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READY FOR REVIEW | | | -- AustinKlar - 05 Dec 2011 | |
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< | RESPONSES TO PROFESSOR'S COMMENTS ON OLD DRAFT | >
> | RESPONSES TO PROFESSOR'S COMMENTS ON OLD DRAFT | | | With the introduction of the iPod, MacBook, iPad, and iPhone, Apple nestled its way into the lives and homes of millions around the world, consistently increasingly its market share of the portable consumer electronics industry. | | | Not really. The importance of any analysis of Apple begins from the tiny share of everything that it actually commands. The corpse of Mr Jobs makes 5.6% of the world's mobile phones, for example. Another way to think of that is that more than 94% of the people who use some such product in the world don't use his. The corpse of Mr Jobs makes more than 50% of the world's profit on handset manufacture, however. In other words, Apple is a manufacturer of luxury products, sold in small quantities at insanely inflated prices. Millions of units in a market of billions, sold to people who do not bring to the purchase any sense of the relevance of value to price, because the handbag or shoe or handset is being sold on a "personal identity facilitation" basis: you're becoming the sort of person who wears Louboutin, carries Kate Spade, or submits to Jobs. Most of the rest of us (could you say of us, given the inevitable forecast now that the wizard is dead, that we are at very least the 95%?) tend to regard the result with something like shock and disgust and something like outraged helpless boredom, as we do with all the other "let them eat cake like mine" behavior displayed all the time by the world's privileged, educated, complacent, self-absorbed, narcissistic stupid people, whose insecurities about technology and about themselves make them Apple's ideal customer. | |
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< | I don’t know if I would characterize the iPhone as akin to Louboutin. iPhones are not prohibitively expensive. They cost $199, the same as many other smartphones on the market. Whether or not Apple makes a substantial profit on the phone has nothing to do with whether or not the phone is a luxury good akin to Louboutin. Absolutely the iPhone is a luxury good. But so is every other smartphone in the world. No one needs the newest android phone or the newest iPhone, or any smartphone for that matter. People want them though because they are useful tools. Further, The percentage of people who buy Louboutin in the shoe market is drastically less than the people who buy iPhones in the smartphone market. The fact is that I buy an iPhone because it works well and it looks nice. I’ve tried many other smartphones and don’t like them as much. The “Louboutin” factor, as you refer to it, has nothing to do with why I buy an iPhone. More of my friends own iPhones than not. I think I have two friends who actually own Louboutin. It’s a different class/type of luxury. The iPhone is democratized luxury. | >
> | I don’t know if I would characterize the iPhone as akin to Louboutin. iPhones are not prohibitively expensive. They cost $199, the same as many other smartphones on the market. Whether or not Apple makes a substantial profit on the phone has nothing to do with whether or not the phone is a luxury good akin to Louboutin. Absolutely the iPhone is a luxury good. But so is every other smartphone in the world. No one needs the newest android phone or the newest iPhone, or any smartphone for that matter. People want them though because they are useful tools. Further, The percentage of people who buy Louboutin in the shoe market is drastically less than the people who buy iPhones in the smartphone market. The fact is that I buy an iPhone because it works well and it looks nice. I’ve tried many other smartphones and don’t like them as much. The “Louboutin” factor, as you refer to it, has nothing to do with why I buy an iPhone. More of my friends own iPhones than not. I think I have at most two friends who actually own Louboutin. It’s a different class/type of luxury. The iPhone is democratized luxury. | | | The software on Apple’s handheld devices, now called iOS, is a critical factor that has enabled Apple to gain its stranglehold control over the market,
What stranglehold? Expensive smartphones are a tiny fraction of the world's handsets, and Android is enabling manufacturers all over the world to turn out es equivalent product at immense cost advantage. Even in its own tiny segment the iPhone is not capable of strangling a kitten, which is why the real market is becoming not smartphones but patents you can use to block your competitors smartphones, which Apple and Google are buying from other people at immensely inflated valuations at lightning speed. | |
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< | I certainly agree with the idea that patents are becoming the tool by which these companies war against each other. The Nortel patent deal, as you discussed in class, is clear evidence of that trend. However, in my paper, I’m not only referring to iPhone. I’m referring to iOS as a whole. While the iPhone market might not be enough to “strangle a kitten”, Apple’s share of the tablet market and the music player market I believe constitutes a stranglehold. No other company comes close to Apple’s tablet market and no other company even tries making music players anymore. So, while you are certainly right that the phone market itself might not be as dominant, the iOS market as a whole is much more substantial. Stranglehold might be too strong of a word, so I will change it. | >
> | I certainly agree with the idea that patents are becoming the tool by which these companies war against each other. The Nortel patent deal, as you discussed in class, is clear evidence of that trend. However, in my paper, I’m not only referring to iPhone. I’m referring to iOS as a whole. While the iPhone market might not be enough to “strangle a kitten”, Apple’s share of the tablet market and the music player market I believe constitutes a stranglehold. No other company comes close to Apple’s tablet market and no other company even tries making music players anymore. So, while you are certainly right that the phone market itself might not be as dominant, the iOS market as a whole is much more substantial. | | | propelling the company to becoming, literally, the most valuable company in the world.
