Comment by josteink | Hacker News Reader

Comment by josteink | Hacker News Reader

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I think the problem described in this post is easily explained by information given at the very beginning: His developer friends posting things on twitter from Apple-made devices.

His developer friends is still living in the bubble that Apple is cool, Apple is leading the pack, Apple is the future. They get offended when someone hints the world is not so.

All the stats, you know cold facts, speak the other way though: Apple, or at least iOS, has seriously peaked and the only way is down now. Soon into sub-10% marketshare.

And with such a dismall marketshare, will it be able to hold on to developers? As we've seen with BlackBerry and Windows Phone... What good does the hardware and OS do without a good ecosystem?

Apple's ecosystem is at a risk of starting to fall apart. And if that happens, iOS and related devices, now accounting for more than 50% of Apple's income, risks collapsing too.

Shareholders see this major risk. And they weight this risk against potential for new, revolutionary products in the future. This value proposition is not good.

Amazon on the other hand. Amazon is killing it. In every single field they enter. Nobody can compete with them in any field they decide to enter.

And they just seem to find new fields to enter all the time, and they leverage everything they do as a service they can sell to others who want to achieve the same.

For future value, there's no doubt Amazon is the good bet.

@josteink you have any stats that back up your assertion that iOS is headed "soon into sub 10% marketshare"?

I didn't think so.

Anyway, I think the market is convinced Apple can't grow earnings much any more. And the market is probably right. Law of large numbers has taken effect.

But this notion that iOS is getting crushed and is headed into oblivion is a product of the simplistic "winner take all" mentality. Just because it happened with Windows doesn't mean it happens with mobile - or anything else for that matter.

> @josteink you have any stats that back up your assertion that iOS is headed "soon into sub 10% marketshare"?

Basic extrapolation. You can take the platforms' relative market-share and see if you spot the trend.

Apple's worldwide market-share has plunged from 50% to 14% in just a couple of years [1]. Android's intake on the market has been so aggressive even Apple is having a hard time keeping up.

Now, to be fair, these numbers are for smart-phones only and not for tablets, so the numbers dont represent the full truth. Right now Apple is definitely leading in tablet-space. But that was also the story for iPhone vs Android-phones a few years back. Android-phones were considered sub-par and iPhones the best of breed.

Where are we now though? Apple is considered the laggard and have to keep up with the constant stream of new and better equipped Android phones.

I suspect we we will see the same in tablet-space: After Apple has had the lead for a few years, it will see it's market getting eaten by Android and Apple will have to start playing the game of catch-up once again. Like they've already done with the iPad Mini.

It looks like history is repeating itself. And from these trends, estimating a future sub-10% market-share doesn't seem all that crazy.

[1] http://techcrunch.com/2012/11/02/idc-android-market-share-re...

You both are looking at the problem wrong.

The problem isn't decline. Big corporations benefit from inertia before they see real decline.

The problem is that a competitor grows and expands the pie faster and bigger than your slice.

Your analysis seems to ignore a fundamental number - the Price/Earnings ratio. Looking at a forward PE, which is a number that help drive stock prices, Apple is around 10 and Amazon over 100. No matter what you thing about Apple vs Android, etc, this fundamental valuation number is way out of whack for Amazon. BTW, I hold Amazon stock and think it's a great company.

Forward P/E only looks at expected profit over the next 12 months, which is likely to be very high for Apple, and very low for Amazon. The big question is, what will the situation be in 5, 10, 20 years?

Forward PE is a guess. Amazon has shown it can sell a lot of stuff at a loss. Guess what, so can I. Apple has shown it can sell stuff with huge profits. That was the past. In the future- who knows...

I'm not sure what you are talking about, but the Price:Earnings ratio is not a guess. It is based on past SEC filings. To suggest as much indicates a significant lack of understanding on your part, and I am really not sure what business you have discussing this topic with anybody.

Edit: I realize that Forward P/E is different from P/E, but various analysts use various numbers for Forward P/E, so it is not a definitive metric in the first place.

The comment above spoke about "this fundamental valuation number" regarding FORWARD P/E. Forward P/E is a guess (== varius analysts use various numbes == Almost always wrong sometimes in a major way). That's why I made the comment. I understand perfectly well what P/E is.

EDIT: Companies also manipulate E in various ways so even though P/E is supposedly not as fictitious as forward P/E you also have to be careful with that number.

Amazon on the other hand. Amazon is killing it. In every single field they enter. Nobody can compete with them in any field they decide to enter.

Nobody can compete with them because they are choosing, through their pricing strategy, to make almost no money (relatively speaking). Buying Amazon stock at these valuations is a bet that in the future they will eventually decide to turn some valves to begin diverting floods of profit into their pockets (i.e., your pocket, as a shareholder), or that the stock price itself will be higher in the future for other reasons (i.e., speculation). The big question is whether the mix of "fields they enter" can support profit margins in the future that will be sufficiently large to justify your investment at current prices (low-margin retail vs. cloud services, for example).

Apple, on the other hand, already has those valves wide open, and is gobbling up historic amounts of cash. The mix of fields Apple has entered is well understood; notably, the market wants Apple to define, enter, and dominate new fields, and Apple's opacity in this regard leads to much gnashing of teeth and rending of garments. At the same time, would the market also prefer that Apple close those valves a bit (make less money to buy marketshare and customers)? Apple is so big and so widely held that there's a large cohort ready to believe any particular strategy is the wrong one.

Agreed on a lot of your points. After owning Apple stock for several years, I'm considering selling it now.

It looks to investors that Apple has run out of ideas, or don't have the design instincts Jobs did and their well has run dry. Sure they've introduced smaller versions of existing products, but where is the next Apple product which is going to make waves and disrupt industries like their other products?? The investors haven't heard anything, and I think Wall Street is getting itchy about the long term prospects of a company whose product ideas seem to have evaporated when Jobs passed away in October of 2011.

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