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THIS.

I pay currently:

$9.99 iCloud Family Storage
$10.71 AppleCare+ My iPhone
$10.71 AppleCare+ Wife iPhone
$16.08 Apple Music
$10.71 Apple News

And I will get Appletv+ for another $4.99 plus tax. I will never get Apple Arcade but that would be another charge.

Even if you don't cut the price that much can you at least bundle it into one charge? It's getting ridiculous.
Wow you can cut $21.42/mo on two iPhones. Ask yourself do you really need insurance? Some questions to ask yourself?

1. How often do you misplace your phone?
2. How often do you crack your screen?
3. Which iPhone does you and your wife own?

You and your wife are spending $514.08 over two years. Is that worth a piece of mind?

You can flip cracked iPhone for at least 60% of its value and get another phone with the difference. That's my thought process...
 
Amateur hour. The analyst's error is that the costs of the Apple TV Plus service has already been expended and is reflected on the balance sheets; thus, there is no $60 offset from hardware sales. In other words, when you or I watch it for "free," there's no marginal cost to Apple.

At this point, Apple TV plus is only improving Apple's financials whenever someone subscribes to it. Of course, to the extent that it increases hardware sales, Apple's financials will improve even further.

Back to Business 101 for this analyst.
 
If I hadn't bought a new iPhone today, I probably never would have got it. So, the only hope of them getting my business is hooking me in the first year. So I agree with Apple. There's millions more like me. At this point there are already too many providers and too many people happy and set in their ways - again, that's me. I have Netflix, Hulu, Amazon Prime, OTA HD, and I get everything I want.
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Wow you can cut $21.42/mo on two iPhones. Ask yourself do you really need insurance? Some questions to ask yourself?

1. How often do you misplace your phone?
2. How often do you crack your screen?
3. Which iPhone does you and your wife own?

You and your wife are spending $514.08 over two years. Is that worth a piece of mind?

You can flip cracked iPhone for at least 60% of its value and get another phone with the difference. That's my thought process...

Yours is the same as mine. I have always used this logic and have come out ahead every time. But I have a protective case and I treat my stuff good.
 
Cost: Apple already sank a lot of $$$ into TV+. Apple is expected to sink much more more $$$ in the future.

Revenue: Apple is playing accounting tricks to make is looks like a service is generating revenue, even though hardware is.

Profit: Apple will try to say it's a profitable service with growing revenue. The street called bs on them.


No, your conspiracy theory doesn't play out in the real world. Apple reports service revenue separately from hardware sales. Apple TV plus paid subscriptions will be reported under "Service Revenue." Apple hardware sales will show up under the hardware categories. No accounting trick. Moreover, Apple doesn't report "profit" by category of item. Never has, never will. So, no they won't be reporting whether Apple TV plus is "profitable," any more than they report it for Apple Music, Apple News Plus, etc., etc.
 
Amateur hour. The analyst's error is that the costs of the Apple TV Plus service has already been expended and is reflected on the balance sheets; thus, there is no $60 offset from hardware sales. In other words, when you or I watch it for "free," there's no marginal cost to Apple.

At this point, Apple TV plus is only improving Apple's financials whenever someone subscribes to it. Of course, to the extent that it increases hardware sales, Apple's financials will improve even further.

Back to Business 101 for this analyst.

Sorry, but you are not right. He is not talking about cash impact to the business due to ongoing operations, he is talking about revenue recognition, which he has a very valid point.

A LOT of people in this thread keep seeming to misunderstand this.
 
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When a major brokerage house like Goldman makes a call that projects one of the worlds largest stocks with strong upward momentum is worth 25% less than the selling price there should be an automatic SEC investigation. Who will profit from this, and if he’s wrong which is likely, where’s the accountability?
 
That analyst is clueless. He has no idea how powerful, how entrapping and addicting the Apple Ecosystem is. Once Apple customers get sucked into the Apple Ecosystem, it's very difficult to bail out. And often it starts with a Free Trial. Remember all the clueless analysts that said Apple Music would fail? That it would never ever compete or catch up to Spotify etc? LOL

Apple Music also started with free trials.

What’s Apple Music?
 
