I think the cold hard fact is that Apple is too big to grow their business in their current products in line with ridiculous investor expectations. I still think Apple is a fundamentally great...
I think the cold hard fact is that Apple is too big to grow their business in their current products in line with ridiculous investor expectations. I still think Apple is a fundamentally great company, and may be a great long term investment when they do come up with a new product category to throw their weight behind. But their current product lines (esp. iPhones) can’t continue at the pace that has been going on recently. I don’t know enough about the Chinese market, but my impression is that Chinese consumers are very fickle and serving the Chinese market what it demands is not necessarily good for long term business. If Apple’s short term growth expectations hinge on Chinese phone shoppers picking up new iPhones every year, then I’m not surprised the stock is suffering. I don’t think that’s really a bad thing for Apple, it’s just bad for Apple investors, esp. short term holders (and maybe the world economy as a whole).
I’ve read a lot of analysts talking about price points for Apple products this year. It’s really funny how short the collective memory is on this. I remember when Apple (Computer) was considered a luxury brand and their price points were considered out of range for most consumers. It’s super fascinating to me that Apple has commoditized the personal computer (in the form of smartphone handsets) at the price points they achieved over the past decade. And I’m also not surprised that Apple’s interest in making what are essentially iPhone Pros (iPhones X and XS) has come with a price hike. The problem is one of perception. In the past, when Apple offered more than one product tier within a product category, no one complained when the high end was something that the average consumer would be priced out of. The average consumer would not have been in the market for a Mac Pro (iPhone XS of today), they’d have been in the market for the commoditized iMac (equivalent to a generation old entry level model such as an iPhone 8 of today). But, the expectations in the handset game have been ingrained on a much larger scale than the Mac market ever was, so I am not surprised that expectations are being upset now that Apple is trying to break the mold that they had a lot of deserved success with. And that is all besides the “macroeconomic conditions” of today.
Apple's problem in China is that the main thing that differentiates iPhone—iOS—is irrelevant there because everyone uses WeChat. When your phone is just a shell for WeChat, iPhone doesn't stand...
but my impression is that Chinese consumers are very fickle and serving the Chinese market what it demands is not necessarily good for long term business.
Apple's problem in China is that the main thing that differentiates iPhone—iOS—is irrelevant there because everyone uses WeChat. When your phone is just a shell for WeChat, iPhone doesn't stand out from the Android crowd nearly as starkly as it does in every other market.
This is a good article from over a year and a half ago that makes that exact point (the author re-linked it today in response to Apple's letter): Apple's China Problem
This is a good article from over a year and a half ago that makes that exact point (the author re-linked it today in response to Apple's letter): Apple's China Problem
I guess that’s the other thing: the Chinese government grants implicit, unlimited monopolies, yet reserves the right to revoke the monopoly for no reason. If, suddenly, FooChat were to replace...
I guess that’s the other thing: the Chinese government grants implicit, unlimited monopolies, yet reserves the right to revoke the monopoly for no reason. If, suddenly, FooChat were to replace WeChat, and for whatever reason FooPhones ran FooChat better than others, then FooCorp would have a major advantage (and Apple etc. would have a major disadvantage with basically no recourse).
There has been a lot of noise about the US yield curve flattening. An inverted yield curve historically predicts a recession in 1-2 years, with a stock market peak 19 months after the inversion....
There has been a lot of noise about the US yield curve flattening. An inverted yield curve historically predicts a recession in 1-2 years, with a stock market peak 19 months after the inversion.
I think the cold hard fact is that Apple is too big to grow their business in their current products in line with ridiculous investor expectations. I still think Apple is a fundamentally great company, and may be a great long term investment when they do come up with a new product category to throw their weight behind. But their current product lines (esp. iPhones) can’t continue at the pace that has been going on recently. I don’t know enough about the Chinese market, but my impression is that Chinese consumers are very fickle and serving the Chinese market what it demands is not necessarily good for long term business. If Apple’s short term growth expectations hinge on Chinese phone shoppers picking up new iPhones every year, then I’m not surprised the stock is suffering. I don’t think that’s really a bad thing for Apple, it’s just bad for Apple investors, esp. short term holders (and maybe the world economy as a whole).
I’ve read a lot of analysts talking about price points for Apple products this year. It’s really funny how short the collective memory is on this. I remember when Apple (Computer) was considered a luxury brand and their price points were considered out of range for most consumers. It’s super fascinating to me that Apple has commoditized the personal computer (in the form of smartphone handsets) at the price points they achieved over the past decade. And I’m also not surprised that Apple’s interest in making what are essentially iPhone Pros (iPhones X and XS) has come with a price hike. The problem is one of perception. In the past, when Apple offered more than one product tier within a product category, no one complained when the high end was something that the average consumer would be priced out of. The average consumer would not have been in the market for a Mac Pro (iPhone XS of today), they’d have been in the market for the commoditized iMac (equivalent to a generation old entry level model such as an iPhone 8 of today). But, the expectations in the handset game have been ingrained on a much larger scale than the Mac market ever was, so I am not surprised that expectations are being upset now that Apple is trying to break the mold that they had a lot of deserved success with. And that is all besides the “macroeconomic conditions” of today.
Apple's problem in China is that the main thing that differentiates iPhone—iOS—is irrelevant there because everyone uses WeChat. When your phone is just a shell for WeChat, iPhone doesn't stand out from the Android crowd nearly as starkly as it does in every other market.
This is a good article from over a year and a half ago that makes that exact point (the author re-linked it today in response to Apple's letter): Apple's China Problem
Yep, Thompson's where I heard about the WeChat problem myself.
I guess that’s the other thing: the Chinese government grants implicit, unlimited monopolies, yet reserves the right to revoke the monopoly for no reason. If, suddenly, FooChat were to replace WeChat, and for whatever reason FooPhones ran FooChat better than others, then FooCorp would have a major advantage (and Apple etc. would have a major disadvantage with basically no recourse).
Here's an analysis article about the news from The Atlantic: Five Ways to Look at Apple’s Surprise Bad News
There has been a lot of noise about the US yield curve flattening. An inverted yield curve historically predicts a recession in 1-2 years, with a stock market peak 19 months after the inversion.
https://www.axios.com/treasury-bond-market-rally-yields-recession-warning-037e002e-a7d5-40c2-83bd-ba5b5de5a8ec.html
The chinese yield curve inverted exactly 19 months ago...
https://www.wsj.com/articles/chinas-bond-yields-throw-another-curve-as-inversion-deteriorates-1497333163
Chinese PMI numbers also decreased recently
http://www.chinadaily.com.cn/business/chinadata/2015-09/01/content_21765931.htm
All signs indicate that China is entering a recession. How severe and what that forebodes for the rest of us, only time will tell.