AAPL - Apple Inc.

[Palantir]

I think a larger iphone 6/6S will alone buy them a couple of years of extra profit. With a 5" flagship, all the guys that use Galaxy will suddenly see this on an equal footing.

 

I'd like to see them be more competitive at the 450 level, but I guess we've been down that road. Many great smartphones at that price, such as Xperia, and now the Nexus 5, and given the COGS is basically around 200, the profit margins can still be great.

[Liberty]

I had an interesting experience tonight. It's just anecdotal, but for me it's one more data point on top of many others...

 

A friend of my wife has just bought a new smartphone today, upgrading from a feature phone. She got a Galaxy because she said 'it was less expensive than the iPhone' (wonder if it's all those sales comissions paid by Samsung, making salespeople in stores push the Galaxy as "just like the iPhone but less expensive"...).

 

I looked at her trying to add some new contacts, find and play a video on youtube, go on Facebook, and generally interact with the phone for a long time.

 

Once she was done, I asked her if I could have a look myself and played with most of the main features of the phone and looked at built quality and feel.

 

Short conclusion: I feel like iOS and the Apple hardware are even more ahead than I thought.

[Guest valueInv]

I had an interesting experience tonight. It's just anecdotal, but for me it's one more data point on top of many others...

 

A friend of my wife has just bought a new smartphone today, upgrading from a feature phone. She got a Galaxy because she said 'it was less expensive than the iPhone' (wonder if it's all those sales comissions paid by Samsung, making salespeople in stores push the Galaxy as "just like the iPhone but less expensive"...).

 

I looked at her trying to add some new contacts, find and play a video on youtube, go on Facebook, and generally interact with the phone for a long time.

 

Once she was done, I asked her if I could have a look myself and played with most of the main features of the phone and looked at built quality and feel.

 

Short conclusion: I feel like iOS and the Apple hardware are even more ahead than I thought.

 

Of course. Samsung is good at marketing, not building products.

[wachtwoord]

Of course. Samsung is good at marketing, not building products.

 

That is my opinion about Apple. All marketing, no content and their customers buy it "because it's shiny". (ok my real opinion is more nuanced than this, but this is basically where it boils down to).

[Guest valueInv]

Of course. Samsung is good at marketing, not building products.

 

That is my opinion about Apple. All marketing, no content and their customers buy it "because it's shiny". (ok my real opinion is more nuanced than this, but this is basically where it boils down to).

 

Yeah, they revolutionized 4 markets by "marketing". ::)

[LC]

Of course. Samsung is good at marketing, not building products.

 

That is my opinion about Apple. All marketing, no content and their customers buy it "because it's shiny". (ok my real opinion is more nuanced than this, but this is basically where it boils down to).

 

I really disagree with you! :)

 

I see Apple as being the only consumer tech company with a long history of producing top-of-the-line products at a mass-market scale. From personal computers to OS to ipod/iphone/ipad...they have shown a remarkable ability to create cutting edge products, make them easy to use by the "mass" consumer, and manufacture, market, and sell them at a worldwide level.

 

No content? This is the company that created the iphone! That created the de-facto mobile operating system layout and "feel". If they didn't create all this "content", then who did?

[txlaw]

I had an interesting experience tonight. It's just anecdotal, but for me it's one more data point on top of many others...

 

A friend of my wife has just bought a new smartphone today, upgrading from a feature phone. She got a Galaxy because she said 'it was less expensive than the iPhone' (wonder if it's all those sales comissions paid by Samsung, making salespeople in stores push the Galaxy as "just like the iPhone but less expensive"...).

 

I looked at her trying to add some new contacts, find and play a video on youtube, go on Facebook, and generally interact with the phone for a long time.

 

Once she was done, I asked her if I could have a look myself and played with most of the main features of the phone and looked at built quality and feel.

 

Short conclusion: I feel like iOS and the Apple hardware are even more ahead than I thought.

