Apple’s New Era Has Begun

Forbes.com ^ | Aug 10, 2020, 09:17am EDT | Dan Runkevicius

[Swordmaker]

Rumor has it that Apple (APPL) AAPL -3% will release its cheapest ever top-tier phone this fall.

Influential tech magazine Tom’s Guide recently posted a leak claiming iPhone 12 will retail starting at $549. That’s almost half of what Apple charged for iPhone X a few years ago.

This raises the question: Why is the most premium tech product maker all of a sudden selling itself short? I’ll show in a moment, Apple’s business is entering a new era where iPhone profits won’t matter anymore.

Low price tags might seem like a desperate move to fend off competition. But like a chess master plotting several moves ahead, Apple is using cheap phones to seize what Apple’s CEO, Tim Cook, calls the “mother of all opportunities.”

iPhone is hands-down the most successful product in history. Since its introduction, Apple sold more than a trillion dollars’ worth of iPhones. And for years, iPhone generated more than half of Apple’s total sales.

But iPhone was more than Apple’s biggest money maker. It was Apple’s gateway into the pockets of over a billion people.

Take a look at this chart. It shows the growth of Apple’s active devices all across the world:

Apple’s active devices (2016-2020) DAN RUNKEVICIUS

Thanks to iPhone, Apple now has 1.5 billion active devices—phones, watches, etc.— used by over a billion people from all across the world. The company added a whopping half billion devices during the last few years alone.

Think about it, nearly one in seven people now carry around an Apple device every day.

Today, those 1.5 billion active devices are the single most important driver of Apple’s business.

Apple makes tons of money outside an Apple store

It does so through a myriad of services connected to Apple devices.

[Rurudyne]

Untrue.

There are numerable sorts of computers, including others very portable but less portable.

These have the advantage of often requiring people to stop to use them where smart phones have become the proverbial addictive slot machine you never ever have to put down.

Perhaps I can poetically clarify by saying that what I disdain is not something that can be thrown out of a window but something that can be thrown across a field.

[bert]

I have both an I phone and a laptop and use each according to it’s capabilities

This morning we took a 90 mile drive through the Unaka Wilderness area guided by Waze on my I phone. That would have been impossible on my laptop. For much of the way within the actual wilderness, there was no phone service but the Waze GPS was precisely on target and best of all, free.

[SunkenCiv]

I had a gizmo that went into the cigarette lighter, and had a USB port. I could load up a thumb drive with tuneage, and the spud would read the files and broadcast via FM to the indash. I wish something like that were around, I doubt that it is. Also, in this car, the cigarette lighter does dead with the key off, so I have to retune every time (I've got some kind of lower-end gizmo now, the cool one died; also the new one doesn't have a very strong signal, so that sucks, and it has a jack to plug in the music source, also sucks).

[zeugma]

I had a gizmo that went into the cigarette lighter, and had a USB port. I could load up a thumb drive with tuneage, and the spud would read the files and broadcast via FM to the indash.

There are a number of FM Transmitters available on Amazon. One of these might suit you.

FM Transmitters"

[SunkenCiv]

I may check it later, but I doubt there's anything like that, because most people have made their music portable using their phones. Ideally, the in-car sound systems would have a data-capable USB port for just what I'm describing, but of course the RIAA and other for-profit turds would do everything it can to kibosh it..

[SunkenCiv]

This is good and nuts, but thought I'd put it up here.

The company's price-to-earnings (P/E) ratio is now 34.9, implying that investors expect significantly higher earnings growth in Apple's future than in the past decade. However, that same multiple expansion that has driven the huge share appreciation directly threatens Apple's biggest source of profit growth -- share buybacks.

From fiscal 2015 to fiscal 2019, Apple's earnings per share grew by 29% to $11.89, or 6.6% on a compound annual basis, a decent rate for a mature company. However, net income during that time, or the actual profits generated by the business, grew just 3.5% total to $55.3 billion, or 0.9% on annual basis.

In other words, Apple's earnings-per-share growth in recent years has been driven predominantly by share buybacks.

Apple's Biggest Source of Profit Growth Is Disappearing | The Motley Fool | Jeremy Bowman (TMFHobo) | Tuesday, August 18, 2020