The End of Apple’s Roach Motel?

  • Posted: 07 March 2012 01:00 PM

    The End of Apple’s Roach Motel?

    EDIT: My bad. It’s the Wall Street Journal, not the NY Times. I feel better. It’s just a poorly written article. It’s not a vendetta. Please accept my apologies for the faux pas.

    What is up with the NY Times? They clearly are at war with Apple. There were the China articles, which were inflammatory but fine. Then came the embarrassing “law of large numbers” article in which the author quoted the mathematical law of large numbers in the mistaken belief that it actually applied to corporate growth. And now this. Take a look as some of the inflammatory language.

    Finally we’ve been getting some company for the thesis that Apple, as impressive as its growth has been, will not grow to the sky by foreclosing opportunity for other mobile software makers.

    Geez, defensive much?

    It’s not enough to note, as many also have, that Apple’s fat margins inevitably will be eroded in the competition for the next billion smartphone customers.

    Inevitable’s a strong word there, chief.

    Google might have a chance at creating a lasting alternative to Apple’s Roach Motel, the scenario goes, but nobody else can catch up, no matter how much they spend to subsidize app makers and content suppliers to create their own versions of Apple’s App Store and iTunes.

    Roach motel? Seriously?

    Until now mobile devices have been like medical technology: spare no expense, performance is everything. That’s changing as more functions get reduced to a single chip, and as price competition heats up. At the same time, capability is retreating into the cloud, which also helps the device become cheaper, even disposable.

    All this means that the Apple bonanza?selling $600 devices to carriers and their customers for a $300 markup?will end.

    Whoa, whoa, whoa! Hold up there a minute fella!

    Apple will be tempted to seek more of its profits from services.

    Not they won’t.

    Apple’s cloud, like anyone’s, will have to pay its own way, which means opening it up to rival devices.

    Ludicrous.

    Moreover, with any cloud service that doesn’t involve a user paying to permanently “own” rights to a piece of digital content, that involves paying on a subscription or per-use basis, the stickiness is gone?poof!

    Say WHAT? I think that iCloud’s proving to be pretty damn “sticky”.

    And in the age of Pandora and Spotify, who really wants to spend man-hours managing a music collection anymore?

    I dunno. 314 million iOS users? Or was the question supposed to be rhetorical?

    But it’s hard to see how an Apple or anyone is going to make device imprisonment pay.


    Imprisonment?

    Customers already get these services free on the Web.

    And yet they still buy Apps. 25 billion of them at last count. Why do you suppose that is?

    One key factor is the rise of HTML5, a Web standard that will give mobile browsers the ability to deliver app-like functions.

    Yeah right. And Apple - one of the early adopters and biggest promoters of HTML5 - didn’t see this coming, right?

    Mozilla has announced a new project, Boot to Gecko, to make the browser central again to the mobile Web experience.

    Buddy, you’ve just jumped the shark.

    Both Apple and Microsoft are working to unify their operating systems across devices, large and small.

    Microsoft is. But Apple isn’t.

    A realistic scenario, however, is that its margins will start coming down sharply and the Roach Motel will prove less formidable than assumed.

    Realistic base on what reality? And again with the Roach motel?

    In the future, picking a device won’t mean locking yourself into an ecosystem.

    In exactly what future is that going to occur? And does it much matter to us if we’re talking 5 or 10 or more years down the line.?

    Conclusion: Can someone please tell me what Apple did to get under the skin of the NY times? Their logic is fallacious but their rhetoric is vicious.

    Word of advice, NY Times. You’re the old media and Apple is new 900 pound tech gorilla. It’s probably not very wise of you to be poking Apple with a stick.

    [ Edited: 07 March 2012 04:05 PM by FalKirk ]      
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    Posted: 07 March 2012 01:06 PM #1

    [Whoops, it’s WSJ]

    “Roach motel”?  Buddy, have I got a financial analyst for you.  Guy by the name of Zabitsky.  Says to short!  Why don’t you try it?

    Nice work as always, FalKirk.  And reply once in a while! raspberry

    [ Edited: 07 March 2012 02:12 PM by Mav ]

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    Posted: 07 March 2012 01:16 PM #2

    Since this is a NYT thread, there’s this golden bit of journalism here too:

    http://www.nytimes.com/2012/03/07/business/dividends-emerge-in-pressing-apple-over-working-conditions-in-china.html?partner=yahoofinance

    Gimme a break.  I don’t care what side of the political aisle you come from, it’s just a stupid article.  And never mind that “poverty line” discussion buried, and ignored, in the article - and that entry-level Foxconn workers, who are hardly working in sweatshops (boring assembly jobs, a different story), are making more than the World Bank poverty line every hour (about $1.70+ an hour vs. about $1.25/day China poverty line) - some sweatshop huh.