 

Looking at the Galaxy S4 probably isn't the best way to assess iOS vs. Android at this time.  I'm assuming she wasn't using the Developer (pure Android) edition of the S4?  Touch Wiz is terrible both from a UI perspective and because of the performance issues it creates.  Lag on the S4 is a pretty well known phenomenon.  (Incidentally, Samsung understands that it needs to get better at software.  See http://blogs.wsj.com/korearealtime/2013/11/06/live-blog-samsungs-analyst-day/. )

 

A better comparison would be the Nexus 5 versus the iPhone 5S, even though the Nexus 5 is not necessarily at the "high end" of the market.  I just ordered a Nexus 5, and I look forward to testing it out before making a decision on whether to stick with my iPhone or try out something new.

[wachtwoord]

Of course. Samsung is good at marketing, not building products.

 

That is my opinion about Apple. All marketing, no content and their customers buy it "because it's shiny". (ok my real opinion is more nuanced than this, but this is basically where it boils down to).

 

I really disagree with you! :)

 

I see Apple as being the only consumer tech company with a long history of producing top-of-the-line products at a mass-market scale. From personal computers to OS to ipod/iphone/ipad...they have shown a remarkable ability to create cutting edge products, make them easy to use by the "mass" consumer, and manufacture, market, and sell them at a worldwide level.

 

No content? This is the company that created the iphone! That created the de-facto mobile operating system layout and "feel". If they didn't create all this "content", then who did?

 

Remember the Micrsoft Zune? Was the iPod really better? Of course it wasn't, it's a freaking mp3 player ffs. Microsoft just sucks at marketing and Apple has some of the best marketeers in the world. They are able to sell HW for at least 50% more than their competitors. They won't be selling it to me however :)

[Palantir]

The issue is not whether the S4 is better than iPhone 5S, it's really about when the rival product is "good enough" so that the iPhone is not such a big upgrade anymore. That is, if you like Android, I don't see why you'd get an iPhone over the Nexus, which is very comparable and $200 cheaper.

 

The way I see it, in the eyes of most users, GS4 is only superior to the iPhone 5S due to its screen size. If/When Apple fixes that, then they're going to be playing on an even footing which will hurt Samsung IMO.

[Palantir]

Remember the Micrsoft Zune? Was the iPod really better? Of course it wasn't, it's a freaking mp3 player ffs. Microsoft just sucks at marketing and Apple has some of the best marketeers in the world. They are able to sell HW for at least 50% more than their competitors. They won't be selling it to me however :)

 

Yep. Just look at how they botched the Surface. The Surface has excellent user reviews, but they've done a poor job selling it.

[txlaw]

The issue is not whether the S4 is better than iPhone 5S, it's really about when the rival product is "good enough" so that the iPhone is not such a big upgrade anymore. That is, if you like Android, I don't see why you'd get an iPhone over the Nexus, which is very comparable and $200 cheaper.

 

The way I see it, in the eyes of most users, GS4 is only superior to the iPhone 5S due to its screen size. If/When Apple fixes that, then they're going to be playing on an even footing which will hurt Samsung IMO.

 

True.  It's about whether Android products are "good enough" and how the price point differential affects Apple's unit sales and profits. 

 

But if we are going to be comparing iOS and Android in terms of "how ahead" they are, we really should be looking at Kit Kat on new hardware versus iOS on the latest hardware (iPhone 5S).  Also, there's really no way to say that Apple will be on even footing if/when Apple fixes the small screen problem because we don't know what Samsung's new phones will look like at that time.  Samsung will always have a COGS advantage because they are vertically integrated -- which means that Apple will never be on equal footing with Samsung at least in one important aspect: price.

[Guest valueInv]

The issue is not whether the S4 is better than iPhone 5S, it's really about when the rival product is "good enough" so that the iPhone is not such a big upgrade anymore. That is, if you like Android, I don't see why you'd get an iPhone over the Nexus, which is very comparable and $200 cheaper.

 

The way I see it, in the eyes of most users, GS4 is only superior to the iPhone 5S due to its screen size. If/When Apple fixes that, then they're going to be playing on an even footing which will hurt Samsung IMO.

 

True.  It's about whether Android products are "good enough" and how the price point differential affects Apple's unit sales and profits. 