To be fair, a company like Goldman Sachs has hundreds of "analysts". Maybe thousands if you count their contractors and partners. But it sure is awkward to downgrade Apple just after the recent partnership.
Not particularly. We’re talking the same company that has had dependencies on Samsung for years for components while they were suing for 1 billion dollars. These companies are big, have multiple arms and that’s entirely understood by the management.

The analysts comments seem entirely fair if Apple does allocate a percentage of income from hardware sales to the services decision. AAPL has in past earnings reports lost value with concerns about the strength of the hardware decision and if each piece of hardware is seeing $60 allocated to services, despite revenue being neutral, the market may react poorly due to the perceived reduction in hardware profitability. That’s over 5% of revenue for iOS devices.

That appears to be the core of the argument the analyst makes and given how the stock market can react rather unpredictably to news it’s not entirely out of the question. Particularly when for the time being services while being on the up, is still secondary by a big margin to hardware. Apple also doesn’t report on units sold which further places focus on total revenue and anything that reduces that on a revenue sheet will be amplified in terms of impact.
 
Do the math. Not paying 4.99 a month is "saving $60 a year." Yowza!! Sounds like real money. So I buy an iPad Pro to check it out, right? So I love it, the year flies by and then $5 a month is hardly anything anyway so I'm not going to cancel, plus I'm hooked on iPad Pro now so when the upgrade comes along....

Duh. Apple is genius. Maybe Goldman analyst forgot the gear buy puts a pretty penny into AAPL's revenue stream.
 
Sorry, but you are not right. He is not talking about cash impact to the business due to ongoing operations, he is talking about revenue recognition, which he has a very valid point.

A LOT of people in this thread keep seeming to misunderstand this.


What's the net revenue impact of free membership that marginally doesn't cost Apple anything? It can only be a net positive, since it will have some positive impact on hardware sales, which increases revenue. This is in addition to the billions in revenue brought in from paid subscriptions to new service. There's no actual negative impact to revenue as he suggests. If it helps, think of it this way, at the end of the year, will Apple have more or less revenue by giving away some free subscriptions? The answer is, of course, "more." He made his error by forgetting that Apple owned the IP in its entirety that it was giving away, so there was no cost borne by Apple by do so.
 
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Ok, I see where this analyst is going. It’s like to them, someone has to eat the $60 dollar per device fee and since that fee is the same across all price ranges (cheap iPad to expensive iPhone 11 pro), it looks like your just lowering the average selling price of your phones for the next year.

And considering $60 from a $300 iPad technically wipes out massive profits it should be seen as a concern.

I get it. But that only makes sense if you don’t understand the play.

Apple TV+ like most moves from Apple is a defensive play to shore up its hardware sales. Every single acquisition or product category Apple has invested in is to protect high margin hardware. Whether that’s Logic Pro, final cut, Apple Music etc..
It’s all there to defend the no.1 problem that Apple faced decades ago:

what do you do when adobe or Microsoft doesn’t want to make software for your device?

if you understand that issue from 20 odd years ago, you understand Apple’s mindset.

The goal is always to provide a buyer of an Apple device with comparable or better software and services so that buying Apple does not put the customer at a disadvantage and to stop them choosing another device instead. So out of the box you have a streaming music service, a tv service, an cloud storage service.. you can get a smart speaker, produce a track, make a film etc..

so looking at Apple TV+ from that perspective, if apple did not provide this service they become vulnerable as if one of the parties that supplies a tv service decides not provide Apple customers with something, that’s a sale of a high margin device gone possibly. It may not seem like it now, but I’m sure years before Microsoft decided not update office for the mac I bet it never seemed likely either.

Apple sees all its products as one product really. It’s breaking out services for accounting reasons but ultimately services doesn’t even exist without the hardware as they completely tied together. Also, from a marketing point of view 60 dollars per device a year is just an ad campaign. Maybe they have taken that spend from marketing or research to make it add up.

also, if a buyer decides to upgrade or buy an Apple product over a competitor because of this deal then that adds to the bottom line more as well.

I just think analysts think Apple are stupid sometimes. Yet they are the most profitable publicly traded company in the world. They make long term bets, which is why they are still here and others have faded.
 
Apple had no other option and I honestly think this was the best move overall besides the hardware fiasco. They are not able to compete with the big boys (netflix, warner, amazon) and fixing people by giving them 1 year is a great move. Will be just interesting to see when they run out of content if the people will extend their subscription. Anyway big gamble for Apple... now the have to just through money around and they got plenty of it for good content.
 
