Guest valueInv Posted August 11, 2013 Share Posted August 11, 2013 Exactly. I don't give a shit about market share in china or elsewhere. I hope they pass on the lower margin, potentially brand diluting opportunities, and continue to churn out the good stuff to the people who are locked into the ecosystem and continue to spew forth the cash. If they need growth to satisfy the sell side they can but back freaking stock. +100 This is a great way to make a smaller and less valuable company. It's nice to claim that you're only going to focus on the high end, but that ignores the fact that Apple's success was driven originally by being THE dominant smartphone on the market. Now that there are other very good competitors that can make phones for different tastes, you can claim that Apple will only focus on the best, but let's be serious, it'll be a smaller and less valuable company if they do that. My opinion - cheaper Iphone is a must. Apple has never been the dominant smartphone vendor. Ever. They have never had more than 25% marketshare. Link to comment Share on other sites More sharing options...
texual Posted August 11, 2013 Share Posted August 11, 2013 Suppose they retain the 25% market share, don't you think it will eventually suck away the profit margins as they have to basically go to an arms race with the other vendors who make cheaper phones and compete at breakneck pace? I think you may be under the impression that loyalists will keep buying the iPhone at whatever price necessary while good options from several vendors at lower cost will be ignored. I find that hard to believe anymore as more people buy into other phone brands and don't mind switching ecosystems. That 25% market share would only go down, and they will have to reduce prices to remain competitive against Samsung. It makes no sense to cater to the high end and believe 25% is 'enough' when that 25% will be more costly to retain against competition. They simply have to grow market share even if it means selling a lower cost cheaper iPhone for the rest of the world. I'd rather them capture 40 or 50% market share and retain customers who would buy a more expensive model on their second or third generation iPhone, instead of believing that the American market is only for the high end loyalists. Those people are switching a lot too. Link to comment Share on other sites More sharing options...
Guest valueInv Posted August 11, 2013 Share Posted August 11, 2013 Exactly. I don't give a shit about market share in china or elsewhere. I hope they pass on the lower margin, potentially brand diluting opportunities, and continue to churn out the good stuff to the people who are locked into the ecosystem and continue to spew forth the cash. If they need growth to satisfy the sell side they can but back freaking stock. +100 This is a great way to make a smaller and less valuable company. It's nice to claim that you're only going to focus on the high end, but that ignores the fact that Apple's success was driven originally by being THE dominant smartphone on the market. Now that there are other very good competitors that can make phones for different tastes, you can claim that Apple will only focus on the best, but let's be serious, it'll be a smaller and less valuable company if they do that. My opinion - cheaper Iphone is a must. Apple has never been the dominant smartphone vendor. Ever. They have never had more than 25% marketshare. This is a great example of the narrative overriding the facts. Apple never dominated the smartphone market. When they entered, Nokia and RIM dominated. Those have been replaced by Android. Apple only sold at the high end and has more or less held on to their segment. All this narrative about marketshare loss has created by clubbing together the various segments, ignoring the fact that most of the growth now is in the low end and ignoring seasonal patterns. Every fall, the geniuses crawl out of the woodwork touting marketshare loss right before the new iPhone is released. Of course, nobody is writing articles saying that Apple doubled its marketshare in January. Link to comment Share on other sites More sharing options...
Guest valueInv Posted August 11, 2013 Share Posted August 11, 2013 Suppose they retain the 25% market share, don't you think it will eventually suck away the profit margins as they have to basically go to an arms race with the other vendors who make cheaper phones and compete at breakneck pace? I think you may be under the impression that loyalists will keep buying the iPhone at whatever price necessary while good options from several vendors at lower cost will be ignored. I find that hard to believe anymore as more people buy into other phone brands and don't mind switching ecosystems. That 25% market share would only go down, and they will have to reduce prices to remain competitive against Samsung. It makes no sense to cater to the high end and believe 25% is 'enough' when that 25% will be more costly to retain against competition. They simply have to grow market share even if it means selling a lower cost cheaper iPhone for the rest of the world. I'd rather them capture 40 or 50% market share and retain customers who would buy a more expensive model on their second or third generation iPhone, instead of believing that the American market is only for the high end loyalists. Those people are switching a lot too. You are making a lot of assumptions: - Others offer competitive phones - People make rational decisions while simply somehow weighing features to determine which phone to buy - People have no brand loyalty - There is no friction/hurdle to moving all your data and content across ecosystems - That they have to spend more to keep their phones competitive - And many more. Reexamine your assumptions. And flip the question. Apple is going to release a mid-range phone soon. So far, they have competed only in the high end, while their competitors have had the middle and the low tiers to themselves. Except for Samsung, no one is making money even in this situation. Even when others break even, it is likely because of margins at the mid-range. They are probably losing money to keep marketshare in the low end. Enter Apple. Now others have three choices: - Drop prices further in order to maintain marketshare - lose marketshare - use cheaper components, drop prices and quality, don't have competitive phones and probably lose marketshare in the mid-range (the only profitable segment) Either way, they lose a lot more money than they are now. I'm guessing, you'll see a lot of them exit the market. In fact, the exit has already begun. The same equation applies to China Mobile and NTT DoCoMo. Both have been bleeding subscribers but have kept the lost small by offering cheaper phones and keeping subscribers in the lower segments. With the iPhone 5C, they have to find even cheaper phones to compete. They now have similar choices to the one above. Or they can choose to offer iPhones. I'll let you contemplate what happens if they chose this option ;) Link to comment Share on other sites More sharing options...
