Hmm, What Is Apple Doing?

Tech
2840

Munster on Apple: There’s a disconnect between the fundamentals and headlines

Munster added Apple would ultimately be the best-performing FAANG stock, noting that others like Amazon (AMZN) and Google (GOOGL) are likely to come under regulatory pressure this year.

Hold only 1 AMZN and 1 GOOG in DimSum (F10) portfolio, unlike manch throwing his fortune into AMZN after reading many media hyping AMZN, the one who would disrupt all businesses and eat them alive - yes, the same narrative as for the once mighty DELL, GOOG, MSFT (recovered)…

Other analysts are less bullish on Apple, pointing to signs of a possible erosion in customer loyalty, the high cost of iPhones, and growing competition from Chinese smartphone makers.

Now and then, change to this narrative. iPhone is too expensive has been around since day 1, yes, from the first version in 2007. So is competition from China smartphone makers, Xiaomi used to be the leading competitor, now is Huawei.

Apple has responded by offering promotional programs for new customers to trade in their Android phones for credits that can be used to buy iPhone XS and XRs, hoping to lure competition away from Chinese brands like Huawei, Oppo, Vivo and Xiaomi.

To boost iPhone sales, Apple launched a “GiveBack” trade-in promotion offer for its new iPhone XS and iPhone XR devices in the U.S. in November. In late December, the promotional program for the new models went live in China, adding one major perk: users in China can not only trade in their old iPhones, but also Android phones made by Apple’s major competitors in China, including Huawei, OPPO and Xiaomi.

marcus’ idea is implemented in China only. Feel like a direct response to anti-Apple campaign by Huawei.

It’s also harder to lock in users within the iOS system in China, where proprietary Apple services, including iMessages and iTunes, aren’t as popular as in the U.S.

Big issue. WeChat is extremely popular and iTunes don’t have many Chinese songs.

2841

I doubt his position in Amzn is as deep as yours in Aapl.

2842

An old article on iPhone sale stall because of WeChat,
iPhone Sales Hit a Big Roadblock in China Because of an App That Does Just About Everything. Apple has been trying hard to counter the impact of WeChat but the geopolitics make it 10x harder :cry:

Although iPhones support WeChat—indeed, it’s become one of its most popular third-party apps and has even begun to challenge the Apple App Store for supremacy—they do so no better than Google’s Android, the iPhone’s chief rival, which generally runs on cheaper devices.

Look like is a matter of time that developers may not have to pay for putting their apps on AppStore.

2843

Munster still doesn’t get it. It’s not about iPhone vs other phones. It’s that smartphones are now at top of S curve. Your SE serves just as well even though it’s generations older than XS.

What Cook says about apple on track to double revenue is very troubling. That’s what Paul Otellini, ex-CEO of intel said at the time about intel. Intel went on losing the mobile war and now losing the Moore’s law race. Focus on products, not profits. Cook has lost his way.

2844

Damn. Then how come my Tencent investment also tanked. Can’t win!!!

2845

Both Munster and Apple get this is. Is why Apple is moving to services, and the hardware for more powerful services can only be implemented by iPhone X series, Apple Watch and AirPods (and may be HomePod). HomePod is a big improvement over the original Apple Hi-Fi - I have both - I think Apple is late to market for these products and still didn’t get it or may be the time is not here yet. HomePod feels like a WIP. Apple Watch & AirPods would be replacing iPhone in … years… transiting from top of S curve of iPhone to start of S curve for Apple Watch/AirPods.

I have spent a fortune on 10c to hedge and ride on the popularity of WeChat. The issue with 10c is CPC suddenly decided to mess around with video games. I now own 1300@$43 :sob:

2846

Go buy some Tsla. Best hedge against Aapl decline. Buy at least 1000 shares.

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2847

Apple cannot win with HomePod. Reason is very simple. Look at Amazon. The key is to stand back and let other devs write applications on your platform. To this date Apple still maintains tight control over Siri integration, compared to Amazon that allows even your toilet integrate with Alexa.

There is a fundamental tension between Apple the hardware company vs Apple the service company. To make money on services you want as many members as possible. But to use any of Apple’s services you need to spend hundreds of dollars to buy a piece of Apple hardware first. So do you lower Apple hardware price so more people in Apple service ecosystem? Or do you maximize hardware revenue and have fewer potential customers for your services?

Apple’s service narrative is just a stop gap measure. Something to tie them over until they have another blockbuster hardware product. iPhone being so big and so successful it will take not one, not two, but three or more such blockbuster hardware products to replace iPhones. Apple stock will wander around in the wilderness much like Microsoft did for the next few years.

I think Cook should just say fuck it, who cares? Focus on products, not revenue. Don’t sell your souls to Wall Street, Apple. Double down on what makes you great in the first place.

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2848

The homegrown groundswell began with a little-known brand called Xiaomi, which burst onto the scene in the early 2010s as one of the first brands in China to have its own operating system, and offered high-speed processing on the cheap. At first it appeared to cater to a completely different market than Apple. Selling entirely online, Xiaomi offered both a low-end model — the Redmi for as low as 699 yuan (then under $150) — and a higher-end model that was still far cheaper than the cheapest iPhone (less than 2,000 yuan, then under $350).

2849

Xiaomi foldable screen prototype.

2850

Foldable display is pipe dream for decades. Soon be ready?

2851

Already ready.

2852

I listened to this podcast on Friday and it was pretty good:

“The really big one right now is audio. Audio is on the rise just generally and particularly with Apple and the AirPods, which has been an absolute home run [for Apple]. It’s one of the most deceptive things because it’s just like this little product, and how important could it be? And I think it’s tremendously important, because it’s basically a voice in your ear any time you want.

