AAPL - Apple Inc.

[Liberty]

It will be interesting to see what comes out of this alleged Comcast partnership. Relying on Comcast could be tricky. Seems like there's the potential for Comcast to back out of a partnership a few years down the line which could leave Apple hanging. Apple doesn't usually rely on things that are out of their control.

 

If such a project becomes successful, what keeps partners around is the money. Record labels could've stopped putting their music on iTunes over time, but it was bringing in too much revenue, and it's not like they had the capability to build their own ecosystem equivalent to iPod+iTunes.

 

I'm sure Apple would structure a deal with video content owners and cablecos in such a way that they get most of the money from the content and distribution, so that if they pull out, they're basically just killing a big avenue for profitable distribution, and it's not like Comcast will replicate the Apple ecosystem. I'm sure Comcast will have their own thing, but Apple tends to bring its very loyal and profitable customers with it to whoever it partners with, and they don't benefit from losing that.

 

That said, it's still much harder to do anything in that space than in music or books or whatever, and I'll be curious to see what they can do.

[Palantir]

^ Looks like Jonathan Ive wasn't responsible for all the gesture based controls on the iPhone, like some have suggested.

 

Who suggested that? Ive wasn't responsible at all for the software in the original iPhone. In fact, the software team didn't even know what the hardware would look like and vice versa.

 

I don't remember, it was valueInv and a few others.

[Liberty]

I don't remember, it was valueInv and a few others.

 

Maybe you are misremembering something about iOS 7? Because Ive was in charge of design on that version. Whatever his faults, valueInv knew his stuff about Apple, so I doubt he thought that Ive was in charge of the software design for the original iPhone...

[Palantir]

^No.

[Liberty]

Office for iOS should be good for Apple, not only because they'll sell more devices, but also for the software revenues that must be close to 100% margins for them:

 

http://9to5mac.com/2014/03/27/yes-apple-is-taking-30-of-every-office-365-subscription-purchased-through-office-for-ipad/

[Palantir]

^ I do not expect Apple to make much revenue from Office 365. Apple makes 30% on in app purchase of Office 365, but given that most people will be buying outside of iOS, especially large volume licensing clients, I don't think it will be a huge boost.

[Liberty]

Interesting article about Apple's SoC prowesses for the hardware geeks out there:

 

http://www.anandtech.com/show/7910/apples-cyclone-microarchitecture-detailed

 

The non-technical summary can be found here:

 

http://www.macrumors.com/2014/03/31/apple-a7-desktop-class/

 

Also, LTE ipads launching in China:

 

http://9to5mac.com/2014/03/31/apple-launches-td-lte-ipad-air-and-retina-ipad-mini-models-in-china/

[Liberty]

 

Galaxy s5 fingerprint sensor vs. iPhone 5s fingerprint sensor.

 

Looking at these two phones side by side (not just the sensor) makes me feel good about Apple. Really looking forward to the iPhone 6.

[jeffmori7]

Excellent report on the iPad conversion of one of the biggest Montreal newspaper:

 

http://www.netnewscheck.com/article/33159/la-presse--pushes-mobiles-frontier/page/1

[VersaillesinNY]

Steve Jobs wanted to launch a 'Holy War' on Google: Emails outline Apple founder's strategy for company a year before his death

 

http://www.gadailynews.com/news/regional/230174-steve-jobs-wanted-to-launch-a-holy-war-on-google-emails-outline-apple-founder-s-strategy-for-company-a-year-before-his-death.html

 

Steve Job's "Do not forward" email

http://www.scribd.com/doc/216405190/Apple-outline?_ga=1.21582200.27979217.1396947917

 

Being the richest man in the cemetery doesn't matter to me. Going to bed at night saying we've done something wonderful, that's what matters to me.

Steve Jobs

[Liberty]

Interesting: http://9to5mac.com/2014/04/18/fuelband-and-other-hardware-discontinued-development-team-fired-as-nike-seeks-to-exit-wearable-tech-market/

[Liberty]

https://www.apple.com/pr/library/2014/04/23Apple-Reports-Second-Quarter-Results.html

 

https://www.apple.com/pr/library/2014/04/23Apple-Expands-Capital-Return-Program-to-Over-130-Billion.html

[hardincap]

https://www.apple.com/pr/library/2014/04/23Apple-Reports-Second-Quarter-Results.html

 

https://www.apple.com/pr/library/2014/04/23Apple-Expands-Capital-Return-Program-to-Over-130-Billion.html

 

Confirms my theory that the previous CFO was a bozo. New CFO is being aggressive, as he should be.

[Palantir]

lame. i was looking for a buy point. OK quarter though, iPad slowdown is bad.

[PatientCheetah]

lame. i was looking for a buy point. OK quarter though, iPad slowdown is bad.

 

They are turning into an IBM - slow/moderate revenue growth, capital allocation creates majority of the value. They need to do a better job managing investor expectation and play the beat/raise game better.

[Viking]

Patientcheetah, if you look at the past 15 months Apple May look a little like IBM (slowing growth and large stock buyback). Looking forward 15 months I will be very surprised if we do not get some meaningful launches in new categories at Apple which should get the top and bottom lines growing nicely. This is where Apple differs from IBM.

