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Reggie Middleton Takes The Challenge To Goldman Sach’s Apple Proclamation One Step Farther, Apple’s Closed System Risks Failure!
It appears as if I wrinkled a few feathers of the birds that are doing God’s work with my missive “Goldman’s
$430 Target, Screaming Buy On Apple At Its All Time High Is In Direct
Contravention To Reggie Middleton’s Logic – Who’s Right? Well, Who Has
Been More Right In The Past?“. This is a good thing! A little
creative destruction and anarchy is positive for the complacent masses. I
say we take this up a notch, pull down our pants and see who is truly
the most intellectually endowed, the outside the box researcher, entrepreneurial investor and thinker that has called nearly every major financial institution bust and market downturn since 2007, or those who are doing God’s work with a 38% accuracy rate over the last 3 years with billions of dollars of government assistance.
In my rant yesterday illustrating weaknesses in Goldman’s argument of
Apple, I hinted at the potential for Google to turn the App Store
delivery model on its head by transforming application sales into an
advertising based model, of which Google thus far reigns supreme and the
closes runner up is not yet close enough to compete. I will take this
concept further in an attempt to show those who cannot see the forest
due to an excess of tree bark in the way one of the several risks that
Apple faces now that it has become so successful – risks that are not
mentioned in the reports of prominent sell side analysts – Yes, even
those that are doing God’s work!
To begin with, let’s excerpt a piece from Google’s 3rd Quarter Operating Results: The Foregone Conclusion That Was Amazingly Unanticipated by the Street!!! Monday, November 8th, 2010 and 
Google Q3 2010 review for all paying subscribers (click here to subscribe).
Be aware that Google beat each and every sell side analyst’s
expectation last quarter, yet was just about right in line with what
BoomBustBlog told its subscribers to expect…
Let’s walk through the logic behind this wise man’s thinking by looking at the phenomenal growth that is Android.
- Android Sales Overtake iPhone in the U.S.: Tech News
- Google: Android now shipping on 60000 handsets per day Feb 16, 2010 …
- 160000 Android Phones Sold Per Day Jun 23, 2010 ..
- Google: 200000 Android Phones Sold Every Day | Gadget Lab | Wired.com Aug 5, 2010
- @ARubin: 300000 Activations Per Day December 2010
According to Millennial Media, iOS average monthly ad impressions
rose 12% month-over-month in October in the US, while Android OS
requests
were up 65%. Remember that Apple practically created this category
(meaning ad rich mobile computing category) in 2007 with the iPhone
(although Microsoft was pushing 3.7 inch smartphone screens nearly 10
years ago).
Source: Macquarie Research, Japan
As can be seen in the graphic above, Google’s Android has come from
nearly nothing to actually matching the market leading Apple in just a
few short months. This figure will probably show Google leading the pack
by next month as Android’s growth continues to ramp at such an
exponential rate.
Android now outsells iOS in the US and
worldwide. This is not lost on developers who wish to monetize their
efforts. The most ubiquitous platform will get the most developer
attention. It’s as simple as that. We have modeled and predicted this
occurrence in detail for paying subscribers (click here to subscribe) with our our 
Smartphone Market Model – Blog Download Version;
which granularly breaks down the market share of various handset
manufacturers with data as recent as last quarter, catching the launch
of the iPhone 4 and the HTC Evo, two of the most important product
launches of the year. We have also included the Mobile Operating System Market Share Model which compares OS shipments across device and hardware type.
So, what does this all mean? Google was
able to commoditize, and then cannibalize several other industry’s
revenues by offering their products for free or at a highly discounted
price while still profiting by subsidizing the offering with ad
revenues. Google takes the advertising model to the next level – just
ask those in print media! In order to do this, Google needs volume and
mass. They need to be the leader in client software. They have actually
achieved this in an phenomenally short period of time and their rate
of growth is actually increasing dramatically. If Google succeeds in
transforming the software delivery model to that of an ad-based model,
the current Apple App Store model and all of its competitors (Ex.
Microsoft and Research in Motion) who are trying to emulate it are
going to have their business models totally up ended. The kicker is,
even they recognize this risk, the only way to do anything about is to
have both the advertising infrastructure (ex. Google’s Acquisition of
AdMob) and the sales mass and volume (ex. 300,000+ activations per day)
to be able to monetize such aspirations.
This is why those who proclaim that
Google only makes the OS, not the hardware and Apple profits from both
are absolutely missing the forest because of all of that brown bark
stuck in their eyes! Some of the best apps available for smart phones
ring now are ad supported and free to the end user, save certain
premium upgrades. Guess who those apps come from? Google Voice, Google
Earth, Google Apps, GMail, Google Analytics, Google Voice Search, etc.
