

Why Apple Shareholders Should Be Cautious - martey
http://online.wsj.com/article/SB10001424052748704830404575200362577226100.html

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tptacek
_One thing keeping Apple from lots of extra iPhone sales to business users is
that Mr. Jobs, for some reason, has a thing against keyboards. There's no
business reason for it. It's a silly, unforced error._

Not building products that fully appeal to "business users" isn't an "unforced
error". It's a market segmentation decision.

~~~
zackattack
I read it as the author implying that not going after as many markets as
possible is an unforced error.

~~~
nostrademons
...which would be wrong. If going after another market makes you mediocre in
the market you're already winning in, you should say no. A physical keyboard
adds bulk and weight to the device that make it a lot less attractive to
consumers.

~~~
zacharypinter
Would having an optional version of the iPhone with a keyboard (or an optional
addon, even third party) make Apple more money? If the answer isn't no, then
the author's point has some merit, even if you prefer a slimmer device without
a keyboard.

Quick question: with all the third-party devices and addons that Apple permits
via its proprietary iPhone/iPod/iPad connector, is there one that provides a
mini physical keyboard? If not, do we know if Apple is intentionally
preventing it (via API's or licensing)?

~~~
catch23
There are dozens of physical keyboard addons for the iPhone. Apple doesn't
prevent any of these 3rd party addons from working. So if some business really
wanted a physical keyboard for the iPhone for their employees, they could make
it happen.

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gamble
There are reasons to be cautious about Apple, but not in this list. Most of
the OP's concerns boil down to a perception that Apple has been 'too'
successful, and it's due for a failure.

On the one hand, Apple's valuation is extremely high. On the other, their
products are selling like gangbusters and the iPhone in particular has nowhere
to go but up. The current emphasis on software and interfaces gives Apple a
substantial advantage over the legacy players like Nokia and RIM; as the iPod
showed, it's not a trivial advantage to overcome.

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jsm386
_And [Verizon's] data traffic just jumped 20%, even without the Apple phone._

To put that in perspective, mobile data traffic on AT&T's network has
increased 5000 percent over the last three years. In 2009, which presumably
this article references for Verizon, AT&T was up 200%.

[http://digitaldaily.allthingsd.com/20091118/time-to-cut-
att-...](http://digitaldaily.allthingsd.com/20091118/time-to-cut-att-some-
slack-iphone-users/)

------
jacoblyles
There are a lot of statements I disagree with in this article. At the same
time, it is true that if Apple were bought to the same ROI as Microsoft then
the stock price would be less than half of what it is. Buying put options to
cap your downside is not a bad idea, especially if the stock has already made
you a few dimes.

------
kadavy
These reasons are pretty weak. For example:

 _#3. The Share Price_

Apple still has a P/E ratio of _only_ 22\. Meanwhile, Amazon's is 70. If Apple
traded at that P/E ratio, the share price would be $940, instead of $270.

Whose investors should really be worried?

~~~
nostrademons
In 2006, Motorola traded at a P/E of _only_ about 12, despite huge and rapidly
growing profits from its wildly successful RAZR phones. They were nearly as
dominant in the cell phone market as Apple is today. Between 2003-2007,
Motorola sold roughly 110 million RAZRs, compared with the 50 million iPhones
that Apple has sold to date.

Then Apple came out with the iPhone, which was light years better than the
RAZR. And further models of the RAZR continued to disappoint.

The Motorola stock that you bought at a P/E of 12 in 2006 has lost nearly 75%
of its value today. Motorola runs at a loss now (well, technically they've
turned a thin profit in recent quarters, after losing more money in 2008 than
they earned in 2006). Its P/E is negative.

Beware P/E ratios. Earnings can head south _very_ quickly, particularly if
they're based on one breakthrough tech product.

~~~
kadavy
That's an excellent example that you seem to have been able to access quite
readily - impressive, +1. And I do agree that you can't just look at P/E
ratio.

