Seeking Alpha


Send Message
View as an RSS Feed
View steftheref's Comments BY TICKER:
Latest comments  |  Highest rated
  • Apple Crushes The Competition [View article]
    May I offer a contrary view for your consideration?

    Firstly, of course, Apple products are designed in the USA and indeed, use some key components that are actually manufactured in the USA (I know it's hard to believe we still manufacture anything, but we do!). Other components come from Japan, Taiwan, Germany and China. The software is entirely made in the USA, although key parts are licensed from ARM in the UK for some products. It is true that assembly is conducted in China, but shortly that monopoly will be broken by a massive assembly plant in Brazil.

    So characterizing the Apple product line as 'cheap China imports' is somewhat wide of the mark, as I hope I have demonstrated.

    As to being gouged, this comes down to your personal assessment of value for money. People vote one wallet at a time and by that measure it cannot be be concluded the company is pricing itself out of the market. People aren't stupid, they know how to work out if they are getting value for their hard-earned money.

    In terms of 'blind loyalty' as an explanation for Apple's popularity, and attributing this to some mystical skill on the part of the company's marketing team, it is surely true that Apple's customers are very loyal, and it's also true Apple's marketing is subdued, careful, considered and usually hits the spot. But to attribute the company's success solely to a mystical force is to devalue the consideration each consumer makes as he or she puts a hand into the wallet to buy a product.

    One can only reliably speak from personal experience and what I think I do when I choose to buy Apple is to understand I've divined the essence of something quite remarkable. I've got a gleam in my eye only because I think I saw the light.

    It didn't happen recently. I was a researcher working with Apple when the Mac was being planned. The first time I saw Andy Hertzfeld pick up a document and put it in a folder, right there on the screen, a big light went on in my mind. It's still burning, more than 30 years later.

    Because in that moment I saw how I might use this box of electronics to do things I wanted to do in my life. I don't mean in my work, I mean in my life. At the time I was quite the mathematician who could do all sorts of complex programming to find cryptographic keys, or probabilities for various options. But the idea of using a computer to keep notes, or write letters, make music, design kitchen layouts, mess around with writing my books.... that had NEVER occurred to me.... but NOW I saw through a glass dimly that here, right here at Apple, was the kernel of the thing that could do all these things, and more, for me, and I assumed millions and millions of others.

    I've never lost this belief that if you make elegant products that 'just work' people will find amazing things to do with them, and that's the meme Apple found all those years ago and hasn't stopped exposing ever since. I don't see this as a cult, and I don't regard myself as some unthinking 'fanboy': it's more a shared belief that things can be better.

    My latest work is a quite small contribution to helping make the iPad a friend that enables autistic kids fulfil their potential within the world in which they have to live. The iPad's infinite patience, forgiving nature and natural language 'just work' and the teachers are reporting remarkable results.

    All from that spark when a piece of paper was put in a folder 30 years ago.

    You know, there's a pride of ownership in having the best of breed. Most of us can't do that with cars, or we'd all be driving Porsches or Mercedes, and most of us can't afford to live on Park Avenue. But when it comes to computers and mobile devices we CAN afford best of breed. And that's part of Apple's appeal, the call to the individual's pride in owning and using something that is elegant, effective, beautiful even, and, more than this, it 'just works'.
    Feb 23 10:06 AM | 17 Likes Like |Link to Comment
  • Apple: One More Thing [View article]
    You're the guy who recently wrote an article about 'why I now hate Apple'.

    Am I right?

    So why would I think this present article is anything other than another excuse to get digs in at Apple?

    You're entitled to your opinions, of course. But as an avowed Apple-hater, you disbar yourself from being regarded as objective.

    For what it's worth, I think the iPhone 5 along with iOS 6 will indeed earn the appellation 'Amazing' for its technological prowess, the sophisticated manufacturing processes required to bring it to fruition, and its sublime design. And of course, a phone selling tens of millions probably does deserve to be called 'amazing'.
    Sep 12 07:16 PM | 16 Likes Like |Link to Comment
  • Why Apple Shares Probably Won't Be Hitting $700 Anytime Soon [View article]
    I hear all the chartists and slide rule merchants, all the tealeaf diviners and those watching the conjunction of Jupiter and Mars and drawing inspiration for their decisions on AAPL. I think about all this every time I walk by the local Apple Store.

