AAPL - Apple Inc.

[LC]

that's a good point, thanks for the insight.

[Palantir]

If it's all about features, why doesn't MS phone have a bigger market share? Please don't say "not enough apps". There are plenty of apps at this point, while not as many as Apple or Goog.

[Guest wellmont]

msft was late. they let lots of sp customers choose an ecosystem. ecosystems are sticky. ios and android got the traction with developers and customers---virtuous circle.  msft is about a year behind in ecosystem development. but they are moving rapidly to catch up. and besides msft phones are simply not getting the great reviews that samsung and apple phones are. Nobody expected samsung to be as strong as they are in sp. they've done a brilliant job. Samsung invented the large form factor note taking category, something Apple will have to copy to maintain share.

[Guest valueInv]

Yes it does.  Samsung = huge scale = 200mm+ devices shipped per year.  HTC = small scale = 50mm or so devices shipped per year.  It is so much harder to make money in this business when you are small.  Hence why I refuse to invest in RIM unless they become a software company.

We're not talking about making money. We're talking about people's buying decisions.

Actually, it should be 100% Google, 0% Bing given the framework that I gave you (".001% better results as the only point of differentiation").  Of course it's not that simple; there are thousands of differentiators between Google and Bing.  Overall, Google is better, which is why it has the higher market share.

So, if I created a potato that was 0.001% better and offered it for the same price, the market would somehow be efficient enough to sense it and grant me 100% marketshaure

 

Another way to look at this is...  Basically the hardware in a G S3 and an iPhone 5 are the same.  There are minor differences but for the most part it's not swinging any votes.  Which means you're paying $150 for software and everything else touchy-feely.  Is that a defensible premium?  Can you truly maintain a $150 price lead on iOS vs. Android, Apple support, and an Apple brand halo?

Apparently that worked for mp3 players.

 

[VAL9000]

Yes it does.  Samsung = huge scale = 200mm+ devices shipped per year.  HTC = small scale = 50mm or so devices shipped per year.  It is so much harder to make money in this business when you are small.  Hence why I refuse to invest in RIM unless they become a software company.

We're not talking about making money. We're talking about people's buying decisions.

I misread your original post.  I thought you were asking why HTC was getting slammed in terms of their business, not their market share.  They're virtually identical, but Samsung spends a boatload on marketing.  Hence, they have mind share.

 

Actually, it should be 100% Google, 0% Bing given the framework that I gave you (".001% better results as the only point of differentiation").  Of course it's not that simple; there are thousands of differentiators between Google and Bing.  Overall, Google is better, which is why it has the higher market share.

So, if I created a potato that was 0.001% better and offered it for the same price, the market would somehow be efficient enough to sense it and grant me 100% marketshaure

Sure.  I'll just say yes because it's such an obvious trap.  Like I just suddenly forgot that we're working inside of a very narrow framework and that you casually relaxed the rules with your question.  And I say yes!  You got me bro!  Good job, but it doesn't change the economics of the smartphone industry.

 

Another way to look at this is...  Basically the hardware in a G S3 and an iPhone 5 are the same.  There are minor differences but for the most part it's not swinging any votes.  Which means you're paying $150 for software and everything else touchy-feely.  Is that a defensible premium?  Can you truly maintain a $150 price lead on iOS vs. Android, Apple support, and an Apple brand halo?

Apparently that worked for mp3 players.

No, there was no product that was anything like an iPod, except next year's iPod.

[Guest valueInv]

I misread your original post.  I thought you were asking why HTC was getting slammed in terms of their business, not their market share.  They're virtually identical, but Samsung spends a boatload on marketing.  Hence, they have mind share.

So if you spend money on branding, the products stop being fungible?

 

I am shocked, I say! Absolutely shocked!!

 

I wonder if there are other things that have the same effect?

