After $30 Billion Mistake, Can Tim Cook Manage Apple?

[Phelonious Ponk]

Well Tim, believe it or not, but that is Apple's business model. I really don't see what you find so difficult to understand - if you release one new product per year, you want sales of the product to be as high and as sustained as possible.
View attachment 5925
This graph shows how the per-quarter unit sales of each iPhone model. Unfortunately I could not find a graph comparing the performance of the 4S vs. the 4, but I assure you that the sustained peak of the 4 was longer than the 4S. Sales of the 4S really flagged off in the final quarter. The iPhone 4 was a truly revolutionary product - it was substantially superior to its competition. No other Smartphone had a high density display. At the time the iPhone 4 came to market, Android was still languishing at v2.2 ("Frozen Yoghurt"). Windows Phone 7 was still a few months from release. The build quality was second to none. In contrast, ask yourself how many features of the new iPhone 5 are market leading? In 2010, iOS users did not have to go on the defensive. In 2012, the situation is quite different.

View attachment 5927
This graph shows two things - the pulsatile nature of product launches, and how much of Apple's revenue is invested in iOS devices. The y-axis is per million units.

View attachment 5926
This pie chart shows where Apple's revenue comes from. iOS devices make up 81% of Apple's revenue.

Of course. That's very different than a business model predicated on maintaining peak sales throughout the life of the product, which is what I thought you were saying before...

The iPhone 4 was profoundly profitable for Apple because it maintained its high sales volume for almost the whole year until the 4S was released.

...and is not what is represented in the charts you posted here. It's hard to read that timeline, even at 150%, and it represents production, not sales (though the connection is not lost on me) but it appears that the iPod 4 took about 1/3 of the year to reach its peak, sustained that peak for a similar period, then declined for the rest of the year until, I assume, the 4S came along. It also appears that the curve is better, but similar to the three iPhones that preceded it. I have no idea how the 4S fared by comparison. I don't doubt the sustained period of the 4 was better. And I don't doubt that Apple wants the peak to sustain as long as possible. What I doubt is that the business model, the expectations, were anything other than a rise to a peak, a sustained period and a predictable decline leading into the next release. If their business model is anything else, they're not paying attention to consumer buying patterns for their own products.

Tim

Bob? Is my quoting workin' bro?

 

[rblnr]

You're all over it Tim if I'm understanding you correctly. Can't read the charts very clearly, but virtually from its release in Sept '11 to August '12, the 4S was the best selling phone in the US, and virtually every month, the best selling phone at each of the 3 main carriers. The tail off happened when the 5 rumors started heating up, July/August, though it was still the best seller in July. I'll take that.

Apple has a one year phone product cycle that is ridiculously well known and press-covered -- offhand, can't think of another business cycle that has such a place in the public consciousness. Obviously this will affect sales. Also, with fewer phones bought late summer in anticipation, fewer contracts are up then too -- there's a snowball effect here.

I've been reading articles like the header here for years -- there's some serious cognitive dissonance, be it repeatedly ignoring sales and profit numbers, what really matters to users or in this case, Steve Jobs mistakes of which there were several. Anyone remember the Cube forex? You take chances, you take some lumps. Doing the maps by themselves was a risk, but I think long term it will work out both qualitatively and strategically to be free of Google. Maps has been OK for me in NYC metro and consumer reports fwiw found it fine with concerns overblown. Antennagate faded w/o apparent consequence. Maps may take a bit longer because of the data and feedback required, but so many of these writers just have their HUTA AFAIC.

As for Windows 8 mobile, I like the interface in what little I've used it and dont find it to be a second rate copy like I found Android, though I understand version 4 is nice. Remember the original Nokias that came out with W8? Me neither. It's a huge wait and see if they can get any market traction. And think about how crucified Apple would be if twice they announced a tablet without a release date and price. We'll see about Surface too. And good luck updating your Android 3 phone from last year. You can still update your 09 3GS to the latest software.

Lots of competition out there and it's getting better, but to me, Apple is still making the best, easiest to use stuff, so I'll stick with my bet. Sorry for any ramble.

 

[Keith_W]

...and is not what is represented in the charts you posted here. It's hard to read that timeline, even at 150%, and it represents production, not sales (though the connection is not lost on me) but it appears that the iPod 4 took about 1/3 of the year to reach its peak, sustained that peak for a similar period, then declined for the rest of the year until, I assume, the 4S came along.

You mean the iPhone 4, not the iPod 4.

