Comment by curiousjorge | Hacker News Reader

Comment by curiousjorge | Hacker News Reader

https://www.estimize.com/aapl

it's pretty amazing how spot on the estimates are to the actual figures for AAPL compared to other stocks.

The reason it's down is probably because there was no surprise and the numbers came a bit shy of what the estimates were but regardless, I view it as an overreaction.

My long term outlook on iPhone and Apple is positive, they've essentially established a monopoly on the luxury market segment which is always a growing market with fat margins while Samsung is feeling the squeeze from Chinese phone makers undercutting them (http://www.usatoday.com/story/tech/personal/2014/10/07/samsu...), it has a similar tone to giants that have fallen (Motorola, Nokia failed to stay relevant after increased market entrants that ate into their margins). Samsung's immediate response will be to continue to spend big bucks on R&D since they can't copy Apple anymore while nothing stops Chinese companies from copying Samsung (as Korean conglomerates behave ruthlessly on it's home turf, so do the Chinese) and reaping the benefits of piggybacking. Also growing wages and demand for increased social welfare in Korea evidenced by the foul cry over the recent merger of Samsung's holding companies, screwing over it's investors and seriously putting a smear on South Korea's corporate governance, market trust is low (message is clear, if you invest in Korea, you can't fight the powerful conglomerate families or the government which share the same bed, see Morningstar) from the failure of government to lay down the law (so much for President Park's promise to reign in the Chaebols or conglomerate families).

The downfall of Samsung might play right into Apple's hands if they launch a surprise attack and release a phone in this segment with cheaper hardware but with the same good software.

Considering Samsung has a repeated history of copying market innovators, undercutting to win significant market share, and dragging out the legal process until finally settling, failure to break into the luxury market will be the downfall for Samsung's phones in an increasingly decreasing margin game.

All of this is great for Apple.

edit: Someone accuses me of being an Apple fanboy when I'm an Android user happy with his Motorola phone, I don't see why that changes anything. Sent from my Android phone.

I feel that for a lot of people, cheaper Android makes like Xianomi are just stepping stones until they have the cash to buy Apple

That's a good position to be in for any company.

IMHO there is an incentive for wall st to be a bit cautious on their estimates (better to beat, then everyone is happy, vs a miss in which a huge pullback occurs and the analysts are questioned). There is not the same incentive on estimize. 9/10 estimize's estimates are slightly higher than the street, which more often than not is correct.

Apple has moved from traditional tech to consumer devices.

College kids may one day decide Apple is not cool.

Maybe but they've executed a great vendor lock in strategy for kids. Apple Purchases are shared with child accounts as is Family Sharing in Apple Music. Transition costs are going to be very high for those that are part of the "iPad mini is my first computer" generation.

Are college kids driving that market or are you just making an assumption?

College kids are the arbiters of cool.

The fact you believe this shows you that you should really stop acting like you understand what is cool. The correct answer would have been that each age demographic has its own culture and trends. And even more so people aren't caring what other groups think or do.

Just standard trolling about how Apple's success is transitory, without merit, and due to people finding them "cool" for no rational reason.

(I'll bite)

Consider this : http://finviz.com/map.ashx?t=sec (finviz: a heatmap visualization of the stock market )

Note that Apple is in "Consumer Goods", not "Technology".

At least one market analyst thinks their competitors are Proctor & Gamble and Coca Cola.

People say Apple is a tech company or a toys for millenials company, but I claim that fundamentally Apple is a user experience company (maybe the only one).

They dominate because Steve Jobs realized what business they're in, and none of their competitors have. This is like when the railroads' lunch was eaten by the tractor trailer because the railroads thought they were rail companies, when in fact they were transportation companies. Samsung and all the other competitors think they're in the device business, but they're not. They're in the UX business.

It helps to have Steve Jobs, who was actually a user experience zealot and in a normal org would have been the CUXO, masquerading as a CEO. As an example, think of the difference between being an Apple vs. Samsung customer, all the way through the value chain. Shopping in that beautiful airy Apple store, experiencing those matte textures and ingenious packaging while unboxing your new devices, the industrial design wizardry that constructed a machine with such amazing fit and finish and tight panel gaps and textures, software that (sometimes, mostly) just works.

Jobs was a strong enough leader to make a bunch of mostly-orthogonal disciplines (e.g. manufacturing, industrial design, software engineering, packaging design) subservient to the company's ultimate objective, which is UX. It doesn't hurt that Apple tends to execute best-in-class on each of these axes, but that's tactics not strategy.

The big question for the future is whether Tim Cook understands this. It's left as an exercise for the reader whether the Apple watch is a product made by a UX company or by a company intent on duplicating the financial success of the ipad and iphone by cargo-culting the "create new device class" methods that worked before.

The whole apple worship thing is kind of creepy to me.

Sorry.