Then there are other apps that are simply phenomenal which don’t come
from Google but still look to take advantage of the ad model. Long
story short (that is if it isn’t already too late in this lengthy
missive:-)), the probability of Google succeeding in making mobile and
even desktop software (Google has added an app store to its Chrome OS as
well) ad supported is simply too great to ignore. If it succeeds,
significant disruption will ensue to the benefit of the consumer and to
the detriment of Google’s competitors.
As excerpted from Even Steve Wozniak, the Co-Founder of Apple, Made a Freudian Slip Extolling the Virtues and Inevitable Dominance of Android! Friday, November 19th, 2010:
The Mac OS actually had the first
mover advantage and blew it doing the same thing that they are doing
now, which was trying to fight the commodization of their cash cow
platform by maintaining a totally vertical manufacturing and
distribution channel – controlling software, hardware and firmware
while refusing to license any portion out. The result was the
proliferation of PC clones that drove the costs of computers
considerably below $1000 per unit while Apple was charging up to
$3000+ while having an inferior selection of 3rd party applications. Does this sound familiar??? Think of the growth of the Android platform to date.
Ironically, Apple has a decent chance of challenging Google on this
front, but instead is retreating its tried and true (but ultimately
limiting) proprietary walled garden business model. It is, again, the
classic open vs closed business model battle.
Flash Notes
Apple’s proprietary tech business model allowed it supranormal
profits in the 80s, but nearly caused its demise in the early 90s, see A Glimpse of the BoomBustBlog Internal Discussion Concerning the Fate of Apple.
Apple is following a similar path today, with similar results.
Supranormal profits as is occurring currently, followed by what looks to
be market cannibalization and commoditization. For those who don’t feel
this can happen, look at all of the objective stats in my work. Apple
is already falling behind Google in market share AND market growth! Just
as they did with Microsoft about two decades ago, while sporting thick
margins and heavy profits. This game is played in the future, not the
present. This is the threat coming from Google’s Android and the ad
model for software delivery.
- According to Paidcontent.org:
The main defense Apple gives of its closed system is that it
makes it easier to preserve the quality of the ads and the targeting,
something that has previously hindered the space. By establishing its
apps as valuable real estate for advertisers, Apple says that it has
signed up half of the top 25 U.S. marketers for the system, but most of
those ads haven’t appeared yet.Apple’s system lets advertisers know exactly where their ads are
placed. In terms of specifics, that’s about as far as it goes. Agencies
and marketers have been fairly unsatisfied with the level of data
Apple has been willing to part with, such as total number of ad
impressions served via iAds, clicks, amount of page views, and average
time spent in app. But Apple only provides an aggregate number, not the
details specific to each advertiser. For the marketers, that’s
galling, considering the premium prices they’re paying. Plus, Apple
keeps all the ad coding to itself and even has a hand over the
creative. The company has shown some willingness to loosen the reins a
bit, but only for even higher prices.Google’s App Inventor, in contrast, gives marketers greater freedom with which to create and manage their mobile ads on Android.
- Major social networking sites develop proprietary apps for both iOS
and Android, but are increasingly throwing their weight behind HTML5.
Facebook, the 800 lbs gorilla in this camp accounts for 40% of mobile
traffic according to Comscore and Macquarie. To a lesser extent, Twitter
is force to be reckoned with as well, particularly as it builds out its
richer multimedia interface and attempts to shut out 3rd party twitter
clients. AgainHTML5 as a defacto standard weakens the grip of iOS
proprietary stance. To date, there is no mobile advertising on Facebook
or Twitter. Once that changes, the landscape will be altered. - Apple’s ostracizing of Adobe’s Flash technology has opened the door
for competition from more open platforms, a side effect that Steve Jobs
may not have anticipated. With the ubiquitous use of HTML5, proprietary
apps are not necessary, hence the proprietary lock-in strategy of
Apple actually serves to work against it. As vendors choose to deliver
ads in pure HTML, Apple loses the advantage as proprietary lock in goes
from boom to hindrance. - Google’s Android system utilizes both open HTML5 and proprietary
apps, and even those proprietary apps are built on an open sourced
language base. - Apple, in concentrating (and successfully so) on creating a higher
end ad market, has pushed the lower and midtier advertisers into the
larger and lower priced Admob camp. This creates large up front profits,
but also creates the critical mass that Google needs to drop the
margins of the entire industry if Google succeeds in having Android
become the most ubiquitous mobile OS – a feat which Google is well on
the way to accomplishing and, on a monthly growth rate scale – has
already succeeded. Apple cannot afford for this to happen. The damage of
having Google capture the OS market crown is more dangerous than the
advantage of ruling the higher end market, for Google can easily pierce
this market one critical mass is attained. It is not as if Google is
creating what is arguably more compelling and capable technology in its
Android platform – reference A First in the Mainstream Media: Apple’s Flagship Product Loses In a Comparison Review to HTC’s Google-Powered Phone.