2021 will be an interesting year. How many subscribers will TV+ have?
Can't remember how many billions Apples has spent on the shows that will premiere in the coming year, but since a lot of the viewers will watch that "for free", it will not be easy to get that money back. To make sure people will continue to subscribe, Apple will have to spend just as much money every year to keep people subscribing, or you can be sure they'll leave.
As opposed to Music where people listens to their favourite music over and over and keep subscribing as to not loose access, Apple will have to do a lot more work, and spend more money to keep subscribers happy on TV+. Not that many people re-watch shows to keep them subscribed, so new great shows have to be added constantly since there's no huge back catalogue like Disney or NetFlix.
I'm sceptical as to wether Apple will continue to throw money at TV+ at this rate if the number of paying subscribers in 2021 aren't showing stellar numbers.
 
Such a strange professional relationship Goldman and Apple have.

Goldman: We back the Apple Card. Get it.
ALSO Goldman: Cuts the Apple stock target price. Don't get it.

have You ever Heard- that a company has different departments, legally separated?
NO, now You have.

the sec should watch Goldman anyhow closely for their tight relationship with Apple.
 
2021 will be an interesting year. How many subscribers will TV+ have?
Can't remember how many billions Apples has spent on the shows that will premiere in the coming year, but since a lot of the viewers will watch that "for free", it will not be easy to get that money back. To make sure people will continue to subscribe, Apple will have to spend just as much money every year to keep people subscribing, or you can be sure they'll leave.
As opposed to Music where people listens to their favourite music over and over and keep subscribing as to not loose access, Apple will have to do a lot more work, and spend more money to keep subscribers happy on TV+. Not that many people re-watch shows to keep them subscribed, so new great shows have to be added constantly since there's no huge back catalogue like Disney or NetFlix.
I'm sceptical as to wether Apple will continue to throw money at TV+ at this rate if the number of paying subscribers in 2021 aren't showing stellar numbers.

Apple TV is just a discount on the heavily overpriced iphones. They don’t have to play in anything as long as people buy overpriced icrap.

in AUSTRIA an iPhone 11 costs around 1000 dollar, that’s 300 more than some years ago

all the services are just candy That You still buy their devices, and gives them leverage in their marketing, no need to compete, if yes, good, if not thanks for paying Apple tax.
 
I was expecting them to announce a bundle for their services, similar to amazon prime, it’s going to get expensive signing up to all of these singular subscriptions and iCloud plans.
 
For the next 12 months the service isn't worth $1.99 a month with the content.

Maybe next year they can be worth $4.99
Where did you find the complete list of first year content?

Can you please provide a link?
 
For the next 12 months the service isn't worth $1.99 a month with the content.

Maybe next year they can be worth $4.99

This keeps getting repeated and it's absolutely stupid. I mean... if even one of the shows is HBO quality then it's worth $14.99 per month. That's how HBO commands their price, quality. And they've done so for nearly 3 decades. So 4.99 would be a huge steal, and certainly be worth it over flexing a high quantity of BS.
 
What's the ATV+ content, beyond a handful of titles? Seems like I'm missing something obvious here. For 2-3x, Netflix gives me a vast library, not six (and more to come!) checklist-satisfying items.

You have to start somewhere... The titles will grow over time.
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Wow you can cut $21.42/mo on two iPhones. Ask yourself do you really need insurance? Some questions to ask yourself?

1. How often do you misplace your phone?
2. How often do you crack your screen?
3. Which iPhone does you and your wife own?

You and your wife are spending $514.08 over two years. Is that worth a piece of mind?

You can flip cracked iPhone for at least 60% of its value and get another phone with the difference. That's my thought process...

You just listed the reason for insurance, peace of mine. I would never own a phone without AppleCare.
 
Sorry, but you are not right. He is not talking about cash impact to the business due to ongoing operations, he is talking about revenue recognition, which he has a very valid point.

A LOT of people in this thread keep seeming to misunderstand this.

I’ll tell you what the point is. Apple have their own analysts who does these calculations and projections for them, Apple knows exactly what they’re doing. Right or wrong, that guy just put himself out of a job trying to show off. You don’t partner with a company and then go publicly and talk smack about them.
 
