AAPL - Apple Inc.

[wknecht]

Boring non-issue. Anybody that pays attention to Apple's product/design philosophies should not just be unsurprised by this, but should have expected this without any supporting rumors. They like dropping support for legacy standards, ports, drives, whatever as soon as they can practically get away with it. That means, by definition, some chunk of users (ideally a minority) will be irritated. They have a record of negotiating this balance act very well, so I don't see any reason to suspect they're going to faceplant on the timing of dumping the headphone jack. Same pattern as floppy drives (iMac), CD/DVD drives (Macbook, then iMac), or even display ports (Macbook Retina).

 

I'd say there's good reason to think that they're going to time this transition well. Not only do they have a decade of retail headphone sales to analyze (to figure out what the wired/wireless mix is, and how that is changing over time), but they also have some newly obtained data from Beats that probably helps them triangulate the entire market with a bit more confidence.

 

I think that an annual ceremony of user angst is pretty much a given. They're going to complain about the hardware transitions regardless of when they happen, and in the absence of a hardware transition, they're going to complain that the new operating system version is killing their battery life, or something else. So I doubt there is much to gain from delaying any transitions for PR purposes.

Yeah I talked to some techy friends and it actually sounds like there could be cool potential. Politically looks maybe a short term issue (has a money grubbing look to it). People will get over it though. For folks that have expensive headphones, there will probably be cheap adapters.

[merkhet]

Pretty similar to switching the charging connector... people got over it.

[petec]

Pretty similar to switching the charging connector... people got over it.

 

Might be slightly different given that a) the original charging connector was already proprietary, and b) the new one is better (smaller, feels less flimsy), and c) you get a new charging connector with every new phone so the only people who had to replace anything were the ones who docked their phone with another piece of hardware.

 

The major reason this won't be an issue for me (if it is not) is that a lot of users probably use wireless.  But anyone who uses a wired set of headphones will be annoyed.  And those that use several hundred dollar sound eliminating ones will be very annoyed.

[krazeenyc]

I for one would have no problem with Apple ditching the headphone jack to make the phone thinner. Why wouldn't it be easy to buy an adapter that allows you to plug your existing headphones into an adapter (30 from apple? $10 from 3rd party?) that plugs into the phone?

[intothebreach]

This is the mother of all non-issues, and absolutely immaterial to the investment thesis in Apple. Apple has demonstrated time and again that they are not shy about changing a standard when they perceive a positive trade-off for their users' experience. The benefits are what is always missing from these early rumours/reports, probably because they are not now in advance. For a more balanced perspective:

 

http://createdigitalmusic.com/2016/01/apple-is-probably-killing-headphone-jacks-but-dont-panic/

[jawn619]

http://raritancapital.com/casestudies/aapl/

 

Did a short, but concise case study on Apple. Enjoy.

[rkbabang]

I bought my iMac in Q4.

 

Gartner: Global PC shipments fell 8.3% in Q4 2015, Apple only company in top 5 to see growth

 

http://1u88jj3r4db2x4txp44yqfj1.wpengine.netdna-cdn.com/wp-content/uploads/2016/01/gartner_pc_shipments_q4_2015.png

[fareastwarriors]

Apple May Be on Hook for $8 Billion in Taxes in Europe Probe

 

http://www.bloomberg.com/news/articles/2016-01-15/apple-may-be-on-hook-for-8-billion-in-taxes-after-europe-probe

[Liberty]

I bought my iMac in Q4.

 

Gartner: Global PC shipments fell 8.3% in Q4 2015, Apple only company in top 5 to see growth

 

http://1u88jj3r4db2x4txp44yqfj1.wpengine.netdna-cdn.com/wp-content/uploads/2016/01/gartner_pc_shipments_q4_2015.png

 

Did you get the 5k screen? It's pretty amazing.

[rkbabang]

I bought my iMac in Q4.

 

Gartner: Global PC shipments fell 8.3% in Q4 2015, Apple only company in top 5 to see growth

 

http://1u88jj3r4db2x4txp44yqfj1.wpengine.netdna-cdn.com/wp-content/uploads/2016/01/gartner_pc_shipments_q4_2015.png

 

Did you get the 5k screen? It's pretty amazing.

 

I did.  I splurged a little bit since I don't plan to upgrade it again for 4-5 years. I got the 27" 5K with 16GB RAM, upgraded video card and the i7 processor.  It is an awesome display.  My old windows machine is now in the basement connected to my network, but powered off.  I thought if I ever need it I can turn it on and remote desktop into it from the iMac.  So far I haven't turned it on in over 2 months.  I think I'm done with windows for good.

 

[giofranchi]

I think I'm done with windows for good.

 

Hi rkbabang,

could you tell us a bit more about your background? Are you a software engineer, right? If so, do you still write code for a living, or are a full time investor now?