From the aforementioned Macquarie report (which
is a very good report, I may add, but contains a material error or two
or at least a point with which we strongly disagree):
iAds create a tightly controlled environment …
Apple acquired ad network Quattro
earlier this year, and quickly adopted its technology to create iAds.
Apple then shuttered Quattro to focus its technology exclusively on apps
as its source of ad revenue. The effect of this was to push out
smaller-scale advertisers that can?t afford the platform, which are then
more likely to go to Android-supported phones or Blackberry or Nokia
devices. This marked the clearest cut yet seen between open-system
mobile internet advertising and closed-loop apps, effectively segmenting
the landscape for these different players. Not content with creating
the revolutionary mobile app, Apple has tried to overhaul the pricing
system for online advertising as well, by charging a punchy $1m minimum
participation fee, plus a charge of $10 CPM and a $2 CPC for use of its
iAds platform. This pricing runs substantially ahead of most prices in
display advertising and is also a significant premium to Google?s AdMob,
which charges CPMs up to $10-15 and no CPC, or a CPC-only rate of
$0.15-0.30 on average. With pricing at this level it aligns iAd at the
top-end of the market with highly targeted internet rich-media and video
campaigns. Part of the success of Apple?s apps is they provide
incentives to developers to use the Apple platform. The table below
provides an example of the revenue potential for Apple and app
developers: the developer of the “LED Light for iPhone 4 Free” app had
26,700 requests (app launches) on a single day, which generated 9,300
impressions. Of those impressions, the developer saw an 11.8%
click-through rate (CTR) for 1,100 clicks. This admittedly is a very
successful app (12% CTR is huge) and is based on only one day?s sale,
but it illustrates the point. The revenues break down as follows:
… Apple says half of the top 25 US
advertisers are signed up for iAds, though we have only seen a few of
these actually complete iAd buys to date. iAds launched in Europe in
December: Apple says it has sign-ups from blue-chip advertisers
including AB InBev, Absolute Radio, Citi, Evian, LG Display, L’Oréal,
Louis Vuitton, Nespresso, Perrier, Turkish Airlines, Renault and
Unilever.
… So tight that advertisers and agencies feel frozen out
iAds offer targeting based on prior
user behaviour, and advertisers know exactly which apps their ads appear
on. However, Apple still owns the data and processes and has been
stingy about sharing this data. This in addition to the hefty
participation fee has served as a barrier to widescale adoption by
advertisers and agencies. Apple does provide metrics such as the total
number of ad impressions served via iAds, number of clicks, number of
page views, and average time spent in app ads – but these are all
aggregated data, not specific to the advertiser. This is a major problem
for agencies and advertisers who can access such data clearly in other
media, and indeed on Google?s Android systems.
So Apple?s combination of high
pricing and lack of transparency appears to be a stumbling block. In
addition, Apple has put obstacles into the production process, by
keeping its ad development codes in-house and by essentially vetting the
advertisers and intruding into ad creation.
In addition, Apple’s browsers aim to mitigate the success of the mobile web
Here again, Apple has set up walls
to ensure its closed iAds system will succeed. Apple introduced
technology in its latest Safari 5 web browser that can block ads on
individual websites. This could have significant implications for the
amounts online advertisers are willing to pay publishers and more
importantly (given online is still small but needs to grow for the
publishers to survive) may have adverse effects on the potential
opportunity represented by mobile advertising. How? The opportunity in
mobile advertising lies in the fact newspaper applications on the iPad
(like the Financial Times or the Wall St Journal) can be formatted to be
more conducive for advertisers – however, if Safari blocks this, it
blocks the revenue upside for the papers as well. This clearly sounds
like part of a plan to migrate all advertising to Apple?s own iAd
platform, where Apple takes a 30% share of all advertising revenue in
which it hosts.
Google’s Wedges Its Foot In The Doorway
Search is the most ubiquitous door into mobile advertising. Google
controls 97%+ of mobile search and over 67% of overall search. Search
(including mobile search) can easily lead to other forms of advertising.
This, apparently, is not easily seen by many of Google’s competitors
until it is too late. Ask any major or minor ad agency who the leading
global ad agency is in terms of revenues, profits or reach! You can also
query the print media industry if there is still a doubt.
