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As someone who is short AAPL, my perspective is that they simply don't have room for growth. At the moment, they are essentially a one product company: the iPho
by darawk 10y ago
As someone who is short AAPL, my perspective is that they simply don't have room for growth. At the moment, they are essentially a one product company: the iPhone. And yes, that product is insanely profitable, but those numbers are going down, and personally I don't see a way for that trend to change.
Apple has expanded into every available market on the planet (literally). The only way for them to grow at this point is to increase their market share relative to android, or increase world economic growth sufficiently that more people in developing countries can buy iPhones.
Increasing their market share relative to android in any significant way seems incredibly unlikely to me at this point. As technology stagnates (as is happening with smart phones), the premium products lose cachet and the lower-end products start to achieve parity with their premium competition.
The two markets where they could still theoretically hope to achieve more growth/penetration are China and India. But China has been antagonistic to them of late, and has demonstrated an interest in protecting its own incumbents who are now making phones that even Westerners will buy (e.g. Huawei). India on the other hand is a highly tech-oriented culture, and as such has a predilection for customization and control that tends to make them prefer android phones. Not to mention that the CEOs of both Microsoft and Google (the only two competitor platforms to the iPhone) are currently Indian, and both companies have demonstrated a specific interest (especially Google) of expanding in the Indian market. And I think that gives them an advantage that's hard to overstate.
All of this would be fine if the market itself were expanding. But it's not. People are upgrading less and less frequently. This looks to me just like the PC market of 5-10 years ago or so. Things have gotten "good enough" for most people. I certainly no longer feel compelled to have the latest and greatest phone right away, and it seems to me that most people feel the same.
Lastly, there is the possibility that they will create some new category defining product. This is of course a real possibility, but I feel pretty confident that anything they attempt to do in the car market will fall flat on its face. I could certainly be wrong here, but I just don't see how they could possibly offer something so much better than existing cars that i'd want to pay an Apple-level premium for it. Especially when they're competing against someone like Tesla, who has already captured all of the rebellious smart-person cool points in this category.
Of course, I could certainly be spectacularly wrong. And to be honest, if I am, I don't think i'd mind losing the money too much. Because it'd mean that we'd all probably have some cool new product to play with.
- deleted 10y ago[deleted]
- brisance 10y ago>Increasing their market share relative to android in any significant way seems incredibly unlikely to me at this point. As technology stagnates (as is happening with smart phones), the premium products lose cachet and the lower-end products start to achieve parity with their premium competition.< Counter-example in a mature industry: Porsche. When the GTR was launched 9 years ago, people were hyping it to be the death knell of all other performance cars. Instead, today we have a wider selection of very good cars and the GTR is no longer the no-brainer choice for performance enthusiasts. Yes, it still offers good performance-value, but there are other good choices out there as well. Of all the car makers, Porsche was thought to be the most severely impacted by the GTR and yet they have gone on to greater heights. >The two markets where they could still theoretically hope to achieve more growth/penetration are China and India. But China has been antagonistic to them of late, and has demonstrated an interest in protecting its own incumbents who are now making phones that even Westerners will buy (e.g. Huawei)< How much money is Huawei making from selling Android phones? What about that Google ad revenue in China, how's that doing? >Not to mention that the CEOs of both Microsoft and Google (the only two competitor platforms to the iPhone) are currently Indian, and both companies have demonstrated a specific interest (especially Google) of expanding in the Indian market. And I think that gives them an advantage that's hard to overstate.< Microsoft's chances at mobile at this stage are as good as Ted Cruz's winning the Republican nomination. Some number closer to zero. Again, how much is Google making from Android phone sales? How are the Nexus sales numbers? Google's competitor is not Apple. Google's competitor is Facebook. Luckily for Google, Facebook is banned in China too. >I certainly no longer feel compelled to have the latest and greatest phone right away, and it seems to me that most people feel the same.< The smartphone is a very interesting product. It is used multiple times a day, is cheap enough to be ubiquitous yet still offers value to people who seek to differentiate. In my view this is only the beginning of the smartphone race. Technologies like NFC/Apple Pay are still in their infancy and are not widespread enough. There will be more sensors, better imaging technology, more features that people would desire. How the differentiation is implemented, matters. You will not find someone cross-shopping Hermès with Coach. Similarly the large majority of people will not cross-shop a Ferrari with a Nissan. That is not to say anything about the value of the brand. It just means there are different markets being served.