Second-Generation iPhone X Estimated to Cost Apple Up to 10% Less to Manufacture

[Ramchi]

if anyone things that Apple is going to drop prices on the next iPhone X because it costs them less to manufacture doesn't understand Apple.

They will take those added margins to wallstreet and boast about how amazing their margins are. it's exactly what they've done for juts about every iPhone.

Exactly, They keep reducing the cost, keep increasing the margins(most likely the price as well) in the anticipation of reduced volume.

At some point, they would sell 50% less volume (compared to their previous best volume in the recentr years & NOT based YoY) yet post record earnings!

They know Apple loyalists would shoulder the burden with pleasure!

 

[HarryWild]

Apple will keep the 5% and add better feature for the other 5%, then they would normally!

 

[n-evo]

i heard this on the news 2 days ago hopefully prices will not be bad.

They'll be € 11,- less.

 

[Freida]

What is reasonable?

When iPhone 6 came out it was the latest and greatest from Apple. Now iPhone X is double the price.
Is that reasonable?
I like the time when Apple released their product and maintain the pricing. Unlike recently when every year there is a price increase which now resulting in a starting price of £999 (for a smartphone!). Are you ok with these incremental price changes?

We have now reached a point where the tech is no longer reflecting the price.
Look at it this way - most people will not notice difference between iPhone 7 and iPhone X on daily basis. The speed gain is pretty much no longer noticeable. The picture quality is negligible to most users. Screen is bigger (with a notch!) and that is probably the only main difference that people will spot straight away but is it worth the price tag? I doubt that and I personally would be happy to wait another 1-3 years for the tech to be less expensive. In fact, I still feel LCD is far superior as I don't think even Apple solved the colour problems with OLED.

And other things like FaceID etc. are just little gimmick that most people don't need and certainly don't justify the price.

Yes, all these little things setup for the future but for now, we are forced to buy thicker and heavier phone, that is more expensive and in everyday use we don't notice much difference.
There is a difference on paper and there is a difference in reality and the price tag doesn't match the reality.

So yeah, I think people are spoiled these days and they no longer consider the real added value to their purchases. They just blindly go and buy the latest because they feel that they need to have it in order for their lives to be to better. The reality is, we can all upgrade once every few years and we would be totally fine.

 

[afir93]

When iPhone 6 came out it was the latest and greatest from Apple. Now iPhone X is double the price.
Is that reasonable?
I like the time when Apple released their product and maintain the pricing. Unlike recently when every year there is a price increase which now resulting in a starting price of £999 (for a smartphone!). Are you ok with these incremental price changes?

[...] Yes, all these little things setup for the future but for now, we are forced to buy thicker and heavier phone, that is more expensive and in everyday use we don't notice much difference.

I agree with some of your points but $999/£999 is not the starting price for Apple's current smartphone generation, it's the $699 of the iPhone 8 (assuming we ignore the SE and pre-2017 iPhones which Apple of course also still sells). Apple didn't move up the entire price range, they just added something on top of it, a new high-end early adapter device with brand-new technologies for an unsurprisingly higher price-tag that is not worth it to everyone.

And $999 will also not be the starting price in the near future as the rumored 6.1" model will most likely take the price of the current 8/8+, so the starting price for 2018 iPhones (again, assuming that there won't be an SE 2 which is also still possible) would be about the same as this year's.

There's a big difference between moving up the entire price range and just increasing its upper bound. It's not like anyone who wants an iPhone is forced into the X like you make it seem like; the 8 and 8+ (and SE, 7/7+, ...) are still perfectly good options. To therefore circle back to your original point if it's reasonable or not, I don't think it's unresaonable to ask $300 more for an early-adapter device that has much higher production costs and much more R&D time and resources put into it. For those for who this technology isn't worth the price-up, the cheaper iPhones of Apple's lineup are perfectly good options.

 

[Freida]

I agree with some of your points but $999/£999 is not the starting price for Apple's current smartphone generation, it's the $699 of the iPhone 8 (assuming we ignore the SE and pre-2017 iPhones which Apple of course also still sells). Apple didn't move up the entire price range, they just added something on top of it, a new high-end early adapter device with brand-new technologies for an unsurprisingly higher price-tag that is not worth it to everyone.