No, not literally, figuratively. No one actually thinks you could sell the assets of Apple for more than the assets of IBM: we're not talking about book value. We're talking about "market capitalization," which is the number of shares outstanding multiplied by the price the last fool paid for what he bought, based (unless as a fool he invests on the greater fool theory) on his guesses about the future sales of the various companies whose "market capitalization" we are comparing.
Apple's "literal" value is slight. As you may know, it doesn't make anything. It sits atop the most complicated and far-flung supply chain in the business, assembled by the current stand-in for the Corpse Of The Greatest Businessman and Genius in the History of Humanity, Tim Cook. Mr Cook is a man who really really really knows how to buy plastic, which he used to do for Compaq before he went to become the Corpse, Etc.'s COO. Mr Cook's effort in assembling and managing this extraordinary supply chain is part of Apple's "goodwill," from an accounting point of view, like the Corpse's personal talent (which was undeniable, and is now undeniably dead) for making things primates like to stroke. These intangible assets of the business are supposed to be so much in excess of tangible book value that they enable us to guess that Apple is worth 14.46 times its annual earnings. Even though those earnings were earned before the most important segment of Apple's goodwill died a more-or-less natural death, and the business of designing the cult's artifacts has descended on one of the world's most experienced plastic-buyers. | |
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< | Yes, Steve Jobs is dead. And I agree with you 100% that the intangible asset factor will be affected by this. He was the company; He made it what it is. And he is gone. Of course this will affect the company monetarily. All I was saying was that as of this time, people were valuing Apple as the most valuable company in the world. The point I was trying to make with the “most valuable company in the world” issue was that Apple has become extremely successful. They might not be talking about selling physical assets. They could be talking about book value. Either way, in some form of “value” that people measure, Apple is (or was when I wrote this), the most valuable company in the world. http://www.bloomberg.com/news/2011-08-09/apple-rises-from-near-bankruptcy-to-become-most-valuable-company.html http://www.huffingtonpost.com/2011/10/27/how-much-is-apple-worth_n_1035973.html According to this, Apple pulled in $37.5 billion in cash profits in fiscal 2011. Further, Apple has over $80 billion in cash, cash equivalents, and market securities. Sounds like they make quite a profit. You even said earlier that “Mr Jobs makes more than 50% of the world's profit on handset manufacture”…To me it sounds like Apple makes substantial profit. I have only the SEC filing report and the wall street journal to go off of. If their information is wrong, I have no way of figuring out that it is wrong (at least not to my knowledge). | >
> | Yes, Steve Jobs is dead. And I agree with you 100% that the intangible asset factor will be affected by this. He was the company; He made it what it is. And he is gone. Of course this will affect the company monetarily. All I was saying was that as of this time, people were valuing Apple as the most valuable company in the world. The point I was trying to make with the “most valuable company in the world” issue was that Apple has become extremely successful. They might not be talking about selling physical assets. They could be talking about book value. Either way, in some form of “value” that people measure, Apple is (or was when I wrote this), the most valuable company in the world. http://www.bloomberg.com/news/2011-08-09/apple-rises-from-near-bankruptcy-to-become-most-valuable-company.html http://www.huffingtonpost.com/2011/10/27/how-much-is-apple-worth_n_1035973.html According to this, Apple pulled in $37.5 billion in cash profits in fiscal 2011. Further, Apple has over $80 billion in cash, cash equivalents, and market securities. Sounds like they make quite a profit. You even said earlier that “Mr Jobs makes more than 50% of the world's profit on handset manufacture”…To me it sounds like Apple makes substantial profit. I have only the SEC filing report and the Wall Street Journal to go off of for that information. | | | Apple has built itself up as a proprietary, rather than “open”, company, and has actively sought to quell efforts by third parties to promote free software for use on its handheld devices. This free software seeks to provide the everyday user with the ability to perform functions and run applications not authorized by Apple, on Apple devices. | | | Apple's "model" is not very well-defined by talking about the licensing of software. Apple makes luxury service platforms. Whether that model is "ideal for fostering true innovation" is irrelevant to whether it makes real money. | |
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< | Right. But my point is that the stated goal of Apple according to this spokeswoman is to foster true innovation, to make the experience the most enjoyable. Making money comes from having the best experience on a handset. They are separate issues but they do necessarily touch upon each other. And the proprietary model cannot be ideal for fostering true innovation when it comes to free software. That is the point of free software, as I understand it from class discussion. People are able to change and adapt the software to make it better, more usable. So if free software is blocked, it hurts progression and innovation. | >
> | Right. But my point is that the stated goal of Apple according to this spokeswoman is to foster true innovation, to make the experience the most enjoyable. Making money comes from having the best experience on a handset. They are separate issues but they necessarily touch upon each other. And the proprietary model cannot be ideal for fostering true innovation when it comes to free software. That is the point of free software, as I understand it from class discussion. People are able to change and adapt the software to make it better, more usable. So if free software is blocked, it hurts progression and innovation. | | |
From the moment Apple released its handheld devices users were imprisoned. Apple restricted the devices such that any new software would come from Apple, and Apple alone. |
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