Apple now a purely for-profit company

[jerryk]

Apple has moved prices and products upmarket to further distance themselves from their Dell-like and Samsung-like competitors. Apple isn't interested in the low-end and mid-end market because that's not where the big money is.

Apple practically has a captive market. Each year, I hear many people say they are leaving the Apple ecosystem because of the cost and then I see them and their kids outfitted with expensive Apple kit.

Me? I always head to the used market for replacement MacBooks before looking at Apple refurbs.

Makes sense. It costs just as much, maybe more because of the more questions, to support downmarket vs upmarket.

 

[Lioness~]

@Lioness~

Well said. The extreme of "raise ASP's and margins as much as possible" is simply going too far.

Nobody should be making the argument that "they're a business - they need to make money".
We get it. Not only are they a business, they're the most valuable one *ever*.

Everything has limits. Some regression from "profit at every single opportunity no matter how big or small" would be awfully nice.

With the logic of just do any/everything you can to make money, one could argue for strip mining the entire planet to make as much money as possible with no regard for anything else. It's capitalistic thinking that goes simply unhinged off the rails.

Tim is milking out Steve’s vision for all he can. Because he want’s a successful company.
But from my perspective there is no vision in Apple today. What’s left of the vision that sells, is from Steve.
They work hard to keep up with the market. What will be left of the vision in 10 yrs? Even less.
I can’t compare Apple with the market, as I don’t know what makes the other companies tick.
But I know what I bought earlier, and what I buy or rather postpone to buy today.
Guess I’ll still buy Apple tomorrow, and I still do it because of what’s left of Steve in it. Not because of the other dudes still there.

The very fact that Apple is so profitable actually proves what Tim Cook is doing is working even if you don’t like him. If people are buying his products, how can we criticise Apple? I don’t like a lot of Apple decisions and product choices, you just have to read my posts, but I can’t argue with numbers which represent the whole customer base, compared to just my own opinion.

You’ll know he’s doing a bad job when Apple goes the way of say Blackberry, Nokia, Yahoo etc

Oh no, Tim is doing a great job, too still make Apple lucrative without having neither vision or any genius in Apple anymore. Of course Jony’s design makes it at least look good. But we just have to see how long it will last. They just keep up with the market today.

 

[matram]

Having worked with companies that have cash flow problems I must say that being successful is good. It allows you to put more money into existing and new products.

How much profit you can make on a product depends on the customer perceived value of your product and the value of your brand. I believe Apple realized they can charge more and are doing this. Of course their is a limit were revenue goes down so I believe it will balance out.

Of course product have lifecycle. We invest in new product, old product are discontinued and other products we largely maintain. I believe Apple is trying to "accelerate" Mac development.

 

[haruhiko]

Just look at all the socialist states
Could anyone of them stay socialist?

If there is no profit, there is no incentive. Do you work for free? Let's earn less from your boss to show that you're not for profit?

I don't think the current Apple is anything worse than the Jobs era for me as a consumer.

 

[Fthree]

no matter how clever they have ever packaged it, apple has always been about making money = profit.

 

[New_Mac_Smell]

Why is this in the MacBook Pro section? With all the hornyness for Steve Jobs, it should be in the religious section.

Apple are a company, they make money, they exist to make money - always have. Get over it, it's not 1977 and a couple of hippies in a garage anymore, wasn't even like that in 1980. There's some serious cult of personality over Jobs kicking around since his death, he was an inspirational and aspirational figure, but he was human and did have flaws. Cook has done a brilliant job from a business perspective of pushing that legacy, extending it to more customers, and placing Apple into more lives. Also, Cook was hand picked and trained by Steve to take over, so kind of Jobs' fault if you disagree with anything.

 

[GizmoDVD]

This is amazing new news. I had no idea they cared about profits.

 

[Audit13]

Steve Jobs wasn't too interested in Apple making money and that is why he was worth billions at the time of his death?

I'm a working stiff. I think about making as much money as I can and/or winning the lottery.

