Apple Study: 8 easy steps to beat Microsoft (and Google)

[ExpectedValue]

 

Thought some of you might find this interesting since we were discussing MSFT/APPL

[Guest valueInv]

And here are the results of that:

 

http://seekingalpha.com/article/213656-2010-the-year-apple-enters-a-new-golden-age

 

Not that I consider the stock a buy but an enviable track record nonetheless.

[Ballinvarosig Investors]

Since when have Microsoft and Google been beaten? Anyway, I don't know what the smartphone market is like in the States, but I do know that here in Europe the techies that formerly embraced the Iphone are now deserting in droves to the HTC/Android platform. The same techies a few months back were telling me that HTC were a company to watch, and that the likes of Nokia were old hat were to be avoided. The Peter Lynch school of stock-picking isn't a strategy I embrace, but maybe in this instance the techies have an insight that we mere mortals may have missed ;D

[ExpectedValue]

Since when have Microsoft and Google been beaten? Anyway, I don't know what the smartphone market is like in the States, but I do know that here in Europe the techies that formerly embraced the Iphone are now deserting in droves to the HTC/Android platform. The same techies a few months back were telling me that HTC were a company to watch, and that the likes of Nokia were old hat were to be avoided. The Peter Lynch school of stock-picking isn't a strategy I embrace, but maybe in this instance the techies have an insight that we mere mortals may have missed ;D

 

I spend quite a bit of time talking to developers. The consensus is that Apple's iPhone is still the most popular mobile. What Google is doing is coming out with many different mobiles, at different price points. That works to an extent for giving  them more market share. But, when you look at things from an applications perspective - if you are a developer hoping to get rich, the iPhone is the mobile to develop for. You are only focusing on one type of phone and the display is standardized so your apps tend to look and work better.

 

I know a lot of developers who have personally moved to using Google phones, but it is mainly due to that company's embrace of open source software. They still develop for the iPhone.

[beerbaron]

Technologies are minutes away from being outdated... what a hard business.

 

Here is a simple question to sort all companies, it has the disadvantage of killing almost all tech stock:

 

-I ask myself what their business will look like in X years. X being determined by the current PE, a PE of 20 will require an outlook of 10 years and a PE of 10 would require an outlook of 5 years. If I don't have any ideas what the business would look like in X year then how can it be considered an investment. The lower you PE and the lower your outlook need to be because you should get your investment back faster.

 

Peter Lynch also had a nice rule of thumb not to pay more then the growth rate. So if the growth is 15%, you should not pay more then a PE of 15.

 

BeerBaron

[bargainman]

I spend quite a bit of time talking to developers. The consensus is that Apple's iPhone is still the most popular mobile. What Google is doing is coming out with many different mobiles, at different price points. That works to an extent for giving  them more market share. But, when you look at things from an applications perspective - if you are a developer hoping to get rich, the iPhone is the mobile to develop for. You are only focusing on one type of phone and the display is standardized so your apps tend to look and work better.

 

I know a lot of developers who have personally moved to using Google phones, but it is mainly due to that company's embrace of open source software. They still develop for the iPhone.

 

This is true now...  But with Android gaining 4% in one month:

http://news.cnet.com/8301-17938_105-20010101-1.html?tag=newsEditorsPicksArea.0

 

it may not be true for long.  Andriod has gone from 0-13% in basically the blink of an eye.

 

Now if you look at the iPhone approval process.  See here for a developer who stood up for Apple, and subsequently got his app, which was approved several times before, pulled!

http://shiftyjelly.wordpress.com/2010/06/01/sentence-first-verdict-afterwards/

 

You have to ask how many companies are willing to bet 10s, 100s of thousands of $ (or millions) building an app which Apple can reject on basically a whim.

 

Here's a list of Andriod devices out.

 

http://en.wikipedia.org/wiki/List_of_Android_devices

 

the list is only going to get longer.  I'm sure iPhone will continue to be big and a big moneymaker, but Android will soon become the next big mobile app destination.

[Guest valueInv]

Possibly. But so far developers are making very little money from Android. Android is Google's attempt to

commoditize the mobile ecosystem and monetize through high volume ads. It also favors web application over native applications as thats their strength. For the foreseeable future, iOS remains the place where they have a reasonable chance at profitability.

 

Also, the initial on iAds is of far higher monetization than AdMob (Google). The developers are getting far higher CPMs and click thrus.

[opihiman2]

Possibly. But so far developers are making very little money from Android.

