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(BGR)   Smooth sailing is over for Apple   (bgr.com) divider line 43
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4496 clicks; posted to Business » on 07 Jan 2013 at 10:57 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-01-07 11:16:52 AM
Well, what did you expect? Apple commanded a premium from the carriers for their equipment for a good long while but those days are ending because the other guys have caught up. So apple is going to have to innovate to maintain profitability - same as it ever was.
 
2013-01-07 11:17:15 AM
Really? An empty Apple greenlight? Or is it filled with the half dozen I have on ignore?
 
2013-01-07 11:19:45 AM
"Apple is just going to have to shrink its margins. Any day now... they totally will... you guys just wait..."

This is a repeat of every analyst article ever written about Apple in the past decade.
 
2013-01-07 11:27:40 AM
I won't feel too sorry for them if they lose out because they didn't use their profits towards R&D or buying companies that do R&D.
 
2013-01-07 11:34:25 AM

Makh: I won't feel too sorry for them if they lose out because they didn't use their profits towards R&D or buying companies that do R&D.


Never buy a company that's actively doing R&D. Wait until they have a product that's ready for deployment, then buy them. That's the Apple way, anyway.
 
2013-01-07 11:42:06 AM
This could be interesting.

When Motorola's RAZR phone was the hottest thing on the market, the profits from that device literally carried the company. When those profits dried up, the company was forced to do some major restructuring, with significant layoffs (including me). This ultimately led to the spinoff of the mobile phone business into a separate company, and its sale to Google.

I doubt that Apple is in quite the same situation as Motorola was, but it's possible that they've been using iPhone profits to cushion the less-profitable areas of their business.
 
2013-01-07 11:44:40 AM
Feels like Apple is doing what Microsoft did years ago. Get so far ahead of the competition to the point where they just stop trying anymore and coast off the work they did years and years ago out of arrogance that no one else will catch up. It also doesn't help that Apple doesn't have Steve Jobs anymore. As much as I didn't like the guy, he knew what he was doing.
 
2013-01-07 11:47:54 AM

Cybernetic: I doubt that Apple is in quite the same situation as Motorola was, but it's possible that they've been using iPhone profits to cushion the less-profitable areas of their business.


Pretty much everything Apple does is profitable. The only question is what sort of volume it returns. Apple rapidly cuts products that aren't hitting their profit targets.

lousyskater: As much as I didn't like the guy, he knew what he was doing


Hey, we thought he was gone once, and he came back in 2000. I'm sure he'll be back in a few years, fixing Apple and dining on the blood of the living.
 
2013-01-07 12:07:31 PM
What I would expect from Apple at this point is to be hard at work on the next 'big thing'. They did the iPhone and the iPad and yes, there's a lot more competition for them now. They way they can keep huge margins going is to release the next thing that everyone has to have, even though right now we consumers don't know what that might be.
 
2013-01-07 12:15:22 PM
For all the doom and gloom, keep in mind Apple devices are often seen as status symbols (as in people overpay for exclusivity) and they still get to enjoy that iTunes/App Store revenue as a baseline. I think their profit margin will drop sooner or later as Android continues to flourish and other media vendors (Google, Amazon, etc) take up some of that iTunes revenue.

That said Apple has a lot of cash in their vaults. It's going to take a lot of dumb moves or a bunch of patent trolling gone horrible wrong to put the company in bankruptcy.
 
2013-01-07 12:24:37 PM
Oh look, it's this article again.
 
2013-01-07 12:25:15 PM
Even if their hardware profit margin drops, they'll never have to join Amazon in the "losing money on hardware to get people hooked" business motto (see: Kindle). And they still take in 30% from the most popular App and music stores available for smartphones. I'm not an Apple fan (I hate their patent trolling) but I can't see them in trouble any time soon.
 
2013-01-07 12:29:05 PM

t3knomanser: "Apple is just going to have to shrink its margins. Any day now... they totally will... you guys just wait..."

This is a repeat of every analyst article ever written about Apple in the past decade.


And continues to be wrong ...
 
2013-01-07 12:34:36 PM

ha-ha-guy: For all the doom and gloom, keep in mind Apple devices are often seen as status symbols (as in people overpay for exclusivity) and they still get to enjoy that iTunes/App Store revenue as a baseline. I think their profit margin will drop sooner or later as Android continues to flourish and other media vendors (Google, Amazon, etc) take up some of that iTunes revenue.