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    Posted: 07 March 2012 01:32 PM #3

    They lost me when they hold up Microsoft as an example of “Open”.  I guess if your ubiquitous your open.  Does that mean Apple is Open because iOS is everywhere?  Asymco had a great article back in 2010 covering this issue, the decline of Apple margins and guess what he said

    The graph shows that companies that grew the fastest had the highest margins, and the companies that grew the slowest had the lowest margins. The trend line in the graph above is precisely orthogonal to what would be expected in a commodity market.

    The orthogonality of growth vs. margin points to the effect of innovation in this market. In a non-commoditized market (i.e. one where usable improvements in a product are quickly absorbed and highly valued) high growth and high margins are correlated.

    Since that time we have seen more of the same as Apple continues to expand.

         
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    Posted: 07 March 2012 01:35 PM #4

    pats - 07 March 2012 05:32 PM

    They lost me when they hold up Microsoft as an example of “Open”.

    LOL, go post on Slashdot that MS is open! That would be major news for the Linux community.

    Terrible job on both fronts, NY Times. How about you compare the Foxconn suicide rate to the general population of China!

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  • Posted: 07 March 2012 01:49 PM #5

    The link is to the WSJ not to the NYT.

         
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    Posted: 07 March 2012 02:12 PM #6

    Good catch.  A pox on BOTH houses, then!

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
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  • Posted: 07 March 2012 02:39 PM #7

    FalKirk:

    Where’s your blog?

         
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    Posted: 07 March 2012 02:43 PM #8

    A bit of thread hijack.

    On today’s edition of http://finance.yahoo.com/q?s=AAPL

    Shares Dive on Concern About Global Economyat New York Times(Wed 1:38PM EST)

    Live blog of Apple’s iPad eventat MarketWatch(Wed 1:38PM EST)

    Wall St rebounds after jobs reportat Reuters(Wed 1:36PM EST)

         
  • Posted: 07 March 2012 04:09 PM #9

    Mav - 07 March 2012 05:06 PM

    [Whoops, it’s WSJ]

    Thanks for catching that, Mav. I was in a hurry and I just goofed. I have added a note to the beginning of my initial post admitting my error.

         
  • Posted: 07 March 2012 04:13 PM #10

    Tetrachloride - 07 March 2012 06:43 PM

    A bit of thread hijack.

    Please! I already mistakenly aimed this post at a brick wall by misidentifying the source. Hi-jack it and save my sorry behind!  tongue laugh

         
  • Posted: 07 March 2012 04:48 PM #11

    Here is the NY Times complaining about the iPad only being a modest update: http://www.nytimes.com/2012/03/08/technology/apple-updates-ipad-with-some-refinements.html?_r=1

    I wonder what it would need for a major update?

         
  • Posted: 07 March 2012 07:11 PM #12

    seba - 07 March 2012 08:48 PM

    I wonder what it would need for a major update?

    Honestly. Apple threw everything in everything that was rumorred - better display, more memory, more speed, 4G, etc. - except for Siri and they provided a “taste of Siri” by integrating dictation.

         
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    Posted: 07 March 2012 07:15 PM #13

    Two points:

    (1)  The actual CPU part of the SoC might not have changed much or at all.  Luckily, the graphics brings the heat - though I’m a bit confused how a 2x increase in performance can cover 4x the pixels.  We’ll see in real-world use I guess.  I’m guessing integrated design plus OpenCL allows the SoC to work as a unified whole for general processing, rather than thinking in terms of “CPU-limited” or “GPU-limited”.

    (2)  Apple can turn on Siri anytime it wants.  If it’s good enough to dictate, it’s good enough for any Siri voice input.

    Btw FalKirk, it’s not a guarantee that there’s more RAM now - though it sure seems a no-brainer.  We’ll see if the chip microscope guys can figure it out. 

    This is no modest update.  This is gonna be so great for Apple and so horrible for the competition.

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  • Posted: 07 March 2012 11:35 PM #14

    seba - 07 March 2012 08:48 PM

    Here is the NY Times complaining about the iPad only being a modest update: http://www.nytimes.com/2012/03/08/technology/apple-updates-ipad-with-some-refinements.html?_r=1

    I wonder what it would need for a major update?

    Another hit piece.  I wrote a reply to the “article” and the editors deleted it.  I accused them of bias.  I’m amused.  I didn’t even swear.  LOL

         
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    Posted: 08 March 2012 03:07 AM #15

    Just looked at it.  Have they edited the article?  It’s irksome but not overly so (it’s a low bar, I’ll admit).

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
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