AAPL - Apple Inc.

[cayale]

Switching/co-mingling ecosystems is not that hard.  I'm a technophobe and it took me about 1/2 an hour to switch from iPhone to a Galaxy.

[jeffmori7]

Switching/co-mingling ecosystems is not that hard.  I'm a technophobe and it took me about 1/2 an hour to switch from iPhone to a Galaxy.

 

It depends...how old are you?

[cayale]

>35<40

[jeffmori7]

>35<40

 

OK, because what I see is that people over 40-50 are most of the time much less technophile than younger people and they are the ones who buy without just looking for cost-saving.

[rmitz]

Switching/co-mingling ecosystems is not that hard.  I'm a technophobe and it took me about 1/2 an hour to switch from iPhone to a Galaxy.

 

On the other hand, as a technophile, I've integrated lots of things with my Apple ecosystem, and it would take me far more effort to change.  You're almost the best case since you didn't depend on advanced functionality, the stuff that is less likely to be compatible, and you're not in the older set which finds it harder to change.

[Guest valueInv]

Switching/co-mingling ecosystems is not that hard.  I'm a technophobe and it took me about 1/2 an hour to switch from iPhone to a Galaxy.

 

On the other hand, as a technophile, I've integrated lots of things with my Apple ecosystem, and it would take me far more effort to change.  You're almost the best case since you didn't depend on advanced functionality, the stuff that is less likely to be compatible, and you're not in the older set which finds it harder to change.

 

Not to mention that you would lose most of the money you have spent on apps, books,

music, movies and magazines. You will also have to find a way to move all that data in iCloud.

 

Interesting that the only people who can move are the ones who are not spending money on the platform.

[cayale]

apps- sunk cost, but I found only a few that I needed

media - I avoided itunes and bought it all hard copy or on Amazon

data - music collection moved to Google play with the click of a button- was all backed up on hard drive as was calendar, pictures, videos, etc.

[VAL9000]

I totally disagree with the "platform stickiness" thesis.  My main reasons are:

1. Consumers have consistently invested in new media regardless of past dollars invested (think VHS -> DVD, CDs -> mp3).

2. The total dollars invested isn't that great (about $30 on average for Apps on each iOS device).

3. Learning new platforms is dead easy.  That's why 1bn people own smartphones.  If it were hard, you couldn't get 15% of the world's population on board.

4. Media is rapidly moving towards a streaming-from-catalog model.  IP ownership is so 20th century.

 

That said, shouldn't Apple shareholders be concerned if stickiness is a real thing?  Apple's global market share is about 12% now.  If stickiness is a real thing, how is Apple going to convince the other 88% to switch platforms?

 

Again, I don't believe in stickiness.  I think Apple's win is on providing an insanely great experience at a high price, but ultimately that will fall in the face of a good experience at an insanely great price.

 

 

[Guest valueInv]

I totally disagree with the "platform stickiness" thesis.  My main reasons are:

1. Consumers have consistently invested in new media regardless of past dollars invested (think VHS -> DVD, CDs -> mp3).

2. The total dollars invested isn't that great (about $30 on average for Apps on each iOS device).

3. Learning new platforms is dead easy.  That's why 1bn people own smartphones.  If it were hard, you couldn't get 15% of the world's population on board.

4. Media is rapidly moving towards a streaming-from-catalog model.  IP ownership is so 20th century.

 

That said, shouldn't Apple shareholders be concerned if stickiness is a real thing?  Apple's global market share is about 12% now.  If stickiness is a real thing, how is Apple going to convince the other 88% to switch platforms?

 

Again, I don't believe in stickiness.  I think Apple's win is on providing an insanely great experience at a high price, but ultimately that will fall in the face of a good experience at an insanely great price.

 

Other platforms don't have the stickiness of IOS as loyalty rate studies have shown. People don't spend as much on Android as they do on IOS as the content revenues and other studies have shown.

[rmitz]

I totally disagree with the "platform stickiness" thesis.  My main reasons are:

1. Consumers have consistently invested in new media regardless of past dollars invested (think VHS -> DVD, CDs -> mp3).

2. The total dollars invested isn't that great (about $30 on average for Apps on each iOS device).

3. Learning new platforms is dead easy.  That's why 1bn people own smartphones.  If it were hard, you couldn't get 15% of the world's population on board.