    Then I look in. The place is heaving.

    When I see it empty I'll be ready to read the tealeaves.
    Apr 2 03:39 PM | 15 Likes Like |Link to Comment
  • An Apple Bubble Is Forming [View article]
    This article mentions the competition. Everyone mentions competition as though it forms a guaranteed threat to Apple. This is not the case.

    I'll propose you look at the iPod story to understand that competition can sometimes actually strengthen the incumbent, or have no noticeable effect whatsoever.

    10 years on, and having faced off innumerable challenges from competitors, including a big effort from Redmond, iPod still commands 80% of the market. This, despite regular prognostications along the way from doomsayers who told us 'iPod's day is numbered, here comes a competitor to take its market'. And why is this?

    Because Apple launched a product that defined a category which turned out to have longevity, and did it with breakthrough technology that left everyone else in the dust initially. They wrapped the hardware device in a cocoon of elegant software delivering functionality nobody else had thought of (iTunes): you didn't just buy an mp3 player, you bought into a little eco-system whereby the mp3 player was closely integrated with iTunes and thence your life.

    They then began an unstoppable process of steady product refinement, with each iPod improving on its predecessor and maintaining and growing the chasm between it and the competition, and the little eco-system growing in sophistication and functionality to add in videos, then movies, books, podcasts, iTunes University...

    Now turn to iPhone and iPad. They're following the same strategy! Initial technology breakthrough + constant improvement + eco-system.

    But now the eco-system is vastly more sophisticated, with 600,000+ apps in the bundle, and iCloud to sync it all together, and Siri maturing by the day to help navigate around.

    Once you buy into this eco-system with your first Apple product the entire experience is so rewarding and fulfilling that it becomes an exercise in futility for the average user to look to a competitor for his or her next purchase. Why would you bother?

    If Apple treated all this in a complacent manner, and just assumed customers would roll up with open wallets, then that would present a competitive opportunity. But have you ever been to an Apple Store? That's an exercise in retail perfection right there, with everything geared to customer service. And do the Apple execs you see fronting the company give the impression they are taking things for granted? That's not what I see.

    Given all this, and the reality that in none of their chosen market sectors is Apple running at or even near saturation, what is to stop customers leading Apple to continuing growth?
    Mar 18 10:25 AM | 13 Likes Like |Link to Comment
  • Why Talk Of Apple's Demise Is Greatly Exaggerated [View article]
    Apple's been building for more than 30 years, always holding to the notion that if it builds systems that 'just work' customers will find that attractive, buy their products and join the family. Even when it just made computers, this promise was fulfilled and despite the dominance of the ubiquitous PC with its Microsoft OS, Apple still had several million loyal customers who stayed with their Mac through thick and thin.

    With the iPod, Apple began to expand this 'just works' approach to people who had never owned an Apple product before, and then continued the process with the iPhone and iPad, and now the glue that holds everything together, iCloud.

    There are hundreds of millions of loyal customers now, who survey after survey has shown will select an Apple products for their next purchase.

    Apple is clearly no flash-in-the-pan. It's here for the long haul, building its loyalties one wallet at a time.

    The very notion that a financial quarter where the company fails to grow by 80% signals the end of the dream is rubbish, plain and simple.
    Jul 27 03:42 PM | 11 Likes Like |Link to Comment
  • Why I Now Dislike Apple [View article]
    Why is this worth the space at all? It's a single individual's personal experience which doesn't translate to the general experience.

    Remember the app that got banned because it contained personally offensive criticism? The one where a Danish political cartoonist got turfed off? That was Apple's policy at the time, but as soon as they realized it wasn't appropriate to political cartoons because by their nature cartoonists are frequently offensively critical, guess what? The policy got changed.

    Apple's not some faceless lump. It's run by people. People make mistakes, and when they do, let's encourage them to change things.

    But do I want an app on my iPhone or iPad that calls executable code that hasn't been validated? Are you NUTS?