And $999 will also not be the starting price in the near future as the rumored 6.1" model will most likely take the price of the current 8/8+, so the starting price for 2018 iPhones (again, assuming that there won't be an SE 2 which is also still possible) would be about the same as this year's.

There's a big difference between moving up the entire price range and just increasing its upper bound. It's not like anyone who wants an iPhone is forced into the X like you make it seem like; the 8 and 8+ (and SE, 7/7+, ...) are still perfectly good options. To therefore circle back to your original point if it's reasonable or not, I don't think it's unresaonable to ask $300 more for an early-adapter device that has much higher production costs and much more R&D time and resources put into it. For those for who this technology isn't worth the price-up, the cheaper iPhones of Apple's lineup are perfectly good options.

I understand your point but I was trying to illustrate that flagship iPhone 6 was this and flagship iPhone X is now that.
Even if we compare 6 to 8 the price is much higher anyway. Regardless, I see what you mean.
I would prefer if Apple stopped going for bigger phones overall. Yes, lets have options but lets just not make it bigger. Why 6.1 again? Give me iPhone 8 screen in a smaller package and ill be happy puppy. That would sell like mad as I'm sure there is plenty of people that just want a pocketable phone rather than a phablet that Apple seems to heading for these days.

 

[Baymowe335]

I know people switching to Android in droves. I haven't activated a movie on iTunes in years because of accessibility issues. AAPL is underwater for the year. Apparently, the stock is not waterproof.

Stocks go up and down. Apple's trajectory is up and was at an all time high a few weeks ago. The entire market is not behaving well lately. Seen Googl and FB?

The anecdotal evidence you have of people switching doesn't matter. You don't even know "droves" of people. You probably know 5 people that switched and used confirmation bias to think that extrapolates to a billion users. It doesn't. Again, look at the numbers from Apple. They are CRUSHING the competition. Apple owns over 90% of the profit in smartphones.

I'm done explaining this to you. Read some credible information and come back.

 

[ipponrg]

It’s even funnier that you are so clueless, you think I wrong.

You might think their services are a mess, but they have 230M paying subscribers to their various services and made over $30B in revenue from services alone in the last four quarters.

With $8.5B in services revenue just last quarter, Apple likely made more profit from services revenue alone than Amazon made in all of 2017.

Again, your perception doesn’t matter. The numbers speak for themselves. The margins Apple makes on services are likely over 60% too. Apple is a consumer products company with a massive services component that is the fastest growing business. iPhone as a service will likely be a reality in the future.

I don't think you're wrong per se. I just think you're dense. No, the numbers don't speak for themselves because you're using the numbers to fit your perception. No one in the tech industry, entertainment industry, and <fill in the blank> industry talks about Apple as a services company. They are first and foremost ONLY known for their hardware and maybe software.

I'm going to use the same information that you got your $8.5B source from (https://www.macrumors.com/2017/11/02/apple-services-revenue-up-34-percent-4q2017/)

"Apple's services category, which includes the App Store, iTunes Store, Apple Music, Apple Pay, AppleCare, iCloud, licensing, and other services, set an all-time quarterly record revenue in the fourth fiscal quarter of 2017."

Now, I'm going to link Amazon's numbers (https://www.cnbc.com/2018/02/01/aws-earnings-q4-2017.html):

"Amazon Web Services gave Amazon $5.11 billion in revenue, above analysts' estimates".

Given how you know how to use numbers and are a superb analyst, what is the difference here?

I'll give you an easy hint since I am apparently more clueless than you are because I don't misuse numbers to fit to my argument. Apple's services are within their ecosystem, so they do not deliver a PaaS, SaaS, IaaS, etc to anyone externally. Amazon's services do all of the above.

Which one of the 2 has a larger reach as a services company?

No one is arguing that Apple isn't profitable and makes a ton of money off their own services. What *I* am challenging is your ignorant misconception that Apple will be known as a service company.

In your mind, do you still think Apple is known or will be known to be a services company considering they have almost little to no integration with anyone outside of themselves? Just think about that for a second.