That said Apple has a lot of cash in their vaults. It's going to take a lot of dumb moves or a bunch of patent trolling gone horrible wrong to put the company in bankruptcy.


While true at one time, that has not been true for several years now.  Apple devices are everywhere now, and people don't see them as exclusive.

Apple has never fared well without Jobs.  The dude was the soul of the company (a pitch-black, rotten soul), and he knew which way the winds of consumer demand were going to change before they even started to shift.  He had a singular talent, and without him Apple is just another tech company - one that provides very poor value for dollar.  Without a strong leader, Apple will lose (is already losing) momentum and slowly sink back to being a niche player.

Apple is reacting to the market these days, rather than forcing the market to react to them.
 
2013-01-07 12:46:09 PM

Kuroshin: Apple has never fared well without Jobs.  The dude was the soul of the company (a pitch-black, rotten soul), and he knew which way the winds of consumer demand were going to change before they even started to shift.  He had a singular talent, and without him Apple is just another tech company - ...  Without a strong leader, Apple will lose (is already losing) momentum and slowly sink back to being a niche player.

Apple is reacting to the market these days, rather than forcing the market to react to them.


Apple wasn't faring well when Jobs was in charge the first time.  It took him being kicked out to learn actually how to run a company.  And Apple had already lost the OS wars by the time the Mac was introduced.  They were never going to be a major player in that industry.  Although its worth noting they are the only ones outside of PC clones that survived in spite of themselves.

And Apple has strong leaders - the bench is deep within Apple.  And Cook has run the company admirably - keeping operations tight, continuing the product timeline, keeping talent, and is quick to admit and fix mistakes.  Unlike say the idiot who runs Microsoft.

one that provides very poor value for dollar.

The 90s called.  It wants its meme back.

/tired arguments are tired - try providing some real evidence next time around
 
2013-01-07 12:58:40 PM
16 months. I takes Verizon 16 months to break even on an iPhone when they subsidize your price on a new contract.
 
2013-01-07 01:04:12 PM

t3knomanser: This is a repeat of every analyst article ever written about Apple in the past decade.


That's horseshiat. Did you miss the articles from the analysts (last year) saying apple hits $800 by the end of the year? Those articles seem different from this article. By the way, $523 and falling...
 
2013-01-07 01:06:06 PM

Gig103: Even if their hardware profit margin drops, they'll never have to join Amazon in the "losing money on hardware to get people hooked" business motto (see: Kindle). And they still take in 30% from the most popular App and music stores available for smartphones. I'm not an Apple fan (I hate their patent trolling) but I can't see them in trouble any time soon.


True enough so far as it goes, but iTunes and IOS Apps only account for about 5% of their revenue vs. approximately 75% coming from hardware sales (2/3s of which is iphone sales). Any decrease in profit margin for any of their devices, iphone especially, is going to have a much larger impact to their overall bottom line.
 
2013-01-07 01:11:40 PM

ikapoz: Gig103: Even if their hardware profit margin drops, they'll never have to join Amazon in the "losing money on hardware to get people hooked" business motto (see: Kindle). And they still take in 30% from the most popular App and music stores available for smartphones. I'm not an Apple fan (I hate their patent trolling) but I can't see them in trouble any time soon.

True enough so far as it goes, but iTunes and IOS Apps only account for about 5% of their revenue vs. approximately 75% coming from hardware sales (2/3s of which is iphone sales). Any decrease in profit margin for any of their devices, iphone especially, is going to have a much larger impact to their overall bottom line.


Word. Somewhere around half their revenue is iPhone related.
 
2013-01-07 01:14:59 PM

Kuroshin: Apple devices are everywhere now, and people don't see them as exclusive.


Tell that to the Asian market.
 
2013-01-07 01:19:56 PM

ha-ha-guy: Tell that to the Asian market.


Lagging, as is typical, but I see no reason why they won't do what the US and european markets have done, which is erode ios market share as the markets mature.
 
2013-01-07 01:29:43 PM

ikapoz: Gig103: Even if their hardware profit margin drops, they'll never have to join Amazon in the "losing money on hardware to get people hooked" business motto (see: Kindle). And they still take in 30% from the most popular App and music stores available for smartphones. I'm not an Apple fan (I hate their patent trolling) but I can't see them in trouble any time soon.

True enough so far as it goes, but iTunes and IOS Apps only account for about 5% of their revenue vs. approximately 75% coming from hardware sales (2/3s of which is iphone sales). Any decrease in profit margin for any of their devices, iphone especially, is going to have a much larger impact to their overall bottom line.


