Apple announces after the market close today. For my subscribers, I believe true valuation hovers around my base case scenario from the last Apple update. Of course, after we have crunched the numbers from this quarterly update we will have considerably more empirical data to munch on. As a quick review...
Apple's major problem is that the vast majority of its profits come from 2 products, both of which are rapidly losing market share and are outclassed by the competition in many different ways. On top of that, the competition is both undercutting on prices and outperforming on tech. That's a bad combination for a company that relies on fat margins to sustain their share price.
The mere diversity of the Android universe is a significant threat to Apple's margins. Check this out...
A water-proof phone must be corny, right?
I know, many will say.. "But, But this is tablet, not a phone!!!" Well, if that's the case, it competes mightily against both the iPad and the iPad mini (the mini hurts Apple's historical margins and the iPad is dropping in both ASP and market share like a rock). We all know what follows rapid market share loss, right?
In early 2010 I warned on Blackberry (then RIMM), with market share loss to Android being the prime determinant... Many More Black Eyes for the Blackberry? A Complete Forensic Analysis of Research in Motion. I put significant data out in the public domain to illustrate my point and put explicit price points out for subscribers, ie. RIM Smart Phone Market Share, RIP? Was I right?
Blackberry market share vs margin correlation analysisBlackberry market share vs margin correlation analysisBlackberry market share vs margin correlation analysis
Sony Xperia Z Ultra Apple Compare
The iPhone and the iPad business franchises are still making money hand over fist, but they are also losing market share and margin - and doing so quickly...
The addition of (margin) mini products and iPhone 5Cs simply evidence what is obvious, the existence of products like those below are pressuing Apple and continue to eat at its hegemony...
11 xperia z ultra 271315438590382730
On top of the fact that Apple faces extreme compeition on all fronts, common business sense begs the question, Have We Reached "Peak Premium Smartphone"?
Is Tim Cook Cooked? Market Share vs Profit Margin, part 2 - Follow What I Do, Not What I Say!
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