 

Thank you,

 

Gio

 

[rkbabang]

I think I'm done with windows for good.

 

Hi rkbabang,

could you tell us a bit more about your background? Are you a software engineer, right? If so, do you still write code for a living, or are a full time investor now?

 

Thank you,

 

Gio

 

 

Hi Gio,  I'm not a software engineer, I'm a hardware guy.  Although I do write scrips and some embedded code from time to time I design digital integrated circuits.  I work full time as an engineer, investing is still just a hobby for me.  I do still have a windows machine on my desk at work, but I don't use it very often anymore. I use my linux machine most often as all the software required for me to do my job runs in linux.  My windows machine was used only for documents/email, but even that is less and less these days because my company is transitioning to gmail/google documents for everything and that can all be done in Linux.  So now that I use Linux almost exclusively at work and my iMac at home, I'm pretty much not using Windows at all anymore. 

 

I was recently telling someone that I hadn't used my windows machine in months, but I was thinking about updating it to Windows 10 while it is still free and he said "So you basically only use Windows to update Windows?"  Yeah, pretty much, that's it.

 

[giofranchi]

Hi Gio,  I'm not a software engineer, I'm a hardware guy.  Although I do write scrips and some embedded code from time to time I design digital integrated circuits.  I work full time as an engineer, investing is still just a hobby for me.  I do still have a windows machine on my desk at work, but I don't use it very often anymore. I use my linux machine most often as all the software required for me to do my job runs in linux.  My windows machine was used only for documents/email, but even that is less and less these days because my company is transitioning to gmail/google documents for everything and that can all be done in Linux.  So now that I use Linux almost exclusively at work and my iMac at home, I'm pretty much not using Windows at all anymore. 

 

I was recently telling someone that I hadn't used my windows machine in months, but I was thinking about updating it to Windows 10 while it is still free and he said "So you basically only use Windows to update Windows?"  Yeah, pretty much, that's it.

 

Thank you! :)

Do you see AAPL ever becoming appealing to companies? Or will it remain most probably "just" a consumer story?

 

Cheers,

 

Gio

 

[rkbabang]

Hi Gio,  I'm not a software engineer, I'm a hardware guy.  Although I do write scrips and some embedded code from time to time I design digital integrated circuits.  I work full time as an engineer, investing is still just a hobby for me.  I do still have a windows machine on my desk at work, but I don't use it very often anymore. I use my linux machine most often as all the software required for me to do my job runs in linux.  My windows machine was used only for documents/email, but even that is less and less these days because my company is transitioning to gmail/google documents for everything and that can all be done in Linux.  So now that I use Linux almost exclusively at work and my iMac at home, I'm pretty much not using Windows at all anymore. 

 

I was recently telling someone that I hadn't used my windows machine in months, but I was thinking about updating it to Windows 10 while it is still free and he said "So you basically only use Windows to update Windows?"  Yeah, pretty much, that's it.

 

Thank you! :)

Do you see AAPL ever becoming appealing to companies? Or will it remain most probably "just" a consumer story?

 

Cheers,

 

Gio

 

 

I have mixed feelings about this.  On the one hand I see more and more people using Macbooks for work and have heard that Macs are easier to support than Windows boxes.  On the other hand Macs are more expensive, considerably more expensive, so I don't know if you will ever see the corporate world convert over en masse.    When companies allow employees to choose or bring their own devices you will see more Macs (this is happening already), but Windows will be dominate in the corporate world for a long time.  And of course Linux will dominate in the scientific/engineering world for a long time for the same reasons (cost and legacy/installed base/software). Mac is BSD based and much of the scientific/engineering software could easily be ported to the Mac, but Linux boxes can be made cheaper and more powerful.  Of course Apple has the advantage in being easier to support over Linux as well, but most tech companies have good IT staff.    So I guess my opinion is that Mac will make inroads, but will stay mostly a consumer product.

[giofranchi]

So I guess my opinion is that Mac will make inroads, but will stay mostly a consumer product.

 

Thank you very much for your feedback!

 

Cheers,

 

Gio

[Liberty]

Thank you! :)

Do you see AAPL ever becoming appealing to companies? Or will it remain most probably "just" a consumer story?

 

Cheers,

 

Gio

 

"Cook shared a few details on the company’s enterprise efforts, which is now a $25 billion annual business (for the 12 months ending in June)."

 

http://recode.net/2015/09/29/apples-tim-cook-and-boxs-aaron-levie-on-how-mobile-is-changing-business-liveblog/

 

This probably undercounts it a lot since there's a lot of BYOD or devices that might be bought for the enterprise without being labelled as such, and with IBM writing enterprise apps and using its salesforce to push Apple products, this could increase a bit faster.

 

I don't think they'll necessarily displace Windows en masse, but they'll probably grab a big slice of the most profitable end of the market and approach the critical mass required for more enterprise software to be ported.

