Thoughts? I have noticed a general shift in sentiment. This could just be my own social circle but it reminds me of Instagram's introduction of stories and the shift away from Snapchat. Once the stigma around using none iOS devices is broken, the bottom will fall out on iphone ownership.
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I am very much on the other side of this trade. Could you elaborate on the negatives of iOS?
Generally speaking, this is not a new idea (not to say that you aren't right now). I was saying the same thing five years ago but changed my tune. The evidence suggests that people are loyal to the AAPL ecosystem. It shows with desktop and tablet market share. iPhone market share has also been steady (with a spike for the 6). Surveys show remarkable loyalty to the iPhone.
The iPhone 8/X cycle has struggled relative to expectations for two reasons. First and most importantly, the $1000 price of the X was too much. It's somewhat amazing that AAPL raised a price ~40% and was able to sell as many X's as the 8's. AAPL grew iPhone revenue +13% last Q on the X price increase (+14% ASP). This follows flattish to declining revenue in the Q's following the 6 launch. It's a good success for AAPL, which brings me to the second reason.
The X lacks the wow factor screen size. People are pretty simple. Give them a big, beautiful screen and they will buy it. They do it with TVs every time. They did it with the 6 and I suspect that the 9 cycle will be robust (analysts expect the smallest screen to be 5.8 inches - same as the X). An iPhone with the S8/S8+ form factor is on the way.
AAPL priced the X where they did because of the cost of the OLED display and, to a lesser extent, the 3D sensing for facial recognition. This is an interesting supply/demand dynamic. Samsung was the sole OLED supplier. Now there is a glut of OLED supply. Prices should come down. When, how fast, is unclear.
Thinking about smartphone producers, who is relevant now other than AAPL and Samsung? And hasn't this list been condensing? As it turns out, maybe it is pretty difficult to produce a top tier smartphone.
In regards to your first point, I completely agree that an incredible amount of loyalty exists for the Apple ecosystem. I am a perfect example of this.
My thesis, however, is based on the breaking down of Apple's loyalty and fan fare. Apple's lack of differentiation within its product line and lagging innovation will drive consumers towards the likes of Samsung, HTC, Sony, Motorola, LG, Huawei, and ZTE. These brands each offer unique features at varying price points. More functional cameras, customization, and other "cool" factors may just be enough to motivate a change in consumers' preferences. Perhaps, Apple's lack of these features is what makes them so successful.
The battery scandal also hasn't helped.
Been an active trader for a long time. AAPL was, at one time, one of my anchor stocks. I liquidated my entire position over the course of 6 months in 2014 using options to collect premium on my way out.
Investment thesis: AAPL had a large moat for a period of time, and they built out their eco-system such that they commanded a great deal of customer loyalty across their various offerings. However, with the X averaging $1000/unit, essentially for nothing more than facial recognition, and AAPL's competitors closing the gap not only on quality of components, but on quality of service, I see trouble on the horizon.
That "moat" I mentioned originally has dwindled to a puddle, if that. When a company continues driving up the cost of their signature offering(s), while bringing nothing new to the table for years now, it is self-evident that the company has lost its edge, vision, whatever you want to call it. Since Jobs exited stage left, what amazing new offering has AAPL brought to market? AppleWatch!? Really? Think I'll pass.
Lastly, the industry has become so bifurcated, and phones have become so ubiquitous that IMHO, I can't see AAPL being anything more than dividend play going forward. And if I'm investing for divs, it won't be in AAPL. I'm sure there is probably still money to be made on the position, but I consider the investing landscape to be so wide open right now, with so many better options in so many different sectors, that I wouldn't put any dry powder to work on AAPL. Just my $0.02.
Yet AAPL gained massive share in 2015 on the 6 and has outperformed the broad market. You should have owned the stock in 2017 no?
Anyway I definitely agree that the global macro has given traders a robust number of opportunities. I wouldn't sleep on AAPL this year. If they come out with a $700-800 price point phone with a 6+ inch screen, it will probably be a big hit.
wso,
Perhaps AAPL gained 20% market share in the US. That frankly wouldn't surprise me. Androids have fallen out of favor with many who were, at one time, quite loyal to androids over AAPL products. I'm more talking globally, since AAPL is now competing on a global stage.
