The Rumored iPhablets Expected In 2014 Will Not Save Apple's Bacon

[frahse]

"The Rumored iPhablets Expected In 2014 Will Not Save Apple's Bacon
Nov 18 2013, 14:43 "

"(Disclosure: I am short AAPL.)"

Michael Blair (seekingalpha.com)

"Apple (AAPL) may have hit a home run with its iPhone 5S but that hasn't stopped it from losing additional market share in the September quarter according to data from three sources.

Apple's share has fallen to a perilously low 14% in the September quarter according to ABI research.

IDC has Apple with an even lower at 12.9% market share, a fraction of the 81% commanded by Android handsets."

read more and see many interesting charts:

http://seekingalpha.com/article/1847...e-apples-bacon


Personally (frahse), on principle with stocks, I don't do margin and I don't short but I can understand Michael Blair's point above.

[Penforhire]

Apple doesn't play in the low-price low-margin market. The 5C surprised many because it is still very expensive. Based on sales and profit I don't really see how Apple's bacon is in any danger.

Oddly enough, while I am also impressed with many of their non-phone products, their revenue is somewhere north of 50% from iPhones. They are now a phone company, or at least their fortunes rise and fall mostly from their phones.

Can you believe the crazy margin they get on memory up-sells in iPads? I'm a fan and I still think their price for larger memory is usurious.

They are still sitting on an absurd mountain of cash. I don't want Icann's stock buyback but they need to do something. I'd like to see them buy Netflix. I am still long AAPL, as are the top performing mutual funds in my 401K.

[Sil_liS]

I didn't realize that Apple needs a new product to save them.

[Kumabjorn]

Granted I have limited understanding of the Smartphone market, but my impression is that the high end markets, U.S., Europe and Japan, are pretty much saturated at this point, hence the growth is in price sensitive markets that would favor low end Android phones.

[Penforhire]

You are mostly right. That is a good reason for the multiple contraction (lowering of P/E ratio) for AAPL. Does it deserve a P/E like it used to have (between 30 and 40)? Heck no. It also doesn't deserve a valuation as low as it was recently (< 10-ish).

However, Apple recently opened sales to more of the world. China is a great unknown. Buick sold more cars in China than the US starting around 1999. Who'd have guessed that would happen?

[Canuck_in_Japan]

They still sell Buicks in the US?

[fjtorres]

Originally Posted by Canuck_in_Japan

They still sell Buicks in the US?

Yup.
Caprice, too.
I recently saw a 2014... looked good.
First time I could say that since the days I had a heated '64 to go to university.

[frahse]

I think the point might be that the incredible gravitas and veneer of glamor that Apple has had will wear thin when most of the machines surrounding the smaller number of Apple users do pretty much the same thing and at very much lower prices.
Plus it isn't like highway robbery to get an upgrade or a new battery.

"How much did you pay? Why?"

[afv011]

Fall 2014, Phil Schiller: "our iPhablet not a response to the competition".

[Katsunami]

Originally Posted by Penforhire

Apple doesn't play in the low-price low-margin market. The 5C surprised many because it is still very expensive. Based on sales and profit I don't really see how Apple's bacon is in any danger.

Oddly enough, while I am also impressed with many of their non-phone products, their revenue is somewhere north of 50% from iPhones. They are now a phone company, or at least their fortunes rise and fall mostly from their phones.

Sticking all your apples in one basket is dangerous. If there's a rotten one in there, you could be in big problems. (Read: If Apple makes a mistake that causes the iPhone to not sell well anymore, there's going to be trouble. They're rich... but they were rich in the 90's too. Still they almost keeled over.)

Can you believe the crazy margin they get on memory up-sells in iPads? I'm a fan and I still think their price for larger memory is usurious.

Memory is the one thing they make their margins on. Memory costs *NOTHING* nowadays. My current computer has 8GB RAM. My next one will have 16GB, possibly even 32GB because it can, and compared to what I paid for this 8GB 6 years ago, it'll be free. (Not to mention what I paid for 128MB 15 years ago.)

