Apple's Shares Swallow Biggest Loss in Four Years
reuters.com
reuters.com
It seems pretty clear the iPhone has peaked, and that leaves Apple the iPad its only remaining mega-profitable venture. A venture increasingly facing competition from much cheaper Android-devices, which people are now buying.
Apple needs to get back into the innovating business as opposed to the lawsuit-business and quick. This minor drop is just a warning about that.
http://www.techinasia.com/android-market-share-china-2012/
Plus, it sounds very unlikely the investors sold their stock because China Mobile chose Lumia 920. It's just another phone like many others on China Mobile, and it's not like it's Nokia's first sale in China. What they would be more concerned about is that Apple is not going to get the deal with China Mobile at all, or not in a very profitable way, after China Mobile has already made it clear in the press that they don't care much for Apple's demands.
Apple has learned to get its way with charging carriers the full $650 retail price for iPhones (which are $200 worth of components), and I think some carriers are going to have enough of it soon, and start asking Apple to give them discounts for volume, just like they do with every other manufacturer.
I am continually amazed by people who quote these figures as if they say anything meaningful. Apple doesn't compete in 2/3 of "the smartphone market" by their own choice. By choice. If Apple thought "global smartphone market share" was all important they would probably sell a phone that's cheaper than $400 pre-subsidy. They don't. By choice. Apple has made the radical decision to voluntarily take a 0% market share of the extremely large sub-$400 pre-subsidy smartphone market. On purpose.
"It seems pretty clear the iPhone has peaked,"
I don't think this is clear at all.
http://www.google.com/trends/explore#q=iphone%2C%20android%2...
Apple's trajectory looks nothing like Blackberry and Nokia, two brands that clearly peaked in recent years.
"Apple needs to get back into the innovating business as opposed to the lawsuit-business and quick. This minor drop is just a warning about that."
Was the stock market very excited about Apple's lawsuits before as they skyrocketed over the last couple years? Trying to read morality into the stock market is a losing proposition.
Supply chain problems? Sure. Stale products? Possibly. Demand dropping? Maybe. Samsung destroying them in sales? Definitely. Tim Cook? Not helping. Ran out of ideas? Haven't really anything but refreshes. iPhone 5S in June? Going to be nothing special.
I think the market is waking up, consumers still have a ways to go but they'll get there...
Yeah, actually, it is. I've heard they're still having supply chain problems with the iPhone 5. If true, that means that they've made some fairly serious mistakes that they haven't made before.
Pretty sure they have had "supply chain issues" with every single iteration of the iphone and ipad.
Two months. Let's see how the Spring 2013 ipad was doing two months in.
http://www.slashgear.com/apple-new-ipad-supply-situation-eas...
It also really bears mentioning that Apple used to roll out globally over 3-4 quarters to manage supply. This time they pretty much did the whole world in one quarter. There's some interesting discussion that this presages a new standard 6 month release cycle.
They market themselfes as uber-user-friendly. But thats not the feeling I get from their devices. I often feel frustrated by my ipad. Examples:
* I was on holiday in a hotel. Before leaving in the morning I looked up the road map of the local subway stations. They had a nice PDF so I wanted to save it. I didnt find a menu entry for that. I thought "Whats going on here? Where do you hide something as simple as the save command, Apple? I dont have time for searching!". In a hurry, I went to the internet for help and Googled "ipad save pdf". Answer: You cannot do it. What the fuck? You sell me a computer and then you dont allow me to save files on it? A real pain for no reason. I grabbed my android phone from my pocket, saved the PDF and was ready to go.
* Some days ago. I went out for lunch with a friend and wanted to show her a couple of photos I recently made. So I plugged my ipad into my notebook with the usb cable to copy the photos over. When I dragged the photos onto the ipad i got "action not supported". What? I got a strange feeling... googled "copy photos to ipad". And again... not possible. Is this a joke? Ok, so started a webserver on my notebook and then copied one by one in Safari.
Yes, I probably could achieve those actions with additional software. Itunes on my other machines and some apps on my ipad. But I dont want to. I dont feel comfortable with that. I have certain expectations about the basic functions of a computer. I have enough other tablets, phones and notebooks laying around.
* Development. Last year I hired a programmer to write a special tablet software for me. When we planned to go ios or android, from what I understood with ios you have to jump through a lot of hoops to get the software on your tablet. While on android you can just get an apk file and run it. So it was a no brainer to go with android. And it worked like a charm.
I heard similar stories from people who wanted to copy mp3s over to their ios devices. And from people who wanted to use their iphones for tethering. I told them "Well, on my android, theres a button for that. It must be on your iphone somewhere too". Just to find out, that even the iphone hardware would support it, there is no software for it built in.