 

[afir93]

I understand your point but I was trying to illustrate that flagship iPhone 6 was this and flagship iPhone X is now that.
Even if we compare 6 to 8 the price is much higher anyway. Regardless, I see what you mean.
I would prefer if Apple stopped going for bigger phones overall. Yes, lets have options but lets just not make it bigger. Why 6.1 again? Give me iPhone 8 screen in a smaller package and ill be happy puppy. That would sell like mad as I'm sure there is plenty of people that just want a pocketable phone rather than a phablet that Apple seems to heading for these days.

Well I see your point, but the price comparison between the 6 and the X doesn't mean much if you're just cherry picking at the fact that they are both flagship phones and ignore that the goals and markets with the respective devices were different in many regards and that the iPhone 6 has a much more suitable 2017-equivalent that it can be compared to, the iPhone 8.

And the price that the iPhone 6 had at launch was $50 lower than the iPhone 8 at launch (looking at US prices) – so yes the 8 is technically more expensive than the 6 was, but that's ignoring the fact that the iPhone 6 also started with only 16GB of storage; if we compare the 32GB versions then it hasn't become more expensive at all (maybe even cheaper, would have to look it up). In any case I wouldn't call it a night-and-day price increase when we are talking about $700+ phones.

I agree about your sentiment about the size of the phones... sort of. For me the iPhone 8/X chassis is the perfect size so I can't really complain, but at the same time, I find the smaller SE size intriguing and for certain purposes more reasonable. It would be a shame if there's no SE 2 this year.

That said, I think Apple went with the 6.1" size because that would lie perfectly between the 8/X chassis size and the 8+/(rumored) X+ chassis size. If only a single iPhone replaces the 8 and 8+ price-wise then it would make sense to make the size something right in the middle to appease the lovers of both sizes to an extend; and the 8/8+ sizes would still be available with the X successor and X+.

 

[ChrisCW11]

So that means an 20% increase in price according to Apple profit mongering rules.

Why pass savings to your customers when they still line up to buy a product full of bugs and quality issues.?

 

[CarpalMac]

I don't care if you care or not, silly. I've been using Apple stuff for 20 years, and up until recently I have existed in that eco system pretty much exclusively. I'm a pro user, and it turns out that costs matter in business.

At the beginning of the 2000s Apple was really the only game in town for digital creatives, so we stuck with Apple stuff. That's all very well, but slowly Apple have 'ditched' as you put it, various Pro centric software and hardware in favour of consumer devices. An iPad Pro is a fantastic computer, but it's still not going to cut it as a workstation. Cutting off all of the connections on a MacBook pro in favour of a fairly useless Touch Bar and neutering the RAM is kicking pros in the guts. But there never used to be an alternative.

The point is that the alternatives have caught up, and in some cases overtaken Apple. And for less money.
I used to think that iOS was the only OS. It works out that android does a lot of things better, and it turns out that it doesn't matter anyway. Microsoft have a superior cloud platform (over iCloud)and Google are open house when it comes to software and digital assistants have left Siri way behind.

Apple Music is great, but then so is Amazon Music, or Spotify.

So let me help you out. You say you don't know why people ditching iOS have to justify it - well I don't. But the glory of the internetz means I can. I use iOs on my iPad. I use android on my Google Phone. I Use One Drive for my cloud services. I use Amazon for my Music. I use an iMac for my business, and my wife uses a PC for hers.

That wasn't possible 5 years ago, maybe even less.

I thought I'd never be able to not have to only use Apple for services and would have to pay the premium, but now I don't.

You don't have to care about that, but on a forum that's discussing the merits of a phone that is over $1K that even die hard iOS fans don't have to own when the competition is better (for some things), cheaper (in every case), and less restricting, less of a walled garden, then some people might actually find that it's of use to actually (ironically?) "Think Different" for a change.

I don't need you to care and I don't need you to advise me on all I had to write, when in the end I could just throw that one right back atcha, mate.

Beautifully written. Bravo.

 

[jadot]

Beautifully written. Bravo.

Aww, Thanks, Man.

 

[Baymowe335]

I don't think you're wrong per se. I just think you're dense. No, the numbers don't speak for themselves because you're using the numbers to fit your perception. No one in the tech industry, entertainment industry, and <fill in the blank> industry talks about Apple as a services company. They are first and foremost ONLY known for their hardware and maybe software.