    Yes, you can do this on Android. Best of luck with that. There are thousands of trojans out there in the Android space. You want to run the risk? Be my guest. Google is running like a scared rabbit to try to close down the open aspects of its free software that present the most threats, but even if they ever manage to do that, it won't help the tens of millions of Android devices out there that have never, and will never be updated. If that's your idea of a better environment, as I say, best of luck.

    But please don't use your bully pulpit to push your simplistic idea about freedom down my throat thank you very much. It may be your genius idea. It's not mine.
    Apr 2 05:06 PM | 11 Likes Like |Link to Comment
  • Why Research In Motion and Nokia Can't Compete with Apple [View article]
    It's a myth that companies cannot compete with Apple. However....

    If you want to be competitive you have to actually BE competitive. The idea that consumers are idiots who won't be able to tell the difference between the marvellous experience it is to be an Apple customer and some PR spin from a company with inferior products, poor service, crappy security etc. etc. IS a myth. Consumers are savvy and when they take their hard earned money out and exchange it for Apple, it's because they've figured out the best deal for themselves. All a competitor has to do, therefore, is to offer a truly better deal than Apple and get the message across.

    And that's not going to be easy because Apple sets the bar very high. Apple isn't spin, smoke and mirrors, PR fluff and nonsense. Apple is very, very good. But impossible to compete with? Of course not.
    May 1 06:39 AM | 11 Likes Like |Link to Comment
  • Apple: Why Is The 'Cult' Of Mac So Misunderstood? [View article]
    The Ugly Truth has hit a home run again.

    These so-called 'expert financial analysts' who dish outrageously ill-informed opinions about Apple's supposed 'problems' are nothing more than haruspices, snakeoil merchants peddling their 'insights' to part fools from their money.

    No company is perfect, every company faces problems, nobody is immune from competitive threats, but after 30 years at the plough, Apple's got pretty damn good at what it does and it's most unlikely a guy in an expensive suit sitting at a desk in an ivory tower is going to figure something out the company hasn't already thought about.

    I remember Sibelius' comment when someone told him 'The critics are not going to like your latest symphony.'

    'Critics!?' he exploded, 'Critics? Whoever erected a statue to a critic?'
    Jul 12 08:54 AM | 10 Likes Like |Link to Comment
  • Get Ready To Be Disappointed With Apple [View article]
    You kinda know it's going to happen, don't you? A company comes out with astonishing results that even the most jaded person could surely appreciate, and what do you know, here comes Johnny with all the problems nobody else has seen.

    (I've posted this data elsewhere, so for those who have read it before I apologize)

    Is it OK if I just do a quick reality check right across the market to see what the analysts are saying about Apple's prospects? (not that these guys know anything, of course.. but indulge me...)

    Richard Gardner, Citigroup: “Stellar…firing on all cylinders.” Buy rating; target to $600, from $500.

    Kulbinder Garcha, Credit Suisse: “One for the record books.” Outperform rating; target to $550, from $500.

    Toni Sacconaghi, Bernstein Research: “Stunning…eclipsed expectations in every line of business.” Outperform rating; target to $600, from $575.

    Bill Shope, Goldman Sachs: “$98 billion in cash, 116% EPS growth and a depressed valuation.” He repeats his Buy rating; target to $600, from $550.

    Tavis McCourt, Morgan Keegan: “Breaking the law of large numbers.” Outperform rating; target to $650, from $513.

    Mike Abramsky, RBC Capital: “iDominance.” Outperform rating, target to $600, from $525.

    Brian White, Ticonderoga Securities: “Apple takes our breath away.” He keeps his Buy rating and $666 target.

    Keith Bachman, BMO Capital: “Apple delivered material upside in all product segments.” Outperform rating; target to $545, from $460.

    Matthew Hoffman, Cowen: “Blowout…another exceptional quarter.” Repeats Outperform rating, with at 15% more upside.

    Rob Cihra, Evercore Partners: “That a lotta iPhones.” Outperform rating, target to $650, from $600.

    Anil Doradla, William Blair: “Calling it a blowout quarter is an understatement.” Outperform rating.