 

You sure about that?

 

 

His iPhone app is about 2-3x more profitable than the Android app, but that's due to much higher volumes.  I have a friend that created a 3d dice application for both platforms, and he says the trends for Android is becoming much better and is quite profitable.

 

I'm in the camp that HTC and Android will eventually catch up to iPhone in market share.  

[hyten1]

i just find it funny, people always look for data to support their theories.

 

its funny how the same set of strategies didn't work so well for apple in the desktop world for a very long time (you can argue if its working now or not). apple almost went out of biz. now that apple is on top, everything they do is right and perfect.

 

at the end of the day which strategy is the better one. it probably depends on the time/market/industry/situation

 

highly vertical/close system/proprietary

 

vs

 

horizontal/open system

 

 

 

 

 

[Guest valueInv]

Possibly. But so far developers are making very little money from Android.

 

You sure about that?

 

 

His iPhone app is about 2-3x more profitable than the Android app, but that's due to much higher volumes.  I have a friend that created a 3d dice application for both platforms, and he says the trends for Android is becoming much better and is quite profitable.

 

I'm in the camp that HTC and Android will eventually catch up to iPhone in market share.  

 

I just got a funny feeling  ;):

 

http://techcrunch.com/2010/07/05/distimo-june-2010/

http://thenextweb.com/apple/2010/07/08/revenues-for-one-app-developer-for-first-day-of-iads-150-huge/

 

You are right, Android is likely to catch up with the iPhone in marketshare. But why do you think Apple is values market

share over profitability? Have they ever demonstrated that in other markets like the desktop/laptop market?

 

 

 

[Guest valueInv]

i just find it funny, people always look for data to support their theories.

 

its funny how the same set of strategies didn't work so well for apple in the desktop world for a very long time (you can argue if its working now or not). apple almost went out of biz. now that apple is on top, everything they do is right and perfect.

 

at the end of the day which strategy is the better one. it probably depends on the time/market/industry/situation

 

highly vertical/close system/proprietary

 

vs

 

horizontal/open system

 

 

Absolutely. In highly dynamic industries like high tech, a strategy successful at one stage of market development completely

fails at another stage. My bet would be that able would be in big trouble if they don't switch strategies in about five years.

 

Clayton Christensen has written extensively about this phenomenon. They are excellent.

 

 

[txlaw]

Very interesting presentation, Tariq.  Thanks for posting that.

 

I'm really curious to see how Apple's cloud strategy develops in the coming year(s).  I was hoping that they would announce a cloud-based version of iTunes when they released the latest iPhone since they shut down Lala, but maybe they're still working on licensing agreements with the copyright owners.  MobileMe is also interesting, and I have to wonder whether they will extend its functionality to sync one's apps and media (music, video) on multiple Apple devices and on other devices (through the browser).  It sure seems like they're heading that way.  It's no wonder that AAPL and GOOG keep going after the same acquisition targets (AAPL snapping up Lala and GOOG snapping up AdMob before the other could get their hands on it).  Perhaps a major LBS provider is next (Loopt, Foursquare, etc.).

 

It's a little odd though for these guys to claim that AAPL has "beaten" GOOG and MSFT because of its market cap.

[ExpectedValue]

Very interesting presentation, Tariq.  Thanks for posting that.

 

I'm really curious to see how Apple's cloud strategy develops in the coming year(s).  I was hoping that they would announce a cloud-based version of iTunes when they released the latest iPhone since they shut down Lala, but maybe they're still working on licensing agreements with the copyright owners.  MobileMe is also interesting, and I have to wonder whether they will extend its functionality to sync one's apps and media (music, video) on multiple Apple devices and on other devices (through the browser).  It sure seems like they're heading that way.  It's no wonder that AAPL and GOOG keep going after the same acquisition targets (AAPL snapping up Lala and GOOG snapping up AdMob before the other could get their hands on it).  Perhaps a major LBS provider is next (Loopt, Foursquare, etc.).

 

It's a little odd though for these guys to claim that AAPL has "beaten" GOOG and MSFT because of its market cap.

 

Yeah, I think the hold up with iTunes "Cloud" has to do with licensing rights.

MobileMe might need the help of an acquisition, some people think DropBox would be appropriate as it syncs files better than MobileMe right now.

 

To me, LBS looks like a pretty tough market. You have Loopt and FourSquare (I think FourSquare is beating Loopt atm) but then you also have the potential of incumbents  like Facebook and Twitter coming in.