[Liberty]

Here's my theory on iPad growth rates:

 

The iPad came out right as Apple was at the peak of its powers and the world was at the height of its Apple mania. The company apparently had done no wrong for the past decade. Even the iPhone took a couple years to ramp up fully, but the iPad started super strong. It was a hit much faster than the iPod or iPhone were, everybody thought it would revolutionize a zillion industries, and it probably grew much faster during the first few years than it would've grown in a more normal period for the company and Apple customers.

 

Well, now we're in a more normal period. If you draw a straight line from the iPad's introduction to now, the trajectory is pretty great (for something that costs this much and doesn't get payments spread over a few years like a phone). In fact, it's the most successful product launch in history iirc.

 

People will always be disappointed when they compare the present to those first few years, but over time the tablet market will become much bigger, and Apple will make most of the profits in that market (market share doesn't matter much, especially if you include all tablets and not just those with comparable features to an iPad -- many are basically undifferentiated dumb video screens and Apple doesn't really compete there).

 

But that's just my theory.

[Palantir]

It is pretty disappointing given how loud the outcry has been that tablets are replacing PCs. But I am sure they will expand this lineup and slowly replace OSX.

[PatientCheetah]

apple faces the same issues in tablets that they do in phones. the richer among us tend to prefer apple. the rest of us are looking at android, which allows for just as much internet and gaming fun; but for prices that fit the budget. on a global basis apple is losing share in tablets, primarily to cheaper offerings. amazon msft and google are improving their software at a rapid clip. as the high priced purveyor, it won't get any easier for $aapl as the user experience of it's competitors keep getting better.

 

http://www.gartner.com/newsroom/id/2674215

 

Also, we are no longer on the steep part of the S curve for smartphones and tablets adoptions. So estimating demands should be a much easier job. It will be a herculean task to start and dominate new product categories that have the potential to be as large as the smartphone/tablet markets. Samsung feels the same pain as much as Apple does.

[Liberty]

As long as Apple makes a majority of the profits in all the categories that they're in, I'm happy. I don't really care that they have a 0% market share of the fast-growing $100 no-margin undifferentiated phone/tablet segment or whatever. If I ever see someone else match their overall user experience and quality, I'll start to worry. Until then, they'll own the profitable end of the market.

 

Even without any entries in new categories I think the next year should be interesting; iPhone 6 could be huge since there's a lot of pent up demand for bigger screens and the full refresh model years always make a bigger splash (even if 5s was a big jump forward, it didn't look much different and that matters to many people...), China Mobile is still just starting to ramp up, there's going to be tens of billions of additional buybacks, iOS 8 will be unveiled in June, iBeacons will start to pop up everywhere, CarPlay in mainstream brands, etc... So add to that something new like cool wearables that add value and further differentiates the iPhone ecosystem and/or a much better Apple TV (more content, gaming capabilities, etc) and things could get exciting.

 

Some interesting tidbits here:

 

http://www.bloomberg.com/news/2014-04-23/why-apple-s-iphone-success-in-bric-countries-is-a-big-deal.html

[Viking]

I think the basic reason iPad sales are 'slowing' is people are hanging on to them longer (not replacing them every two years); this talks to the quality of the product (including software). That it can be used for many years and still deliver a quality experience. All Apple cares about is the premium market. They own this segment and continue to grow their share in this segment; nobody is taking share away from them in the high end market. At some point those owning an older version will see a reason to upgrade and we will once again see a nice uptick in sales.

[PatientCheetah]

"Invert, Always Invert." -Munger

[ni-co]

I think the basic reason iPad sales are 'slowing' is people are hanging on to them longer (not replacing them every two years); this talks to the quality of the product (including software). That it can be used for many years and still deliver a quality experience. All Apple cares about is the premium market. They own this segment and continue to grow their share in this segment; nobody is taking share away from them in the high end market. At some point those owning an older version will see a reason to upgrade and we will once again see a nice uptick in sales.

 

+1

 

Just some anecdotal experience:  In kind of a self experiment I have been trying to use my iPhone and iPad as long as I'm able to.

 

I still use the iPad 1 and my iPhone 4, both of them bought in 2010. To do this with my iPhone, I had to cancel my mobile phone contract. I'm happy with that, but I really had to overcome the urge to just keep on paying and thereby buying the shiny new models. I think people still underestimate what a boon those contracts are for iPhone sales.

 

In my current situation, without a contract, I find it much harder to justify the EUR 800.- price tag that comes with a 32 GB iPhone 5s. However, this year I began thinking about replacing these devices because the lack of RAM and speed started to annoy me. I'm going to replace them by Apple devices, because I like the experience so much.

[Palantir]

Not, it is more likely because they pay full prices for them, and not 2 yr contracts. And no, they dont last well necessarily, my iPad 2 keeps crashing two years after purchase.

 

Why are people jumping to justify a sales decline?

[DCG]

Side question..Where did ValueInv go? I hope he wasn't actually banned.