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confluence

My dad: Apple just won right?

Me: No - they just lost big time - Apple is done.

Dad: Wait - What? They just won the court case and got a billion dollars to boot.

Me: That doesn't matter - Samsung won.

Dad: Explain.

Me: As soon as you have to sue your competition to remain competitive - you're done. Apple did the same thing with Microsoft in the nineties. Furthermore, Samsung builds not only many of Apple products - it's also leading the charge with the explosive growth of Android - open systems always win in the long run.

Dad: So Apple is done?

Me: Yeah - I sold my Apple stock after this very short case finished up. Funny thing is - the new CEO will be blamed for the fall set up by Steve Jobs - a damn shame if you ask me.

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So what if you are wrong? How long do we have to wait to see if you gave your father an inaccurate reading of the situation?

I mean, I remember a lot of the "Apple is at 90$ a share now, it will go down soon" crowd in the '06 in the Yahoo Finance forum posts and I'd love to see them now and sincerely ask them what were they thinking or why did they reach that conclusion back then.

I'm completely serious. This kind of "its the beginning of the end" prophecies are easy to make because you can always say "wait a little bit longer, it will happen" but other than anecdotal evidence, i don't know what prompt you to say "s soon as you have to sue your competition to remain competitive - you're done". Is this a real thing? No company has remained afloat and well after suing a rival?

Is there no way that Apple might be both suing and at the same time innovating in some other way or on any other markets? Does it have to be one or the other?

Seeing as I bought Apple in 08 I understand your reasoning :D

A few factors lead to my understanding of this situation changing.

1: Mobile saturation - only thing left is more of the same and virtual/augmented reality.

2: Absolute domination of Android and the continual manufacturing dominance of Samsung

3: The move towards commoditizing most consumer electronics thanks to work done by Google and other hardware manufacturers. The iPad was insanely cool when it came out - not so cool when everyone else looks the exact same as you do.

4: Domination of the living room by both Sony and Microsoft - leaving Apple little room for entry.

5: CPU underutilisation - people don't really need to upgrade their computers anymore.

Companies often sue each other, but I doubt the lawsuits are what caused previous companies to fold. Kohler sued Moen on several popular faucet designs that were patented, but I don't see either companies going away any time soon. I can agree with your other factors for argument, but not the lawsuit.

re #2, dominance is an interesting word, and it can mean a few different things.

In terms of percentages of devices in pockets, I believe Android (including all versions) as an OS is doing better than iOS as an OS.

In terms of physical smart phones, I think Apple's phones are in more pockets than any other specific manufacture with their name on the box.

In terms of raw profit in the smartphone industry, Apple dominates.

In terms of people using smartphones like smartphones (downloading apps and using them, actually browsing the internet) instead of like dumbphones (phone calls / txting etc), I believe iOS still dominates (more people use Mobile Safari than they use Android Browser et al).

Manufacturing dominance is an interesting one. Lots of parts for iPhones are made by Samsung, but does that mean Samsung controls iPhone sales? Could Samaung halt iPhone production if they wanted too, or could Apple just go to someone else (with a ramp-up delay presumably).

(I own a Samsung android phone and am happy with it, in case this post comes off pro apple and people wonder about my "allegiances" [because apparently everyone must have one])

> specific manufacture with their name on the box.

Nice little constraint there - Samsung has made the most phones by far.

> raw profit in the smartphone industry, Apple dominates.

Profit really isn't everything and is only important so long as you have a monopoly - afterwards it's all about volume baby! Apple has lost their monopoly on mobile.

> iOS still dominates.

Nope - Android has more activations, downloads and usage than iOS.

I own a Galaxy Nexus.

In terms of raw profit in the smartphone industry, Apple dominates.

Yes, but luxury brands almost never drive any particular market. A lot of the app business these days is about getting an app in front of users as part of some larger business plan and in that world it's the number of eyeballs that count. Once Apple loses that battle then their developer mindshare is going to slide.

You then should have sold your AAPL the day Apple started suing Samsung.

How is the outcome of this particular case affecting your reasoning in any way?

Price wasn't high enough and I wanted to see the outcome and Apple's reaction - would they leave it alone - or double down?

They doubled down.

So instead I sold at 660 instead of ~600 and got my answer.

How high is high enough and the trial has being going on for fucking 18 months. In what unicorn infested world would Apple "leave it alone" and what constitutes "double down"?

AAPL will at least pop briefly in a few hours, seems like you have no problem making a profit on the back of a company you have a ethical disagreement with, can you justify your behavior to not riding the AAPL train further?

660 is high enough. I changed my mind with the Koh case.

Not rational to say the least.

Your prediction is on equally magical ground.

Good luck and have fun.

I got 60% CAGR on AAPL (90-660) and I've pulled 20% CAGR on GOOG (570-670). I will have fun. Check back in a year and see how my prediction pans out.

Big distinction is that Apple lost their big court case with Microsoft in the 90s.

Key point here is suing your competition to remain competitive is an indicator of a coming fall.

