Interesting Take On The iPhone 5

[monkor]

I'm not too huge on the gloom and doom stuff, but Seeking Alpha has a pretty interesting article here http://seekingalpha.com/article/910...-5-design-and-its-effect-on-stock-performance on the presumed flaws of the iPhone 5 and negative implications/effects for investors and stockholders.

It concerns the "Scuffgate" dilemma, citing reports saying that potentially 40% of 5's are scuffed right out of the box. That's not a very good number, to say the least, and there are legitimate concerns about supply shortages which could eat into sales.

Another thing I found pretty concerning were the statistics on research and development, which I didn't know before. Here's the quote:

"One writer thinks this market is maturing, and that Apple is not spending enough on Research and Development to stay ahead of the intense competition. According to his research, Samsung spent $29 billion on R&D last year, which is more than ten times the $2.4 billion that Apple is spending. And according to another report:

"Apple is 18th on the list, spending $2.6 billion, behind other technology giants such as Microsoft, Intel, IBM, Cisco, Oracle, Qualcomm, Hewlett-Packard and Amazon.com. Apple's R&D spending as a percentage of its revenue of $127.8 billion was 2%.""

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I think there were some pretty valid points made in the article that have to concern anyone as an investor. It's not the be all end all, of course, but it doesn't illicit confidence. I thought the scuffing was trumped up, but now I have actual concerns considering that story that broke on Friday about the Foxconn rift between workers and management. The R&D thing also came as a bit of a surprise, as that number isn't where it should be in comparison to the competition. It's obviously just a number and doesn't reflect actual results (doing more with less), but there's a large disparity there.

Thoughts?

 

[xraydoc]

$29 billion and the best Samsung came up with was a 4.8" Android and a 5.5" Android using otherwise off-the-shelf processors and chipsets (besides the self-manufactured OLED screens)?? Hmmm...

Perhaps some of Samsung's R&D budget goes to screen manufacturing, televisions, Blu-ray players, refrigerators, cameras, air conditioning units, chip fab technology, laptop design, etc.... I refuse to believe they spent $29B on cellphone research. I don't think TouchWiz is worth $29B.

However, with Apple's $100+B in the bank, they should be spending more... of that I agree.

 

[tymaster50]

At this point Apple fans will buy anything that's even a slight increase from last year. However that's the way to go now. You can't just radically change things you have to introduce it slowly, I honestly saw the lightning port coming however the relocated headphone port was a confusion. Apple would be out of the phone business if they released one "to do it all" phone.

 

[monkor]

$29 billion and the best Samsung came up with was a 4.8" Android and a 5.5" Android using otherwise off-the-shelf processors and chipsets (besides the self-manufactured OLED screens)?? Hmmm...

Perhaps some of Samsung's R&D budget goes to screen manufacturing, televisions, Blu-ray players, refrigerators, cameras, air conditioning units, chip fab technology, laptop design, etc.... I refuse to believe they spent $29B on cellphone research. I don't think TouchWiz is worth $29B.

However, with Apple's $100+B in the bank, they should be spending more... of that I agree.

Good point about that R&D going toward other things; we tend to forget that Samsung manufactures a lot more than just cellphones. They do a whole lot more. If they are spending that much on TW, then that's a pretty big fail on their part. Perhaps something else is in the works.

Apple really does need to spend more I think. The new design, while nice in theory, is being panned by a lot of people. It truly is incredibly light and thin, but there seem to be definite costs to that.

Maybe the iPad Mini will surprise a lot of people.

 

[Hankster]

At this point in the game Apple has two major advantages.

1. They have the largest and most loyal user base due to iOS and the app store. People who have spent money on dozens of apps are not going to move operating systems. Unless the iPhone becomes a horrible phone, the majority of users will not change due to their investment (apps, iTunes, etc) already. Also, most users are too comfortable with iOS to change.

2. Apple has over $100 billion in cash. That's more than any country. This company has the ability to sink 500x more money into any research/ development over another company.

 

[chakraj]

Yes I think the new ipod Touch Max will be a great gauge as to if they only messed up on the 5 or if there is more going on at HQ.

 

[monkor]

At this point in the game Apple has two major advantages.

1. They have the largest and most loyal user base due to iOS and the app store. People who have spent money on dozens of apps are not going to move operating systems. Unless the iPhone becomes a horrible phone, the majority of users will not change due to their investment (apps, iTunes, etc) already. Also, most users are too comfortable with iOS to change.

2. Apple has over $100 billion in cash. That's more than any country. This company has the ability to sink 500x more money into any research/ development over another company.

They have really set themselves up for future success, you're right about that. It's amazing the brand loyalty that Apple has, honestly. But it's well deserved; they haven't done a whole lot to piss off the majority of their customers. That being said, the resale value of these 5's is going to get hurt by the scuffing issue I suppose unless something is done. That might make people mad who sell their older products to get the next best thing every year. I suspect a lot of people do that, but I could be wrong.

And eventually they are going to have to spend that money on something, but they haven't really shown an inclination to spend it on R&D lately..

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Yes I think the new ipod Touch Max will be a great gauge as to if they only messed up on the 5 or if there is more going on at HQ.

Haha iPod Touch Max, that's funny. It's going to be interesting to see if those two markets will overlap. Is Apple releasing too much, too soon? And there are already hints of supply issues on the Mini as well

 

[sand_man]

With essentially one new model iPhone every 12-15 months R&D expenditure is probably sufficient.