I'm going to use the same information that you got your $8.5B source from (https://www.macrumors.com/2017/11/02/apple-services-revenue-up-34-percent-4q2017/)

"Apple's services category, which includes the App Store, iTunes Store, Apple Music, Apple Pay, AppleCare, iCloud, licensing, and other services, set an all-time quarterly record revenue in the fourth fiscal quarter of 2017."

Now, I'm going to link Amazon's numbers (https://www.cnbc.com/2018/02/01/aws-earnings-q4-2017.html):

"Amazon Web Services gave Amazon $5.11 billion in revenue, above analysts' estimates".

Given how you know how to use numbers and are a superb analyst, what is the difference here?

I'll give you an easy hint since I am apparently more clueless than you are because I don't misuse numbers to fit to my argument. Apple's services are within their ecosystem, so they do not deliver a PaaS, SaaS, IaaS, etc to anyone externally. Amazon's services do all of the above.

Which one of the 2 has a larger reach as a services company?

No one is arguing that Apple isn't profitable and makes a ton of money off their own services. What *I* am challenging is your ignorant misconception that Apple will be known as a service company.

In your mind, do you still think Apple is known or will be known to be a services company considering they have almost little to no integration with anyone outside of themselves? Just think about that for a second.

I'm just over here laughing at you. Remember, you started off being condescending, not me. My Apple as as services company is not my idea, lol. Google it. Services is their second largest business and growing at 20%. Go buy AMZN (a low margin retail company trading at 300 times earnings) and their 5.1B in services revenue.

For now, you don't exist to me.

 

[9081094]

Correct. Not a specs nerd. Just need the best overall value. Once you get out of the specs/tinkering phase, some things are more important than widgets, roms, and launchers.

I think you have been trapped in the walled Apple garden and don’t really know nor understand what’s out there. I feel sorry for your ignorance

 

[ipponrg]

I'm just over here laughing at you. Remember, you started off being condescending, not me. My Apple as as services company is not my idea, lol. Google it. Services is their second largest business and growing at 20%. Go buy AMZN (a low margin retail company trading at 300 times earnings) and their 5.1B in services revenue.

For now, you don't exist to me.

I'm finding it humorous that your ego is brittle once someone challenges you legitimately where your numbers caused you to trip and fall on your face. Continue throwing those numbers in the rest of your posts about how great of an Apple investor you are as if it has anything to do with Apple being recognized as a services company. Whether it's their second largest business and growing at 20%, it means absolutely zilch / nothing. No one in industry recognizes them as a services company.

Oh wait... it seems you are not working in industry and are just Googling your answers. Makes sense.

It's a fallacy that Amazon is now just a low margin retail company. They are a behemoth in cloud services. I don't care about share prices or revenue shares. I'm only addressing your claim of Apple to be known as a services company. Maybe you were responding to a previous post, but you are still defending it as if it were true.

 

[DNichter]

I think you have been trapped in the walled Apple garden and don’t really know nor understand what’s out there. I feel sorry for your ignorance

Enlighten me. What do I need that’s out there? No reason to feel sorry, I am able to execute my business and personal computing needs from an iPhone X and iPad Pro, with no issues. I’m good where I am, but I’d love to hear your thoughts on what I am missing out on.

 

[Falhófnir]

Yes, but I told you why AND iPhone revenue (what matters) is up sharply. They are selling for $800 each now. It was in the $600 range in 2015.

1.3B active devices means unit sales become less and less meaningful. Apple is monetizing the user base and will be viewed as a services company in the future.

Revenue and ASP are one thing, but the question is do they actually make more money selling a X than an 8? Yes it's more expensive, but the R&D for the X will have been higher, it costs more to make, and will also add more to the advertising budget (3 models to promote rather than 2). This year it won't matter as much as X sales are likely just represent a chunk of those who would have bought an 8 or 8+ anyway. Going forward, however, it does matter quite a lot. Component costs have been creeping up for a while now (little things like the wide colour gamut screen on the iPhone 7 don't sound like a lot, but the slight component price increases add up). And that is why this 10% reduction is significant. Apple can't keep upping the price indefinitely to account for every little extra cost, so they need to try and get unit prices for this design cycle of iPhone down so they can start profiting from it in the high volume way they have with previous iPhone designs (high volume is a big thing when you need to spread the cost of R&D).