Can that work? Artificially reducing the usefulness of your own product? Even though the competition is offering fully functional products?
Are there any historical examples?
Because that is extremely intuitive. I can see Apple patenting this right away.
Either you think that users should be able to save any files they want to their devices (and move them to other devices), or you don't.
Personally, I wouldn't accept this even if iBooks was preinstalled. There are so many other file types that you just cannot move/save.
For saving pictures, any image retrieval app works. For macs, Image Capture is standard and it will take images off any phone. The iPhone/iPad is recognized as a digital camera when plugged into a computer.
It wasn't quite real-time for the first couple months, and I had a few situations in which pictures took a while to sync up - definitely was not as reliable as Dropbox - but, since late october - I haven't had a failed sync. I do it 2-3 times a day, it's how I get pictures onto my Mac when I'm doing documentation. It took them a while, but Apple finally nailed the "How do I get pictures on/off my phone/Mac/Ipad" - would have probably been done a couple years earlier if they had managed to acquire Dropbox.
For the pictures, see the "install software" part of my post.
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I'm a huge fan of Apple but even I would start to question the wisdom of the iPhone 5 costing 649 $ (unlocked) vs a very capable & well-specced 349 $ Nexus 4. The same could be said about the iPad Mini & the Nexus 7. It's not the Apple products have lost any of their shine, it's that Nexus Devices have gotten a lot better.
Google's OS is getting polished by the day (Google Now's today update) & is slowly but surely eroding the advantage Apple once had in mobile OSes. WallStreet is expecting those margins to compress & that's affecting their valuation.
Source: http://www.knowyourmobile.com/blog/1666557/google_said_to_be...
Now, as far as GOOG selling their tables at cost. It's because Google is not a hardware company & does not expect their margins to come from devices. If you step back a little to contemplate the entirety of their business plan, you'll see that the see devices as conduits for their services & that's where their profits comes from, ad impressions.So, the fact they're selling their devices to break-even is only a piece of the puzzle.
Lately I had to think about PGs essay "Microsoft is Dead". And I think the same is happening to Apple. Imho that's a good thing for consumers, developers and even Apple.
Previous discussions:
"“At this point, the most plausible explanation is not very reassuring. It seems that COR Clearing is increasing Apple’s margin requirements to 60% from 30% due to excessive concentration,” Santos writes. “This is supposedly leading to mechanical selling to re-establish maintenance margins of leveraged traders.”
From a comment on VentureBeat that seems very plausible for a drop:
The reason why Apple sold off today is that clearing firms are raising their margin requirements for positions due to fears of being too heavily concentrated in the company. One firm, COR Clearing, raised its margin requirement to 60% from 30%. Doubts regarding their current and upcoming product lines have already been priced in for weeks; this price movement seen today was the result of advanced algorithms scanning the news and executing trades, and investors who traded on margin selling shares to meet the new requirements, all of which put heavy downward pressure on the stock.
http://venturebeat.com/2012/12/05/aapl-sheds-a-yahoo-yelp-an...
Those earnings largely depend on the ability to sell iPhones for $700-750 each, including carrier subsidy. Google just proved they could sell the Nexus 4 for $299 unlocked without subsidy. How much longer can Apple expect the carriers to play that game? At $500 each or even $400 Apple would be enormously profitable but maybe not biggest-market-cap-in-the-world profitable.
That means that carriers have less and less incentive to care about whether or not Apple walks away from the negotiating table if they ask for lower prices.
Apple will still have the diehard fans who are willing to buy unsubsidised directly, if the iPhone market share dips low enough that carriers see the iPhone as optional enough that they feel they can afford to lose it, Apple will have to choose reductions in sales or lower prices.
That's an unfair comparison. Google doesn't directly make money off of Android. A better comparison would be Apple to any other single Android manufacturer.
If more people are going to buy Android phones, then less people are going to buy Apple. It means less people getting locked into their eco system. That is not good for their future.
So you sell off your shares and take whatever you can get from them.
Just thinking about it recently, and I'm surprised that they manage expectations before the launch a little better. Most people were expecting a jaw dropping new phone.
Instead they got the i5 and Tim Cook.
I suspect if it was Jobs they would have got the i5 but along with : "I spend a lot of time on my devices just listening. And you know how much you pay for good sound? So we made these amazing, beautiful and cochlear perfect (tm) headphones which are world standard, and only @ 25. This is why Apple is the cross roads of liberal arts and Tech."
And then apple would have made a killing on selling overpriced head phones with a 400% profit margin, while everyone ignores the Meh-ness of the phone itself.
This is what people said about Nokia when the iPhone came along.
Now Apple needs to realize that Android has come along, and it's not going to go away.