 

[scaredpoet]

I'm not too huge on the gloom and doom stuff, but Seeking Alpha has a pretty interesting article here http://seekingalpha.com/article/910...-5-design-and-its-effect-on-stock-performance on the presumed flaws of the iPhone 5 and negative implications/effects for investors and stockholders.

... and that's where you lost me.

Just like everything you see on Gizmodo, engadget, other tech blogs and even this site, you have to take with a grain of salt, you have to do DOUBLY so for investor sites. These are people trying to read into a crystal ball to plot where the Apple is going to be next month, wildly guessing at sales numbers and consumer demand, and making dumb calls like assuming all of Samsung's R&D budget is going into phones, and not refrigerators or TVs or any of the other hundreds of things they make. Not to mention Samsung makes multiple different phone models over the course of the year, and doesn't seem to care all that much about support for each device past the next product cycle.

You also have to consider that these if these pundits really knew about half of the things they write about, they'd probably be very rich designing these things, and possibly working for Apple. But they aren't. They're in the stock market, trying to justify whether it's a good idea, to buy, hold, sell or sell short APPL and other stocks. Half of the time, they guess right. But that's often no better than you or I could be.

At the end of the day, the writing speaks for itself. These "writers" aren't concerned so much about whether a product is good, or even whether customers are really happy. Their end game is what the share price is going to be.

The only "take" I'm interested in is whether a particular device works, well, and if it suits my needs, and if it's well supported and will likely last a while, if I choose to keep it for a while. If all that's true, then it doesn't matter to me if 1 million or 50 million others are buying it.

If I had stock in Apple, then maybe I'd pay attention to the metrics. But even then I wouldn't trust these guys writing articles like this. If writers like these truly knew what was going on, we'd have been warned well in advance of 2008 that the stock market was going to take a dive.

 

[monkor]

With essentially one new model iPhone every 12-15 months R&D expenditure is probably sufficient.

One new iPhone model, one new iPad model, a new laptop, iPad mini, a redesigned iPod, Apple TV. They do a lot more than just release an iPhone, and yet they are still not spending as much as a whole lot of other companies.

My point is that if they are going to be releasing one model every 12-15 months, shouldn't they invest even more in research to ensure that said model is even more impressive (and i'm not saying that performance wise the iPhone 5 is unimpressive, because it is).

Dare I say that Scuffgate would have been completely avoided if LiquidMetal were fully developed in time for the iPhone 5? Because it's what my mind keeps getting drawn back to. That technology is truly impressive but is in its infancy states...Apple could have pushed forward with that given their near unlimited funds

 

[scaredpoet]

My point is that if they are going to be releasing one model every 12-15 months, shouldn't they invest even more in research to ensure that said model is even more impressive (and i'm not saying that performance wise the iPhone 5 is unimpressive, because it is).

Then, more impressive how? How much "innovation" is enough, exactly? And how much R&D spending is enough?

Dare I say that Scuffgate would have been completely avoided if LiquidMetal were fully developed in time for the iPhone 5?

You can dare and you can say it, but none of us out here have any clue at all what the status of LiquidMetal is, or even if it would've been suitable casing material. Liquidmetal seemed pretty fully developed when it was first unveiled and Apple purchased them. It could well be that we might be seeing the fruits of their labor and not realize it. Or, they could've tried to do something with it and it could've failed miserably. We just don't know.

 

[monkor]

... and that's where you lost me.

Just like everything you see on Gizmodo, engadget, other tech blogs and even this site, you have to take with a grain of salt, you have to do DOUBLY so for investor sites. These are people trying to read into a crystal ball to plot where the Apple is going to be next month, wildly guessing at sales numbers and consumer demand, and making dumb calls like assuming all of Samsung's R&D budget is going into phones, and not refrigerators or TVs or any of the other hundreds of things they make. Not to mention Samsung makes multiple different phone models over the course of the year, and doesn't seem to care all that much about support for each device past the next product cycle.

You also have to consider that these if these pundits really knew about half of the things they write about, they'd probably be very rich designing these things, and possibly working for Apple. But they aren't. They're in the stock market, trying to justify whether it's a good idea, to buy, hold, sell or sell short APPL and other stocks. Half of the time, they guess right. But that's often no better than you or I could be.

At the end of the day, the writing speaks for itself. These "writers" aren't concerned so much about whether a product is good, or even whether customers are really happy. Their end game is what the share price is going to be.

The only "take" I'm interested in is whether a particular device works, well, and if it suits my needs, and if it's well supported and will likely last a while, if I choose to keep it for a while. If all that's true, then it doesn't matter to me if 1 million or 50 million others are buying it.

If I had stock in Apple, then maybe I'd pay attention to the metrics. But even then I wouldn't trust these guys writing articles like this. If writers like these truly knew what was going on, we'd have been warned well in advance of 2008 that the stock market was going to take a dive.

I agree with what you're saying. I hold Apple stock and do a lot of my own market research in my spare time, which is why I like to read investment sites to get a gauge on the marketplace. That's why I found this article interesting.

Obviously stock prognostication is a feast or famine trade, but in fairness he does make valid points. From a consumer side, I see what you're saying about it not mattering if the end result is fantastic, and that obviously plays into the overall numbers.

As for the '08 market, there were plenty of people who knew and plenty more people who told those who knew to shut up, haha. But you're spot on that, as with everything, you take it with a grain of salt. This was just one of the more well-supported explanations that I'd read on the future of Apple in the short term.