 

Sure.  I'll just say yes because it's such an obvious trap.  Like I just suddenly forgot that we're working inside of a very narrow framework and that you casually relaxed the rules with your question.  And I say yes!  You got me bro!  Good job, but it doesn't change the economics of the smartphone industry.

Please, al credit goes to you.

 

Apparently that worked for mp3 players.

 

No, there was no product that was anything like an iPod, except next year's iPod.

Zune and the host of other offering FM radios and everything that they could stuff into their products. More features for less money.

[VAL9000]

I misread your original post.  I thought you were asking why HTC was getting slammed in terms of their business, not their market share.  They're virtually identical, but Samsung spends a boatload on marketing.  Hence, they have mind share.

So if you spend money on branding, the products stop being fungible?

 

I am shocked, I say! Absolutely shocked!!

 

I wonder if there are other things that have the same effect?

The products remain fungible.

 

Expand what you're thinking with your question and maybe I can help answer it.

 

Sure.  I'll just say yes because it's such an obvious trap.  Like I just suddenly forgot that we're working inside of a very narrow framework and that you casually relaxed the rules with your question.  And I say yes!  You got me bro!  Good job, but it doesn't change the economics of the smartphone industry.

Please, al credit goes to you.

 

Apparently that worked for mp3 players.

 

No, there was no product that was anything like an iPod, except next year's iPod.

Zune and the host of other offering FM radios and everything that they could stuff into their products. More features for less money.

 

Yeah I don't think so.  Every Zune offering was (at minimum) 2 years behind the equivalent Apple product when released.  There were some features that were early (FM radio as you mention) but the core offering was never at par.

 

I guess we'll see over the next 1-2 years who is right.  My call is eroding margins followed by declining iPhone market share.  My reasons are well documented, and they related more to industry economics than Apple as a company.

 

 

[ericd1]

No facts and figures in this post so you might want to skip it, but I believe some folks are missing part of the Apple mystique.

 

There are a lot of moving parts to this company and several reasons why they can maintain a premium pricing strategy in developed countries.  Apple is a highly valued brand. It's a high-end product that some (not all) people are willing to pay for. The apple system syncs my calendar, contacts and whatever else I want to put into the cloud. They keep track of everything including my music, videos and other multimedia across multiple devices and do it seamlessly.

 

Would I want to switch phones even if someone else provided the same features? Probably not. When I'm ready to move to a newer phone I probably won't look at anything else. This suggests to me the company will retain its loyal customer base, which is currently generating significant profits.

 

The company can maintain their margins by offering more features, memory, etc. for the same price as the costs of the extras come down with added volume. I also don't think the company has to offer a low cost phone in developed countries and I'm not sure they need to offer one in developing countries.

 

I think it's important to remember Apple isn't just another tech company, rather they are a premium brand consumer products company and that's the way they think and operate. There are other similar high-end consumer product companies that provide "commodities" - Ralph Lauren, Coach, Channel, Lexus, etc. sure they strive for high profits and market share, but even in highly competitive markets they continue to grow sales and profits.

 

Add in some unknown future products - that work together with existing products and the franchise continues to gain value. I'm keeping my eye on Apple, but right now my wagon is loaded with other opportunities.

 

[RichardGibbons]

I can just imagine this conversation over the years (http://en.wikipedia.org/wiki/List_of_best-selling_mobile_phones):

 

1996:

A: "Wow, the StarTAC phone is the best ever.  I'm going to make killing in Motorola shares?  They have a huge lead, the cell phone market's growing at a massive rate, and they'll just keep innovating!"

B: "Are you sure?  Nokia seems like a decent competitor.  What about the 1610?"

A: "There's no way.  You need a clam shell design to win, and everyone knows Motorola's UI is awesome!  I can even set the Macarena as my ringtone!"

 

1999:

A: "Nokia's got to be one of the top 5 companies on earth!  Its 3210 is completely dominant.  It'll own the market forever!"

B: "Didn't you say something similar about the StarTAC a few years back?"