 

[9081094]

Enlighten me. What do I need that’s out there? No reason to feel sorry, I am able to execute my business and personal computing needs from an iPhone X and iPad Pro, with no issues. I’m good where I am, but I’d love to hear your thoughts on what I am missing out on.

I’m wondering what kind of business you’re running. Surely no complex computing. You could do the same for half with other brands these days. But some need to give their ego a boost, look ma I’m typing on an iPhone X(pensive) . And under every mail ‘delivered to you by an iPad Pro’. The target audience of Apple these days.

 

[Michael Goff]

I think you have been trapped in the walled Apple garden and don’t really know nor understand what’s out there. I feel sorry for your ignorance

As a guy who has bought three Android phones and a Chromebook within the last year, I can tell you that the value of the walled garden is there. It’s not ignorance to want products that you know are going to work.
[doublepost=1521753990][/doublepost]

I’m wondering what kind of business you’re running. Surely no complex computing. You could do the same for half with other brands these days. But some need to give their ego a boost, look ma I’m typing on an iPhone X(pensive) . And under every mail ‘delivered to you by an iPad Pro’. The target audience of Apple these days.

It really is easy to insult instead of actually try to consider the other side of an argument, isn’t it?

 

[9081094]

As a guy who has bought three Android phones and a Chromebook within the last year, I can tell you that the value of the walled garden is there. It’s not ignorance to want products that you know are going to work.
[doublepost=1521753990][/doublepost]

It really is easy to insult instead of actually try to consider the other side of an argument, isn’t it?

I’ve stated my arguments many times before. But it’s like Apple, deaf to good arguments. It’s common knowledge that Apple is getting behind/too expensive in not only hardware offerings but software and services as well. Higher prices are only justified when the products/services are better. Years of neglect begin to show off.

 

[Baymowe335]

I'm finding it humorous that your ego is brittle once someone challenges you legitimately where your numbers caused you to trip and fall on your face. Continue throwing those numbers in the rest of your posts about how great of an Apple investor you are as if it has anything to do with Apple being recognized as a services company. Whether it's their second largest business and growing at 20%, it means absolutely zilch / nothing. No one in industry recognizes them as a services company.

Oh wait... it seems you are not working in industry and are just Googling your answers. Makes sense.

It's a fallacy that Amazon is now just a low margin retail company. They are a behemoth in cloud services. I don't care about share prices or revenue shares. I'm only addressing your claim of Apple to be known as a services company. Maybe you were responding to a previous post, but you are still defending it as if it were true.

I work in finance at a Fortune 10 and have nothing to prove to you. There is a story on this very board about services being a huge future driver for Apple. I said Apple will be valued as a services company in the FUTURE. We aren’t there yet. They already should be valued as a consumer products company with a fierce services biz, but they are valued as a hardware company. You disagree, fine...but you were the condescending one at the start by quoting me.

I own thousands of shares of AAPL not because I’m a great investor, but because I actually do understand the numbers and their potential future prospects. All they have to do is keep delivering high margin services and the market will respond, much like what has happened with MSFT, although I think they are too highly valued given their own foray into hardware and much lower profits. Apple has already delivered to justify valuation. I love AMZN, but they still have to deliver to justify theirs.

Say what you want...to support a $700B valuation, AMZN needs a lot more from AWS...they may get it, but the majority of AMZN revenues are indeed a low margin retailer.

You are flat out wrong if you dismiss all the LEGITIMATE talk and frankly, real numbers, that Apple is headed for services in a big way.

 

[LordVic]

I work in finance at a Fortune 10 and have nothing to prove to you. There is a story on this very board about services being a huge future driver for Apple. I said Apple will be valued as a services company in the FUTURE. We aren’t there yet. They already should be valued as a consumer products company with a fierce services biz, but they are valued as a hardware company. You disagree, fine...but you were the condescending one at the start by quoting me.

I own thousands of shares of AAPL not because I’m a great investor, but because I actually do understand the numbers and their potential future prospects. All they have to do is keep delivering high margin services and the market will respond, much like what has happened with MSFT, although I think they are too highly valued given their own foray into hardware and much lower profits. Apple has already delivered to justify valuation. I love AMZN, but they still have to deliver to justify theirs.