If you look closely at the graph, it peaked between July 2010 - October 2010. The iP4 was released in late July, meaning the earlier quarter would have captured some of the sales figures from the first couple of weeks of iP4 sales. Those are quarterly sales figures, meaning that the iP4 hit its peak within the first quarter. No doubt it could have gone even higher had they not been bottlenecked on the production front.

 

[Phelonious Ponk]

You mean the iPhone 4, not the iPod 4.

If you look closely at the graph, it peaked between July 2010 - October 2010. The iP4 was released in late July, meaning the earlier quarter would have captured some of the sales figures from the first couple of weeks of iP4 sales. Those are quarterly sales figures, meaning that the iP4 hit its peak within the first quarter. No doubt it could have gone even higher had they not been bottlenecked on the production front.

Yes, I did mean iPhone. I did look closely at the graph and I did see that it peaked between july and October. That's how I concluded that sales climbed for about 4 months peaked for about 4 months and declined for about 4 months toward the next release. The pattern is very similar to the ones that preceded it, though more dramatic. No doubt it was a raging success that the lesser release of the 4S didn't repeat, but my observations about the plan appear to be supported by your chart. The business cycle is too short for sustained peak of more than a few months; it's really that simple.

Tim

 

[ack]

So glad to see Forstall being booted out - defeated in his own political game - finally, over this maps fiasco http://abcnews.go.com/blogs/technol...d-for-refusal-to-apologize-for-maps-says-wsj/

 

[amirm]

Heads did roll. Didn't think it would come though...

 

[Keith_W]

The exit of Forstall confirms that Apple themselves knew what we have been saying all along. The only people who have been denying reality are the Apple apologists:

- iOS is stale. Compared to the leap between Android 2.3 to 4.0, or even from 4.1 to 4.2, Apple's move from iOS 5 to 6 is an incremental upgrade which shows little innovation and even goes backwards in some areas. You want to see what happens to tech companies when they do this? Look at what happened to Microsoft after they went from XP to Vista.

- skeumorphism is out. Why does the hardware look modern, minimalist, and beautiful, whilst the software imitates old leather pads, post-it notes, and ring binders? These things belong on childrens computers, not serious productivity tools.

- Apple arrogance is out. Releasing substandard products and then telling people that the product is perfect, the problem is with them - does not cut it in 2012. Steve Jobs couldn't get away with "you're holding it wrong", just like Forstall couldn't get away with refusing to apologize for the maps disaster.

The massively underwhelming iPhone 5 and Apple's arrogance will alienate more and more people. Thanks to Forstall being asleep at the wheel, Samsung is now the no.1 smartphone maker in the world. That's right, not only is Android the market leader, but its largest manufacturer also sells more handsets than the whole of Apple. Given that I have pointed out in the past that 75% of Apple's income relies on iOS, it is not hard to see that this spells serious danger for Apple. If the growth of all Android manufacturers continues, and if Microsoft's innovative new Surface gets any traction, Apple will be floundering within the next couple of years - UNLESS it rediscovers its mojo and reverses the stagnation.

I'd like to see what the apologists say Some reality denialists think there is nothing wrong with Siri or Apple maps. Well, if Forstall was doing such a great job, why is Apple losing market share? Why did Apple kick him out? What do they know that you don't?

 

[JackD201]

Samsung's international distribution strategy is very different from Apple's. It isn't just about the technology.

 

[Phelonious Ponk]

The exit of Forstall confirms that Apple themselves knew what we have been saying all along. The only people who have been denying reality are the Apple apologists:

- iOS is stale. Compared to the leap between Android 2.3 to 4.0, or even from 4.1 to 4.2, Apple's move from iOS 5 to 6 is an incremental upgrade which shows little innovation and even goes backwards in some areas. You want to see what happens to tech companies when they do this? Look at what happened to Microsoft after they went from XP to Vista.

- skeumorphism is out. Why does the hardware look modern, minimalist, and beautiful, whilst the software imitates old leather pads, post-it notes, and ring binders? These things belong on childrens computers, not serious productivity tools.

- Apple arrogance is out. Releasing substandard products and then telling people that the product is perfect, the problem is with them - does not cut it in 2012. Steve Jobs couldn't get away with "you're holding it wrong", just like Forstall couldn't get away with refusing to apologize for the maps disaster.