We've seen SSD's drop from $400 for 32GB to $100 for 128GB. Memory cards are gigantic; in the Netherlands, it's difficult to get SD-cards below 4GB. Shipping them in an envelope is more expensive than the card itself.

They are still sitting on an absurd mountain of cash.

Yes, but everything and everyone can go broke at some point. Apple almost fell over in '97, having been rich before. Who thought Microsoft would buy Nokia as if it's nothing; the biggest phone manufacturer that ever existed, at some point in time at least?

Nokia was like the King, Queen and Emperor of the phone market, but they got complacent. Then smartphones caught on, and *boom*. They're about dead within 5-6 years. The same can happen to Apple.

[Penforhire]

Agreed. It can happen to any company. Not just Nokia. I'm thinking of Research in Motion, Motorola, Myspace, Digital Equipment Corp, Atari, Pan American, Kodak, Polaroid and so many more who were all at one time on top of their world.

The question is, is now the time for Apple to fail? Not yet, not in 2014.

[Katsunami]

Originally Posted by Penforhire

Agreed. It can happen to any company. Not just Nokia. I'm thinking of Research in Motion, Motorola, Myspace, Digital Equipment Corp, Atari, Pan American, Kodak, Polaroid and so many more who were all at one time on top of their world.

Good list indeed. It can be made longer with:

Pentax, once the premier SLR seller, now only a Ricoh name.
Leica, the premier rangefinder seller, now only a high-end niche player.
Interplay: At one time the biggest game publisher in the world.
Comodore, once the top home computer.
Genius, once the biggest seller of computer input peripherals, completely eclipsed by Logitech. In the computer world we also had TSeng, Cirrus, Diamond, S3... and many others that once were top or number one brands, who are now dead, or only a name in someone else's portfolio.

The question is, is now the time for Apple to fail? Not yet, not in 2014.

Can't be predicted, but sometimes I wish Microsoft hadn't injected that money into Apple in 1997. I'm sure they only did it so they could tell everyone that they (MS) didn't have a monopoly on the computer market, so those rules wouldn't apply to them. I think it's also the case why Intel and nVidia don't team up to completely wipe AMD/ATI from the computer market.

(ATI is now owned by AMD, but they are older than nVidia, and at one time were the biggest manufacturer of graphics hardware in the world.)

[JAcheson]

You could add Palm to that list of failed companies who were once on top of the world as well. It's a shame, because there really isn't a good replacement for them as an address book/to do list/note taking device.

[JAcheson]

As for Apple, they do seem to be complacent.

They aren't even trying to fight Microsoft in the mainstream computer OS arena, at a time when Microsoft is stumbling badly. In fact, they seem determined to drive away high-end pros and prosumers by dumbing down apps and replacing the previously excellent Mac Pro desktop with a useless executive toy.

[Katsunami]

Originally Posted by JAcheson

In fact, they seem determined to drive away high-end pros and prosumers by dumbing down apps and replacing the previously excellent Mac Pro desktop with a useless executive toy.

That new Mac Pro is going to be a seriously powerful computer, but I've read that the "lowest" version will start out at $2999, upping the price $500, as the previous starter model was $2499. That's without a screen, and as far as I know, only with one year warranty.

That's some serious money for a workstation computer that doesn't come with support comparable to what Dell provides or can provide. If I'm going to spend $2999 on a computer that I don't to intend to fix or upgrade by myself, I want *at least* 5 years of support for it.

That's actually one of my biggest pet peeves with Apple. You get 2 years of warranty through the seller (in The Netherlands/EU), and if you want more, you'll have to go with the ridiculously expensive Apple Care to get 3 years through Apple.

With Dell, I just pay them something around €100, and I get 5 years of next business day warranty. (This means that if one calls before 16:00, a technician will come and fix the computer before 16:00 the next day. edit: where "day" is a working day.)

Another pet peeve is that there's "nothing in the middle".

I you want a desktop computer so you can choose your own screen (so, not an iMac), you'll have to go with the Mac Mini, which is underpowered for my use, or with the Mac Pro, which is too expensive and grossly overpowered.