4. Media is rapidly moving towards a streaming-from-catalog model.  IP ownership is so 20th century.

 

That said, shouldn't Apple shareholders be concerned if stickiness is a real thing?  Apple's global market share is about 12% now.  If stickiness is a real thing, how is Apple going to convince the other 88% to switch platforms?

 

Again, I don't believe in stickiness.  I think Apple's win is on providing an insanely great experience at a high price, but ultimately that will fall in the face of a good experience at an insanely great price.

 

How many years did migrating from VHS to DVD, and CDs to mp3s and other digital audio take?  That's the bigger part of the argument, not that it couldn't happen, *at all*.  That would be silly to assert--certainly if there are enough incentives, people will make the effort, it'll just take time.

[Guest valueInv]

apps- sunk cost, but I found only a few that I needed

media - I avoided itunes and bought it all hard copy or on Amazon

data - music collection moved to Google play with the click of a button- was all backed up on hard drive as was calendar, pictures, videos, etc.

 

Sounds like you're one of those guys who doesn't spend much money on the platform.

 

[Viking]

Val9000, we see things quite differently:

1. Consumers have consistently invested in new media regardless of past dollars invested (think VHS -> DVD, CDs -> mp3). The 'new media' is the smartphone and tablet and, yes, consumers are investing (big time). Looks to me like these categories are going to continue growing at a serious clip for the next few years and this will benefit Apple (and lots of other companies).

2. The total dollars invested isn't that great (about $30 on average for Apps on each iOS device). Personally, when I look at the dollars I have invested in an ecosystem I start with the devices... for many Apple customers that includes some combination of ipods, iphones, ipads, macs, iTV. Many Apple customers have thousands of dollars 'invested' in Apple hardware. Content can then be added to this total. I have no desire to have a Sony MP3 player, a Nokia or HTC phone, an android tablet, a Windows PC and a google TV. Apple is in the unique position of being able to offer their customers the best of everything in terms of devices. Many people aleady own one or more and it is narural that they will continue to purchase additional items in the future when the old items need to be replaced (or the new model comes out).

3. Learning new platforms is dead easy.  That's why 1bn people own smartphones.  If it were hard, you couldn't get 15% of the world's population on board. You must be a managers dream... I managed multiple sales teams over many years and one of the most difficult thing to execute is change. Very few people embrace change; most get up in the morning, put their jeans on and go to work and try to survive. The majority of people are not looking for change; they actually dislike it. Change only happens (on a large scale) when their is a very big reason. Moving from a feature phone to a smartphone is a BIG change; however, the REWARD is huge so people slowing are doing it (look how long smartphones have been available and how long it has taken people to switch). Once people learn Apple or Android platforms they are not going to switch (on a large scale) unless there is a very big reason (price alone is not enough to get a big change). 

4. Media is rapidly moving towards a streaming-from-catalog model.  IP ownership is so 20th century.

 

That said, shouldn't Apple shareholders be concerned if stickiness is a real thing?  Apple's global market share is about 12% now.  If stickiness is a real thing, how is Apple going to convince the other 88% to switch platforms? Cook said during the April earnings conference call that we should look to ipod to understand what Apple will do with the iphone. My guess is they will now start to offer multiple devices: iphone (high end), iphone mini (mid range priced phone), larger screen iphone (5" screen) etc. As they offer more devices at different sizes and price points I think they will start to grow share again.

 

Again, I don't believe in stickiness.  I think Apple's win is on providing an insanely great experience at a high price, but ultimately that will fall in the face of a good experience at an insanely great price. I think most people now view 'insanely great experience' across devices (not individually); they are investing in platforms when they purchase hardware. To get them to make the switch from Apple (on a large scale) you are going to have to be able to offer them a BIG, BIG reason across all devices - in todays world it would take an experience that is much, much better and a price point that is much cheaper across a family of devices (mp3, phone, tablet, computer, TV). I repeat, Apple is the clear leader today in every device I just listed. And we are months away from their new launches which will widen the gap. I think as new categories get added (wearables, a real TV solution) it will get more difficult for Android to displace Apple in the high end segment; it will be much easier for Apple to displace Android in the mid-range segment and I think this will be Apple's fresh meat that will allow it to once again show growing revenue and profit.