The massively underwhelming iPhone 5 and Apple's arrogance will alienate more and more people. Thanks to Forstall being asleep at the wheel, Samsung is now the no.1 smartphone maker in the world. That's right, not only is Android the market leader, but its largest manufacturer also sells more handsets than the whole of Apple. Given that I have pointed out in the past that 75% of Apple's income relies on iOS, it is not hard to see that this spells serious danger for Apple. If the growth of all Android manufacturers continues, and if Microsoft's innovative new Surface gets any traction, Apple will be floundering within the next couple of years - UNLESS it rediscovers its mojo and reverses the stagnation.

I'd like to see what the apologists say Some reality denialists think there is nothing wrong with Siri or Apple maps. Well, if Forstall was doing such a great job, why is Apple losing market share? Why did Apple kick him out? What do they know that you don't?

I don't know a thing about Apple maps, so I can't defend or condemn them. But Apple has never been about superior hardware technology. They're about operating systems and, more specifically, the user experience with those operating systems and the interactivity between devices. Microsoft sucks at all of the above and, being a user of several Googlethings, I can say that they're better than MS, but not nearly as good as Apple. If a really good, intuitive user experience is important to you, Apple is probably your choice. If you're already invested in Apple technology and would like your phone to support and integrate with the apps on your iPad, your Mac, your Airport Express, you Apple TV, etc. the other choices are not even worth considering.

Market share? When you take over a category and dominate market share the way the iPhone did, when you start off without any decent competition to speak of, there really is no place to go but down as other companies begin to get competitive products in the market. And if you are both the operating system and the hardware provider and your competition for that market share is two other operating systems implemented across dozens of hardware manufacturers, well....the line is fuzzy. Is Apple in competition with Google and Windows Mobile, or is it competition a bunch of phone builders using those two platforms?



A very different market share story than the one you see if you look at operating systems. Very different markets. Very different stories. Very different competition for market share. No apologies necessary. What do you do for a living, Keith?

Tim

 

[Keith_W]

But Apple has never been about superior hardware technology. They're about operating systems and, more specifically, the user experience with those operating systems and the interactivity between devices. Microsoft sucks at all of the above and, being a user of several Googlethings, I can say that they're better than MS, but not nearly as good as Apple.

Hey Tim, I thought you were an objectivist! Why are you resorting to subjectivist claptrap about user experience and all that I don't think Apple offers a great user experience at all. Try to download a .XLS onto your iPhone and you will see what I mean. You can't find it because you have no access to the file system? The powers that be have decided that you are too stupid to know what you are doing and have hidden it from you?

Another thing. I have seen you go on rants about how high end audio charges you more and you get less. Well, how can you justify Apple's pricing structure:

- iPhone 5 16GB - $199
- iPhone 5 32GB - $299
- iPhone 5 64GB - $399

Do you know how much RAM costs these days? I'll bet that the extra 46GB of RAM that the 64GB version has over the 16GB version doesn't cost Apple $200 at wholesale prices. They are price gouging, charging what they think the market can tolerate. They are creating an artificial distinction, when in reality the difference in price is very small. If you can not stand it when high-end audio companies do it, shouldn't you be saying something about Apple?

And if you are both the operating system and the hardware provider and your competition for that market share is two other operating systems implemented across dozens of hardware manufacturers, well....the line is fuzzy.

Nothing to stop them from licensing iOS to third party manufacturers, just as they licensed Mac OS to third parties for a while ... until Steve Jobs decided to shut the whole party down.

 

[Phelonious Ponk]

I download the app, Numbers, from the App store for $9.99. Now I have a simple spreadsheet program on my iPad/Phone (the only kind of spreadsheet program you want on a pad) that will quickly and automatically convert any .XLS file at the touch of a finger and integrate beautifully with the touch screen interface in iOS. There are a number of ways to get the .XLS files there. The simplest is just to email them to yourself and open them in Numbers. How do you do that? I must confess, it is a rather difficult process. Draconian. You have to leave your finger on the attachment icon in the email for a second, at which point it asks you if you'd like to convert it to Numbers. Say yes.

I can see why the user interface is such a bad experience for you.

Tim

 

[Phelonious Ponk]

It occurs to me that you may not actually be wanting to work with the data, but to just import a spreadsheet of contacts into the contacts on your iPhone? Even worse, an extra step -- first you have to save the xls file in CSV format, and import it into Outlook. Then your iPhone will automatically import it into its contacts. An extra step but you save the $9.99 for Numbers. Too much luddite-challenging complexity? There's an app (there's always an app Apple has and others are waiting for...) that will do all the conversion and importing work for you, but the price is dear. It's $2.99. Greedy bastards.

No apologies. Just realities.

Tim