Ah I didn't realize that, I thought their commission was a larger part of their business model.
 
2013-01-07 01:36:35 PM

Gig103: Ah I didn't realize that, I thought their commission was a larger part of their business model.


Their incredible profits have been driven (among other things but primarily) that they could get a much better deal for their hardware from the carriers than could LG and Samsung Motorola, HTC etc. Now that there are literally dozens of models that many consumers see as the equal or better of apple, that's going to change. It's inevitable. I phones will continue to be profitable. They just won't be AS profitable because the carriers will increasingly be in a much better position to push back on unit price. They couldn't do that when there was only one phone the masses wanted. Now they can. So they will.
 
2013-01-07 01:57:23 PM

JohnBigBootay: ha-ha-guy: Tell that to the Asian market.

Lagging, as is typical, but I see no reason why they won't do what the US and european markets have done, which is erode ios market share as the markets mature.


Asia farking LOVES the iPhone.  AAPL might not make a large a margins as they did in the past but there's no way they do a RIMM job
 
2013-01-07 01:58:02 PM

gingerjet: keeping talent


Off the top of my head: Bertrand Serlet, Ron Johnson, Scott Forstall. All left while Cook was in charge. Coincidence? Perhaps. Forstall might have grown too big for his britches, but Ron Johnson was a rainmaker for the wildly successful retail arm, and Bertrand Serlet was the fattest brain in the company during his time there.
 
2013-01-07 02:04:04 PM

JohnBigBootay: Did you miss the articles from the analysts (last year) saying apple hits $800 by the end of the year?


I did miss those, largely because I try not to pay attention to the mentally ill, and leave their treatment to professionals.
 
2013-01-07 02:04:38 PM
Apparently you can write this same article over and over, and be proven wrong time and time again, and still keep your job.

Frankly, I envy his job security.
 
2013-01-07 02:16:03 PM

relaxitsjustme: Asia farking LOVES the iPhone.


As did the US market.

AAPL might not make a large a margins as they did in the past

They won't. Not on THAT product anyway. Too much quality competition.

but there's no way they do a RIMM job

I can't imagine that even the most boneheaded analyst would predict that. they'll be successful in that space for the foreseeable future.
 
2013-01-07 02:17:20 PM
Nevermind that Apple stock has lost nearly 30% of its value in the past three months. If it were any other company, Wall Street would be hailing them as a dying organization.
 
2013-01-07 02:18:00 PM
Here's To The Lazy Ones
i.i.com.com
/hawt
 
2013-01-07 02:19:00 PM
Apple's decline is inevitable. Companies are like empires; they'll have their moments in the sun to bask in glory, but it never sustains indefinitely.

The mistake a lot of analysts make is assuming that Apple's decline will be an overnight implosion like Enron or Webvan. Apple has enough cash reserves to prop up failure for at least another 20 years; and that's assuming that they decide to take the route of abject failure which they certainly won't.

It's not the same company without Jobs to be sure, but Apple will still be around when we're all in retirement homes. They're not going anywhere any time soon.
 
2013-01-07 02:23:14 PM

dennerman: What I would expect from Apple at this point is to be hard at work on the next 'big thing'. They did the iPhone and the iPad and yes, there's a lot more competition for them now. They way they can keep huge margins going is to release the next thing that everyone has to have, even though right now we consumers don't know what that might be.


from the looks of it, apple doesn't get ahead of the trend, they make it. personal computers, digital music players, smart phones, and tablets have been around long before apple decided to make one. sandisk's "rio", palm/blackberry/winmo 6.5, hell, palm had a touchscreen smart phone with slide out keyboard. but they were all niche markets until apple stepped in. they were laughed at when they made the iphone and ipad, but here we are, waiting for apple to make a tv.
 
2013-01-07 02:25:33 PM

lousyskater: Feels like Apple is doing what Microsoft did years ago. Get so far ahead of the competition to the point where they just stop trying anymore and coast off the work they did years and years ago out of arrogance that no one else will catch up. It also doesn't help that Apple doesn't have Steve Jobs anymore. As much as I didn't like the guy, he knew what he was doing.


The problem for both companies is that the products got to be "good enough".

It's what might be classed as the "visible megapixel problem". You take a photo with a 0.5mp camera and 1mp looks awesome by comparison. 2mp looks great. All the way up to 5mp. After that, unless you're a pro, it's irrelevant. So, people only start replacing their tech when it gets broken rather than upgrading for a product improvement.