As for other forms of mobile search reach, Google is not only
climbing exponentially in terms of reach (via Android, and potentially
Google TV and Chrome OS), but is quickly gathering the low and mid-tier
advertisers due to Apple’s eschewing them for the big fish. This is
clearly Apple’s business model forte, but it appears that Apple is
failing to play defensive in preventing Google from getting those
advertisers that they are tossing to the side. This is not a matter of
profits and revenues, now, but who controls the bulk of the web
tomorrow. This is a game of chess, and Apple is gathering many of
Google’s pawns but allowing Google to make an end game run the Apple
King!
Remember, if or once Google gains critical mass they will drop the
prices of everything in the industry and rely on its heavy and
ubiquitous ad revenue cash flow to support it. This is already happening
in the handset and mobile OS market where Google is forcing Apple to
expedite its refresh cycle. Google and its hardware partners (who are
also the sole sourced suppliers of the most critical components
of Apple’s most profitable product – responsible for 70% of the
company’s earnings) are also throwing superior technology at the market
at comparable price points to the iPhone (and most likely the iPad very
soon), while also offering comparable tech at lower and lower price
points. Apple will not be able to compete with the entire open source
universe and its hardware partners from a brute force perspective, yet
that appears to be exactly the game that Apple is being drawn into. Its
Microsoft vs Apple, Open vs Closed all over again, just this time the
company is Google and the ubiquitous cash flows come from advertising
instead of the Windows OS and Office suite of productivity apps.
I actually questioned the IDC numbers that the Macquarie report
heavily quoted above used to infer that Apple was the leader in mobile
display advertising. You have to be very careful when using 3rd party
data as confirmed fact without fact checking. The Macquarie report was
very well done (kudos), but they made a grave error in their 4G
pronouncements in the US regarding Verizon (who is currently in 2nd
place behind Spring whose Android phones are currently the only handsets
to use 4G technology, although they probably advertise more) and
according to our research regarding Apple’s lead on Google in mobile
display. From Searchengineland.com:
Earlier this week a Bloomberg/BusinessWeek article appeared under the headline: Apple Threatens Search Giants’ Mobile Ad Shares.
It gained a tremendous amount of secondary pickup and discussion for
the proposition that Apple had tied Google in mobile advertising
revenue.
The article relied on IDC estimates
to argue “Apple may be gaining share in the U.S. mobile advertising
market this year at the expense of Google and Microsoft.” Here are the
IDC US mobile advertising marketshare figures (based on revenue) cited
in the article:
- Apple: 21%
- Google: 21%
- JumpTap: 13%
- Millennial: 11%
- Yahoo: 9%
- Microsoft: 7%
- Nokia: 2%
- Other: 16% (missing from the figures mentioned in the article)
When I saw this it immediately struck me as wrong. IDC has gotten it wrong before.
But how could Apple with its very recent entry in mobile advertising
(albeit based on the Quattro acquisition) have greater share than a
combined Google and AdMob?
…
I immediately reached out most of the
companies on the list to get their feedback and reactions to the IDC
figures. I talked to several people though no one wanted to be quoted.
Almost without exception those whom I spoke with faulted the numbers. I
was told by one party (in an informal estimate) that the universe of
mobile display advertising in the US looks like this as a practical
matter:
- Google, Apple, Yahoo, Millennial Media (60%)
- Publishers (20%)
- Other (20%)
I reached out to the IDC analyst
mentioned in the article. He did not respond to my questions in email,
however. So I’m relying on others who’ve talked to him or are more
directly familiar with the IDC estimates.
One question that immediately arose
is whether the market share figures above include mobile search
revenues. According to second-hand information I obtained they
apparently do but don’t include “hybrid” campaigns, those that run both
on PCs and mobile devices. But since this describes most of Google’s
mobile search advertising it undercounts Google’s mobile ad revenues by
a mile — at least.
One reputable source told me that the
$60 million that Apple reported was based on upfront commitments and
not actual billings. That same source said that at least two major
advertisers had canceled their iAd campaigns over frustration with
Apple’s tight control and the slow pace of the process. (There’s been a
mixed reaction to iAd.) That would mean the $60 million figure will translate into less actual revenue for Apple.
God love ‘em, Apple has done more for
mobile consumers and mobile advertising than any other single company.
But they’re not the revenue leader. And if the Mahaney figures are
anywhere near correct — and they’re search numbers exclusively — then
Google has got to be, far and away, the mobile ad revenue leader in
the US.
According to eWeek:
Sterling isn’t the only one to
dispute the IDC numbers. Jumptap CMO Paran Johar said iAd may be
capturing 21 percent of the dollars today, but not the impressions or
the opportunity.”They are a very focused on the super premium brand
advertisers willing to spend $1 million minimum while controlling the
brand’s creative,” Johar said. Moreover, he said Apple shut down iAd to
mobile Internet publishers, causing a surge in publishers wanting to
work with a partner that is platform agnostic and open. Jumptap is
reaping the benefits of this shift, he added.
