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Comment by LnxPrgr3 | Hacker News Reader

Interesting thoughts, but I'm confused: how exactly is Apple going wrong here? Despite their sky-high margins, they're finding enough customers to rake in record-breaking earnings. New products are often hard to find in stock: even iMac demand still outstrips supply. Samsung actually ran commercials mocking supposedly stereotypical Apple customer loyalty.

How is Apple hurting exactly? What are the symptoms of their failure to go after the low end market? From here, it looks like their big ailment is not making money as much faster than everyone else as some people would like.

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The only market in which Apple enjoys a healthy phone market share now is the U.S. and I strongly suspect that is largely a product of the carrier subsidy model. If people had to pay the full price of a phone upfront I'm sure a lot of iPhone buyers would opt for cheaper alternatives. Any company that's growing should post "record-breaking" earnings every quarter.

Luckily for Apple the U.S. market is also by far the most lucrative, at least for now.

Australia is a market where Apple holds a healthy phone market share and has both subsidised and unsubsidised iPhones available. Anecdotally, people who can afford get it outright and those that can't take the 2 year carrier contract.

Even there Android has overtaken iOS from next to nothing in just two years: http://www.theage.com.au/digital-life/mobiles/android-overta...

Remove the subsidies and I think you'd see an even greater tilt to Android.

And "triple digits" growth in China. And premium resselers going from 200 to 400 in China. And 2.5x increase of iPhone points of sales.

And, as of last month, in 6th place behind Huwei:

http://www.dailytech.com/Apple+Falls+to+6th+Place+in+Chinas+...

But really it's the Apple apologists that keep saying nothing is wrong that are doing the most harm. If you care about Apple then you should be doing what you can to help put a boot up their backside.

You purposefully chose a link from Dec. 5th, way before earnings and when everyone was speculating on AAPL numbers. Choose any of the articles about AAPL and China after 1/23, like say this one, and things aren't as bad as you keep trying to make them:

http://online.wsj.com/article/SB1000142412788732353980457826...

Your posts were erroneous, so people corrected you. That doesn't make them apologists.

The iPhone has a huge portion of the Japanese market. Just glancing around the train right now I see about 75% iPhones.

I think that Apple could reduce iPhone pricing to close to iPod Touch pricing if they wanted to. My suspicion is that the high price of unlocked iPhones is a concession to carriers.

I'm sorry, but almost everything you wrote is wrong.

Take Europe. The ratio of Android:iPhone may be higher in Europe than in the US, but it's still a MASSIVE share. And people are still extremely defensive if they've got anything but an iPhone here in the UK.

The European models also have carrier subsidy on ALL monthly contract phones, not just iPhones. Generally only poor people have pay-as-you-go.

It's not as if there aren't regular articles on here about the ratios of iPhones to Androids in all markets.

It's slightly confusing that you could believe any of what you wrote.

BTW, you're also wrong about any company that's growing should post "record-breaking" earnings. Earning are profits. Growing companies often post losses. It's not turnover.

It's worth noting that carrier subsidy system in the USA seem to be much sillier than you get elsewhere. It's a fair hypothesis that this is part of the reason Apple does better there. (Though of course, historically they were always much bigger in the US on desktop as well)

Luckily for us actual facts exist instead of baseless opinions.

http://techcrunch.com/2013/01/22/kantar-iphones-top-seller-i...

I wouldn't call the US their only healthy market.

Ok two markets, U.S. and Japan. From the same article:

In markets where Android is leading, it is consolidating its lead, accounting for over half of all smartphone sales in the 12 weeks ending December 23.

Doesn't sound like something Apple fans should be cheering about to me. Personally I'm not anti-Apple. I'd just like to see them get back to making interesting new stuff instead of polishing what they already have and suing everybody.

I've seen the exact opposite iOS vs Android numbers for Japan though I have no theory on why there is the discrepancy. And it's worth noting that the fancy phones a lot of people have in Japan don't count as "smartphones" so only 25% of people have "smartphones" vs 40-50-60% of the market in other nations, in other words there's more scope for these numbers to change (in either direction), assuming the Japanese move to "smartphones" en masse.

http://news.cnet.com/8301-1035_3-57497144-94/android-apple-t...

They're hurting because their super high profits and margins have attracted an amazing array of competition and left them plenty of room to get a toe in the water. The fear is they're going to go from being the absolute leader in this space in terms of volumes, margins and profits to a smaller bit player. There is a sense that history is repeating itself.

