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TMFPostOfTheDay (< 20)

Apple and Ninety Years Ago



August 29, 2014 – Comments (4) | RELATED TICKERS: AAPL

Board: Apple

Author: Goofyhoofy

In the beginning, radio stations went on the air without visible means of support. The first stations were commissioned by Westinghouse, which made radio sets, Crosley, which made radio sets, General Electric, which made radio sets, and ... well, you can see where this is going. Some department stores started up stations because, well, radio receivers sell better when there is something to listen to on them. Even AT&T got into the act, having acquired a particularly valuable patent that would provide them an ongoing revenue stream.

However they all figured out that eventually everyone would have a radio set, maybe even two, and then the revenues and profits would stop, or at least slow down to a replacement, rather than acquisition cycle.

And then WEAF (later WNBC and now WFAN) in New York (owned by AT&T at the time) carried a radio commercial for the Hawthorne Court Apartments in Jackson Heights. 90 years ago this week. AT&T, above all the others, understood the concept of "renting time", since that's what they did on their telephone lines.

You don't have to go back 90 years to imagine what radio was like in the summer of 1922, just recall the state of the Internet about a dozen years ago, a modern miracle of technology with one problem: Nobody knew how to make it pay. Well, that was radio in 1922. How do you finance an endless stream of programming and still make money? One possibility, the profits from radio receivers, which may explain why so many department stores built their own broadcast stations that year.

As we look at the bending trend in iPad sales, I can't help but think that the same thing will happen with iPhone sales especially and particularly if the "subsidy" model breaks or bends, as it threatens to do. With feature parity I suspect people will hold their instruments a little longer, and the "first time acquisition" market will dry up, and even the replacement cycle will elongate.

Don't get me wrong, there's still gas in the engine, but I do believe Apple needs to find more sources of revenue. iTunes is being attacked by streaming services (and Apple's offerings haven't swept the world as iTune 99-cent breakthrough did). iPod sales are declining. iPad sales are flattening, and iPhone sales are increasingly growing in foreign countries - where there is also increasing competition in all segments.

Well, I wish I could say more... ;) But it's gonna be interesting... 

4 Comments – Post Your Own

#1) On August 29, 2014 at 5:19 PM, qazulight (< 20) wrote:

I was thinking about this, the other day. My wife has sever headaches, she doesn't know why, and neither does anyone else. However, if she could wear a device simular to the FitBit, with more telemetry, the big data scientist would be able to isolate the cause.

 when I thought about it some more, I realized that a device like that could provide the data for many many improvements. Further, using the psychological pushes and rewards, the devices could be used to modify behavior.

So, if Apple is still the innovator it was, the next big thing will not be an I-Pad, I-Phone, and it will be the much derided I -watch with an intergated health monitoring system and life style enhancement program.

Will it work? It might, sex sells, and fitness generally leads to more sex.




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#2) On August 30, 2014 at 3:05 PM, mauser96 (< 20) wrote:

For once I find myself agreeing with you.  It seems to me that even older iPads are so good at what they do that there is no rush to upgrade. When the next one comes out mine will be 2 generations old but I will keep it. Not like an iPhone, there I am good for a 2 year upgrade cycle since  with a contract and sale of my old one an iPhone upgrade  is cheap.

There is still a lot of stickiness in almost all Apple products. Since they are so good, interact  so well, and have a local repair site, I seldom even look at the competition. But growth requires attracting new customers too. .

Other than wearables I lack the imagination to come up with what the next Apple breakthrough could be. They have nearly exhausted the obvious range of screen sizes, keep in pocket, hold in hand, use on a desktop, etc. A innovative TV is possible but seems to be blocked  by content providers and creeping improvements by incumrent brands. I have almost stopped watching TV in favor cof streaming, AppleTV and CD. i would buy an improved Apple TV, one where it is less awkward to ebnter searches of Netflx etc.

 At the right P/E ,ample  cash flow , dividends and buy backs ,  AAPL doesn't need to be a super fast grower to attract interest. It will probably be around a long time. 

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#3) On August 30, 2014 at 11:44 PM, qazulight (< 20) wrote:

Just a couple of data points.

 1. My son sells cell phones. He gets to use all the phones. While the Android phones are slick, he says he will not get rid of his I-phone and the next upgrade will be an I-phone.

2. Big Data. Big Data is the game changer and the data from wearables will be big; really big. While Apple has already made the rule that you cannot resell to advertisers, they can use the data for health. However, that doesn't mean the data will be free. It will not, and it will be valuable. Also, there are indications from some marketing that customers given a choice about sharing the data for discounts, or keeping the data private, will share the data. Of course that data will be anonymous still it s valuable.

 So, even though many people kind of sneer at the idea of the I-Watch, it is possible that the I-watch may be a real game changer.


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#4) On September 02, 2014 at 11:02 AM, captainccs (33.66) wrote:

Growth follows the S curve 


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