While Weide is bullish on iAd in the
near term, he also told eWEEK that Google will “in years to come crush
Apple” because its Android platform will outsell the iPhone. Indeed,
Apple sells a handful of versions of the same iPhone. As good as that
handset is, Android’s open source delivery model has spurred many major
phone makers–Motorola, HTC, LG and Samsung–to build more than 60 Android
smartphones.This provides a greater footprint for application
developers to seed their software and generate revenues from mobile ads.
But that will take some time for in-app ads to foment on Android
devices in earnest. For the time being, Weide said the iPhone and iAd,
with richer ads and higher click-through rates, is the more attractive
distribution vehicle
in the U.S. Accordingly so the majority of mobile marketers are looking
at advertising on iPhone and iAd over Android devices and Google’s
AdMob unit.
May I reiterate the dangers to Apple if they allow Google to escape
with the lion’s share of ad market share, particularly enough to
overcome any potential margin benefit Apple may be able to accrue. By
dropping margins across the board, Google can transform the landscape.
As it stands now, many more apps in Google’s marketplace are ad
supported as compared to Apple’s app store, which leads at least this
particular consumer to try out and eventually buy more apps on the
Google platform.
I strongly urge all paying subscribers to read and reread the longest forensic analysis that I have ever released (@63 pages): Google Final Report, as well as the An Analysis and Valuation of Google’s Android and AdMob.
Below, those that do not subscribe can find an extensive excerpt that
illustrates how we clearly articulated to our research subscribers the
rise in Google’s prominence that the ENTIRE sell side of Wall Street
somehow missed…
Subscribers should also review the following documents (click here to subscribe):
Google Valuation Model (pro and institutional). - Smartphone Market Model – Blog Download Version – all paying subscribers
- Mobile Operating System Market Share Model – all paying subscribers – This model is key to showing the trends across operating systems, and not just handset manufacturers.
Relevant links:
- There Is Another Paradigm Shift Coming in Technology and Media: Apple, Microsoft and Google Know its Winner Takes All
- The Mobile Computing and Content Wars: Part 2, the Google Response to the Paradigm Shift
- An Introduction to How Apple Apple Will Compete With the Google/Android Onslaught
- A First in the Mainstream Media: Apple’s Flagship Product Loses In a Comparison Review to HTC’s Google-Powered Phone
- Android is gaining preference as the long-term choice of application developers
- A Glimpse of the BoomBustBlog Internal Discussion Concerning the Fate of Apple
- Math and the Pace of Smart Phone Innovation May Take a Byte Out of Apple’s (Short-lived?) Dominance
- Apple on the Margin
- RIM Smart Phone Market Share, RIP?
- Android Now Outselling iOS? Explaining the Game of Chess That Google Plays in the Smart Phone Space
- How
Google is Looking to Cut Apple’s Margin and How the
Sell Side of Wall Street Will Enable This Without
Sheeple Investor’s Having a Clue - Empirical Evidence of Android Eating Apple!
- More of the Android Onslaught: Increasing Handset Revenues and Growth
- Many More Black Eyes for the Blackberry? A Complete Forensic Analysis of Research in Motion
- The BoomBustBlog Multivariate Research in Motion Valuation Model: Ready for Download
- The Complete, 63 pg Google Forensic Valuation is Available for Download
- iSuppli Continues to Validate BoomBustBlog’s Original Thesis: Android as the Viral Game Changer!
- BoomBustBlog Research Hits Another One Out the Park! Google up nearly 10% after hours, true blowout earnings unlike JPM
- As
I Warned in June, DO NOT DISCOUNT Microsoft in This Mobile
Computing War! Their Marketing Campaign is PURE GENIUS! and it
Appears as if the Phone Ain’t Bad Either - Reggie Middleton Wasn’t the ONLY Openly Apple Bear in the Blogoshpere, Was He?
- A Quick Peek Into the REAL WORLD Logic That Went Into Building the BoomBustBlog Apple Model: It’s Called Compression!!!
- Goldman’s
$430 Target, Screaming Buy On Apple At Its All Time High Is In Direct
Contravention To Reggie Middleton’s Logic – Who’s Right? Well, Who Has
Been More Right In The Past?
- advertisements -
Reggie- Saw something yesterday that said Verizon was not doing that well with Android phones and Iphone was much better to ATT than Android is to Verizon, how does that fit in.
And, will Nokia pull an IBM or MSFT, by sure market power, even tho late in the game, recover and go on to claim a big chunk of smart phone business back? Some of their latest data seems promising.
