More sharing options...
undervalued Posted September 16, 2015 Share Posted September 16, 2015 As a consumer, I am going through ATT new plan. It looks like I will be jumping to T-Mobile. I don't know why ATT has a plan with a 2 year contract that is more expensive than a non-contract. Why would anyone sign a 2 year agreement unless they want to lock up the monthly price right now? Mobile Share Value Promotional plans: Limited-time offer. Must sign up for these promotional plans. Available in select stores and at att.com on August 15, 2015. You can switch to them at any time at myatt.com. Prices include monthly plan charge and per-device monthly access charge. Devices: Sold separately. AT&T Next installment charges or other devices purchase costs are extra. Discounted access charge: Access charges for smartphone lines on No Annual Service Contracts (AT&T Next, bring your own, pay full price, or month-to-month) are discounted up to $25 per month when compared to smartphone lines on new 2-year contracts. Savings will be $15 or $25 per smartphone line based on your plan. Customers with smartphones on 2-year contracts that started in or prior to March 2014 may also be eligible for these savings. Loss of discount with 2-year upgrade: If upgrading to a smartphone on a 2-year wireless contract, you will lose the discount for that line. Loss of discount with plan change: If you change your rate plan and are currently receiving a discounted access charge, your discount may change or be lost. Data overage: If you exceed the amount of data in your plan (including available Rollover DataSM) during your billing period, additional data will automatically be provided in increments of 300MB at $20 per 300MB on a 300MB plan, or 1GB at $15 per GB on the other plans shown above. Unless otherwise specified, data allowances, including overages and Rollover Data, must be used in the billing period provided or they will be forfeited. Device limits: 10 per plan for consumers and Individual Responsibility Users. Limit on number of financed devices per account applies. ATT with 2 Lines using smarthphones with 2GB data w/o 2 year contract is $30 + $25 + $25 = $80. With 2 year agreement it is $30 + $40 + $40 = $110. T-Mobile has it for $80 for 2 lines 1GB each line which is comparable with no contract on ATT. If I am already using a Nexus 6, jumping to Google Fi is a no brainer which has 1GB each line for $30 each so $60 total. Link to comment Share on other sites More sharing options...
Liberty Posted September 16, 2015 Share Posted September 16, 2015 http://www.macworld.com/article/2984416/apple-phone/3d-touch-is-a-hard-problem-that-apple-got-just-right.html Great piece about the importance of integrating software and hardware, and how hard that is. Link to comment Share on other sites More sharing options...
undervalued Posted September 16, 2015 Share Posted September 16, 2015 http://www.macworld.com/article/2984416/apple-phone/3d-touch-is-a-hard-problem-that-apple-got-just-right.html Great piece about the importance of integrating software and hardware, and how hard that is. I want to know how this solves our butt dialing issue. It's becoming an epidemic. Link to comment Share on other sites More sharing options...
Liberty Posted September 16, 2015 Share Posted September 16, 2015 http://www.macworld.com/article/2984416/apple-phone/3d-touch-is-a-hard-problem-that-apple-got-just-right.html Great piece about the importance of integrating software and hardware, and how hard that is. I want to know how this solves our butt dialing issue. It's becoming an epidemic. Guessing this is a reference I'm not familiar with :) Link to comment Share on other sites More sharing options...
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