Say what you want...to support a $700B valuation, AMZN needs a lot more from AWS...they may get it, but the majority of AMZN revenues are indeed a low margin retailer.

You are flat out wrong if you dismiss all the LEGITIMATE talk and frankly, real numbers, that Apple is headed for services in a big way.

\

I think one of the reasons you see the valuations of MSFT and GOOG where they are is because unlike Apple, they aren't reliant on the closed system. No matter how amazingly well Apple's hardware sells, the concern with their services, and why Apple's not directly seen as a service company is because of the closed nature and reliance on hardware sales.

Microsoft and Google do not need to release a single piece of hardware for their services, which are fairly open, platform agnostic and portable. This means that the future revenues from their services can be seen as more reliable and consistent.

Apple however relies currently on hardware as a platform to sell their services. most of their services are either useless on competing hardware, or not cross platform at all. While their hardware sales keep going strong, this isn't a problem. But the fear is, as with all hardware manufacturing, should the market suddenly erode for iPhones, Apple would need to pivot somehow to keep services going (either breaking down their walls, offering cross platform support and going platform agnostic.

this overall does temper some investment into Apple if you're looking to invest in a services company. Remember, as you say you know investing, Investing isn't about the value today, it's about perceived value "tomorrow". Apple needs to break away from their current reliance on iOS and MacOS for most of their services if they expect services to grow into the sort of "overvaluation" MSFT has.

 

[DNichter]

I’m wondering what kind of business you’re running. Surely no complex computing. You could do the same for half with other brands these days. But some need to give their ego a boost, look ma I’m typing on an iPhone X(pensive) . And under every mail ‘delivered to you by an iPad Pro’. The target audience of Apple these days.

Nope. I don’t handle any operational tasks and I’m very happy about that. I manage a virtual team of about 60 employees for a logistics brokerage. I’m not sure why it bothers you so much what platform I choose, but my only point is that I don’t feel the need to try other platforms. As long as Apple gives me the best combination of performance, security, privacy, ecosystem, apps, and support. I’m good.

 

[ipponrg]

I work in finance at a Fortune 10 and have nothing to prove to you. There is a story on this very board about services being a huge future driver for Apple. I said Apple will be valued as a services company in the FUTURE. We aren’t there yet. They already should be valued as a consumer products company with a fierce services biz, but they are valued as a hardware company. You disagree, fine...but you were the condescending one at the start by quoting me.

I agree that services will be a revenue driver for Apple because simply what is left after hardware? Just like GoPro they are hitting a plateau in hardware ownership. Should they rely entirely on regurgitating devices every year for sustained sales?

Here is the most apparent issue though. You work in finance, and I work in tech. You see it from the angle of finance, and all you see are numbers. However, I see it from within tech because I work with services directly. There is without a doubt absolutely ZERO threat in the next few years (if ever) that Apple has on the industry with their services.

The only reason you would ever use their services as a consumer would be:

A) you had to consume content from Apple
B) you had to ingest content into Apple

Fun fact: Apple uses GCP (Google Cloud Platform) for iCloud services.

I own thousands of shares of AAPL not because I’m a great investor, but because I actually do understand the numbers and their potential future prospects. All they have to do is keep delivering high margin services and the market will respond, much like what has happened with MSFT, although I think they are too highly valued given their own foray into hardware and much lower profits. Apple has already delivered to justify valuation. I love AMZN, but they still have to deliver to justify theirs.

Say what you want...to support a $700B valuation, AMZN needs a lot more from AWS...they may get it, but the majority of AMZN revenues are indeed a low margin retailer.

You are flat out wrong if you dismiss all the LEGITIMATE talk and frankly, real numbers, that Apple is headed for services in a big way.

You are still wrong with your numbers. No one is disagreeing about Apple's profit margins and their value. You keep mentioning these numbers as if it means anything for them to be valued as a service company. They do a great job servicing their own users, but they are utterly worthless outside of their ecosystem.

Apple will not be valued by anyone in industry for their services until they become proficient at being a platform agnostic service company, which by the way they will never do.

