Replies

(Remember, I’ve really given up debating this point, but your post deserves at least one response...)

Think about the original article. What does it say? I’ll paraphrase: Apple has been losing since 2012 and finally came back to win a quarter!

That’s the subtext - Apple has *been losing*.

My analysis was specifically designed to address whether this comeback is a trend or a blip. I see it as a blip. Why? Because there is pent-up demand in a market niche that is being filled.

I’m good at this type of analysis. It’s why I am usually able to make money in the stock market. For the record, I *have* owned Apple stock in the past and made money on it. The question at hand is “what is driving the swap in sales leaders?” I think my analysis is fair and accurate. iPhone users, for the most part, are upgrading their iPhones. Once that upgrade cycles is done, the underlying market dynamic - which is that Android is crushing Apple in market share - will take back over.

This is objective analysis and not driven by hatred. The reason I say things like “the cult of Apple” is because it would never occur to an Apple user who wanted a bigger screen to just go get a Galaxy Note, for example. They waited and waited for Apple to finally produce a bigger screen. When you have the mentality that only ONE product brand will do, you become blind to things like actual features and price.

I have owned both Android and Apple devices. I can unequivocally say that I personally prefer the Android devices I’ve owned. I no longer own an Apple device, although my daughter has an iPod. It works for her.

As a technologist, features and capabilities matter to me. As a businessman, price matters to me. As a human being, usability matters to me. A couple years ago, when it became clear that I was using my phone more as a mini-computer, I decided that I should get a large screen device. I bought Android and haven’t looked back.

Apple has joined the large screen party (albeit late). Will this put them permanently into a leading market share role? My analysis says “no.”

I have been wrong about other things in the past, but - at least anecdotally - I have seen Apple make significant missteps to lose a market leadership position. That’s the only reason I bring that up. I believe history will repeat itself.

bolobaby,
Thanks for the explanation. We will disagree on some parts, but that is normal.

In regards to Apple, I think they lost their way with the departure of Jobs. They had a ridiculous number of me too products. His first action was to eliminate almost all of those products and innovate.

That innovation led to Google copying the Apple system features. You should be grateful. Apple has now copied some Android features like the bigger screen.

You can argue that the largest player “controls” the market. I argue that the purpose of a company is to get and keep a customer in a profitable way. All three needed. Using my definition, Apple created a long-term business. They do not need to the the largest controller of the market. They have a very well integrated product line and a strong eco-system of profits that reaches into music, apps, tv shows and movies, podcasts, and niche markets they dominate inside of. All that means that they are more than phones. And most importantly, their products just work.

Having said that, I like competition and I really don’t care what phone anyone picks, any more than I care if they drive a Yugo or a Lexus.

[As an aside... You are an investor. I spent my career as an RIA, hedge fund manager and mutual fund manager. We have that in common. Today, I am a venture capitalist and also buy alternative assets.]

OK, so here is where we disagree. “iPhone users, for the most part, are upgrading their iPhones. Once that upgrade cycles is done, the underlying market dynamic - which is that Android is crushing Apple in market share - will take back over.”

iPhone users are upgrading, as they routinely do every two years. Android users are also now upgrading to iPhones. Many went to android phones to get a bigger screen. Now that is not an issue. Two years from now, more upgrading will occur - either way - depending on who creates value.

What is not to miss is that you can capture market share by making products close to free. You do not become a profitable business that way. There will always be more poor people who want a cheap product than affluent people who want greater value at greater cost. Companies can be created with business models in each of these markets.

“The reason I say things like “the cult of Apple” is because it would never occur to an Apple user who wanted a bigger screen to just go get a Galaxy Note, for example. They waited and waited for Apple to finally produce a bigger screen. When you have the mentality that only ONE product brand will do, you become blind to things like actual features and price.”

This is an assumption. They did not move to Android because by doing so, they lose the value they prefer. If anything, it says just how strongly these consumers prefer an apple product - so much that they will “suffer” with a smaller screen and see what is coming next. They freely decided that they will pay more for a system they prefer, even with a smaller screen, than to pay less for an (perceived) inferior product. That is the market at work, Adam Smith’s invisible hand, lifting apple’s fortunes because they are satisfying their customers.

“Apple has joined the large screen party (albeit late). Will this put them permanently into a leading market share role? My analysis says “no.”

I don’t think they ever foresee capturing the “leading market share.” That is not their profitable business model.

“I have been wrong about other things in the past”

Happened to me once too!