It's why PC sales are down. Not because everyone is converting to tablets, but because for most people, a 7 year old PC running an Athlon X2 is good enough. Give it a year or two and they'll be outselling tablets because everyone that wants an iPad has one, and the iPad 6 isn't doing much more than the iPad 5.

Jobs wouldn't have been able to do much more with the iPhone. What he might have done is to find new markets, new products. That's what Apple are missing. He's the guy that invested in Pixar and bought into the idea of them being a movie company, created the nice-looking PC, made a user-friendly MP3 player and convinced the music industry about iTMS.
 
2013-01-07 02:44:29 PM
Steve Jobs was the kind of guy who would sell you something first, and then get people to build it, while forcing them to constantly simplify things so he could understand them. Apple doesn't have anybody like that in charge anymore. I don't know if that's good or bad, but it's mighty different, and it will be very noticeable to consumers and investors in the coming years.

I met Steve a couple of times, dropping off documents at his house in Palo Alto. I'll never forget what he said to me...

"Hey."
 
2013-01-07 03:07:49 PM

dennerman: What I would expect from Apple at this point is to be hard at work on the next 'big thing'. They did the iPhone and the iPad and yes, there's a lot more competition for them now. They way they can keep huge margins going is to release the next thing that everyone has to have, even though right now we consumers don't know what that might be.


I think that may be their problem - they don't need to be at work on the "next big thing", they need to be releasing the "next big thing" now. If they don't have something in the queue, right now, they're in bad shape. Not a new iPhone or iPad - something new and innovative. Something that gets their base going, and pisses off their detractors.

If they don't have something announced soon, we may be looking at a case where there are no more golden eggs - because there's no one left there to lay them.
 
2013-01-07 03:12:43 PM
anytime something related to apple gets posted all the armchair tech-giant-ceo's gotta tell it like it really is
 
2013-01-07 03:23:16 PM

AdamK: anytime something related to apple gets posted all the armchair tech-giant-ceo's gotta tell it like it really is


And whenever the stock is riding high we get all the armchair investors crowing about the three shares they are lucky to have because they got in at $595.
 
2013-01-07 04:40:31 PM

ha-ha-guy: Apple devices are often seen as status symbols (as in people overpay for exclusivity)


based on my daily subway trips, being a non-iphone user makes me pretty damn exclusive.

/the only exclusive iphones I see on the train are the ones that don't have cracked screens
 
2013-01-07 06:30:54 PM

farkeruk: lousyskater: Feels like Apple is doing what Microsoft did years ago. Get so far ahead of the competition to the point where they just stop trying anymore and coast off the work they did years and years ago out of arrogance that no one else will catch up. It also doesn't help that Apple doesn't have Steve Jobs anymore. As much as I didn't like the guy, he knew what he was doing.

The problem for both companies is that the products got to be "good enough".

It's what might be classed as the "visible megapixel problem". You take a photo with a 0.5mp camera and 1mp looks awesome by comparison. 2mp looks great. All the way up to 5mp. After that, unless you're a pro, it's irrelevant. So, people only start replacing their tech when it gets broken rather than upgrading for a product improvement.

It's why PC sales are down. Not because everyone is converting to tablets, but because for most people, a 7 year old PC running an Athlon X2 is good enough. Give it a year or two and they'll be outselling tablets because everyone that wants an iPad has one, and the iPad 6 isn't doing much more than the iPad 5.

Jobs wouldn't have been able to do much more with the iPhone. What he might have done is to find new markets, new products. That's what Apple are missing. He's the guy that invested in Pixar and bought into the idea of them being a movie company, created the nice-looking PC, made a user-friendly MP3 player and convinced the music industry about iTMS.


For one thing, the point that sometimes gets lost with respect to articles like this is that Apple was so insanely profitable with the iPhone and then the iPad that some kind of comedown was inevitable. This article is suggesting there will be a reduction in profit margin, and that's the 'end of smooth sailing,' but the claim that Apple is entering 'choppy waters' is a little more difficult for me to decipher. For one thing, while it's true that Android outsells iOS 5 to 1, only the Galaxy S3 had higher sales in 3Q2012 than the iPhone (I'm not sure about Q4 but wouldn't be surprised if Apple did well with the iPhone 5). Next year Apple is supposed to release both a higher-end iPhone 6 and also a cheaper iPhone aimed at the prepaid market overseas, where it isn't very competitive. That's one big area in which Android sells a lot of phones but there's little to no competition from Apple. While none of this has anything to do with how good iPhones are or whether Apple needs to innovate (it does), I am confused by the claim that Apple is headed for 'doomsday' because its gaudy profit margins are declining a little, especially compared to Android competitors who don't make nearly as much per unit, and aren't making any money in the cloud either.
 