    Brian Marshall, ISI Group: “With minimal real competitive threats to AAPL’s major product families in CY12, we believe the outlook for the next 4 quarters can be characterized as smooth sailing.” Buy rating; target to $525, from $500.

    Kevin Hunt, Auriga USA: “Wow…Apple remains a cheap growth stock that even value investors can love.” Repeats Buy rating; target to $650, from $550.

    Avi Silver, CLSA Asia-Pacific Markets: “How do ya like them Apples? A blowout.” Buy rating; target to $550, from $505.

    Bill Choi, Janney Capital: “Blowout Q1 results.” Buy rating, target to $580, from $515.

    Scott Sutherland, Wedbush: “The Big Apple…[a] monster quarter.” Outperform rating, target to $585, from $540.

    Daniel Ernst, Hudson Square Research: “Awe-inspiring.” Buy rating , $700 target.

    Alex Gauna, JMP: “Spectacular.”
    Jan 25 05:32 PM | 10 Likes Like |Link to Comment
  • Has Apple Become A Speculative Stock? [View article]
    I remember what Sibelius said when someone commented that the critics wouldn't like his new symphony:

    'Forget the critics. When did anyone erect a statue to a critic?'

    Ditto authors of books on making money. If they really knew, they would be too busy spending it to have the time to write about it, at least that's my jaundiced view on the matter.

    I'm not an options trader, I'm an investor. I entrust my money to the Board and give them the opportunity to prove I was right to do so.

    You couldn't be more wrong about what an empty Apple Store would mean. Enterprises have momentum. They don't suddenly stop and lose their customer base. There would be plenty of time to bail if you ever saw a decline in feet going into the Apple Stores.

    Option traders may look for tiny movements on charts, or divine the future from tealeaves or the confluence of Jupiter with Mars, and good luck to them if that's what rocks their boat, but I look for a company that offers its customers the very best products and service it can at prices the market can afford. So long as it keeps doing that, I'll leave my money with them.
    Apr 2 11:48 AM | 9 Likes Like |Link to Comment
  • Mr. Market Is Not Undervaluing Apple [View article]
    I wonder if you could explain to me why an online retailer selling at single digit margins at best, and actually selling billions at or below cost expecting to 'make it up in volume', has a P/E of 90+ while a company producing spectacular figures that any CEO would donate a limb for, with margins in excess of 40%, customer loyalty to die for and a consistent growth story is rewarded with a P/E in single digits or thereabouts?

    It's a mystery to me.
    Jan 25 03:54 PM | 9 Likes Like |Link to Comment
  • Apple May Have Jumped The Shark And Reached Its Zenith [View article]
    How can Apple products be too expensive when the iPhones, at least, are subsidized by the carrier and cost no more than their Android or Windows Phone competitors? Indeed, the iPhone 3GS is free! How can you beat that?

    The iPad offers tons more bang for the buck too: it's widely known the competition's problem is achieving a low enough build cost to become competitive in the marketplace.

    As for the MacBook Airs, Sony's offering is MORE expensive.

    Sure, in general, Apple's product line is in the top 20% of most sectors in which it operates, but as in most of life, you get what you pay for. The evidence is the market doesn't want cheap and crappy and is prepared to pay the price to get something that works elegantly nd well.
    Jan 6 09:48 AM | 9 Likes Like |Link to Comment
  • Android to Lose From Verizon iPhone? [View article]
    Characterizing Apple as offering a 'closed ecosystem' is a simplification which may appeal to simpletons, but falls down upon inspection.

    The demand for Android results partly (mainly?) from dozens of second tier manufacturers wanting a share of the smartphone market but lacking the smarts to build their own OS. So they grab a 'free' OS off Google. That's great for them, they can shift their (sometimes junky) hardware now onto an unsuspecting public. The fact that tons of Android devices are shipping should come as no surprise as they are chiefly running on cheap devices. There's always a market for cheap.