What's the net revenue impact of free membership that marginally doesn't cost Apple anything? It can only be a net positive, since it will have some positive impact on hardware sales, which increases revenue. This is in addition to the billions in revenue brought in from paid subscriptions to new service. There's no actual negative impact to revenue as he suggests. If it helps, think of it this way, at the end of the year, will Apple have more or less revenue by giving away some free subscriptions? The answer is, of course, "more." He made his error by forgetting that Apple owned the IP in its entirety that it was giving away, so there was no cost borne by Apple by do so.

You still don't understand what the analyst was saying. He is NOT saying there will be an impact in the overall revenue (but it could), but will have a material impact in the Hardware revenue due to Apple reallocating some of the hardware sale to the "free" aTV+. I will make it simple for you.

Let's talk the example of buying a Xs last year versus a 11Pro this year. Both sold/sell for $1000. Last year, when you bought a Xs, Apple recognized $1000 in hardware revenue (while not exactly true, Apple was already allocating some hardware sales to Services, but let's ignore that as it doesn't change the theory.) This year, when you buy a 11Pro, Apple ONLY recognizes $940 in hardware revenue and now recognizes an additional $60 in Services. So, Apple's hardware sales goes down and services go up an equal amount. So, yes you are right, their total revenue is the same, but Apple is still highly leveraged to their Hardware sales. So, a drop in revenue will be noticed.

There are also a couple of other assumptions in your post that are likely not true:

What's the net revenue impact of free membership that marginally doesn't cost Apple anything?
That is false statement. First of all, there is always going to be incremental cost in delivery costs (hardware, bandwidth, processing, etc.) While not huge, it is also not ZERO. In addition, without knowing the terms of the deals Apple has made with Studios/Actors/Directors, you can't assume that there isn't some revenue sharing based on views. Very likely, much like streaming music, there is some payments based views.

It can only be a net positive, since it will have some positive impact on hardware sales, which increases revenue.
How many people are going to buy an iPhone JUST to save $60 per year? Very little. Apple might see a small impact on their AppleTV sales, but I doubt the number of iPhone sold is affected by any significant margin due to a free AppleTV+ subscription. To most it will be just be a nice add-in.

If it helps, think of it this way, at the end of the year, will Apple have more or less revenue by giving away some free subscriptions? The answer is, of course, "more."
Interesting financial analysis. Give something away for free = more revenue? Not sure you thought that through. Apple is giving up a LOT of potential revenue by giving this away for free. The most likely subscribers will be Apple's most loyal users. There will be a large overlap with people who buy Apple product this year and get the free subscription. While I am sure Apple will never disclose the numbers, I would be curious at the end of next fiscal year, how many people were paying customers and how many were "free" customer. I would bet the number of "free" customers will be greater than paid customer. And, I mean the number of customers that pay continuously, not just pay one month, binge the one show they are interested in, and then cancel.

With all the being said, I will make two points:
1) I disagree with the analyst that this will have a material impact on Apple's stock price. Apple's stock is pretty solid right now. It can weather a "bad" quarterly report or two. Apple is committed to making Services a bigger part of their portfolio. (Now, I don't think all their ideas will pan out.)

2) This free trial is a good way for Apple to weather the growing pains of their new service. Face it, compared to Disney+, AppleTV+ is lacking. Apple will have to find a way to build up a stable of programs that will encourage people to keep subscribing versus just subscribing, binging, and cancelling.
 
What's the net revenue impact of free membership that marginally doesn't cost Apple anything? It can only be a net positive, since it will have some positive impact on hardware sales, which increases revenue. This is in addition to the billions in revenue brought in from paid subscriptions to new service. There's no actual negative impact to revenue as he suggests. If it helps, think of it this way, at the end of the year, will Apple have more or less revenue by giving away some free subscriptions? The answer is, of course, "more." He made his error by forgetting that Apple owned the IP in its entirety that it was giving away, so there was no cost borne by Apple by do so.

We are talking about revenue recognition, not cash revenue.
 
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Apple calling every Goldman contact they can think of to shut this analyst up.
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I guarantee you most of the comments here won't understand this distinction.
Yes, because you are so much more sophisticated than the rest of us hillbillies!
 
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