[Palantir]

Hmm...I think a cheaper iPhone in the sub400 range would handily cut into the "high price, great experience" argument. Remember the iPod? The iPod at every form factor from Shuffle to Classic charged substantially more than all the other instruments. Before you start, I know it is not a perfect comparison, but even price sensitive shoppers like nice things, and a cheaper iPhone within their reach will be great. IMO.

[Guest valueInv]

I totally disagree with the "platform stickiness" thesis.  My main reasons are:

1. Consumers have consistently invested in new media regardless of past dollars invested (think VHS -> DVD, CDs -> mp3).

2. The total dollars invested isn't that great (about $30 on average for Apps on each iOS device).

3. Learning new platforms is dead easy.  That's why 1bn people own smartphones.  If it were hard, you couldn't get 15% of the world's population on board.

4. Media is rapidly moving towards a streaming-from-catalog model.  IP ownership is so 20th century.

 

That said, shouldn't Apple shareholders be concerned if stickiness is a real thing?  Apple's global market share is about 12% now.  If stickiness is a real thing, how is Apple going to convince the other 88% to switch platforms?

 

Again, I don't believe in stickiness.  I think Apple's win is on providing an insanely great experience at a high price, but ultimately that will fall in the face of a good experience at an insanely great price.

 

http://techcrunch.com/2013/07/25/nexus-7-trade-ins-suggest-lots-of-upgraders-to-new-model-little-to-no-interest-from-the-ipad-crowd/

 

 

BTW, IIRC,  Apple's share is around 20% of the smartphone market.

[VAL9000]

 

http://techcrunch.com/2013/07/25/nexus-7-trade-ins-suggest-lots-of-upgraders-to-new-model-little-to-no-interest-from-the-ipad-crowd/

 

 

BTW, IIRC,  Apple's share is around 20% of the smartphone market.

 

I was using this data, which with the updated iPhone numbers should be 13.8% - the 12% was an estimate:

 

http://bgr.com/2013/07/23/samsung-smartphone-sales-q2-2013-iphone/

 

Last Q was 210 million units so the total share could fluctuate higher yet.

 

 

[cayale]

apps- sunk cost, but I found only a few that I needed

media - I avoided itunes and bought it all hard copy or on Amazon

data - music collection moved to Google play with the click of a button- was all backed up on hard drive as was calendar, pictures, videos, etc.

 

Sounds like you're one of those guys who doesn't spend much money on the platform.

 

Yes, the platform is great. But isn't the bread still buttered in hardware with AAPL?

[Guest wellmont]

Hmm...I think a cheaper iPhone in the sub400 range would handily cut into the "high price, great experience" argument. Remember the iPod? The iPod at every form factor from Shuffle to Classic charged substantially more than all the other instruments. Before you start, I know it is not a perfect comparison, but even price sensitive shoppers like nice things, and a cheaper iPhone within their reach will be great. IMO.

 

if it was simply that easy (for apple) to segment the smartphone market, apple would have done it already. They are fully aware that there is going to be a tremendous amount of cannibalization of the existing iphone. hence, resist as long as you possibly can. the weak performance in China, the most important smartphone market on the planet, suggests capitulation, and the release of a true lower cost smartphone, is near.

[Guest valueInv]

 

http://techcrunch.com/2013/07/25/nexus-7-trade-ins-suggest-lots-of-upgraders-to-new-model-little-to-no-interest-from-the-ipad-crowd/

 

 

BTW, IIRC,  Apple's share is around 20% of the smartphone market.

 

I was using this data, which with the updated iPhone numbers should be 13.8% - the 12% was an estimate:

 

http://bgr.com/2013/07/23/samsung-smartphone-sales-q2-2013-iphone/

 

Last Q was 210 million units so the total share could fluctuate higher yet.

 

http://247wallst.com/telecom-wireless/2013/05/15/iphone-market-share-falls-in-q1-gartner/

http://techcrunch.com/2013/01/17/apples-smartphone-marketshare-expected-to-peak-at-22-in-2013-says-abi-research/

http://appleinsider.com/articles/13/05/16/idc-apples-ios-fell-to-17-of-smartphones-shipped-in-q1-windows-phone-passed-blackberry

 

Something tells me Apple gained marketshare this quarter ::)

[Guest valueInv]

Hmm...I think a cheaper iPhone in the sub400 range would handily cut into the "high price, great experience" argument. Remember the iPod? The iPod at every form factor from Shuffle to Classic charged substantially more than all the other instruments. Before you start, I know it is not a perfect comparison, but even price sensitive shoppers like nice things, and a cheaper iPhone within their reach will be great. IMO.