    But a piece of hardware and an OS has been shown to be only part of what mobile users need and want. Users will figure out what's missing and the next time they buy, they'll be better educated and they may well look for a 'proper' solution that fills all their needs. If they do, Apple will be there with the benchmark solution. So it could well be that the initial surge of Android actually creates a bigger market for Apple down the pike.

    It's no simple matter to build a resilient, responsive eco-system in the mobile market. Ask Palm. And ask a leader (RIM) who have to face the daunting task of building out their own ecosystem to include apps.

    I suspect that what appears to be 'free' comes at a cost. Google isn't giving away Android out of charity! It's objective is to get millions of devices out there (which it controls through its OS) through which it can push endless advertising, polluting the Internet with the drivel which now has a stranglehold on mainstream TV and radio. Having their mobile device swamped in this way could drive many users nuts, not least because of the bandwidth used for delivery of this crap, bandwidth they are paying for every month. Still think Android is free?

    There's another thing. Apple right now has a business strategy that has resulted in the most vibrant mobile device eco-system on the planet. Part of this offering is a curated AppStore, which means Apple validates all apps residing therein. It has good business and social rationales for this aspect of its business, and so far you would have to say the market goes along with Apple's position.

    It seems this is the area where Mr. Denninger and his ilk consider Apple to be 'closed'. Do you imagine that if it should ever come to pass that the average consumer starts to reject Apple because of this, that Apple would not respond? It will be much easier for Apple to relax its conditions (if it ever proves necessary) than for the Android community to tighten theirs up (as many think they will be forced to as fraudulent and malicious apps proliferate on an 'open' Android): the horse will have long bolted by then.

    There is another closed area, Apple's mobile iOS which no outside party has access to. Thankfully. The idea of allowing hackers to freely tinker around with the OS running my mobile device is something to be feared, not welcomed.
    Jan 11 05:07 PM | 9 Likes Like |Link to Comment
  • Apple: A China Syndrome That Could Explode [View article]
    So Apple stops an unauthorized seller from selling its products in China. That's unusual or newsworthy? Or significant?

    So a bankrupt Chinese company that sold its iPad trademark to Apple some years ago is now trying to weasel its way out of the deal and go back to the trough for seconds, and Apple is telling it to get stuffed. This is news?

    So Chinese factories are not compliant with every cosy firstworld activist's definition of acceptable work conditions and Apple should stop having its stuff made there immediately. This is reasonable? Work conditions in China are the responsibility of the Chinese authorities. They have in the past, quite rightly, told us to take a walk when America has tried to tell the Chinese how to live their lives.

    We can advise, demonstrate by example, request the Chinese to improve, but we can't require them to do so. And the day is long gone when we can just walk away if they don't do as we ask: Walmart and every other department store would be almost empty if we did that.

    Apple has long conducted audits on all the places its stuff is assembled and if it can further improve the process for workers, one has every reason to expect it will do so. But anyone who has done business with the Chinese will know they don't appreciate being lectured to by westerners and will do things in their own way and in their own time.

    All the evidence is that conditions for workers in the high technology factories are significantly better than those in the garment and lower tech industries and one might expect the Chinese authorities to focus their efforts there first.
    Feb 17 02:04 PM | 8 Likes Like |Link to Comment
  • Has Apple Become A Speculative Stock? [View article]
    Who is Jeff Augen and why should I care a rat's rear end what he thinks?

    Does he run a major high tech company? Has he got some special insight nobody else has divined?

    The fact he thinks the pipeline for the next quarter is even relevant shows his view is that of a short term player, and I simply don't care one wet whistle what any short term player thinks.

    I KNOW from direct personal experience that the high tech game Apple is playing is a longterm play, requiring maybe a decade of prior R&D, experience, infrastructure building, customer relationship building, supplier relationship building, design philosophy refinement, software deployment and so on before you could even begin to be in a position to threaten Apple's position strategically.

    You don't need little charts or pseudo-analysis to understand what is going on. The only thing you need to do is wait outside ANY Apple Store, anywhere in the world.

    The day you see it empty is the day you can start to think maybe the gloss has gone off this company.

    Take lots and lots of sandwiches though, it's going to be a long wait.
    Apr 2 11:10 AM | 7 Likes Like |Link to Comment