 

But if we are going to be comparing iOS and Android in terms of "how ahead" they are, we really should be looking at Kit Kat on new hardware versus iOS on the latest hardware (iPhone 5S).  Also, there's really no way to say that Apple will be on even footing if/when Apple fixes the small screen problem because we don't know what Samsung's new phones will look like at that time.  Samsung will always have a COGS advantage because they are vertically integrated -- which means that Apple will never be on equal footing with Samsung at least in one important aspect: price.

 

As usual, you are not even close to reality. Apple has already shifted to 64 but not so much Kit Kat.

btw, the nexus 5 still doesn't have a fingerprint sensor and the camera still sucks. I could go on and on.

[Guest valueInv]

Of course. Samsung is good at marketing, not building products.

 

That is my opinion about Apple. All marketing, no content and their customers buy it "because it's shiny". (ok my real opinion is more nuanced than this, but this is basically where it boils down to).

 

I really disagree with you! :)

 

I see Apple as being the only consumer tech company with a long history of producing top-of-the-line products at a mass-market scale. From personal computers to OS to ipod/iphone/ipad...they have shown a remarkable ability to create cutting edge products, make them easy to use by the "mass" consumer, and manufacture, market, and sell them at a worldwide level.

 

No content? This is the company that created the iphone! That created the de-facto mobile operating system layout and "feel". If they didn't create all this "content", then who did?

 

Remember the Micrsoft Zune? Was the iPod really better? Of course it wasn't, it's a freaking mp3 player ffs. Microsoft just sucks at marketing and Apple has some of the best marketeers in the world. They are able to sell HW for at least 50% more than their competitors. They won't be selling it to me however :)

 

Did Microsoft ignite the market for mp3 players?

[Liberty]

http://www.asymco.com/2013/11/04/do-ads-work-the-ad-budgets-of-various-companies/

 

http://stratechery.com/2013/clayton-christensen-got-wrong/

 

If there was a 'good enough' in consumer product when it comes to ease of use and quality of experience, the world would be a lot different and Macs would've stopped selling years ago when windows got "good enough" and Porsche and BMW would've stopped selling decades ago when the average car got "good enough" and fancy kitchen knife companies would've stopped selling when the average knife got "good enough", etc.

 

That mentality comes from the corporate world where buyers and users are different people, and buyers judge things on spec sheets (easily quantifiable things, unlike user experience, which buyers don't care much about beyond a certain point because they won't be the ones using the products). That mental model doesn't work for consumer products like those Apple makes.

 

But in all markets (Wine, audio equipment, knives, cars, restaurants, etc) there are people who can't perceive or don't care about quality. That's fine. Apple isn't targeting these people, and they aren't that profitable anyway.

[txlaw]

The issue is not whether the S4 is better than iPhone 5S, it's really about when the rival product is "good enough" so that the iPhone is not such a big upgrade anymore. That is, if you like Android, I don't see why you'd get an iPhone over the Nexus, which is very comparable and $200 cheaper.

 

The way I see it, in the eyes of most users, GS4 is only superior to the iPhone 5S due to its screen size. If/When Apple fixes that, then they're going to be playing on an even footing which will hurt Samsung IMO.

 

True.  It's about whether Android products are "good enough" and how the price point differential affects Apple's unit sales and profits. 

 

But if we are going to be comparing iOS and Android in terms of "how ahead" they are, we really should be looking at Kit Kat on new hardware versus iOS on the latest hardware (iPhone 5S).  Also, there's really no way to say that Apple will be on even footing if/when Apple fixes the small screen problem because we don't know what Samsung's new phones will look like at that time.  Samsung will always have a COGS advantage because they are vertically integrated -- which means that Apple will never be on equal footing with Samsung at least in one important aspect: price.

 

As usual, you are not even close to reality. Apple has already shifted to 64 but not so much Kit Kat.

btw, the nexus 5 still doesn't have a fingerprint sensor and the camera still sucks. I could go on and on.

 

You probably could have done without putting that first sentence in.  I'm willing to "engage with you intellectually" if you learn some manners.

 

I don't consider support for 64-bit to be of much use at this time.  However, I do think it becomes more important on upcoming next gen devices because I still believe in convergence, where the phone will be the only computer you need (the Ubuntu Edge vision, if you will).  The fingerprint reader is pretty nice, but it's only one feature and doesn't make it a given that Apple is way ahead. 