I don't follow Verizon closely enough to comment on the statement, but the iPhone was not all that good to ATT until they renegotiated their contract with Apple. I also know that Android literally pulled Sprint's left foot out of the grave with the Evo and Galaxy phones, along with their 4G service, which I must admit is pretty cool.
I don't have much confidence in Nokia until they show me some better results. Unlike MSFT, Nokia doesn't have a proprietary lock on thier business, which is why they are losing it so quickly. MSFT may be a red herring in mobile, but it is too early to tell and management will have to execute well. Thus far that is something that they sucked for 4 years straight, but the new OS shows promising new minds and ideas at work.
thanks, interesting points
nothing but a hunch, but I think Nokia will right themselves, but that only reinforces Apple's problems, and it likely will not be enough to dent further growth for Google/Android, just maybe limit Googles eventual world domination some...
Reggie - you been hanging around Tyley too much....this quote is one of the better financial blog quotes of the year:
" I say we take this up a notch, pull down our pants and see who is truly the most intellectually endowed..."
however, I don't know if you intended to imply you both yours and GSucks brains are below the waist :)
Just starting to have bad feelings about the quasi-governmental Google snooping on everything as an arm of the fascist PTB. So now in addition to scanning and catagorzing all web content, all searches, all advertising activity, all businesses, all GMail traffic, are they now covertly doing it through their Android operating system?
Google is a CIA wet dream.
I thought Google is the NSA?
Oh wait, NSA just has to issue a freedom subpoena under the Patriot Act which requires no signature by a Judge, nor any notice to the individual whose information they want.
That looks better than having outright ownership of Google by NSA.
Reggie,
Here's a challenge of a different flavor:
Your proposed future history is largely driven by advertising. Fair enough. But depressions tend to crater advertising expenditures. Might that sort of environment not stifle the trends you foresee? I think it might at least draw out the competition, to the point of giving Apple a chance to change strategies.
A tough economic environment will draw more advertisers to the most cost effective campaigns, which will actually advantage Google in comparison to the more expensive stuff. If anything, it would hurt going after the high end.
Touche' !
What are your thoughts on Bing and Facebook and the ad space.
Wild cards, to hard to guage right now. Bing is strong tech, Facebook is the 800 lbs gorilla in the eyeball space. Management competence is what will determine what becomes of each.
"Apple’s proprietary tech business model allowed it supranormal profits in the 80s, but nearly caused its demise in the early 90s. Apple is following a similar path today, with similar results."
I remember that. You'd think Apple would have learned a lesson.
There is math and charts and left-brain rationale. And then there is the human condition.
Apple N.Korea
When dear leader leaves the stage it will crumble.
Don't look for the company look for the next ONE.
when i need to go mobile i buy a tracfone for $10 from the dollar store.
luckily i'm usually at home videoconferencing on a 10 foot screen
for free via skype, ekiga, linphone, etc.
give joogle and joobs the deep six!
gates is one too what a coincidence!
Jesus Christ, your obsession is tiresome already. Take your two incher back to Stormfront and leave the market talk to those who don't give a shit whether one's dick is circumcised or not.
Reg
1. You may be right. But here's a few factoids you probably aren't aware of. Small devlopers to larger ones are appearing to devlops app for the iPhone and iPad. The average ticket is 17G and can go up to 6 figures easily depnding on the complexity.
2. Abbott Labs amoung others are now distributing iPads to their Sales force. Repair and Maintenance are not far behind. In other words the consumer market is not the end all be all for Apple Hardware. I looked at the iPad and immediately thought that it's future was in vertical B2B markets. Developers are flocking to it becuase the pay level hasn't been seen since the 1990s.
3. For those of us who program in scripting languages for the web, there is a free porgram now that will convert our apps to iApp.execs. They can run on a open connection to the internet and run-time databases when no connection is available.
4. Droid is seeing many apps, but it hasn't touched the Enterprise market. Many users complain that the app store is not well organized with so many of the apps being free , they is a high ratio of junk to quality.
5. Apple has always been a monopolist. Yes it was a mistake that Jobs realized in 1997 when he took over Apple again with the idea that "In order for Apple to win, Microsoft doesn't have to lose". That's also true of Google and the myriad of manufacturers that are trying desperately to come up with something that matches the iPad. Smart Phones are a huge market but the touch pad market could supplant the laptop market with far bigger margins especially when a model makes it out of the consumer space and into the vertical enterprise space. Once that happens in quantity, then Apple becomes the next Microsoft with a huge rate of growth , control over content, programming and tools yet allowing programmers to use open technology and utilize software products to make their open technology apps C Objective ready.
In order for Apple to succeed, Google doesn't have to fail and vice versa.