A: "Have you looked at the StarTac?  It's primitive!  Nokia has huge market share.  It'll be almost impossible for someone to overtake them!  It's like MySpace and Napster.  There are so many people using them already that their lead is insurmountable!"

 

2004:

A: "Wow, that RAZR is so hot!  Look how small it is!  And the clamshell design is so innovative!  With a single phone, Nokia's been almost put out of business.  It'll take years for Nokia to get a good clamshell.  Motorola's basically won!"

B: "But, is the clamshell really that innovative?  Wasn't the StarTAC...."

A: "Come on!  There's no other phone on the market like it!  And with Bush's re-election, the economy will roar -- more jobs, more money, more need for RAZRs!"

 

2009:

A: "Look at the iPhone!  It has the best user interface! Easy for everyone to use.  Plus, so many apps!  Apple's won for sure!"

B: "Should I even bother?"

A: "Bother?  I don't get it.  Apple's totally won, man!  The economy is collapsing and we're probably in a 15-year depression, but people still have money to buy iPhones!  If that's not proof, I don't know what is."

 

2012:  A single model Samsung Galaxy SIII outsells all iPhone models by a 3 to 2 margin....

[Guest valueInv]

The products remain fungible.

If they are fungible, then HTC should be selling a lot of phones because they are just the same as the Galaxy SIIIs. People, being rational, would walk into stores and ask for a list of features. With price and features being the same, they would pick Samsung, HTC and others equally.

 

Ironic how value investors shout from the rooftops about how people behave irrationally when buying stocks are now arguing they are magically rational when buy products.

 

 

Yeah I don't think so.  Every Zune offering was (at minimum) 2 years behind the equivalent Apple product when released.  There were some features that were early (FM radio as you mention) but the core offering was never at par.

Whose memory is failing?

 

http://www.dvdtozune.com/zune-vs-ipod.html

 

[PLynchJr]

2012:  A single model Samsung Galaxy SIII outsells all iPhone models by a 3 to 2 margin....

 

Are we just making stuff up now?

[Junto]

2012:  A single model Samsung Galaxy SIII outsells all iPhone models by a 3 to 2 margin....

 

Are we just making stuff up now?

 

Yes, it appears that way...

 

http://boygeniusreport.files.wordpress.com/2013/01/iphone-galaxy-2.jpg

 

http://bgr.com/2013/01/17/iphone-sales-comparisons-samsung-294236/

 

http://i0.wp.com/boygeniusreport.files.wordpress.com/2013/01/iphone-galaxy.jpg?w=618

[VAL9000]

The products remain fungible.

If they are fungible, then HTC should be selling a lot of phones because they are just the same as the Galaxy SIIIs. People, being rational, would walk into stores and ask for a list of features. With price and features being the same, they would pick Samsung, HTC and others equally.

 

Ironic how value investors shout from the rooftops about how people behave irrationally when buying stocks are now arguing they are magically rational when buy products.

 

If one product is well marketed and the other one is not, and they are the same product, then the well marketed one will sell more.  Because the consumer is already educated on the features of the product, so they save time.  So it's still a rational buy. :)

 

 

Yeah I don't think so.  Every Zune offering was (at minimum) 2 years behind the equivalent Apple product when released.  There were some features that were early (FM radio as you mention) but the core offering was never at par.

Whose memory is failing?

 

http://www.dvdtozune.com/zune-vs-ipod.html

 

They're comparing the Zune 30 (released Nov 2006) with the fifth gen iPod 30 (released Oct 2005).  Which is almost exactly the same product they released in July 2004 (iPod 4th Gen).  This is what I mean by them being 2 years behind.

 

 

[Guest valueInv]

2012:  A single model Samsung Galaxy SIII outsells all iPhone models by a 3 to 2 margin....

 

Are we just making stuff up now?

Haven't we always?