Or that losing a key look and feel lawsuit means the competition can copy you without fear, losing your distinctiveness.

I don't think its that black and white but suggesting the lawsuit, and not the lawsuit outcome, is somehow responsible for a company's lack-of-success is silly.

> losing your distinctiveness

You honestly think that is why they lost?

They lost because the stopped trying to compete - and just ran off to "Mommy" government screaming "Microsoft took my toy!" instead of fighting back.

And I didn't sell on outcome - this was a relatively short case - I was just waiting for the market to increase my exit price - 660 - from 600 (http://www.google.com/finance?client=ob&q=NASDAQ:AAPL).

What do you mean, they stopped trying to compete? Are you implying that Jony Ive and Scott Forstall are sitting on their butts right now thinking "good thing we won, we won't have to compete any more?"

What evidence do you have that they've stopped competing? Anyway, maybe you should have waited until the new iPhone and iPad come out before selling your stock.

It's quite simple. If you sue your competition to win - you will lose because the reason for your success is not protecting your IP rights (which can and will be abused as soon as you succeed - relentlessly) - but by making new IP.

Disney rocks not because of Mickey Mouse - it rocks because of Pixar.

Google rocks not because of PageRank - but because of pushing the edge of search and AI.

Tesla rocks not because of the Roadster - but because of the cars yet to come.

What you've done in the past means nothing in intellectual pursuits - it's what you are going to do that matters.

The only places Apple can enter now are to continue trying to grow PC market share and Virtual Reality. Google does both better.

Yes, if you stop innovating, then another company can innovate their way to your marketshare.

No argument there. The argument is that you see initiating a lawsuit as a sign that a company is not innovating.

A lawsuit and a company's ability to innovate are independent variables.

So how does this philosophy square with Google's recently filed lawsuit against Apple via Motorola's patents?

Apple started it - Google is defending both Samsung and it's Android product from the litigiousness of the new Apple.

No. Nokia and Motorola did. If you are going to pontificate, get your facts right.

Go back far enough and someone's father started it - what's your point?

I didn't actively buy Nokia or Motorola for this very reason.

Google acquired Motorola to defend against Apple and Microsoft. They are doing so admirably.

My point is that you are trying, constantly to have the final word in a construct of your making that is based entirely on a fallacy and doing so in an extremely smug manner. To follow your line of thought, with your hubris continuing to grow you will eventually become too cocky and get you next investment increadibly wrong and lose everything in the process.

I disagree with what you say unfortunately - so I guess we should just agree to disagree.

Let's come back to this thread in a few months, shall we?

Judging by the bump in AAPL today, I think you sold too soon.

I don't think it comes down to a simple reason. But I certainly don't think it's because they filed a lawsuit.

You seem to be of the opinion that you can't sue and also innovate. This is obviously false. The engineers arnt being pulled from projects to work on the lawsuit.

All Apple has gained here is an escalation in the patent war. Google's already fired back with their new Motorola patents and this verdict is going to send everybody scrambling back to the market for more patent acquisitions.

In the meantime iOS is looking increasingly long in the tooth and nobody at Apple seems to be willing to take the kinds of chances that won them their success in this market in the first place. It's a classic innovator's dilemma, raising up a new king and then casting him down.

Apple holds on to ideas until it declares yesterday's crown jewel garbage.

Remember the funeral of classic Mac OS?

All will be dead in time.

Apple is the most successful IT company in the world and they are the most profitable in the phone industry and have the greatest market share in the tablet and music player industries. So not sure how you come up with this ludicrous idea that they can't compete.

Also "open systems" always win ? Linux would like a word with you.

Don't you think I know that? I've owned their stock since 08. But the past isn't what matters - but chances for future growth.

Success always comes before the fall - Apple can either stabilise or fall. They will fall.

Linux won - Android is Linux. Consumer electronics are Linux. Servers are Linux. Everything runs on Linux. Microsoft is done.

Google wins. I own Google now.

I wouldn't exactly confuse Google with Linux. They're linked because of Android, but if some company innovated on the search engine front and took Google's monopoly, Google would be in a rough spot.

Linux was winning before Google arrived, and Google still would've won had they used BSD instead. Nobody cares what OS is running underneath google.com

I would then sell Google now then wouldn't I - just like I sold Apple.

but chances for future growth

I find it thoroughly creepy that we define success through growth in a finite world. If a company isn't growing, it's "done".

I realize that isn't quite what you mean, but then you shouldn't write it. The mindset is actively destructive.

Sorry but I'm an investor. Companies need to grow my investment above 11% a year to be worth extra volatility/liquidity/market risks.

Mature companies are like bonds - I don't invest in them because they don't generate enough capital in return for the risks taken.

From an individual perspective that makes sense. That does not change what I said, however.

This is old and beaten ground though, which you are no doubt familiar with. I'll refrain from treading it again.

>I find it thoroughly creepy that we define success through growth in a finite world. //

The current capitalist system revolves around rich people making more money because they are rich - that only works if they invest in companies that can return a [quick] profit.

It is very sad.

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