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Have We Reached Peak Apple?
Submitted by Omid Malekan via OmidMalekan.com,
Technological change often comes faster than what the people in it’s thrall can predict. It wasn’t that long ago when you and everyone else you knew were probably using AOL Instant Messenger, around the same time that dude, you were getting a Dell. Then one day you weren’t. Blackberrys used to be so popular that “to bbm” someone made it into the dictionary, but then the devices all but disappeared. These inflection points are seldom based on the companies failing their customers, but rather because consumers simply moved on.
Apple’s success in the past year with the iPhone 6 has been so spectacular that it’s hard not to assume it will go on. Unfortunately that’s usually when the turn starts, without anyone noticing. To question whether the iPhone’s cultural and economic dominance is peaking is not to say that one of its competitors will overtake it, as It wasn’t MSN Messenger or Hewlett Packard that took down the major players of their day, but rather their customers’ apathy. Apple now stands at the same precipice.
The first threat to the iPhone’s ongoing success is the iPhone’s ongoing success. Apple realized long before any of its competitors that portable technology is as much a fashion item as it is a gadget, and marketed its products accordingly. But now that so many different kinds of people own an iPhone, it’s no longer cutting edge fashion. Being popular in the tech world might feed on itself, but being too popular in fashion is dangerous.
The second threat to the iPhone, and smartphones in general, is the success Apple and its competitors have had in cramming every imaginable feature into the latest devices. Today’s iterations are more like “a computer in your pocket” than a communication device, and that’s a liability. Once smartphones become little computers then the only improvements left to be made are incremental. The next model will be a bit faster and have a better camera, but what it probably won’t have is a revolutionary feature that will dramatically shift user experience. There was a time in the PC business where the release of every new Windows version or Intel processor was a milestone and a boost to sales, but the changes eventually became incremental, and it was PC makers who paid the price.
Not all aspects of the iPhone’s dominance have followed historical precedence however. Thanks to the unique position of wireless carriers in the smartphone market, Apple (and to a lesser extent its rivals) have enjoyed heightened US adoption thanks to the carrier subsidy model. When smartphones first came out it wasn’t a given that everyone would jump to an expensive data plan. To drive adoption major carriers like Verizon and AT&T decided to subsidize smartphone purchases in exchange for locking customers into a 2 year contract. This model was beneficial for iPhone sales in several ways.
The overall cost of owning an expensive phone and upgrading regularly was now lower. Since the monthly data bill did not change whether you were under contract or not, all consumers were encouraged to always upgrade to the latest model as soon as possible. iPhone owners enjoyed a third perk, as iPhones on average cost more than their competitors. Since the carriers decided to make the initial contract fee $200 regardless of whether you were signing up for a $700 iPhone or $500 Android device, iPhone users were effectively being subsidized by non-iPhone users.
All of these benefits are about to end. As smartphones have gone mainstream, carriers no longer need to subsidize the phones to get users to pay for data plans. To them it doesn’t matter if you have the latest iPhone or your old phone from 2 years ago. This is why they have been moving towards a monthly installment model and Verizon, the nation’s biggest, recently announced an end to all phone subsidies and contracts. Instead subscribers can now either bring in their own phone, pay full price for a new one or go on an installment plan where they pay the full cost of the phone in monthly increments.
This move from Verizon is bad for all smartphone makers because for the first time consumers are forced to choose how much they spend on a new phone. Back when all new phones still cost $200 the incentive was to choose the most expensive option (which was almost always an iPhone) and to upgrade regularly. But now by using an old phone or choosing a cheaper one consumers can save money. Those savings occur either all up front or on a monthly basis, so the likelihood of impulse purchases of the latest and thus most expensive models will go down. If a user doesn’t upgrade at all their monthly bill will drop substantially once their existing phone is paid off, making the cost of a new phone that much more apparent.
As the dominant market leader and the company with the biggest margins Apple has the most to lose to these changing industry dynamics. Premium brands always benefit the most from an industry subsidy, but when that subsidy ends, they suffer the most. It would be one thing if Apple could counter the de facto price increase on all iPhones going forward with significant improvements, but alas the commoditization of smartphones in general means those days are behind us. Consumers are about to be asked to pay more for a phone that stands out less.
In the past few weeks Apple’s stock has seen significant turmoil, along with the rest of the market. Although some of Apple’s decline has been rightly attributed to the economic turmoil in China, the changing industry dynamics in the US should not be ignored. Current reports indicate that Apple has ordered a record number of units from its suppliers for the release of the upcoming iPhone 6s. Record uncertainty is about to meet record supply.