[Guest valueInv]

If one product is well marketed and the other one is not, and they are the same product, then the well marketed one will sell more.  Because the consumer is already educated on the features of the product, so they save time.  So it's still a rational buy. :)

So with marketing, Samsung gained marketshare, through marketshare gained economies of scale, though scale gained margins and is likely to push competitors out of the market judging by the latest HTC report.

 

But...but....that would mean Samsung circumvented commoditization. How is that possible?  :P

 

They're comparing the Zune 30 (released Nov 2006) with the fifth gen iPod 30 (released Oct 2005).  Which is almost exactly the same product they released in July 2004 (iPod 4th Gen).  This is what I mean by them being 2 years behind.

 

Let's humor you. So according to you Apple stopped innovating between the 4th gen and the 5th gen. Now they're comparing what was available in the marketplace at the time, it would make sense to compare anything else. Which means the Zune caught up with the iPod. Wow!! Almost the same story as iPhone vs Android. So, according to your theory, commoditization should have ensued. So, did the Zune gain marketshare and compress Apple's margins?

 

How is the Zune two years behind if Apple "stopped innovating"? With Steve Jobs at the helm, no less?? I am shocked again!!

[Ross812]

I can just imagine this conversation over the years (http://en.wikipedia.org/wiki/List_of_best-selling_mobile_phones):

 

1996:

A: "Wow, the StarTAC phone is the best ever.  I'm going to make killing in Motorola shares?  They have a huge lead, the cell phone market's growing at a massive rate, and they'll just keep innovating!"

B: "Are you sure?  Nokia seems like a decent competitor.  What about the 1610?"

A: "There's no way.  You need a clam shell design to win, and everyone knows Motorola's UI is awesome!  I can even set the Macarena as my ringtone!"

 

1999:

A: "Nokia's got to be one of the top 5 companies on earth!  Its 3210 is completely dominant.  It'll own the market forever!"

B: "Didn't you say something similar about the StarTAC a few years back?"

A: "Have you looked at the StarTac?  It's primitive!  Nokia has huge market share.  It'll be almost impossible for someone to overtake them!  It's like MySpace and Napster.  There are so many people using them already that their lead is insurmountable!"

 

2004:

A: "Wow, that RAZR is so hot!  Look how small it is!  And the clamshell design is so innovative!  With a single phone, Nokia's been almost put out of business.  It'll take years for Nokia to get a good clamshell.  Motorola's basically won!"

B: "But, is the clamshell really that innovative?  Wasn't the StarTAC...."

A: "Come on!  There's no other phone on the market like it!  And with Bush's re-election, the economy will roar -- more jobs, more money, more need for RAZRs!"

 

2009:

A: "Look at the iPhone!  It has the best user interface! Easy for everyone to use.  Plus, so many apps!  Apple's won for sure!"

B: "Should I even bother?"

A: "Bother?  I don't get it.  Apple's totally won, man!  The economy is collapsing and we're probably in a 15-year depression, but people still have money to buy iPhones!  If that's not proof, I don't know what is."

 

2012:  A single model Samsung Galaxy SIII outsells all iPhone models by a 3 to 2 margin....

 

Richard, this time is different...

 

To invest in Apple you need to have one of these assumptions:

 

a. The iPhone will retain market share, price will stay at over $600, and/or growth in unit sales will increase enough to offset any loss in sales price.

 

b. This time is different. Competition will not force margin compression or unit sales price reduction. Smartphones as a product behave differently than all other consumer electronics products. By adding incremental bells and whistles, smartphones will not become cheaper as a whole. Laptops and desktops have maintained their prices by adding faster processors and new capabilities right?

 

c. Apple will innovate a completely new product that everyone has to have. The next iDevice.

 

d. The stock is so cheap that any uncertainty is eliminated by the low share price. 

 

 

[VAL9000]

If one product is well marketed and the other one is not, and they are the same product, then the well marketed one will sell more.  Because the consumer is already educated on the features of the product, so they save time.  So it's still a rational buy. :)

So with marketing, Samsung gained marketshare, through marketshare gained economies of scale, though scale gained margins and is likely to push competitors out of the market judging by the latest HTC report.