But the key difference is _...based on one breakthrough tech product..._

Apple has a much more firm footing in people's digital lives - and more brand
loyalty - than Motorola could have ever hoped to have.

~~~
nostrademons
Are they really all that dominant, though? As I see it, they have 3 major
product lines: the Macintosh, the iPod, and the iPhone (perhaps the iPad will
join that soon). They have massive brand loyalty _among a certain segment of
the population_ , but a good number of people don't give a rats ass about
them. I'm typing this on a Macbook Pro, but I honestly regret that purchase (I
wish I'd gotten a System76 Pangolin instead). I've got a iPod Nano sitting
unopened in a box, an unused gift from my employer. I couldn't live without my
N1, but have never felt the need for an iPhone.

~~~
mattyb
Why do you wish you went with the System76 model (I'm considering both right
now)?

~~~
nostrademons
I found that pretty much the only applications I use on the Mac are Terminal,
Macvim, Chrome, VLC, and BitTorrent, all of which are just as good or better
on Linux. Plus, I like to play around with advanced programming languages and
other command-line only programs, and usually the apt-get packages are a bit
stabler and more problem-free than the MacPorts ones. I'm perfectly familiar
with Ubuntu - I use it at work - so the usability/eye-candy benefits of a Mac
don't apply to me. In fact, I found it harder to get used to and learn a whole
new set of keyboard shortcuts, because I'm so used to Linux.

If I'm just going to use it like a Linux machine, I might as well pay half the
price and get a real Linux machine.

The Mac does have some nice points. Two-finger scroll is great, as is the
magnetic attachment for the power cord (I can't count the number of times I've
tripped over that). The battery life is significantly better. I can get more &
better games for the Mac than for Linux. But the screen on the Pangolin is
better, and for half the price, I think I'd end up liking that more than all
the little fit & finish on the Mac.

Plus, the Mac had a firmware bug when I bought it (thankfully been fixed
since) that randomly would lock up the computer for 30 seconds at a time. Not
impressed, Apple.

------
zacharypinter
Perhaps this is wishful thinking, but I'd say a good reason to be cautious
about Apple right now is the growing discontent that they're creating amongst
"alpha geeks" (<http://www.martinfowler.com/bliki/AlphaGeek.html>).

I get the opinion from the swarm of recent Apple-related articles here on
Hacker News that Apple-loyalty is down and that a large number of alpha geeks
are, at the very least, prepped for competing devices to sway them away if
they haven't left Apple already.

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isleyaardvark
_Right now they're paying most of the cost of each new iPhone, and under-
charging for the data plans too. That's great for customers and great for
Apple, and bad for the networks._

Provider-wise an influx of new iPhone customers sounds like one of those good
problems to have. Word is you'll be able to get a Verizon plan on the next
iPhone, Verizon doesn't seem to be shying away from it.

------
dwwoelfel
"4. Steve Jobs's ego"

This is Apple's main asset. It doesn't belong on a list of Apple's weaknesses.

~~~
zacharypinter
Double-edged sword.

------
catch23
Apple fatigue? The ipod mania has lasted almost 10 years... my sister wants to
upgrade her ipod nano to an ipod touch because her nano "feels" old. I have a
feeling the ipod will still have a good share of the mp3 music player market
for at least the next 10 years or so.

~~~
zackattack
I would like to see more iPod innovation.

~~~
zacharypinter
Phones are the direction for iPod/mp3 player innovation. Once battery life and
storage size reach a certain point, there's no reason to carry a dedicated
device.

~~~
catch23
I'm not sure -- Apple sold as many iPod Touch models as iPhones. Considering
that they still sell iPod classic, nano, and shuffle, someone at Apple
probably has the data that shows that it's still necessary to sell all these
other models.

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steveplace
"Cautiousness" has been the prevailing investor sentiment over the past 9
months, and it hasn't worked.

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jhawk28
All these "weaknesses" can be turned around to be strengths. Much of this is
why Apple is successful.

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cmer
Is it just me or these are all terrible points the guy made? WSJ, fire that
guy!