(edit: go ahead fanboys, I got lots of karma for next time. go ahead and down vote my previous threads while your at it.)

GP here: Don't get me wrong, I would rather see out-of-the-box Linux win in the laptop market and I strongly dislike walled gardens (mobile and otherwise) on philosophical grounds. But that doesn't stop me from hypothesizing about why Apple is making a boatload of money.

>(edit: go ahead fanboys, I got lots of karma for next time. go ahead and down vote my previous threads while your at it.)

now that is creepy.

I'm not even an Apple user but it doesn't mean I can't analyze and form my own opinions. So your argument here is moot that there's a massive conspiracy of Apple lovers downvoting your comment. I certainly am not a fan of Apple but you gotta give credit where it's due, it's headed to be the first trillion dollar company this year or the next so I pay attention.

And I can't downvote anyone since I'm a mere peasant with under 300 karma points.

I think this is a very good insight. UX is a huge differentiator. In the early to mid years of Android, Apple had no real competition. Although I have some qualms about Material UI designs (why does it lag when I press ON and OFF? why does it look and feel like dreamy cotton candy world?), the UX has gotten considerably good on the Android due to faster and cheaper phones. However, I do agree that Jobs absolutely nailed it with UX and focus on that area (much like how luxury car brands focus on the little things).

My answer to your exercise is that Tim Cook indeed tried to duplicate the same formula to a new device. Some problems are that there is such a small screen real estate, the UX would need a different approach. Another is market fit for the demographic that are into luxury. Would wearing the apple watch make you look cheap and "techie" or send other unintentional messages about you? The people who wear watch these days seems to be those that wants to flaunt their 100k Rolex or older generation. I remember people stopped wearing watches when cell phones displayed time, (I never wore one, I relied on my internal clock), an entire generation might have never wore a watch before, could the apple watch end up like the iPad where people first buy it out of curiosity and nobody bothers with it afterwards? Who knows but Apple will have enough cash to screw up several times now (if they do reach trillion dollar market cap). If Tim does make the Apple Watch a success, it would be huge for Apple. You just convinced your loyal iPhone buyer they need a watch now too. Experience and lessons gained with Apple Watch could lead to more wearables, maybe we'll see Tim do his take on the Google Glasses.

i wish they would make databases and webservers and cacheing proxies and clustering tools and distributed filesystems or something like that. the ux on android, windows phones , symbian, etc are all plenty good already.

UX and ecosystem, which includes the software, services, content, and work of other users. The hardware is a key into the walled garden.

Apple's biggest asset is the fact that it's the only computer company to care about UX. All other companies try to sell computers as if they're engineering or business tools designed for engineers or business people.

So you'll often get a load of crap and bloatware which is only really there to underline the fact that a lot of engineering has happened. (It's like Japanese hifi which always has something like "SuperDynamic Extra Bitwidth HyperTechnology" on the front somewhere, so you can tell it's not just another generic amp, or something.)

Only Apple tries to sell computers to non-technical people.

Nokia would have done the same thing if they'd moved into the computer market, but they didn't. They got very close with phones, but Nokia were never run by a dictator, so the culture was too unstructured and chaotic to really nail it.

Microsoft tried it with Win 8 but got it unbelievably, insanely wrong, mostly by thinking all you have to do is dumb down the UI and add really loud colours. (Clue: no.)

Unfortunately I think the plot has been lost with Watch, which is a lifestyle product whose only real point is to be a lifestyle product.

Unlike everything else Apple has made, it's not obviously useful and trying to be beautiful - it's trying to be beautiful, because Apple.

I hope that's not the beginning of a trend. Maybe a serious use case will appear, but it's clearly not doing it for the market yet.

I agree with yours & the parent argument very much. I feel like the Watch could usher in Security/Identity features, that no other consumer device is capable of.

Imagine not having to carry your Company ID card, your credit/debit/loyalty/gym card or any home/car/locker keys or your insurance/drivers license whatsoever for the rest of your life.

This combine with tracking your health, could be its USP.

As the hardware evolves (in 2 years - where its hopefully independent of your Phone), all you need is your watch to go to the gym, or take your dog for a walk.

Iteration/Execution is key, of course. As long as Apple realizes its more important to fix bugs & not keep adding broken features to more broken features (like Apple Music & iTunes 12.2 - which have been horrible IMHO) they should have enough of a user base to make the Watch a household product like the Phone.

UX is more than UI. Apple's UI design is still the best, but the judgment on consumer needs and product integration is gone with Steve Jobs. A brash and creative genius like Jobs has no chance climbing the corporate ladder. Has to start his own company. My guess is Apple will continue to be financially successful, but the best days are over.

a bit off topic but in my security analysis course long time ago, I remember a professor telling a story of a hedge fund that blew up because they relied excessively on such viz heatmaps and other fancy graphics to base their trading theories. It's pretty but it doesn't really show the underlying intrinsic core business. Like the other commenter replied, apple realized early UX is key to establishing luxury brand whereas the rest thought it was about having faster and better hardware for cheap and innovated their way out of existence (motorola, nokia).

