

Why Apple may be losing its edge - joxie
http://www.cbsnews.com/8301-505124_162-57555744/why-apple-may-be-losing-its-edge/

======
someperson
Incredible blogspam, the original source (not linked from the CBS News article
is [http://allthingsd.com/20121126/iphone-5-costs-may-be-
eating-...](http://allthingsd.com/20121126/iphone-5-costs-may-be-eating-
apples-gross-margins/)). Then they spun the story into something else with a
terrible editorialized headline ("losing its edge" actually means "lower gross
margins per phone").

There's probably some useful discussion to be had whether Apple is really
"losing its edge" in regards to making disruptive devices though. This is not
that article.

~~~
pretoriusB
> _There's probably some useful discussion to be had whether Apple is really
> "losing its edge" in regards to making disruptive devices though._

Less than two years after they introduced their last disruptive device (the
iPad)?

What "disruptive devices" has Apple's competition released during last 10
years exactly? Blackberry could be thought of as one. Any other?

(And one could argue that the high-dpi laptop, introduced less than a year
ago, is also another disruptive device in the PC industry -- as was the Air
that created the whole ultraportable thing and is still unsurpassed).

~~~
steverb
There's a problem if your technical edge is disruptive devices. In order to
maintain that edge you have to keep disrupting.

I think the iPod, iPhone, and iPad were fairly obvious choices (although I was
surprised that it was Apple that released the iPod, I had expected a killer
device from one of the then traditional consumer electronics companies). Apple
has already addressed all of my personal pain points, although I suppose they
could eventually get AppleTV right I don't think it will be disruptive at
anywhere near the scale that the iPhone was.

~~~
pretoriusB
> _There's a problem if your technical edge is disruptive devices. In order to
> maintain that edge you have to keep disrupting._

True, but why "maintain that edge"? Apple was doing just fine with just the
Mac like pre iPod. And then it did phenomenal after the iPod, iPhone, iPad.

Even just with those, it's a tens of billions dollar business they can
continue milking.

It's not like "disruptive" is what marks Apple. The iPhone 5 is not disruptive
anymore, but it sells like hot cakes.

Incremental improvement and more especially high class machines (design, build
and software integration) is what marks Apple. They can milk that for decades.

~~~
steverb
The edge matters for investors. Yes, Apple can continue to trundle along
making about what it does now for a good long while, but their stock is
generally priced for growth (although that has been changing lately). In the
meantime they have have Android (and eventually probably MS) swallowing their
market from the low end up.

To me it seems very similar to what happened with the desktop market.

~~~
pretoriusB
> _The edge matters for investors. Yes, Apple can continue to trundle along
> making about what it does now for a good long while, but their stock is
> generally priced for growth_

That's true, but I don't care much for investors. I was happy with Apple in
2002-3, when it was 1/50 today's size, because it had the product I wanted: a
bloody usable Unix that can run proprietary apps, and good hi-end laptops.

I wish companies were less relied in investors and the stock market and more
on their actual production and revenues. Then you wouldn't have some social BS
selling for several billion dollars only to die out a couple of years later...

------
S_A_P
Every blogger wants to be the person who "calls" a company
peaking/declining/etc. I think the zeitgeist has been that apple is going to
decline ever since Steve Jobs passing. While he certainly curated apples
products well, all the smart people who created them are still around.(mostly
anyway)

Everything is shifting to mobile, so its not a blue ocean anymore. Its going
to be increasingly competitive and harder to hit homeruns with every product.
Im happy to see at least 2 really competitive platforms to iOS out there.
Consumers win here, and all three platforms benefit from having to stay
competitive.

------
brudgers
The iPhone is a great product, but it is no longer the best product for a
significant portion of the market. This is due to the changes in demographics
as the smartphone market has expanded and competition from sophisticated
competitors with deep pockets, the desire to out innovate the market leader,
and experience in commoditized markets.

Apple is fighting increasingly defensive campaigns because they are
increasingly confronting the same sorts of challenges RIM experienced from
them a few years ago.

------
chris_wot
That only tells me they are not as profitable, not that they've lost their
edge. No real insight here I'm afraid.

~~~
wiremine
I agree there isn't any real insight. I've often wondered, however, how a
(relatively) lower profit margin would affect Apple. They seem to be banking
the profits at this point. So, would the net effect just be $10B less in the
bank, or would it actually change their operation?

And, if that change _would_ effect their edge on innovation?

------
twootten
Linkbait aside, if Apple's gross margin is decreasing, which it looks like it
is, its most likely because of the iPad which carries a lower profit margin.
So when iPad sales become a larger portion of total sales, gross margin goes
down while total profits still go up.

~~~
steverb
I think that the rise of Android is enabling carriers to push back a lot
harder on the subsidies too. From their point of view, there's good demand
across the board for Android phones and they can sell them with better profit,
which would probably make them more inclined to negotiate harder with Apple.

I wouldn't be surprised if one of the carriers threatens to skip the next
iPhone release.

~~~
Tloewald
The carriers make way more money off iPhone customers so not likely. Also, in
general, no-one switches carriers to get random android devices. They will
leave carriers to get iPhones.

As android increases share of the phone market (vs. smartphone market, right?)
the percentage of mobile web traffic from android has, if anything, dropped.
This suggests android is winning big in the "I don't care what phone I get"
market. This isn't the fat juicy part of the market.

~~~
steverb
They USED to make way more money. I don't know that that is still true, based
on gripes from sales people about commissions I'm pretty sure it's no longer
true. I do know that carriers are pushing Android (and even Windows) phones a
lot harder than they were a year ago.

~~~
Tloewald
Sales people's commissions tend to be inversely related to customer demand.
iPhone demand outstrips supply to incentivizing salespeople to sell iPhones
makes no sense.

Think the numbers have dramatically changed since August?
[http://www.forbes.com/sites/ycharts/2012/08/10/can-anyone-
he...](http://www.forbes.com/sites/ycharts/2012/08/10/can-anyone-help-these-
poor-wireless-carriers-break-their-addiction-to-iphones/)

~~~
steverb
As far as I can tell, those charts don't break down the usage between iPhone
and others. Doesn't matter though as your first point trumps it.

But good point about the reverse commissions arrow. I'll have to go check what
current commissions are on the iPhones vs previously.

~~~
Tloewald
Agreed about the figures as they can only be inferred. asymco has done some
analyses along these lines in the past but I couldn't find one in a hurry (and
it might not have been recent). Other indirect measures do not show android is
doing better as a "smart" phone (I.e. generator of demand for expensive
cellular plans).

------
calciphus
The stupdily sharp edge on my Macbook Pro says otherwise.

Now where's my angle grinder...