 

But...but....that would mean Samsung circumvented commoditization. How is that possible?  :P

The first sentence is sort of right.  It's a virtuous cycle induced by excellent execution.  Commoditization is in process right now.  I would say 2 years ago that the market was much more varied in terms of phones and their capabilities.  I would say today that the playing field is fairly level.

 

And no, they haven't circumvented commoditization.  You seem to make this assumption that there can't be a winner in a commodity industry.  Or at least, you're trying to make that my argument, which it isn't.  Clearly when you look at the likes of Exxon (what's more commoditized than oil?), this is not the case.  My ongoing argument against investing in Apple has been that the economics of handset manufacturing (broadly consumer electronics) are garbage, primarily due to the commoditization of said handsets.  Exxon only achieves margins that are half of Apple's today.  This is Apple's future.

 

Again, if handsets are not being commoditized, then show me a significant smartphone feature that is not widely replicated on all other smartphones.  Commodities are marked by their lack of differentiation.  The closer matched handsets are, the more price competition becomes a leading factor in a purchase decision.

 

They're comparing the Zune 30 (released Nov 2006) with the fifth gen iPod 30 (released Oct 2005).  Which is almost exactly the same product they released in July 2004 (iPod 4th Gen).  This is what I mean by them being 2 years behind.

 

Let's humor you. So according to you Apple stopped innovating between the 4th gen and the 5th gen. Now they're comparing what was available in the marketplace at the time, it would make sense to compare anything else. Which means the Zune caught up with the iPod. Wow!! Almost the same story as iPhone vs Android. So, according to your theory, commoditization should have ensued. So, did the Zune gain marketshare and compress Apple's margins?

 

How is the Zune two years behind if Apple "stopped innovating"? With Steve Jobs at the helm, no less?? I am shocked again!!

 

1) Distribution

2) Marketing

3) iPod Nano

4) iTunes

 

And I never said they stopped innovating, so I'm not sure why you're making up quotes.  I said it was almost the same product.  Which it is.

 

[Guest valueInv]

The first sentence is sort of right.  It's a virtuous cycle induced by excellent execution.  Commoditization is in process right now.  I would say 2 years ago that the market was much more varied in terms of phones and their capabilities.  I would say today that the playing field is fairly level.

 

And no, they haven't circumvented commoditization.  You seem to make this assumption that there can't be a winner in a commodity industry.  Or at least, you're trying to make that my argument, which it isn't.  Clearly when you look at the likes of Exxon (what's more commoditized than oil?), this is not the case.  My ongoing argument against investing in Apple has been that the economics of handset manufacturing (broadly consumer electronics) are garbage, primarily due to the commoditization of said handsets.  Exxon only achieves margins that are half of Apple's today.  This is Apple's future.

 

Again, if handsets are not being commoditized, then show me a significant smartphone feature that is not widely replicated on all other smartphones.  Commodities are marked by their lack of differentiation.  The closer matched handsets are, the more price competition becomes a leading factor in a purchase decision.

So you can continue to be a very profitable company in an industry that is commoditized? Well, how about that? Good thing you brought up oil. How are the profits in the oil value chain?

 

On handset features - so if the features of handsets are similar, then they must be commoditized, right? How about soda? Clearly, they all have the same features, taste the same, etc. They have to be commoditized. Coke will suffer margin compression and Buffet will look foolish, right?

 

How about sound systems? They must be commoditized too. Is Bose is going to tank?

How abut TVs? Are they commoditized?

How about cars? Is BMW being commoditized? I would love to buy a Porsche for $25K. Tell me when I can do that.

 

 

1) Distribution

2) Marketing

3) iPod Nano

4) iTunes

 

And I never said they stopped innovating, so I'm not sure why you're making up quotes.  I said it was almost the same product.  Which it is.