 

[TheAppleFairy]

The business that gets really great starts from a vision. Apple did too.
They continue however to want profit, because that’s survival.
But the difference between business with vision and business only for profit, Apple is an extremely good example. Because we know it as a company with vision, and we all payed gladly for its products.

Today people don’t seem that happy to pay for it, because there’s no vision there anymore.
Only vision left is profit on the products.
That’s the difference.

Some people aren’t happy with their vision or claim they don’t have one.

Their vision is focused on mobile products and services and of course profit.

If they are lacking vision somewhere a competitor will fill that void or Apple will adjust.

 

[burgman]

It was operated in a fundamentally different way, with a variety of products constantly being introduced and updated, must superior customer service and lower price points. It was definitely profitable, but the main focus was not on the profit, it was on customer experience and rapid expansion into new markets. One example is the number of products it kept up-to-date compared to the current Apple, which does not maximize the profit but raises the customer experience and brand value overall.

Did you even own Apple products back then, you are so far off on your "analysis" Ask any cheese grater MacPro owner or 17 inch MacBook Pro owner, or, or, or you are holding it wrong. Go back further same thing.

 

[Painter2002]

I believe this is important to discuss now that Apple has reached a trillion dollar valuation what the company actually does and why it does it.

I think it is important for Apple users to understand the fundamental shift that has happened to Apple between Steve Jobs and Tim Cook.


Under Jobs, Apple had a variety of products that it constantly introduced or improved. Mind you, that was not necessarily the best financial decision, but it did create a reputation for Apple (and for the userbase) that it is still riding on.

Under Tim Cook, Apple has just one objective: maximum profit for the shareholder. Which it is very successfully accomplishing, no questions about that. The consequence, however, is how much the non-so profitable products have suffered.

Let's have a look at this:

This is Apple's revenue by product for Q1 2018. It differs from quarter to quarter: but the main take-aways is that iPhone + Services make around 80% of Apple's revenue at any time.

So knowing that Apple is a for-profit company, we can easily derive where their efforts will go:

80% on iPhone development and services
20% on EVERYTHING else.

And this literally explains all the Apple's product development.

Why hasn't the Mac Pro been updated since 2013? Cause it doesn't make enough money.
Why haven't the MacBook, MacBook Air, Mac Mini or iMac been updated in over a year? Cause they don't make enough money.
Why are the new MacBook Pros completely glued together? Cause repairs will bring now even more money.
Why it's impossible to get repair components for iMac Pro, no one at Apple stores knows how to repair them (check Linus or Snazzy Labs with their stories)? Cause they simply don't make enough money so there is no reason to put more effort into them.
Why are the prices for ALL Apple product increasing to never-before-seen heights (iPhone, Macbooks, iMac Pro)? Cause Apple wants to be as profitable as possible and will keep raising the prices. They have figured out that they have a very loyal fanbase with inelastic demand (so raising the prices will cause complaints but not really a lot of people shifting to other products), so raising the prices just makes them even more money.


Moving on to the final part - what does that mean for the future?
Very simple: Apple will just go where the money is and abandon everything else. Products will become even more expensive with no replaceable or self-repairable components. They definitely haven't reached the limit yet when people refuse to buy Apple products because they are too expensive, so there is no reason to not further raise the prices. Being successful and profitable has very little to do with being nice to consumers

I’m sorry but I can’t disagree more... you automatically make a false statement in the very beginning, that Apple is now (gasp) only a for profit organization. Everyone can say Steve this, and Steve that, but anybody who has every been in the business end of company management knows that the end goal is about making money. That’s what drives companies to greatness and allows for more employees to design newer and greater (supposedly) products. Steve did the same thing.

I will agree with the point that many make that Apple may be loosing some of the bleeding edge innovation and original designs, but I think there is a good chunk of people who still feel Apple makes good products. People don’t keep buying the products for no reason, Apple still makes a darn good product. There are issues, but so does every other company that is fighting to be the best they can be. Samsung Note 7, anyone??