 

[Baymowe335]

\

I think one of the reasons you see the valuations of MSFT and GOOG where they are is because unlike Apple, they aren't reliant on the closed system. No matter how amazingly well Apple's hardware sells, the concern with their services, and why Apple's not directly seen as a service company is because of the closed nature and reliance on hardware sales.

Microsoft and Google do not need to release a single piece of hardware for their services, which are fairly open, platform agnostic and portable. This means that the future revenues from their services can be seen as more reliable and consistent.

Apple however relies currently on hardware as a platform to sell their services. most of their services are either useless on competing hardware, or not cross platform at all. While their hardware sales keep going strong, this isn't a problem. But the fear is, as with all hardware manufacturing, should the market suddenly erode for iPhones, Apple would need to pivot somehow to keep services going (either breaking down their walls, offering cross platform support and going platform agnostic.

this overall does temper some investment into Apple if you're looking to invest in a services company. Remember, as you say you know investing, Investing isn't about the value today, it's about perceived value "tomorrow". Apple needs to break away from their current reliance on iOS and MacOS for most of their services if they expect services to grow into the sort of "overvaluation" MSFT has.

You can’t wait until it’s already happened to get in on it. Microsoft was dead money for 15 years and they didn’t have a closed system then either. Microsoft is trying to do both, just failing on the hardware side.

Apple is more about getting a critical mass of hardware out there where services can be incr dinky successful by virtue of the insane amount of Apple devices active and over 90% buying the hardware again down the line. The cycle continues.

Both incredibly successful companies, Apple just more valuable and I feel long term potential. Apple is still only a small portion of my portfolio. I am long MSFT and GOOGL as well. I’m mostly an index fund investor to be honest because I understand stock picking is a losing battle.
[doublepost=1521771131][/doublepost]

I agree that services will be a revenue driver for Apple because simply what is left after hardware? Just like GoPro they are hitting a plateau in hardware ownership. Should they rely entirely on regurgitating devices every year for sustained sales?

Here is the most apparent issue though. You work in finance, and I work in tech. You see it from the angle of finance, and all you see are numbers. However, I see it from within tech because I work with services directly. There is without a doubt absolutely ZERO threat in the next few years (if ever) that Apple has on the industry with their services.

The only reason you would ever use their services as a consumer would be:

A) you had to consume content from Apple
B) you had to ingest content into Apple

Fun fact: Apple uses GCP (Google Cloud Platform) for iCloud services.



You are still wrong with your numbers. No one is disagreeing about Apple's profit margins and their value. You keep mentioning these numbers as if it means anything for them to be valued as a service company. They do a great job servicing their own users, but they are utterly worthless outside of their ecosystem.

Apple will not be valued by anyone in industry for their services until they become proficient at being a platform agnostic service company, which by the way they will never do.

I actually really like your content and I can admit you have a clue. I think you’re wrong and overly critical of my stance shared by many, but at least you’re not just disagreeing for the hell of it.

I’m fully aware Apple uses the Google cloud. Apple uses a lot of non Apple companies as suppliers...I believe it’s smart.

Their strategy is a closed system and it's propelled them to the most profitable and valuable company in history, with services growing double digits and already their second biggest business. When it becomes the biggest, the services valuation will start to come through. It will take time. Apple devices keep growing and last so long, they can operate in their bubble of services to the point nothing outside matters. They are massive and will get more massive.

You can’t use their closed system model as some sort of negative because it works; better than the open system when measured from a profitability perspective.

I totally disagree they need to be platform agnostic to be valued as a services company. If services become the biggest business, makes 70% GM, and keeps growing, no one will care how those services are provided. You’ve already seen a multiple expansion as Apple traded over $180 until Trump ruined the market. These things take time.

The closed system is Apple’s biggest strength. I like their strategy and investors confirmedearlier this year they like it too (Along with the fantastic Tim Cook). Even if it’s not valued as a pure services play, it can be valued as a consumer products company, which gives it a multiple in the 20s.

Apple is severely misunderstood. I am very long AAPL so I’m going to see how it works out unless the facts change. My investment is largely based on the insane numbers. Apple could buy 15% of the shares with their net cash, which they will likely announce in May. The buyback is an incredibly huge tailwind.