[DMcCunney]

Originally Posted by Katsunami

And how do teenage daughters keep paying for €600 phones? At some point, someone will realise that better or equal products can be had for less money.

In the US, at least, you have a skewed market based on how phones are acquired.

Most aren't bought at full retail. They are bought through a carrier, who subsidizes a good bit of the price because you are also buying a multi-year cellular service contract. There are an assortment of cell phone stores in my neighborhood. All are operated by one or another carrier.

Indeed, AT&T was the original US cellular carrier to offer the iPhone, and I've seen some pretty convincing arguments they lost money initially - what they had to pay Apple to offer the desired subsidy more than wiped out any profit they might have made. They were hoping customers would renew the contract when it expired, and they'd make money in subsequent years. But they assumed (correctly) the iPhone was going to be a monster hit, and they had to take the pain up front to sell the contracts. Cellular providers are all in cut throat competition for market share, and the throat they cut can be their own.

A contact elsewhere did the math. He wanted an iPhone, and got a top end "unlocked" iPhone at full $600+ retail price, and then went searching for the best contract. He actually saved money over the life of the phone. Most buyers don't do that sort of life-cycle cost analysis. And some that do might want an iPhone but not have the spare cash to buy full retail, so acquisition requires a carrier subsidy.

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Now, Carl Zeiss is almost too big to ever fail, while Leica is mainly supported by rich Americans and Asians. As soon as someone sees fit to introduce a real rangefinder for a normal price (under €2000 or so, instead of Leica's €4700), it's bye bye for Leica. Everybody will switch to that rangefinder using Zeiss or Voigtländer lenses.

So the camera market bears resemblance to the high end cell phone market. A lot of the purchase decision seems to be driven by intangibles not necessarily related to underlying design or technology in the camera.

At some point, I see the same happening to the iPhone. I firmly believe that at some point within the next 20 years or so, Apple will be a marginal player at best, if they don't bring anything other besides new iPhones and tablets. Their 6-7% market share on the desktop/laptop is not enough.

I can't agree. Apple has very carefully staked out the high end in their respective markets. The folks they sell to don't buy on price, and price may play no part in the purchase decision.

In terms of unit sales, Apple is hardly the market leader. They don't care. In terms of revenue and profitability, Apple is far out in front. They can successfully charge a lot more for their products, and make an enormous amount more on each one they sell. It's how they reached a point where they have $205 billion in cash, cash equivalents and short marketable securities, and $119 billion in shareholder equity.

It's all about the price of the stock.

Once upon a time, Microsoft was the quintessential "growth" company. They retained earnings, and didn't pay dividends, but investors didn't care because MS posted steady double digit increases in revenue and profits, MS stock price rose into the stratosphere, and investors made out nicely, thank you, on the appreciation in the value of their portfolio.

But sooner of later, any market gets saturated. Pretty much anybody who could use a PC had one. There was a substantial market for replacements and upgrades, but where would new sales come from? New sales were required to maintain growth. MS was making the transition from "growth" company to "mature" company. Mature companies throw off gobs of cash, but don't have stock prices in the stratosphere. You can make a case that Bill Gates picked an appropriate time to step aside. He had built Microsoft into a giant, and was at one point the world's richest man based on his MS stock holdings. He could exit as a winner. Ken Ballmer was left holding the bag and trying to support the stock price. He floundered, because he had no recipe for growth.

Apple has been recapitulating that process. They have been the current poster child growth company. Apple didn't create any of the markets they were in. Computers, media players, cell phones and tablets all existed before Apple started making them. Steve Job's genius wasn't in innovation, it was in refinement. Under Jobs, Apple developed products became the standard defining "This is how you do this!". The iPod, iPhone, and iPad largely transformed and expanded the markets they were in. Apple exhibited phenomenal growth, and got a stock price in the ionosphere.

I was grimly amused a while back. Apple historically did not pay dividends. They retained all their earnings, and plowed them back into the company. One of the issues Tim Cook confronted after Steve Jobs died and he took over as Apple CEO was that Apple had something like $80 billion socked away in retained earnings

As CEO of a publicly held company, Cook is a custodian of Other People's Money, and his first responsibility is to preserve and increase the value of his shareholder's holdings. What could he invest that $80 billion in that would do that? The usual strategy for a company in that position is to use the accumulated capital to make an acquisition, but there really wasn't one Apple could make that would significantly benefit Apple or further boost the value of the stock. I assumed the only option they had was the one he took: begin to return some of the accumulated earnings to shareholders, so for the first time, Apple began paying dividends.