Although Apple offers many other products none of them come close to to the iPhone in terms of sales volume or profits. That is why in the coming years the company will live or die by its flagship product. To borrow their long time marketing slogan, if it’s not an iPhone, then its not an iPhone.
Looking back to the Dell example, it now seems fairly obvious that the stock and company were bound to fall down to earth as its products became increasingly commoditized while lower cost competitors moved in, and sexier gadgets like smartphones took center stage. Someday future analysts might feel the same about Apple and its historic iPhone success.
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Yes. Please drive through.
The iShit will end-up just like the Rubik’s Cube, but many people, companies, and countries will loose a lot of money in the process.
Looney
Oh please, every smart investor knows you buy apple stock for the dividend
It's all Gartman's fault!
[he went long this morning...]
iQuit
iCar. iSendAllYourInfoToGubmint. Many i's to come.
iRobot
[iReplace you at work]
In my opinion, Apple as a technology manufacturer peaked with the 2012 Macbook Pro, the last one with a CD drive. Very nice machine. Everything after that is pure cost cutting and re-hashing. I hate that I like my Macbook - ease of VM usage with Parallels has been the single biggest productivity enhancer for me in recent years. Thing just works.
What's a CD? Is that something like a vinyl record?
Down Low Timmy must be sweating bullets.
You can only purchase so much good press and hype before the revenues numbers have to get reported.
Without a new game changing product, Apple will go the way of Itty Bitty Machines, Compaq, Silicon Graphics, etc...
STOP THE PRESSES!!!!
APPLE ANNOUNCES NEW SOCIAL MEDIA SITE:
INTRODUCING:
iMeMyspace®
"It's all about ME, All the time."©
Repeat after me:
"I, Me, My. I, Me, My. I, Me, My. I, Me, My..."
I, Me, Mine:
https://www.youtube.com/watch?v=01UipbZL3ww
Priceless.
Definitely a +1...
m
Timmah will always have the pope and algore on his side...as long as he says the planet is warming and it is my fault he will be a friend to all concerned people of the earth....at least those without any elemental kowlege of chemistry or physics....
...oh...polar bears support Timmah too..
Why do so many of teh ZH posters put their name after teh comment? It's kind of annoying...
branding.
Maybe if you could keep the Tylers from banning you once a month, you could still be rocking that Fonestar avatar.
Jealous?
Maybe they just wanted to use their iPencil?
I cannot fucking believe that the "iPencil" is not a practical joke.
This must be a leg pulling gag, and if it's not, short the fuck out of this fucker.
I'll wager if just HALF of Apple's customers boycott anything they make for just 24 months...they'd be all but gone.
An American enterprise born on this soil thinks you're smart and capable enough to use their shit...
...but somehow, you're not worth a living wage to build it in the nation that gave them life.
While they pay some poor Chinese worker a few bucks a day to make their tired gizmos, they could give a damn where you get your scratch to buy their shit...
...as long as you do.
And you stand in line for the privilege of receiving that treatment...
m
Apple needs to understand that just saying something is "profound" does not MAKE it profound.
Have We Reached Peak Apple?
iHave
[PS: Wow, Hero; that's profound...]
Iphone is now being offered in gold & silver
Is the Fed now suppressing anything gold or silver?
If all Apple products were removed from the planet only stupid people would miss them and take more than a day to adjust.
If you can work in at a cheap enough price, who cares? But yeah, I don't think there is enough value unless the price were to fall a long way. I really don't like the company at the moment that much.
In the meantime, go buy some other of the trillions of things that throw off cash that is at a good value.
Apple: Tech's Tulip.
I want things for what they can do and not because of the name. Apple reminds me of the old USSR in the way they treat their customer base. They call it a "walled garden" which I interpret as a prison with a nice paint job.......
I still have a Dell. In fact I bought it second hand only last year and I love it: cheap and it works a treat.
In other news: Goldman dodges another bullet. Remember this from 2010? The "Hudson Mezzanine 2006"?
Levin: Do you think they know that you think something is a piece of crap when you sell it to them and then bet against it? Do you think they know that?
Blankfein: Again, I don’t know who the ‘they’ is.
http://wallstreetonparade.com/2015/09/goldman-sachs-beats-another-fraud-...
FUK U, FANBOIZ!!!!!! BASTARDS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
I heard the best way to trap millennials in a pen is to place any apple device in the center and build a pen around them. They are sluggish and stay transfixed for hours and even line up for the captive bolts.