Palantir Posted August 11, 2013 Share Posted August 11, 2013 Apple has never been the dominant smartphone vendor. Ever. They have never had more than 25% marketshare. Hmm...fair enough. Link to comment Share on other sites More sharing options...
texual Posted August 12, 2013 Share Posted August 12, 2013 Something I did note to be a former advantage with iPhone was iMessage. You don't really hear much about this but for me, personally, it was a big deal. I didn't have a text message plan but I got to save money by using iMessage, which was free. I did get the smallest text message package available because a few friends of mine were not on iPhones. And by a few I meant like a handful, just two years ago. But now most carriers are offering unlimited texting! I just jumped onto the share everything plan on vzn. I think that really changed my mindset about phones. Today most of my friends are not on iMessage anymore (I have less than half my text messages from iPhones, a year ago it was way more). I simply don't care about iMessage since I have unlimited. So I get to text but that makes me think I don't actually need a iPhone for much else since the #1 thing I do with my phone is text. The once biggest advantage to having a iPhone was free sms to other iPhones! But now that doesn't make a difference since 40% of all VZ customers are now on share everything, and most carriers are going this way too. Once that advantage goes away I wonder if iMessage has many benefits to end users who didn't want to pay for text packages. All the most used apps are on Android too. Windows Phone lacks but it seems they will also have most of the top 100 apps eventually. The point being that phones today can be competitive as a innovation allows. iMessage was super awesome when it first came out and up until the past year I have noticed it completely eroded as a competitive advantage. In fact I would say for most of my friends, getting a unlimited texting option cleared the way for them to justify getting an Android device. Link to comment Share on other sites More sharing options...
texual Posted August 12, 2013 Share Posted August 12, 2013 - Others offer competitive phones I don't think the competitors phones are not competitive though. I don't see how that is an assumption. Plenty of people are out using other phones and I have never heard them say they regretted it. Actually one girl today did. She bought a Z10 BBY and sold it to buy a iPhone 5. I went with her to the store. She said she sold it because BBY had no apps. She wanted a galaxy too but decided the iPhone was the easier immediate choice. But that was the only time I saw a competitors phone get a bad review. - People have no brand loyalty People do have brand loyalty but also get tired of those brands and especially if they become products with mass appeal. If everyone has a iPhone I don't see why having one for me is fresh. The consensus among my age group (mid 20's professionals/students) is that they love the iPhone but want something new. Nobody has brand loyalty to Samsung though, they do however love the Galaxy brand. - There is no friction/hurdle to moving all your data and content across ecosystems In the last year not one person told me this was an issue. And these are people who use apps all the time, and play games. Shifting content is pretty trite when you consider the largest phone is 64 gb and that doesn't take too long to transfer using software like iTunes. In all, I don't think anyone in my age group who switched has told me they had an issue with that. Ecosystems are not that different between App Store and Google Play, they offer most of the same 100 apps everyone is using. Perhaps an older less experienced person would have trouble justifying the switch. For instance my dad would never switch. But then again he isn't the group who makes and breaks products. Its my age group that begins finding new things, and pushing them up as cool, or getting early adopters to expose the product to different people. Even at the expense of sounding anti iPhone I will admit that I have used every iPhone since the original and I have owned Android phones and Lumias but always go back to iPhone. But after the Galaxy S4 I have to say I am really hoping iOS7 is awesome so I don't wind up owning a Galaxy Note III. Link to comment Share on other sites More sharing options...