For example, there are these new YouTube type celebrities, and everybody’s kind of wondering where people are finding the spare time to watch these YouTube videos and listen to these YouTube people in the tens and tens of millions. And the answer is: they’re at work. They have this bluetooth thing in their ear, and they’ve got a hat, and that’s 10 hours on the forklift and that’s 10 hours of Joe Rogan. That’s a big deal.

Of course, speech as a [user interface] is rapidly on the rise. So I think audio is going to be titanically important.”

Andressen also had the contrarian view that VR will be much bigger than AR, because most people live in boring places who want to be transported away to a more fun environment via VR.

The TC article didn’t mention Andressen’s view on Silicon Valley as the central place of innovation. Technology will make remote work more and more high bandwidth so that may mean SV as a hub may lessen in importance. On the other hand, because of winner-take-all effect in tech, the future tech winners are going to win big, much bigger than today. Startups will need to hyper-optimize and that means founding team will still need to stay in close physical proximity and that means continued dominance of SV.

Interesting views.

2853

.

Now that the cat is out of the bag, buy buy buy on Monday at the open :triumph: Stop trying to time it at $120 or even $100. Recalled I said it moons ago, worse case is $140. Even if I am wrong, is $120 (recently Jim Cramer said this) or even $100 (who said this?), so what? Can just buy 30% now and wait for either a breakout to commit the other 70% or scale 30% at $120 and 40% at $100. Is very hard to buy within 10% of bottom - those are the experts with tons of info or just lucky. Within 20% is good enough. Remember bullseye is not a dot, is a solid circle.

Btw, every experienced AAPL investors know the moment AirPod is out that it is a voice in your ear.

Apple touts AR. But Mark is all out into VR. I also hedged with 420@$148 FBs :blush: At last Friday close of $137.95, 7% red :sob: Recalled I said worse case is $120, has yet to hit the worse case just like AAPL. But I don’t wait for worse case to buy, scale in while it is declining… hard to know what Mr Market is thinking.

Buy outstanding companies at great price :slight_smile: You should thank Mr Market over-obsession over short-term issues to buy at such prices.

I subscribe to both of his views (in bold), so holding on to my two Cupertino houses. Btw, have’t read his podcast, which startups did he recommend or you think is a winner? Actually AMZN is also a good bet on audio/voice. You piling into AMZN is a good idea.

“The second thing I’d nominate for wearables is the concept of sensors on the body. Here, the Apple Watch is clearly in the lead with what they’re doing with the heartbeat sensor.

You omitted quoting this. Told you AppleWatch/AirPods is the next big thing to replace iPhone.

2854

Watch and AirPods not big enough to replace iPhone. Need one or two more.

Here’s the interview.

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2855

I don’t think there will be anything to replace the iPhone. Steve Jobs is gone. Cook is not a visionary. iPhone will remain as Apple’s top product as long as Cook remains in charge.

This isn’t necessarily a bad thing. Google has always been a one hit wonder: it’s website. Also, what new product has Facebook unleashed?

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2856

You are thinking of complete replacement. All you need is revenue of services + apple watch + AirPods to grow faster than the decline of iPhone revenue. This should work for the next 5-10 years if not for the geo-politics.

Btw, ain’t the iPhone upgrade program that you subscribe to lower the initial cost of owning an iPhone. PAAS.

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2857

All along I was bought by such arguments, but recent Apple debacle opened by eyes like Trump vs Hillary election !

I understand iphone+watch+airpods complements each other and they add revenue to company. I use all of the three. Watch+Airpods are supposed to be equal of iphone, but they are yet to match the performance.

Above all, you just see 100000 feet level about apple operations and understand why Apple has failed.

Many predicts against TSLA saying that TSLA technology can easily be replicated by some Chinese, Japanese or European competitor and TSLA will fall when it happens like that…

Now, Replace TSLA with AAPL. That is what happened now.

Apple manufactures cheap phone at China, around $275/piece, sells it for $1000+. All Chinese Competitors, four of them, developed similar smart phones and sells it $600 range.

“The cost difference is notable: In China, an iPhone XR starts at around $950, while Huawei’s top-end handsets start at about $600, and Xiaomi’s comparable models start at even less. The iPhone XS starts at around $1,250.Companies like Huawei and Oppo have made improvements in features and overall quality”

Ref: https://www.nytimes.com/2019/01/04/technology/china-smartphones-iphone.html

Since Chinese competitor are available everywhere except USA, as they (Huawei+others) are banned - protection barrier, Apple’s new and high end products are selling in USA mainly and low end old products are selling Asia+Emerging market which itself challenging as they can not match Chinese competitors products.

Those who are against trade-war, if trade-barrier against Huawei+others removed, Apple goes down like hell.

Second, even with trade-barrier, Apple losses market share outside of USA, esp China which is 2nd biggest Apple market.

Third, Since China banned apple old products (QCOM lawsuit), apples new products can not compete against Chinese companies.

It is better to be practical than too optimistic.

AAPL_2018_01_05_revenue_in_china
AAPL_2018_01_05_revenue_in_china1280×722 208 KB

In summary, after stability, about 18-24 months provided trade-barrier exists, apple becomes a stable income producer than a big growth machine and it will take pretty longer time, many years, to reach the same one Trillion mark.

2858

Fail!!!

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2859

Jil

In the early years, Xiaomi phones look very alike iPhone and sell for half the price. Now ditto for Huawei, Oppo and Vivo. In a competitive market, especially near or matured market, it is expected competitors would close in to the leaders in quality. Is why it is critical for the leaders to innovate like crazy, and at the end of the S curve, come up with new products to replace the matured products. Is a sop. Apple is doing sop. Geo politics cause the sale decline in China much faster than Apple expected. No need to talk micro, you are talking about this tree that tree when the forest has been screwed. Is a China issue, not a product strategy issue.

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