It could be argued now that Apple has already achieved a level of success that no corporation can match. If you bought a few grand of Apple stock in 1997 , you would be a millionaire a couple of times over. This was achieved after two major stock bubbles and crashes too. If you bought Google at it's IPO, you would have a nice return but the accumulated return is about 20% higher than inflation.
The greatest weakness and strength of Apple is Steve Jobs. He hasn't name a or appeared to be grooming a successor. If he should die, that would be devastating for the stock. On the other hand, look at the handset makers and Google's stock performance. It's virtually dead money . Motorola is the best example. They are getting no credit for building the smart phone handsets. Google? Still trading at 5x its ipo Price. Apple is within 1% of it's all time high.
Yes that's a short-term snapshot. However, to assume that Apple is standing still on its achievements with Jobs in charge would be a major mistake. In fact, I suspect that Pad makers have been very cautious because they just don't know what Apple will do once they release their best shots at prices a little lower or higher than a iPad. Seen any sales reports on Samsung? They are in a real quandary. Investing large amounts of money in a Clone market may be similar to the PC clone Makers doing the same in the 90s. The graveyard of dead tech is littered with PC makers who tried to do anything beyond what Microsoft/Intel allowed them to do.
Even if they had innovations that went beyond, they had no margin or budget to promote it.
Just some factoids that may temper your analysis or not.
Which is to be expected considering the lead, market share and momentum these products have.
I really like the iPad, and actually own one. I was quite doubtful at first, but got one after playing with someone elses for a while and saying "Damn, this is pretty slick". The caveat is, I would have never bought it had the HTC Evo came out a month or two earlier. After seeing what was capable via Android, I would have gladly waited for the Android tablets. The iPad willl not share the advantages Apple had with the iPhone. For one, it will have less than a year's head start where the iPhone nearly 3. Second, it will probably be trounced from a technical capability perspective. Third, it will be challenged price-wise, and it is already a relatively low margined product for Apple, in comparison to hanset sales. Fourth, it will face an enormous amount of hardware competition nearly off the bat. Every major hardware vendor is ramping up Gingerbread ready devices. Its the world vs. Apple, and the world has a free, technically superior OS to fight with.
Droid is already in the enterprise. Look and ask around or do some comprehensive news searches. As for the junk app ratio, it is not much worse than Apples. They are both too, IMO, though.
Apple does not have anywhere near the codebase and the legacy users to challenge MSFT right now. That is pie in the sky. Google is much more of a threat due to its cloud offerings (plus its synergistic success with Android), thus the reason behind MSFT's offereing of Office live, Skydrive, etc. You are putting too much faith in the iPad.
In order for Apple to succeed, Google doesn't have to fail. You're right there, but this is not a linear equation and the same is not true the other way around. If Google succeeds, Apple's margins get compressed and you will not see those $400 and $550 per share price targets that are being bandied about. It may happen in a short run spurt, but medium to long term Apple will have to quell Google's pace.
Be careful in measuring a company's prospects by its share price, particularly in a time such as this when fundamentals are taking a back seat to how much gas the Central bank is willing to pump into the ethosphere!
Again, you are measuring the quality of a car by how much money the car dealer is succeeding in getting you to part with. Share prices do not always equal fundamental value. That is how truly smart money actually makes money, by taking advantage of the crowd that believes that the market is always right!
You don't appear to follow the Android market closely. Samsung jumped the gun by releasing a small form factor tablet running a smartphone OS. The Android OS (gingerbread) has not been released yet. We really have not seen the effects of Android on tablet sales as of yet, because we have yet to see the Android tablet OS (slated for release in March). Judging by the explosive success and capabilities of the Android smarthpone OS/hardware combos, one can be rest assured that at the very least the margins of the iPad will take a beating.
Keep your pants on, Reggie. Nobody knows it yet but the music has stopped. Pretty soon it's just not gonna matter if Apple is closed or not. best of luck to you and yours in these interesting times ahead
Yes indeed, the next year or two will show who has the juice, and who can manage a business when times get thinner. My bet is on the team that has years of experience climbing out of a deep hole while folks like Reggie claimed they were dead meat, and every story in the press started with the word "beleaguered".
Apple has always been a software company, and it shows in their software's quality.
Microsoft beat Apple in the desktop market with quantity.
Google is now preparing to mop up the handheld market with opensource, which is providing quality software in quantity. (if dyslexic, read twice)
Reggie, keep calling it the way it is.
Apple is a hardware company. They only make software to sell their hardware products. If you don't agree, then look at the % of revenue derived from software vs hardware sales.
Apple is like Bose Audio.... great marketing, questionable substance and anyone with true knowledge of the sector would buy something far better for the same (or less) money.
same with Bang & Olufson.