 

In some respects, Apple is behind.  Small screen is absolutely a problem.  Tighter integration of Google Now into Kit Kat blows Apple out of the water for the very common use case of finding stuff on the fly on your phone.  iCloud integration still isn't very good compared to Android and Google services.

 

So, no, I wouldn't say Apple is far ahead.

[wachtwoord]

Of course. Samsung is good at marketing, not building products.

 

That is my opinion about Apple. All marketing, no content and their customers buy it "because it's shiny". (ok my real opinion is more nuanced than this, but this is basically where it boils down to).

 

I really disagree with you! :)

 

I see Apple as being the only consumer tech company with a long history of producing top-of-the-line products at a mass-market scale. From personal computers to OS to ipod/iphone/ipad...they have shown a remarkable ability to create cutting edge products, make them easy to use by the "mass" consumer, and manufacture, market, and sell them at a worldwide level.

 

No content? This is the company that created the iphone! That created the de-facto mobile operating system layout and "feel". If they didn't create all this "content", then who did?

 

Remember the Micrsoft Zune? Was the iPod really better? Of course it wasn't, it's a freaking mp3 player ffs. Microsoft just sucks at marketing and Apple has some of the best marketeers in the world. They are able to sell HW for at least 50% more than their competitors. They won't be selling it to me however :)

 

Did Microsoft ignite the market for mp3 players?

 

Nope, they suck at marketing. That's my point.

[txlaw]

http://www.asymco.com/2013/11/04/do-ads-work-the-ad-budgets-of-various-companies/

 

http://stratechery.com/2013/clayton-christensen-got-wrong/

 

If there was a 'good enough' in consumer product when it comes to easy of use and quality of experience, the world would be a lot different and Macs would've stopped selling years ago when windows got "good enough" and Porsche and BMW would've stopped selling decades ago when the average car got "good enough" and fancy kitchen knife companies would've stopped selling when the average knife got "good enough", etc.

 

That mentality comes from the corporate world where buyers and users are different people, and buyers judge things on spec sheets (easily quantifiable things, unlike user experience). That mental model doesn't work for consumer products like what Apple makes.

 

I completely disagree with that stratechery post.  It's nonsense to say that consumer products are different from business products and not subject to the "good enough" phenomenon. 

 

Just think about consumer appliances, generally.  There's that famous story about how Steve Jobs used some high end washer/dryer from Germany.  Well, the vast majority of people use ordinary washer/dryers because they are good enough.  The vast majority of people buy kitchen knives that are good enough -- that get the job done.  Yes, you can make the argument that luxury knives are worth the price one pays, but people who are into luxury or designer goods can always explain why they believe the high end goods are better than the rest.  And they often seem to forget that people might just have different preferences that explain their purchase decisions. 

 

Take the whole JD Power tablet "controversy."  Samsung passed Apple this year.  Why?  Because of price.  That's because there are always trade offs when it comes to purchase decisions.  Even with luxury goods -- if I had a a billion dollars, I wouldn't buy a Bentley, despite the fact that is ostensibly of higher quality than other cars. 

 

Now, nobody is arguing that the iPhone goes away.  But what a lot of people fail to remember is that, by definition, a luxury good provider has a much smaller "installed base" (and smaller market share) than non-luxury good providers.  So the question is whether or not Apple's valuation is justified if it just becomes a luxury appliance provider.

 

But in all markets (Wine, audio equipment, knives, cars, restaurants, etc) there are people who can't perceive or don't care about quality. That's fine. Apple isn't targeting these people, and they aren't that profitable anyway.

 

"Quality" is more subjective than you are letting on, though.

 

There is no wine that is superior than all the rest.  There are good wines and bad wines.  And people have different preferences for different types of wines too.  Some people don't even like wine, since it is an acquired taste.

 

If I'm a car guy, I might buy a Subaru BRZ and get a pretty cool driving experience instead of buying a Porsche.  A lot of car guys do that because they can't afford a Porsche.  Or they think that the extra tens of thousands of dollars are better spent elsewhere.