Huawei is eating their lunch in India, China, for all of their bloviating, still has trade barriers in place such that the "Luis Vuitton" perception of iphones has become less and less of a selling point. AAPL has been trying for years now to come up with something innovative to get them back in front of the pack. They have failed miserably, and their business model to continue pushing out more expensive iPhones with a new, flashy name, face recognition, blah blah blah for $1k is obviously NOT working for them. Perhaps the $700 - $800 will work. I hope so for all investors sake.
Do not misunderstand my premise. I do not believe AAPL is going anywhere, and they may well be the first $1T company, but the salad days of AAPL being able to pick a price point and consumers would just bend over and take are long gone. Phones have not only become ubiquitous, but they have also become a commodity for many of us.
Perhaps an iPhone X is still considered a status symbol among the... younger generation,, but I don't understand how an entire generation of people who are still mired in student loan debt, many still living w/their parents, many who have to scramble from one garbage job to the next just to keep the lights on, so to speak; are willing to pay a thousand dollars for a phone.
I'm not an old geezer, at least in the classic sense of the term, but I moved out at 17. I literally ate beans and rice, Spanish rice, and chicken and rice for lunch and dinner the first 3 years out on my own. That was a character builder and it made me realize I better get an education if I didn't want to be stuck in shit jobs the rest of my life.
Sounds like I'm off on a tangent, but the reason I bring this up is to emphasize that we all make our own decisions and once we're adults, we have to live w/said decisions. Anyone out there who is struggling to make ends meet, but chooses to go out and buy a thousand dollar phone that will take them 4 years to pay off, while at the same time they're trying to figure out which Peter they will steal from this month to pay which Paul, will most likely be living hand-to-mouth the rest of their lives.
I just do not, as an investor and/or a consumer, see AAPL's current business model pushing it back into a real leadership position. We shall see what we shall see.
I don't agree because frankly, most iPhone users don't give a shit that a Galaxy/Droid phone can do XYZ more/better than an iPhone. It's all about perception and the iPhone is the Louis Vuitton bag vs. the MK bag.
If you're talking purely from a stock price perspective, then maybe. But Apple to lose 20% of smartphone market by 2020? I'm saying not a damn chance. They're the sexiest brand out there and that's that.
BBD, I would submit to you that iPhone users don't give a shit that a $1000 iPhone X has face recognition and a few other non-earthshaking nuances from the 7.
I would also submit to you that the biggest consumers of these high-end iPhones have been younger people. The same generation who has over $1T in student loan debt alone is the target for AAPL to market their ever-increasingly expensive new phones.
The "Luis Vuitton" analogy you continue trying to make is precisely what I am talking about. Why in hell does someone who has $50 - $100k in student loan debt, who has not one thin dime saved for retirement, or an emergency fund, or a nest-egg to eventually buy their own home as opposed to pissing away thousands a year NOT building equity in anything, think it is SO important to have the Luis Vuitton of cellphones? It is absolutely ludicrous to hear/watch/see people who have not a pot to piss in or a window to throw it out of consider a Luis Vuitton phone to be the most important purchase of their lives.
Don't know or care if AAPL gains or loses 20% market share by 2020. I just know that, at some point in the future, the general public is going to realize that a cellphone is nothing more than a commodity. Once they become a true commodity, you will have seen the last mass-marketing of $1000 phones.
Good. Tim Cook is joke.
I cringe when I get a girls number and she doesn't have an iPhone. I immediately think they're weird
I agree they've lost share in China but that's well known.
In the U.S., I still lack an alternative. I was booking travel the other day and they still have warning signs that Samsung phones need to be turned off. F that.
I'd bet that 90% of users are more likely to downgrade to a lower iPhone version than to switch to Samsung/Droid. How am I going to watch my iTunes movies and shows? I'm sure there's a way but frankly I don't care enough to learn. We're all busy and bears consistently under-estimate the moat, especially what they built around the cloud. Much better bear arguments were made when Apple was at $100 in 2016, at least back then China was "weak" and the market had corrected. Their thesis was the same as yours but better, and one applicant told me his price target was $60 by 2018E.
Unless Apple screws up majorly and erases all my cloud backups, in the words of Jordan Belfort, "I'M NOT F$($$#%& LEAVING".
In the end, you're going to need a better catalyst than lower share in 2 years.
I can get on board that the biz slows and consequently it becomes expensive, but shorting on valuation alone is a great way to go broke.
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