 

if it was simply that easy (for apple) to segment the smartphone market, apple would have done it already. They are fully aware that there is going to be a tremendous amount of cannibalization of the existing iphone. hence, resist as long as you possibly can. the weak performance in China, the most important smartphone market on the planet, suggests capitulation, and the release of a true lower cost smartphone, is near.

 

Maybe segmentation is not a priority when your sales are growing 50% a year and  you can't keep up with demand. ;)

A rational CEO would segment after sales slow down. Doesn't mean they can't or that it is too hard for them.

 

And no, segmentation does not always imply cannibalization. Eg iPod.

[Guest wellmont]

iphone loses market share.....conclusion: apple needs a cheaper phone.

 

"All this would be pretty 'regular' news, except for a little historical perspective. When looking at market share, we have now seen 3 consecutive quarters where Apple's market share has declined, when compared to the same period 12 months before."

 

http://communities-dominate.blogs.com/brands/2013/07/apple-q2-results-signs-now-do-indicate-that-we-have-passed-peak-iphone.html

[Guest valueInv]

iphone loses market share.....conclusion: apple needs a cheaper phone.

 

"All this would be pretty 'regular' news, except for a little historical perspective. When looking at market share, we have now seen 3 consecutive quarters where Apple's market share has declined, when compared to the same period 12 months before."

 

http://communities-dominate.blogs.com/brands/2013/07/apple-q2-results-signs-now-do-indicate-that-we-have-passed-peak-iphone.html

Notice that you use the present tense in your first sentence.

[texual]

We have hit the peak in iPhone sales!

 

Anecdotal evidence: my five closest friends who all had iPhones one by one got Galaxy phones. They are the 'young' generation that convinces their parents and friends to buy these phones too. Needless to say they convinced a lot of other people to do the same. It means nothing but I miss having the blue text bubbles on iMessage these days...

 

basically now I know if you get a blue text message its an iPhone and if its green, its a galaxy. (that ratio used to be near 100%, today its like 50/50)

 

The iPhone is less popular among my friends starting in 2013. Before this year they were super loyal. Nobody cares about owning a phone that is over five years old, and has mostly the same design from 2010! I'm not even sure I would get the iPhone 5S down the road. The redesigned iOS7 got panned among my social circle, even girls who use iPhones said they found it silly and they weren't convinced it was anything more than some cosmetic changes.

 

Windows phone is just a global story (rest of world, india, etc) when it comes to growth. It will never be a hit in America from what I can tell. I can never see the day when my city doesn't use the default iPhone. But I am seeing about 20% Galaxy use here in NYC and I take the trains everyday. That wasn't the case a year ago. And I predict it will be getting closer to even soon enough. Those Galaxy phones are amazing.

 

Apple and its brand is tired. Its been around for years, everyones got em. Do you know how badass you were for owning an original iPhone? I remember how many girls wanted to give me their number just so they could type it into that glass touchscreen.

 

How about now when every other person you meet on the street has one? It isn't a hero product anymore, the stores are everywhere, you can buy them in every cell phone shop. We are a very fad based society, and this fad has passed. the iPhone simply isn't going to draw the original fans to come back when newer products are available.

[texual]

I will say that iPAD popularity is not going away anytime soon. Nobody I know has a non-iPad tablet. Every person I know has one, or is getting one each time they decide to buy a tablet. That product, the iPad Mini is exactly why Apple is going to keep that market share for a while. But I also suspect in another two years when that five year mark comes along people will find alternatives more appealing just for change. And anyone who claims change is rejected, you forget that over long periods of time we've been adapting and changing to trends very frequently. Standards change, companies come and go, products and gadgets become cool and lame within a short period of time.

[Liberty]

http://www.bloomberg.com/news/2013-07-25/samsung-misses-estimates-as-high-end-smartphones-near-saturation.html

[Guest valueInv]

http://www.bloomberg.com/news/2013-07-25/samsung-misses-estimates-as-high-end-smartphones-near-saturation.html

 

But...but...everyone's friends are switching to the Galaxy phones.... :P