 

You're fooling yourself if you really believe that people who choose Android "can't perceive or don't care about quality."  And remember: the first principle is that you must not fool yourself, and you are the easiest person to fool.

[Liberty]

Nope, they suck at marketing. That's my point.

 

The iPod wasn't just the iPod, it was also iTunes. What did the Zune have? It's not just about comparing specs, it's about putting an easy to use and useful product in people's hands, and the Zune was too little too late. People also had little trust in microsoft because they knew their other products; that trust has to be earned, and it has value.

[Liberty]

I completely disagree with that stratechery post.  It's nonsense to say that consumer products are different from business products and not subject to the "good enough" phenomenon. 

 

Just think about consumer appliances, generally.  There's that famous story about how Steve Jobs used some high end washer/dryer from Germany.  Well, the vast majority of people use ordinary washer/dryers because they are good enough.  The vast majority of people buy kitchen knives that are good enough -- that get the job done.  Yes, you can make the argument that luxury knives are worth the price one pays, but people who are into luxury or designer goods can always explain why they believe the high end goods are better than the rest.  And they often seem to forget that people might just have different preferences that explain their purchase decisions. 

 

Exactly. And the vast majority of people buy Android, but the top of the market, where the money is, most buy Apple. I never said that most people bought Apple or knives made out of S30V steel. What I said is you can't overshoot in ease of use and quality, and the top end of the market will follow you as far as you go, not that average people will all use luxury brand because nothing else is "good enough".

 

I would also say that a washing machine is closer to a gas furnace than to an iPhone. Depending how you define things, it's not the same kind of consumer product and isn't judged the same way. A car or a computer is probably closer in how "consumer" it is.

 

One more thing to keep in mind about "market share": http://www.theguardian.com/technology/2013/nov/07/android-market-share-smartphone-users-google-apple

 

Which is why the usage surveys are so telling.

 

Take the whole JD Power tablet "controversy."  Samsung passed Apple this year.  Why?  Because of price.  That's because there are always trade offs when it comes to purchase decisions.  Even with luxury goods -- if I had a a billion dollars, I wouldn't buy a Bentley, despite the fact that is ostensibly of higher quality than other cars.

 

That JD power thing made no sense at all. Apple beat it in all categories, except in price, but even that highly depends how you count price and for which models

 

http://techcrunch.com/2013/11/01/jd-power-explains-why-samsung-beat-apple-in-its-latest-tablet-study-price/

 

But saying that Samsung beats Apple in a quality survey because of price is like saying that a Corolla is a better car than a BMW 3 series because it's cheaper.

 

Now, nobody is arguing that the iPhone goes away.  But what a lot of people fail to remember is that, by definition, a luxury good provider has a much smaller "installed base" (and smaller market share) than non-luxury good providers.  So the question is whether or not Apple's valuation is justified if it just becomes a luxury appliance provider.

 

If the top end were to fragment heavily and Apple only had a slice of it, maybe that'd be a problem. But Smartphones and tablets (which are basically general computing devices) aren't watches. They have strong network effects and ecosystems matter. There's a winner-takes-all aspect which means that we probably won't see much more than 2-3 platforms. I doubt the high end will fragment, and Apple can retain a big chunk of where the money is.

 

And Apple is affordable luxury, it's not Rolex, so let's not get carried away with the implications of the word "luxury".

 

"Quality" is more subjective than you are letting on, though.

 

There is no wine that is superior than all the rest.  There are good wines and bad wines.  And people have different preferences for different types of wines too.  Some people don't even like wine, since it is an acquired taste.

 

True, but it's less subjective for computing devices than for wines.

 

If I'm a car guy, I might buy a Subaru BRZ and get a pretty cool driving experience instead of buying a Porsche.  A lot of car guys do that because they can't afford a Porsche.  Or they think that the extra tens of thousands of dollars are better spent elsewhere.

 

Exactly, except imagine a world where there's just 2-3 car makers.

 

You're fooling yourself if you really believe that people who choose Android "can't perceive or don't care about quality."  And remember: the first principle is that you must not fool yourself, and you are the easiest person to fool.