I'm sorry that viz maps caused a hedge fund to fail.

Good reason to stick to index funds.

why would you be sorry? I'm just illustrating the pitfalls of relying excessively on visualization diagrams and graphs to form unsound insights.

Index outperforms vast majority of money managers but that's a whole other topic.

On an infinite timescale, that analysis will be correct ;)

God, I wish I could listen to Siracusa talk about Tech more than those 1:30 hours, that he does every week.

Yes yes so much yes.

FWIW he does a podcast with Merlin now, called Irreconcilable Differences, but it's not primarily about tech.

This cool factor has always been largely nonsense.

College kids may buy an iPod based on it being cool but they sure as hell aren't going to spend thousands on a iPhone, MacBook or iPad based on nothing more than the perceived gain of social status.

The fact is that PC laptops (apart from Surface) are largely cheap junk with bloat ware and questionable antics eg disabling software updates all of the place. Likewise iOS is far more polished, far better supported over the long term and is the primary development platform compared to Android.

History has shown that people won't buy Apple products based on coolness alone eg. Cube, Newton, eMate.

Agreed.

College kids never spend a lot on trying to gain social status.

The saturation point of the smartphone market is near and Apple knows this very well and the novelty factor for their products is diminishing and people are looking for a new thing to experience rather than the old Apple can deliver.

What's with the Samsung bashing on an Apple thread?

Where's evidence of people looking for a new thing to experience? Apple's great power is you know exactly what to expect every time you open the box, even if you have no clue what the product itself is.

Koolaid much or you have skin in the stock market game?

Neither, I'm just asking for evidence that people are moving away from Apple when a) people have been saying the same thing for years and b) the company has only grown in value.

I think you can draw some parallel if you look at the car luxury market, people are more likely to keep buying the brand they like vs. non-luxury market where people are inclined to get the most value for less. Guy purchasing M5 for his daily driver and an M class for his wife isn't probably looking to drive it for the next 20 years vs. a single mom purchasing a van will be driving it for the next decade or so.

Market saturation calls for distinguishing yourself, and it's tougher to do this in the lower end market vs. luxury. Cars are everywhere, yet Ferrari & Lamborghini are constantly finding new customers in emerging markets. This hasn't been easy for the rest who are fighting each other over the average joe. There are so many players on this level and stakes are high especially because the margins are thin. Failing to stay relevant will drive them out. Failing to deliver across the board will not suffice. One reason Hyundai has been so successful here is that they offer a lot more value for the price to the average driver. Today, the brand has improved, car has improved as American cars have. In fact, the industry has improved a great deal because people in this segment is very demanding but without the rewards of high margins a luxury or supercar producer might enjoy.

As your income grows, your taste begins to change, and luxury brands know this very well. Do you really need a button that gives you extra 200 HP on demand? Will embedding diamonds in your dashboard increase km/L? The typical questions a non-luxury buyer will ask won't apply to those that demand the absolute best. One reason might be social hierarchial reasons, if you were a hedge fund manager and you were golfing with your other hedge fund buddies equally looking to impress clients and sell image of success, an Acura isn't just going to cut it.

I really like your rebuttal, it's food for thought but here's my counter-argument to this. You can't really compare the experience you get from driving a certain car to that of a smartphone.

Cars are in a whole new category and there are a lot of tangibles and bells and whistles that symbolize or embody a car brand where in the smartphone world it's all about smoke and mirrors and how to market your overrated stuff as the latest shiny thing to attract as many gullible people as you could to hand you their wallet.

So, no cars can't be compared to consumer electronics in terms of brand loyalty or user experience.

Based on the second quarterly decline in iPad sales, we may have already reached the saturation point in the tablet market.

In some ways, I think people bought a tablet and the time it takes to buy a new one is much longer than a phone. Plus, a lot of people are not doing well yet or in the first part of recovery.

one theory might be that iPhones are publicly visible since you are using it at work and your friends see it (so you are more likely to keep upgrading to show that you have a taste for luxury), where as iPads can't be carried around in public due to it's large size and remains parked at home.

ex. (warning hypothetical stereotypes here that I just thought of) J.A.P. wouldn't want to be caught dead with an old iPhone (what would Samantha think of her now) but might be using an older iPad if it means she can still play Candy Crush at home before bed and tucked away in a drawer.

It is saturated in developed countries so the thing to focus on is upgrade cycles.

Countries like China, however, have a huge growing middle class and represent a ton of opportunity.

The Chinese economy has some problems this year, I wouldn't be surprised if Apple gets hit by that for the rest of the year.

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