Apple is repeating the same mistake it has done in the 80's, closed system risk.
hmmm... A true audiophile recognizes Bose as a shopping mall consumer product versus a tool that can replicate with fidelity!!!
What are we replicating, MP3s. ;-)
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Hey Mr. True Knowledge, there's this minor thing called software, have you heard of it? Comparing what Apple has accomplished to Bose shows you don't have a clue. if you want to compare fucktard companies, try Bose and Sony.
-1 trolling
They are both marketed as premium products that they really aren't to give people with a little more disposable cash than they perhaps deserve something to blow it on.
Precisely, both Bose and Apple are great at marketing pretty boxes with the illusion of it being top quality and that if you do not own it you are less/lower than...
Perhaps Rogerwilco should watch the four-part video Century Of The Self.
BTW: If Apple is a SOFTWARE company then why not open up their OS to allow HP, Dell, Toshiba and others to offer computers using their OS. If M$oft did what Apple is doing there would be major lawsuits. Besides, Linux is better :)
@market
Not everyone lives at the bottom levels of Maslow's pyramid, so please stop the egalitarian nonsense. I have to laugh when people like you dismiss tens of millions of consumers as misguided fools and imply their buying decisions are solely the result of clever marketing. I will grant you that people can be influenced, even "tricked" by good marketing, but if the product doesn't deliver, they are rarely fooled again.
People generally buy the products that provide them with value. To use Reggie's metaphor, Apple hangs it out there in the breeze every day, and from the looks of their earnings and share price, they have nothing to be ashamed of. When customers walk into an Apple store they can see exactly what they are buying. GOOG, MSFT, et al take the "back door" approach and sell their products via OEMs. Their real customer is the OEM, not the end user, or should I say the user who takes it in the end?
Your pushing it now. Many i-product buyers buy as a result of marketing and me-too status. They are not buying based on ability or capability. The same goes for Bose. You can get much more sonic quality for the dollar by going with any number of brands than you can with Bose, but many Bose consumers don't realize it because those companies don't adertsie to the shopping mall crowd. That's why you see Bose retail stores in big malls, but you do not see Jamos, or Macintosh Monoblocks, or.... The list can get quite exensive. Macintosh is probably at least a 100 years old as well.
The same goes for Apple. You can get much more performance for the dollar, but you don't get the same marketing panache.
Bose? Bose is crap, just like Sony, and that is why I said the comparison with Apple doesn't work. Does Apple market their products well? Damn right they do, but once consumers get an Apple product, it delivers on their expectations. I bought a pair of Bose QC headphones and was given a Waveradio as a gift. Both products failed in less than a year, and as a result of their poor design and lousy warranty policies, I will not buy from Bose again. My original iPod, bought in 2001, worked until 2006 when the battery finally died. A replacement battery cost all of $20. When I sold it last year for $40, it was working perfectly. Would I buy another iPod in lieu of some other brand. Definitely, because Apple products provide lasting value.
Since we're busy comparing companies, I'll throw this one out. Apple today is more like the old (pre-Carly) Hewlett Packard. The company is managed, hands-on, with an iconic leader, and the people working there believe in what they're doing. Focus is on one thing, the end user. In its heyday, HP kicked ass around the world. Dave Packard wrote their mission was "to build quality products of lasting value", and while he ran the place, that is what they did.
I'll certainly agree that there are a plethora of intelligent discerning Apple customers without doubt however the appeal of Mac products has now gone from it being the most suitable meeting of hardware and software for creative professionals to having the life milked out of this originality and creative chic appeal and making it the latest brand on the wannabe hipster shopping list. With the massive dissemination of "Apple cool" to the sheeple market Apple has found its brand value actually reducing in my opinion and more importantly the level of intelligence for which it credits its customers has reduced significantly.
When any company loses touch with its core customer base - i.e the one that made them cool then they are always topping out in their near term potential. It's the real creative types that made it cool, not the young skinny jeans, black frame glasses with no lenses "weekend photography" experts posting tacky tinted polaroids of themselves online supposedly being cool.
Check out their "Back to the Mac" press conference from late October this year and tell me Jobs doesn't try to sell the Apple customer base things they already have as "revolutionary new concepts". Check out the iMovie part in particular where you can make your own movie trailers? Aren't they only good if you have a fucking movie to show afterwards? I'm sorry but most creative people just vomited in their mouths at the smug bullshit being peddled and shook their heads at the throngs of hipster fuckwit creaming their dacks at the idea of starring in their own movie trailer.
Puke.
try Burmester, Bower Wilkins or my favorite www.vroemen.de. A speaker made out of stone with incredible base volume. Not good for the car's 0-60 performance since one speaker weighs in excess of 200 lbs.
You do not want to pull your pants down and compare endowment with a black man.
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