So,by tweaking those 4 factors you can avoid commoditization even if your features are the same? What a novel concept!! You should patent it.

 

 

Well, if they were release iPods that very virtually the same as the previous release, obviously, they're not innovating are they?

[Guest valueInv]

More evidence of "commoditization":

http://techcrunch.com/2013/03/07/more-data-showing-ios-and-especially-the-iphone-still-killing-it-in-the-enterprise-at-androids-expense

[compoundinglife]

When applying mental models does it need to be a binary "this does apply" "this does not apply"? I think selling a differentiated product to people whose decisions are driven by price may warrant including that model to some degree.  If you are looking for someone to say smartphones are not potatoes sure. Smartphones are not potatoes :)

 

Let's say I am attempting to sell something to people whose decisions are price driven. My product exceeds their requirements, it exceeds the functionality of the competitors and it is the same price then they will probably buy it. If the competitor drops their price enough, then they will likely buy the cheaper product that still meets their requirements skipping my value add because of the additional cost. If that happens then the decision to buy the product is ultimately driven by price. It is not a true commodity as we commonly define it. But I don't think its a binary yes/no this model or idea is or is not applicable.

 

Are you saying a mental model partially applies? If this "partial" application throws your valuation off by 50%, is it any useful to apply it?

 

In business school, we did a case study on Dewars. For some business reason they were forced to increases prices. They braced themselves for a drop in sales. They were surprised by an increase in sales.

 

Do I need to explain to a group of value investors the problems of assuming people behave rationally?

 

I am not making any assumptions, I am just trying provide a counter point or alternative view. The alternative view being that because one tier of consumers behaves a certain way it does not mean that other tiers will behave the same way. Especially if the lower price competitors react by lowering their prices even further. As I mentioned in my previous post I understand the ecosystem may prevent that from happening. My initial gut feeling is that the price sensitive consumers will not care much about ecosystem. But I guess we will see.

 

I actually think Apple will do great for at least the next few years and currently own the stock. But I still think providing alternative view points or outcomes is a good exercise.

 

[VAL9000]

So you can continue to be a very profitable company in an industry that is commoditized? Well, how about that? Good thing you brought up oil. How are the profits in the oil value chain?

 

On handset features - so if the features of handsets are similar, then they must be commoditized, right? How about soda? Clearly, they all have the same features, taste the same, etc. They have to be commoditized. Coke will suffer margin compression and Buffet will look foolish, right?

 

How about sound systems? They must be commoditized too. Is Bose is going to tank?

How abut TVs? Are they commoditized?

How about cars? Is BMW being commoditized? I would love to buy a Porsche for $25K. Tell me when I can do that.

 

I don't understand your point here.  Are you saying that the smartphone industry is commoditized, and you're excited because Apple can still be a product leader and highly profitable?  Or are you saying that the smartphone industry isn't commoditized?  You seem to be arguing both sides and it's getting pretty muddled.  It's like you're just throwing whatever you can into this post to see what sticks.

 

If you can give me a clear opinion either way, we can resolve this.

 

I'm still looking for that proof that smartphones have a varied feature set.  Any time now, feel free to reveal it.

 

 

1) Distribution

2) Marketing

3) iPod Nano

4) iTunes

 

And I never said they stopped innovating, so I'm not sure why you're making up quotes.  I said it was almost the same product.  Which it is.

So,by tweaking those 4 factors you can avoid commoditization even if your features are the same? What a novel concept!! You should patent it.

 

 

Well, if they were release iPods that very virtually the same as the previous release, obviously, they're not innovating are they?

 

Oh I couldn't patent it - it's based on prior art.  Again, they're not avoiding commoditization.  They are profiting in a commodity industry.  Although it's hard to say that the iPod was ever  a commodity due to its tie in with iTunes, which was a genuinely unique service available only for iPod users.  However, today there are very strong iTunes competitors.