I personally think that the trillion dollar threshold is nothing more than something hyped by the media, and still doesn’t change who Apple is to many, a company trying to make good products and deliver good service. And yes, ultimately Apples goal is to make money, it really always has been. Don’t let the Steve Job enthusiasts fool you otherwise. Don’t get me wrong, I loved and miss Steve Jobs, but reality is Apple is who they are today, and if people don’t like it, they are doing a terrible job showing it by sales numbers...

 

[macpro2018]

It's the details in these products... Steve Jobs pursued perfection which you tell by looking/using his product. Of course they're also not flawless. But you can tell that he must have tested them all to ensure the best quality/experience he could deliver.
On the other hand Tim Cook seemd lowered the standard of quality/experience. Not to mention the details which amazed us are gone for no reason... The products are made to look like from lazy hands or who compromise a lot...
There is no more real "one more thing" under Tim Cook... Admit it.. sad..

 

[Cycling Asia]

This is why macOS will one day become iOS and the only apps you purchase are those that you get from Apple's store - with which they'll finally get their cut of everything from every platform they're pushing.

 

[throAU]

It was operated in a fundamentally different way, with a variety of products constantly being introduced and updated, must superior customer service and lower price points. It was definitely profitable, but the main focus was not on the profit, it was on customer experience and rapid expansion into new markets. One example is the number of products it kept up-to-date compared to the current Apple, which does not maximize the profit but raises the customer experience and brand value overall.

I think what you're trying to say is that previously the product development (focused on user experience) came first, and then the profits came from that. i.e., make good products, whatever they may be, people want, people buy.

Now, the profit share drives the development.

I.e., see what brings in the money, focus resources on that.

What they should be doing is seeing where they are NOT making bank, and focusing on those areas.

The iPhone is massively profitable because the device is great. I'd thus argue that bulk development there is a case of diminishing returns at this point. You'd get far better bang for your development buck on things like the Mac, services, etc.

 

[Shanghaichica]

I get what you are saying but not sure you are saying it right. Is all of Tim Cook’s activist leanings a ruse to hide the company’s greed?

Kidding aside, your harp on the iPhone weighted revenue. The iPhone is the Apple Halo effect bringing users to the Apple Watch, TV and to Macs. They sell most of these other items because of the iPhone. Without it the Apple Halo doesn’t grow. Go to an airport or coffee shop and see the volume of Apple notebooks out there. Yes it is a great product and more preferred by students, etc., but to a great degree the iPhone has boosted the attractiveness to the Apple laptop, or at the minimum decreased the aversion to its higher price point as compared to PCs.

This leads to the other and more important factor that you are missing which is the economics. People buy more cell phones, replace them due to damage and want more often than a computer, which both naturally leads to greater volume. More people have phones than people have computers.

And then there is price. The barrier to entry. A phone is inherently cheaper and easier to sell in volume due to price and barrier to entry, especially considering both Apple and the carriers incentivize purchasing through no interest financing. You do not get this with computers. No one is really selling a $1000-3000 computer for $50 or $100 or $200 a month. But it is so easy to buy a cellphone for $25-50 on your monthly cell bill. We’ve accepted it as part of life for the most part. A computer is a bigger decision.

All of these factors are going to undoubtedly skew revenue towards the iPhone.

I haven’t even mentioned advertising. Most commercials are what? Beverages (beer/alcohol/soda); insurance; cars; and wireless providers. The cell phone companies used to advertise coverage. Now most of their ads are for the new phones from Apple and Samsung.

This. I had a few iPods but it wasn't until I got an iPhone that I decided to buy into the Apple ecosystem. First it was the Apple TV, then the iPad, then the mac. It just continued from there, Apple watch, airpods, home pod. But it all started with the iPhone.

 

[TimmeyCook]

"now"...

 

[IllIllIll]

It's so amusing to watch people who clearly have no background, knowledge, or understanding of business and economics ruminate about business and economics.