Palantir Posted August 12, 2013 Share Posted August 12, 2013 ValueInv, should I buy the iPhone 5 right now or wait till next month when the next iPhone comes out? My phone died and this is an awkward moment in the upgrade cycle. Link to comment Share on other sites More sharing options...
Guest valueInv Posted August 12, 2013 Share Posted August 12, 2013 ValueInv, should I buy the iPhone 5 right now or wait till next month when the next iPhone comes out? My phone died and this is an awkward moment in the upgrade cycle. I would wait if you can. They need to differentiate the 5S from the 5C. Knowing Apple, they won't cripple the 5C, which means they have something in store for the 5S. The fingerprint sensor seems highly probable. They will probably layer on some services/features on top of it. I've hear talk of a IGZO screen - better and more battery life. Another thing that looks interesting is: http://appleinsider.com/articles/13/06/19/inside-ios-7-ibeacons-enhance-apps-location-awareness-via-bluetooth-le In any case, iOS7 is a huge update even for the 5. Link to comment Share on other sites More sharing options...
Palantir Posted August 12, 2013 Share Posted August 12, 2013 I predict that the new iPhone won't be called 5S. S = Siri. With a fingerprint scanner, it can be called iPhone 5 F? They'll release a range of iPhone Minis in a range of awesome colors. I hope it's not plastic but that shiny metallic material on the mini iPods. Link to comment Share on other sites More sharing options...
rkbabang Posted August 12, 2013 Share Posted August 12, 2013 I predict that the new iPhone won't be called 5S. S = Siri. With a fingerprint scanner, it can be called iPhone 5 F? They'll release a range of iPhone Minis in a range of awesome colors. I hope it's not plastic but that shiny metallic material on the mini iPods. Rumor has it that '5S' is the official name, along with '5C' for a cheaper model. http://www.dailymail.co.uk/sciencetech/article-2389896/New-Apple-iPhones-called-5S-5C-claims-Japanese-website-Macotakara.html We'll see in a few weeks I guess. Link to comment Share on other sites More sharing options...
texual Posted August 13, 2013 Share Posted August 13, 2013 http://www.theverge.com/2013/8/12/4615882/larry-ellison-says-we-already-know-apple-is-doomed-without-steve-jobs Thought you'd get a kick out of this one valueInv ;) Link to comment Share on other sites More sharing options...
Guest valueInv Posted August 13, 2013 Share Posted August 13, 2013 http://www.theverge.com/2013/8/12/4615882/larry-ellison-says-we-already-know-apple-is-doomed-without-steve-jobs Thought you'd get a kick out of this one valueInv ;) Man, why don't comments like this bring down the stock price? :( Maybe Ellison should go back and look at history: http://www.futureblind.com/2011/01/apple-inc-the-greatest-turnaround-in-corporate-history/ For 7 years after Jobs came back to Apple, the numbers were pretty much stagnant. Link to comment Share on other sites More sharing options...
Viking Posted August 13, 2013 Share Posted August 13, 2013 The multi-billion dollar questions: 1.) will Apple launch a 5C (less expensive smartphone) - looks like 'yes'; we will find out Sept 10. 2.) what will the price point (and gross margin) be? - will GM be below the corporate average, like the ipad mini? 3.) how many units will sell? - will it get a distribution deal with China Mobile? 4.) how much will it cannibalize 5S sales? 5.) will total gross margin for the smartphone category grow in fiscal 2014? - or will be have a year, like the ipad, where Apple invests in growing market share (by growing units aggressively) but where total gross margin goes sideways? The answers to these questions will likely move the stock more than anything else over the next year. Personally, I really like what they have done with the ipad category (being aggressive with the margins on the mini) and I hope they do something similar with the 5C (price it a little above the corp avg; perhaps right around 40%GM). Right now they own the premium ($600-$800) segment; I would love to see them launch a phone that allows them to become number one in the high mid range ($400-$600) segment. What will people say if Apple actually grows units AND meaningful share gains in 2014? Here is the latest from Asymco on this exact topic: http://www.asymco.com/2013/08/12/how-will-iphones-5s-and-5c-be-priced/ For those in need of a good laugh, CONAN pokes some good fun at Samsung: Link to comment Share on other sites More sharing options...