 

As I said, they weren't innovating much between iPod 4 gen and iPod 5 gen.  Unless you have a counter example?  Also the iPod Nano was an innovation which hurt the appeal of both iPod classic and Zune 30.

[Guest valueInv]

I don't understand your point here.  Are you saying that the smartphone industry is commoditized, and you're excited because Apple can still be a product leader and highly profitable?  Or are you saying that the smartphone industry isn't commoditized?  You seem to be arguing both sides and it's getting pretty muddled.  It's like you're just throwing whatever you can into this post to see what sticks.

 

If you can give me a clear opinion either way, we can resolve this.

 

I'm still looking for that proof that smartphones have a varied feature set.  Any time now, feel free to reveal it.

Really?? After all this you still don't know where you've been led to??? :o

 

 

Oh I couldn't patent it - it's based on prior art.  Again, they're not avoiding commoditization.  They are profiting in a commodity industry.  Although it's hard to say that the iPod was ever  a commodity due to its tie in with iTunes, which was a genuinely unique service available only for iPod users. 

 

Whhhaaaatttt??? The iPod was not a commodity despite having the same features as the Zune?? Amazing!!!

Is it fathomable that the iPhone may not be commoditized even if it had the same features as the S III??? Whoooaaaa, the need to sit down!!

[Guest valueInv]

More commoditization:

 

http://www.wired.com/autopia/2013/03/apple-ferrari-siri-ipad/

[VAL9000]

I don't understand your point here.  Are you saying that the smartphone industry is commoditized, and you're excited because Apple can still be a product leader and highly profitable?  Or are you saying that the smartphone industry isn't commoditized?  You seem to be arguing both sides and it's getting pretty muddled.  It's like you're just throwing whatever you can into this post to see what sticks.

 

If you can give me a clear opinion either way, we can resolve this.

 

I'm still looking for that proof that smartphones have a varied feature set.  Any time now, feel free to reveal it.

Really?? After all this you still don't know where you've been led to??? :o

 

Please enlighten me.  A straight answer would be welcome at this (or any other) stage.  I don't see how it's so hard to answer my very simple question.  Instead you just seem to want to fuck around with argument whack-a-mole.  Which is fine, but speaks volumes about what you're looking to accomplish with your time (and mine).

 

So the question again is:

Do you think that the smartphone industry is commoditized, and you're excited because Apple can still be a product leader and highly profitable?

 

And if you're still up for answering another basic question, then you can answer another one that I have been asking and can't get any answer on (even a sarcastic one!):

 

What is the feature (or features) that differentiate the iPhone from any other handset?

 

Oh I couldn't patent it - it's based on prior art.  Again, they're not avoiding commoditization.  They are profiting in a commodity industry.  Although it's hard to say that the iPod was ever  a commodity due to its tie in with iTunes, which was a genuinely unique service available only for iPod users. 

 

Whhhaaaatttt??? The iPod was not a commodity despite having the same features as the Zune?? Amazing!!!

Is it fathomable that the iPhone may not be commoditized even if it had the same features as the S III??? Whoooaaaa, the need to sit down!!

 

You don't read well, do you?  iTunes is very clearly a feature that Zune doesn't have, and a significant one at that.  Hence it wouldn't be a commodity.  Also this is exactly what I said about 10 posts ago - that the iPod was unique:

 

No, there was no product that was anything like an iPod, except next year's iPod.

 

Basically I gave you my patented list of the differentiators.  I'm still waiting on the equivalent list for the iPhone.  Which by its very absence..  its total lack of existence just further shows that I'm heading down the right path.

 

[Palantir]

Ok, I'll bite. I think the smartphone industry is and will be commoditized, however Apple will continue to have a strong section in the market due to its advantages of design, aesthetics, usability, quality of software, and switching costs from the Apple ecosystem.

 

I believe ValueInv is arguing the same. Apple is competing in a commodity industry with commodity hardware however, it's own products are not commodities, as it differentiates itself via things besides features.