That kind of applies to any of the useless shit that's so popular nowadays......
"Apple’s success in the past year with the iPhone 6 has been so spectacular that it’s hard not to assume it will go on"
No, not really. It's easy to imagine it not going on. Once Apple finally bowed to consumer demand and built a larger phone there s no other place to go for growth. Sure they can improve around the edges with a better camera and force touch, but they are really going to have to do something spectacular and disruptive to continue growth. Unfortunately for Apple they have a wallstreet dick sucking asshole for a CEO instead of a visionary to drive innovation. Apple is the new Microsoft..
As I listen to this live event it sounds like there's no passion about their product. It sounds like they are just repeating what they have said in the past. "This is like no other iPHone before"....., I certainly hope so asshole, why else would a person buy one if it's the same?
Apple has a lot of room to expand its laptop and desktop sales in the corporate market. They haven't tried to compete in that space yet.
The thrill is gone
https://www.youtube.com/watch?v=oica5jG7FpU
Took ipad and made it bigger. Now that's innovation.
And the price grew by the same ... $799 in an economy of more taxes, less pay. Please child. People will be happy enough to keep their older IPads.
The real cost is the difference between $799 and whatever your old iPad will fetch on eBay. Same with the phones - the second-hand market is fairly liquid.
Oh goodie...AAPL invented the MaxiPad !!!
Nokia has been rising from ashes lately...
Nokia has divested itself of all mobile phone handset (and mapping) business. They're just a network equipment company now. Any handsets you see with Nokia badges from this point on are just rebadged Foxconn generic devices.
As the article says, handsets are commodity items now, it's a thin margin business.
Apples margins are on accessories and memory.
These phones still have 16gb to start. The same entry for a flagship as 5 years ago and not enough to take 12mp pictures and use new apps. So they sell the next useable memory at 64gb to add $100. The difference is just pennies now that ssd storage prices came down
It's a business model that works for the fast food industry - break even on the burger, and make your profit on the carbonated sugar water.
Lets hope not, wouldn't want the sale of suicide nets to drop.
Death to the Apple Toy Store!
Die Apple! Die!
Give our childrens brains back! Damd drug pushers.
Apple TV Siri? Siri sucks so bad i don't even know where to start. The last time I used it I asked what is a good cuban restaurant near my house and it responded by calling some unknown phone number.
I recently saw a video explaining to (suckers) investors how they could basically PRINT MONEY by selling uncovered puts on blue-chip stocks. Like, for example (straight from the video) you sell 1 AAPL 125 put, and you put $488 in the bank, free and clear. How could you go wrong? And in the unlikely event AAPL goes below 125, well, no problem, you just buy the 100 shares of AAPL to cover your position, because who wouldn't want to own shares of Apple, anyway.
And they say nobody ever rings a bell at the top....
Apple fanboys are hilarious, they remind me of Scientologists.
Apple should lobby to allow consumers to buy iPhones and iPads with their EBT cards.
Apple will have to purchase fleets of motorized mobility scooters for every iStore. Hoveround stock will soar!
It seems they already have in a sense -- every other person at Walmart paying with an EBT card has an iTard device in their other hand. EBT pays for the food so they can spend their discretionary income on toys.
It figures a gay dude would get excited about a pencil.
The new iPhone is a gay changer!
Cramer and the Fast Money guys apparently own 800,000,000 shares. I always wait to see what they say about important stuff like this. One of the Fast Money chaps recently went long 25,000 Dec 145 calls. At least that's what I overheard him bragging about at a local bar to a dazed and confused foreign exchange student with about 25 pounds of makeup on. I didn't know what it meant so I emailed Cramer's show when I got home.
Meant he had somewhere north of $250K that he was looking to give away, and felt that the options market makers were the most deserving recipients.
Have a 5 year old phone, works OK, does what I need. I can't believe the Apple iArmy who have to have every new fucking gimmick Apple pukes up.
I have a cell phone that I pay $20 a month for. It has 6000 minutes on it now and most of the time I cant find the damd thing.
Careful rayciss Apple haters. Saying disparaging things about the chosen company will get you branded as an unpatriotic terrorist. And don't even think of shorting or selling the chosen stock symbol.
I just saw that the Apple Pencil (please, don't call it a stylus) is going to cost $99.
Personally, I don't want an Apple Pencil, so I'm going to wait for the upgraded iPencil 2.5s.