Palantir Posted August 13, 2013 Share Posted August 13, 2013 I would prefer if margins drop and overall sales increase. I think focusing too much on high margins at the expense of shrinking market share is a bad idea. High margins tend to be unsustainable. By being the premium phone in within the lower end, they can in many cases accomplish both things. I want to see 3 things: 1) iPhone Mini 2) China Mobile deal 3) Expanded retail footprint in China and rest of Asia. To some extent, I think all three are happening. Link to comment Share on other sites More sharing options...
Viking Posted August 13, 2013 Share Posted August 13, 2013 Nice summary of why Apple needs to launch a cheaper phone: http://ben-evans.com/benedictevans/2013/8/13/defending-ios "This means that the financial value of a cheaper iPhone cannot be considered in isolation. A large part of its purpose is to defend sales of the high-end model." Link to comment Share on other sites More sharing options...
Palantir Posted August 13, 2013 Share Posted August 13, 2013 I agree with the above, and that's why strong marketshare is important, just focusing on the niche will not work when you have an ecosystem and network effects you want to leverage. A mid-tier iPhone could allow them to dominate that segment of the market, even if it is at the cost of margins, which I don't consider terribly important. Link to comment Share on other sites More sharing options...
fareastwarriors Posted August 13, 2013 Share Posted August 13, 2013 http://www.cnbc.com/id/100952123 Carl Icahn says he's taken a position in Apple, says stock undervalued Link to comment Share on other sites More sharing options...
Guest valueInv Posted August 13, 2013 Share Posted August 13, 2013 http://www.cnbc.com/id/100952123 Carl Icahn says he's taken a position in Apple, says stock undervalued Oh, c'mon!! This is exactly what I was worried about >:( The stock just keeps is up more than 7% in the last two days. This just reduces the effectiveness of the buyout. I hope there isn't a big pop on Sept 10th. Link to comment Share on other sites More sharing options...
Liberty Posted August 13, 2013 Share Posted August 13, 2013 http://www.cnbc.com/id/100952123 Carl Icahn says he's taken a position in Apple, says stock undervalued Ichan wrote on Twitter: "We currently have a large position in APPLE. We believe the company to be extremely undervalued. Spoke to Tim Cook today. More to come." "Had a nice conversation with Tim Cook today. Discussed my opinion that a larger buyback should be done now. We plan to speak again shortly." Guess I had good timing for once in buying some AAPL a few days ago.. Update: Icahn sure can move markets. His announcement added over 20 billion to Apple's market cap. Link to comment Share on other sites More sharing options...
Palantir Posted August 13, 2013 Share Posted August 13, 2013 Great, another fool with a lot of money telling Tim what to do. Go away loser. Link to comment Share on other sites More sharing options...
Guest valueInv Posted August 13, 2013 Share Posted August 13, 2013 Great, another fool with a lot of money telling Tim what to do. Go away loser. Well, they have little choice now, the cheap buy back window may close soon. Link to comment Share on other sites More sharing options...
Guest valueInv Posted August 13, 2013 Share Posted August 13, 2013 http://www.theverge.com/2013/8/12/4615882/larry-ellison-says-we-already-know-apple-is-doomed-without-steve-jobs Thought you'd get a kick out of this one valueInv ;) Man, why don't comments like this bring down the stock price? :( Maybe Ellison should go back and look at history: http://www.futureblind.com/2011/01/apple-inc-the-greatest-turnaround-in-corporate-history/ For 7 years after Jobs came back to Apple, the numbers were pretty much stagnant. And here is a proper rebuttal: http://kensegall.com/2013/08/larry-ellison-gets-steve-jobs-wrong-twice/ Link to comment Share on other sites More sharing options...
Palantir Posted August 13, 2013 Share Posted August 13, 2013 Great, another fool with a lot of money telling Tim what to do. Go away loser. Well, they have little choice now, the cheap buy back window may close soon. Are you still buying? I should have bought more at low 400s. Now I actually have to do work to figure out whether this is worth buying. Link to comment Share on other sites More sharing options...
Guest valueInv Posted August 13, 2013 Share Posted August 13, 2013 Great, another fool with a lot of money telling Tim what to do. Go away loser. Well, they have little choice now, the cheap buy back window may close soon. Are you still buying? I should have bought more at low 400s. Now I actually have to do work to figure out whether this is worth buying. Nope, I am hoping for drops either when this quarter's earnings or on Sept 10th. In any case, I have already bought a lot. I hope to hold for a long time though. Link to comment Share on other sites More sharing options...
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