 

There are many reasons why people pick Android, but I'm pretty sure one of the biggest ones is price. Sell the iPhone for the same price as the competition and you'll see what happens to Android's perceived advantages over the iPhone (especially after they have a model with a bigger screen -- Apple has always taken its time to get things right, but they do give people what they want eventually (ie. iPad Mini)).

 

The Feynman quote is very good - in fact it used to be my signature on this forum - and I encourage you to also apply it to yourself..

[wachtwoord]

Nope, they suck at marketing. That's my point.

 

The iPod wasn't just the iPod, it was also iTunes. What did the Zune have? It's not just about comparing specs, it's about putting an easy to use and useful product in people's hands, and the Zune was too little too late. People also had little trust in microsoft because they knew their other products; that trust has to be earned, and it has value.

 

Microsoft had (probably still has) a iTunes equivalent. Oh and I'm pretty sure the Zune was first. Zune == iPod, it's just not shiny :)

[Palantir]

http://www.asymco.com/2013/11/04/do-ads-work-the-ad-budgets-of-various-companies/

 

http://stratechery.com/2013/clayton-christensen-got-wrong/

 

If there was a 'good enough' in consumer product when it comes to ease of use and quality of experience, the world would be a lot different and Macs would've stopped selling years ago when windows got "good enough" and Porsche and BMW would've stopped selling decades ago when the average car got "good enough" and fancy kitchen knife companies would've stopped selling when the average knife got "good enough", etc.

 

 

Just because a product sells doesn't mean another product isn't good enough. The Mac is far more of a niche device than Windows, you can retreat to "marketshare isn't everything" but your claim is getting weaker and weaker. Even on the "high end", where do you think Samsung is competing?

 

Autos are a totally different market, apples and oranges. When people buy a car, they make an expensive purchase that lasts many years, smartphones, they upgrade every 2-3 years.

[Palantir]

As usual, you are not even close to reality. Apple has already shifted to 64 but not so much Kit Kat.

btw, the nexus 5 still doesn't have a fingerprint sensor and the camera still sucks. I could go on and on.

 

I repeat, it's not about whether the 5S is better than the nexus. Surely I would hope given that the 5S costs $200 more than the Nexus, it would be superior in hardware. Therefore it follows that the iPhone may have a better camera and fingerprint sensor. Is that better camera and fingerprint sensor worth $200? To some it might be, to others, it may not.

[Palantir]

But if we are going to be comparing iOS and Android in terms of "how ahead" they are, we really should be looking at Kit Kat on new hardware versus iOS on the latest hardware (iPhone 5S).  Also, there's really no way to say that Apple will be on even footing if/when Apple fixes the small screen problem because we don't know what Samsung's new phones will look like at that time.  Samsung will always have a COGS advantage because they are vertically integrated -- which means that Apple will never be on equal footing with Samsung at least in one important aspect: price.

 

I disagree. If you do not know what Samsung's phones will look like, and you don't have a definitive opinion on KitKat, how can you be so sure that Samsung will have an advantage? :)

 

I don't agree that Samsung has a COGS advantage, because Apple has been very good at keeping supply costs as low as possible, and the price advantage is gone because Samsung is squarely aiming at the high end with its Galaxy series. The Note is a $700 phone.

 

If Apple comes out with a 5" phone, I think Apple will clearly have the advantage - it is equal on size and price, but has the better UI, better design, better brand name, and better overall experience.

 

Size is important. :)

[Palantir]

Also, people do not buy Android solely because it is cheaper. Some do, some don't. The people who are using Galaxy S4, Galaxy Note 3, HTC One, definitely didn't buy because they are cheaper. Galaxy is a high end brand.

[LC]

Remember the Micrsoft Zune? Was the iPod really better? Of course it wasn't, it's a freaking mp3 player ffs. Microsoft just sucks at marketing and Apple has some of the best marketeers in the world. They are able to sell HW for at least 50% more than their competitors. They won't be selling it to me however :)

 

The Zune was late to market and offered no benefits over an iPod...

 

The ipod was released in 2001...the zune...2006! Five years? To make absolutely no useful improvement? It wasn't that Microsoft sucked at marketing...it's that Apple had five years of an advantage to develop the market into the type of consumer it wanted!