Please dont forget about 999$ iEraser
...or the iDildo
I am buying that 13 inch ipad as a coffee table! can't wait
Apple can survive a while, much like Nintendo has. They have a trillion dollars liquid don't they? Ultimately they'll fall but they'll power their way for a while.
Then Google will buy them out and take over all those resources.
The stylus was just too much for the market to handle...total flush out.
Definitely not since ZH is predicting it.
99$ stylus... It's interesting when russian "opposition"'ll loose all money because off fuckin' stylus.
So much apple hate, people won't be happy until the entire tech sector is a google monopoly.
The same company that helped elect Barry for another 4 years.
You would figure you people here at zerojew would want some competition to counter the google goliath, but nooooo.
Apple is not tech; their racket is "protecting" their customers from tech.
Fuck Joogle too. Fuckin' kikes!
HELP!!!
Smart phones are becoming as boring as PCs. Until they come up with a satellite-array-based worldwide wireless Internet accessible from anywhere including remote areas, they'll remain that way and I don't see anything that would significantly increase their usefulness or be considered revolutionary.
Until then, it's just hardware performance increases and lower prices just as with PCs. Boring. The problem with that for hardware manufacturers is that people eventually end up with a device they like which does everything they want or need and they then don't want to spend more money on something new just because it's new.
https://www.youtube.com/watch?v=uEY58fiSK8E
guess including Apple in the Dow was not their best plan....
So many insightful comments regarding the thesis of the article.
We don't need theses and shit; we know that Apple sucks, and their product lines are overhyped and unsustainable. This article could have been 10 words long. :)
Legit.
:)
why are they calling a Stylus a Pencil and there's already a $50 pressure-sensitive stylus made for the paper app in the apple universe... their sport watch that you can't go swimming with seems outright brilliant compared to this $99 prostate tickler they just introduced.
+1 for the term 'prostate tickler'.
wrg
Getting prepped. Not really interested in any apple that I can not eat.
I'm just so in love with Apple anything regardless of what they charge, & I think I'll buy 5 of each device so then I will be so cool! Sigh
But wait, I think I've got an Apple erection, Timmy, oh Timmy
Tim Cook likes it in the bum.
My mother has an iPhone and is on twitter -> Time to short.
It wasn't other smartphones that helped subsidize people paying $200 for a $750 phone, it was people still using flip-phones and bar phones. The monthly charge was always $20 added to your contract for a basic "free" phone. $240 a year for a phone that without contract would cost you $40.
The millions of people still using "dumbphones" subsidized the greedy iPhone customer. Now that smartphones are ubiquitous, there isn't that huge chunk of cash to subsidize the iPhone market.
The competition in the $250-400 unlocked phone space is getting fierce.
Cheap Chinese company BLU mobile just launched a killer phone for the money. 6" QuadHD screen, 24mp camera, etc for $349 http://www.engadget.com/2015/09/08/blu-pure-xl/
Motorola, One+, Xiaomi, Lenovo, BLU, and many others have quality phones matching the iPhone6 for half the price.
Who wants a stylus ... applepencil ? https://www.youtube.com/watch?v=4YY3MSaUqMg
I thought cell phones were making watches obsolete. Then Apple came out with a watch.
This is not a good sign.
iPhucked
Well according to ZH's general sentiment about the markets the past... six years or so, the house of cards is about to fall down on the ground, in a very very near future, and quite hard.
Then I suppose AAPL will be no exception.
Quite the contrary.
So I 'm happy I bought myself a few AAPL put options yesterday, and should be even more in a few weeks from now, if the markets has followed their natural path, at last.
(Now I could also be quite pissed off, if the Big Scheme beats the odds, once again, for a few more months, but I do not believe it will. Not this time).
Apples were to be eaten, not tapped on.
Fuck apple! I hope it goes down in tumultuous flames.
I would pay to see the commie trendies and fucktard hipsters moaning in anguish when their macintosh, or whatever shit they use, turns rotten and stops working.
MOAR I-SHIT THAT PEEPUL DON'T NEED.
i-jumptheshark
https://www.youtube.com/watch?v=t4ZGKI8vpcg
i-jumptheshark
https://www.youtube.com/watch?v=t4ZGKI8vpcg
Same dynamics are starting to take place in Japan as well.
I wonder how things are going for other markets.
My impression is people buy iCr@p because... it is iCr@p...
No Chinese phone maker can change that, unless, maybe, they come up with a phone that costs a lot MORE than an iPhone...