2013-01-08 12:47:48 AM

Naptowner: farkeruk: lousyskater: Feels like Apple is doing what Microsoft did years ago. Get so far ahead of the competition to the point where they just stop trying anymore and coast off the work they did years and years ago out of arrogance that no one else will catch up. It also doesn't help that Apple doesn't have Steve Jobs anymore. As much as I didn't like the guy, he knew what he was doing.

The problem for both companies is that the products got to be "good enough".

It's what might be classed as the "visible megapixel problem". You take a photo with a 0.5mp camera and 1mp looks awesome by comparison. 2mp looks great. All the way up to 5mp. After that, unless you're a pro, it's irrelevant. So, people only start replacing their tech when it gets broken rather than upgrading for a product improvement.

It's why PC sales are down. Not because everyone is converting to tablets, but because for most people, a 7 year old PC running an Athlon X2 is good enough. Give it a year or two and they'll be outselling tablets because everyone that wants an iPad has one, and the iPad 6 isn't doing much more than the iPad 5.

Jobs wouldn't have been able to do much more with the iPhone. What he might have done is to find new markets, new products. That's what Apple are missing. He's the guy that invested in Pixar and bought into the idea of them being a movie company, created the nice-looking PC, made a user-friendly MP3 player and convinced the music industry about iTMS.

For one thing, the point that sometimes gets lost with respect to articles like this is that Apple was so insanely profitable with the iPhone and then the iPad that some kind of comedown was inevitable. This article is suggesting there will be a reduction in profit margin, and that's the 'end of smooth sailing,' but the claim that Apple is entering 'choppy waters' is a little more difficult for me to decipher. For one thing, while it's true that Android outsells iOS 5 to 1, only the Galaxy S3 had higher sales in 3Q2012 than the iPhone (I'm not sure about Q4 but wouldn't be surprised if Apple did well with the iPhone 5). Next year Apple is supposed to release both a higher-end iPhone 6 and also a cheaper iPhone aimed at the prepaid market overseas, where it isn't very competitive. That's one big area in which Android sells a lot of phones but there's little to no competition from Apple. While none of this has anything to do with how good iPhones are or whether Apple needs to innovate (it does), I am confused by the claim that Apple is headed for 'doomsday' because its gaudy profit margins are declining a little, especially compared to Android competitors who don't make nearly as much per unit, and aren't making any money in the cloud either.


Good points all. But you know how it is with the stock market. You either grow profits or you're shiat. Its hard to grow profits (relative to your peers) when you're already on top of the heap.
 
2013-01-08 11:57:37 PM

t3knomanser: "Apple is just going to have to shrink its margins. Any day now... they totally will... you guys just wait..."

This is a repeat of every analyst article ever written about Apple in the past decade.


DING. "Oh, this article again..."

Tech writers: Apple doesn't care what you think. Apple isn't going to go out with you again. They with someone else now. Get over it.
 
2013-01-09 02:28:30 AM
Thread is probably dead but I came across this little tidbit today that I thought I'd pass along.  Apple sold 2 million iPhone 5 in China the first week they went on sale.

Just with cash on hand AAPL is worth over $100 a share.  The author thinking it's going to $50 a share is daft
 
2013-01-09 03:58:50 AM

dennerman: They way they can keep huge margins going is to release the next thing that everyone has to have, even though right now we consumers don't know what that might be.


Exactly. That's not an easy thing to do, but it's the one trick Apple has. They refuse to play in the low-margin markets -- as every Apple hater is happy to tell you -- and they make great money doing it -- as anyone who has owned Apple stock in the past 12 years can attest. I don't know why "business" articles keep predicting that Apple will suddenly decide to sell to the low end of the market. They might have to glide for a while until they can figure out what the next high-margin item is (and then buy the company that invented it and slap some Apple logos and corners on it), but I just don't seen them playing "who can make the cheapest iPhone clone", because Apple can't beat "Aaple" on price once the product becomes a commodity and they know it.
 
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