Maybe things have changed in the last several months, but:

"94.2% of iPhone users plan to buy an iPhone for their next phone, improving upon last year's rate of 93%."

"Android phones were measured at a re-buy rate of 60%, up from 47% last year."

(Source: http://tech.fortune.cnn.com/2012/07/17/piper-jaffray-80-mill...)

"Delving deeper into the retention and user metrics, iPhone and iPad users are 52% more loyal to their apps than Android users. A healthy 35% of Apple iOS users launched an app more than 10 times after downloading, compared to 23% of Android users."

(Source: http://www.localytics.com/blog/2012/app-user-loyalty-increas...)

"Google paid App devs approximately $320 million through end of January. At that time Apple reported it had paid out $4 billion."

(Source: https://twitter.com/asymco/status/199127829550612481)

I'm finding conflicting numbers on mobile browser share, but none of them are making the iPhone look particularly weak either.

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I see two scenarios that could theoretically actually hurt Apple (not just in a slowed growth kind of way, but by actually causing their revenue to fall): iPhone users ditch the platform for something else they like better, or another platform becomes more lucrative to develop for, causing developers to abandon the iOS App Store and leading users to abandon the iPhone over the lack of new and updated apps.

From the bits of data I can dig up, that doesn't look like a terribly immediate threat: iPhone users are still ridiculously loyal to the platform and still far more willing to spend money on apps. Some of this is old data and things change quickly, so life could be worse for Apple than I realize.

That said, the closest things I could find to reasons to worry: Android users do seem to be becoming increasingly happy with their phones, or at least the platform, and they're downloading apps at a rate approaching what Apple's App Store sees, even if it hasn't led to the same developer revenues iOS produces yet. Apple's dominance profit-wise is far from guaranteed, and Android is a legitimate threat that could eventually bring down the empire.

I'm having a hard time believing Apple's hurting at the moment though in any way besides a drop in share price. Revenue is healthy and growing. iPhone sales are healthy and growing. Profit is healthy if a bit stagnant. (Ironically enough, it's a decline in margins hurting Apple right now, not sales.) iPhone users seem to like their phones enough to buy upgrades, and to buy and use apps on them, and Apple is still winning new converts.

If this is what hurting is, Apple sure makes hurting look attractive.

"...They're hurting because..."

Wow.

Just to be clear, we are talking about Apple right?

Pay attention to context: the poster is responding to the grandparent's question of "How is Apple hurting exactly". Any response besides a straight denial would take the form "they're hurting because..."

From the article, the argument isn't that Apple is hurting, but it's market position is weak against newcomers because there are many vectors to compete on. While it holds a very strong position now, it's very conceivable that some brand can come up and compete on all aspects of design, quality and price.

Amazon then, can be considered to have a more stable position because newcomers cannot beat them on price, but merely match them.

Can you source your record-breaking earnings statement? From what I've seen they seem to be kind of stagnant.

`The firm matched last year’s net profit figure at $13.1 billion.` [1]

[1]http://www.washingtonpost.com/business/technology/apple-face...

If this is correct, then it is technically record breaking:

"Apple just announced its Q1 2013 earnings, and the company posted a record $13.1b profit on a record $54.5b in revenue. That's just over last year's record of $13.06b profit on $46.33b in revenue at this time last year, and well over the $8.2b profit on $36 billion in revenue in the last quarter."

http://www.theverge.com/2013/1/23/3908330/apple-q1-2013-earn...

$13.1 > $13.06 but just a bit.

Last year had an extra week. So per-week profit is higher (which is what should matter).

This can't be overstated and I am loathe to admit it but I have a feeling that a large part of the panic today was the fact that it was widely reported that Apple's earnings were "flat" year over year. They weren't, they were up by about 7%, which isn't stellar but is a far cry from flat.

Last year they were record breaking.

`Apple reported record-breaking net profits for the three months to 31 December 2011 of $13.06bn (£8.36bn), up 118% from the same period in 2010.` - http://www.bbc.co.uk/news/business-16712089

I don't think they're going wrong - its just a different model to Amazon's.

If you pare back the reason why Apple is a profit leader in the markets it sells to, you might come up with design, quality and brand. In the end the competitors can eventually catch up on design and quality. But brand is something that's build over a long time, and takes a long time to change.

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