More recently, I watched Apple's release of the iPhone 5 and product launch in China. Apple still had the issue of maintaining growth. The smartphone market was showing signs of saturation. I believed that if Apple didn't have another category transforming product up their sleeves to fuel another round of growth, their stock price would get hammered. It did.

Where would future growth come from? Apple needed to expand sales in markets they weren't heavily in, with China the biggest and most obvious. The iPhone 5 was among other things designed to be sold at a somewhat lower price and still make the desired margins. Apple was counting on the Apple name being a sales driver. The initial results were underwhelming. China has a strong "Buy Chinese!" ethos, and the Apple brand name and (relatively) lower price weren't enough. Apple is doing okay in China, but I don't think their numbers are what they hoped for in the Chinese market.

So the market is waiting for the Next Big Thing from Apple to fuel another round of growth. We'll see if Apple can come up with one.

It won't go under if it doesn't. It's too big, with too much accumulated cash, and there is a big enough market for replacements and upgrades of existing products to keep Apple going nicely. It simply won't have the sort of growth the financial market loves, and investors will need to look elsewhere to get that sort of results.

I think it would. Microsoft is betting everything on Windows 10. That is why they are giving it away. If people and businesses won't upgrade, they will have a new Windows XP-like problem at their hands in 2020, called Windows 7.

Windows 10 being free is the only reason people are upgrading, despite the fact that it phones home so much. It's not for nothing tools like Shutup10 and tips how to lock down Windows 10 are appearing by the dozens.

Personally, I don't care that Win10 phones home. Unless you specify otherwise when you install, the default level of data sent to MS is the lowest level, and MS documents what they collect. Nothing in that level of data gives me heartburn. The area that really has people concerned is the highest level of data transmission, when Windows will send memory dumps that may contain sensitive data. But you don't turn on that level of sending unless you are having serious problems you need assistance debugging. It's not the default action, and almost no one will have cause to enable it.

And the way Win10 behaves, including phoning home, is a consequence of the focus on the Enterprise market. Corporate users want Windows to Just Work, with prompt fixes if something breaks, so MS is collecting data on Windows performance in use to see where it breaks and have a better idea of how to fix it.

That's increasingly SOP for all manner of things. I use Firefox as my browser, and Firefox has various telemetry to aid Mozilla in development and fixes. I could turn it off but don't. Nothing it phones home is a problem for me.

Windows 8.x is hated. If Windows 10 wasn't free, nobody would upgrade to it (including myself, on my current computers), and the 2020 Windows 7 monster would be a real threat.

Windows 8 got hated largely because MS did what it has a bad habit of doing - totally revamped the use interface. Once you figured it out, it wasn't a transcendent horror, but it was different Most folks I know, and have supported professionally, learn just enough about the PC to be able to do what they need to do, then stop. The obstacle to any sort of upgrade is the learning curve, and the steeper the (apparent) curve, the greater the resistance. I've spent a fair bit of time elsewhere explaining that no, staying put wasn't an option, and the more they dragged their feet on upgrading things they used, the more trouble they were storing up for when they simply couldn't delay any longer.

Win10 at least brings back the Start menu, though it's gotten a fair amount of "Why did they fix what wasn't broken?" comments about some of the changes they made. (I helped a friend buy a new laptop than came with Win8.1, and installed Classic Shell so she could largely ignore the Metro interface. She was happy)

Microsoft HAS to make Windows 10 work. If they don't, most of the IT world will be stuck in 2009 for another 10 years from now.

Thus far it has been, but no, it won't.

The Windows Server group has been concentrating on what I believe they call Windows Core. It's (relatively) lightweight at about 400MB. It's the basic set of Windows APIs needed to run a server. It doesn't even have a GUI. The assumption is that it will be in a "lights out" environment, and configuration and systems administration will be done remotely via SSH. If you need a GUI, you can add one via a additional modules. The fundamental design of Windows is becoming far more modular.

Windows Core will be the base on which everything else is built, including what gets deployed to desktops. The question is precisely how MS is handling the split into modules and what functionality will be in what modules. What people will actually pay for in the future will likely be new or upgraded modules, and the MS challenge is providing things buyers will find worth paying for.
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Dennis