 

IBM has been deploying a lot of Macs and iOS devices internally, and apparently the higher cost of the devices is more than made up by lower support costs and higher residual value after a few years:

 

http://9to5mac.com/2015/10/15/ibm-mac-support/

[rkbabang]

 

IBM has been deploying a lot of Macs and iOS devices internally, and apparently the higher cost of the devices is more than made up by lower support costs and higher residual value after a few years:

 

http://9to5mac.com/2015/10/15/ibm-mac-support/

 

That is what I had read that said the support costs were less for Macs in the corporate environment.  I couldn't remember where I had seen it.

 

[mbharadwaj]

A few friends who work at IBM have mentioned that about the official policy of being offered a choice between mac or windows based laptop at work. Many IIRC switched at the beginning of this year. I don't know if there was a specific reason for start of this year (2016).

 

Also, most employees have been offered a fitness device - Apple Watch is one and again my friends are getting this. I am again not sure if other fitness devices such as FitBit are a part of this.

[TheAiGuy]

Thank you! :)

Do you see AAPL ever becoming appealing to companies? Or will it remain most probably "just" a consumer story?

 

Cheers,

 

Gio

 

"Cook shared a few details on the company’s enterprise efforts, which is now a $25 billion annual business (for the 12 months ending in June)."

 

http://recode.net/2015/09/29/apples-tim-cook-and-boxs-aaron-levie-on-how-mobile-is-changing-business-liveblog/

 

This probably undercounts it a lot since there's a lot of BYOD or devices that might be bought for the enterprise without being labelled as such, and with IBM writing enterprise apps and using its salesforce to push Apple products, this could increase a bit faster.

 

I don't think they'll necessarily displace Windows en masse, but they'll probably grab a big slice of the most profitable end of the market and approach the critical mass required for more enterprise software to be ported.

 

IBM has been deploying a lot of Macs and iOS devices internally, and apparently the higher cost of the devices is more than made up by lower support costs and higher residual value after a few years:

 

http://9to5mac.com/2015/10/15/ibm-mac-support/

 

This also gets easier with larger cloud deployments -- there are less software compatibility issues if all the important code and data are on a server somewhere running whatever.

[Guest roark33]

What's the best bear case for apple. 

 

 

[innerscorecard]

What's the best bear case for apple. 

 

 

 

- The culture rots.

- There is a global economic recession serious enough that the aspirational job to be done of premium hardware takes a backseat to needs lower on Maslow's hierarchy.

- There is a new business model that obsoletes Apple's model of premium hardware.

[jawn619]

Iphone sales collapse.

 

http://raritancapital.com/casestudies/aapl/

 

I look at how 2/3rds of sales come from Iphones(large percentage in China), which won't grow at historical rates. Apple already has a 40%+ market share and the only thing I can think of as a reasonable bear case is that both market share and price point decreases.

[GregS]

What's the best bear case for apple. 

 

 

 

Replacement cycle for iPhones slows down.  The pace of new innovation slows, and people stick with their older models for longer.

 

This is not because of Android competition catching up, which I think is a BS argument.  Apple’s strongest competition is the iPhone people already have.  If Apple's incremental improvement slows to the point that people upgrade every 2-3 years (or longer) instead of every 1-2, it's easy to see how this hits revenues, margins and thus profits.  At the same time, the market is closer to saturation so the pace of new customer adds will not make up for the slower replacement cycle, and profits on other products and services probably won’t make up for lost iPhone sales.

 

I don't have any conviction in this bear case, but I think it is more realistic today than in the past and thus Apple has gone into the too hard pile.  I sold out recently.

 

[Viking]

Greg S, I agree the most likely 'bear case' for Apple is iPhone replacement cycle increasing in length.

 

A second, less likely case would be the Chinese government doing something stupid; perhaps US and China international relationship gets materially worse and the Chinese government feels they need to send the US government a message by hammering on Apple in China. Or the government may decide Apple wields too much influence compared to domestic Chinese manufacturers and they need to handicap Apple to level the playing field.

[GregS]

Greg S, I agree the most likely 'bear case' for Apple is iPhone replacement cycle increasing in length.

 

A second, less likely case would be the Chinese government doing something stupid; perhaps US and China international relationship gets materially worse and the Chinese government feels they need to send the US government a message by hammering on Apple in China. Or the government may decide Apple wields too much influence compared to domestic Chinese manufacturers and they need to handicap Apple to level the playing field.

 

Yes, the risk/opportunity balance is a big issue for any company doing business in China.  I can think of several reasons the Chinese government wouldn't do anything to Apple - popularity among consumers, domestic businesses built around the ecosystem, makes them look like a backwater to drive out the largest US company.  At the same time, this presumes some level of intelligence and rationality on the Chinese leadership, and the way they've handled their stock market suggests that's too much of a presumption.