Apple loyalty

Investment Analysis Clubs Saul’s Investing Discussions
1

About 92% of iPhone owners say they are "somewhat likely or “extremely likely” to upgrade their smartphone in the next 12 months, according to a note from Morgan Stanley. The loyalty rate is up sharply from 86% one year ago.

https://www.thestreet.com/story/14206352/1/conventional-cars…

Does any other company come close? Tesla maybe, but I suspect it won’t be nearly 92% upgrading in the next year.

I probably will be one of those upgrading and no I won’t look at an Android phone., I won’t be looking at BMW or MB or GM when it’s time to trade in my model S. But if they get a good BEV I probably would.

Munster on Tesla

Gene Munster said conventional cars will soon be as obsolete as horses with the monumental advent of Elon Musk’s Tesla (TSLA) cars, CNBC reported.

“The Model 3 is important, but what’s more important is this bigger shift. Every Tesla that is shipping today is going to be fully autonomous in what Tesla is saying two years,” Munster said.

2 Likes
2

Mauser,

Apple loyalty is just slightly below Windows loyalty. Until there is some discontinuous innovation that makes the current Apple ecosystem less necessary (as happened with Windows when mobile and browser applications disrupted desktop and server) Apple will continue to maintain loyalty.

It is difficult to give up the ability to pull out any device while I am on the go, take down critical notes in a flash, and know that those notes will be there across all my devices (even the one’s I upgrade to in the future) and automatically saved and backed up so I don’t even need to worry about my devices blowing up anymore. There is nothing critical on any of my devices that is not either backed up to iCloud or to Dropbox, or that is not shared across devices.

Apple has a lock just about as good as Windows did, with the exception that Apple’s hardware sales are larger money than simply the OS that Microsoft sells.

The limits for Apple is penetration of its products, and population growth. I am shocked that Apple is not supporting the Catholic Church and “every sperm is sacred” campaign of a British movies from the 1970s. Life of Brian I think.

Fortunately for Apple, there is still marketshare to penetrate, there are bigger markets yet to start (like autonomous driving), and Apple can always raise its prices as well, as it does.

For me, if my iPhone 6S were to get destroyed, I would buy a 2016 version of the downgraded iPhone SE. But I appear to be one of those rare folks who is finding less joy in each upgraded product cycle that Apple produces these days. Albeit, iOS 11, that will be nice. Alas though, an iPad cannot replace my laptop and never will be able to. And that is not just famous last words. Too many pieces of software that just won’t run on an iPad. But, sadistically, there are too many pieces of software that will only run on an iPad as well and it a MacBook or a Windows machine. So more power to Apple in regard.

From may iPad Pro, sitting next to my MacBook, while my other two iPads are in the other room, and my iPhone hopefully waits for a return email from a girl I met this afternoon (in vain, yes, yes).

Tinker

3 Likes
3

I just upgraded from a iPhone 6 to the 7.

My first cel phone was a clunky thing that sat on the floor of my car, plugged into the cigarette lighter and had a hand held receiver attached to a cord that reached up to the side of my head.

State of the art !

:slight_smile:

4

About 92% of iPhone owners say they are "somewhat likely or “extremely likely” to upgrade their smartphone in the next 12 months, according to a note from Morgan Stanley. The loyalty rate is up sharply from 86% one year ago.

This may not be because of good reasons - e.g. connector/cable compatibility with charging and peripherals which Apple seems to mess with every couple of releases or deteriorating battery performance meaning the iPhone can’t even last a day without recharging. But I guess so long as they rebuy Apple for all of the lock in reasons then Apple don’t care.

A

1 Like
5

Still have an iPhone 5S. Will upgrade to the iPhone 8 when it’s released in a few months.

6

I’m not sure “loyalty” describes one who upgrades release after release. Loyalty implies unselfish motivation. Is that really the driver here?

7

Interesting that you mention loyalty with AAPL and TSLA in the same post…it is that very loyalty of leveraging its ecosystem that some believe will be a competitor to autonomous against TSLA.

Most think that AAPL is way behind in autonomous…maybe…but what your 92% figure illustrates is the power of their ecosystem…if they can turn that into other aspects of life (car, home, etc.)…they could get back to pretty substantial growth rates. Apple sheep are very loyal to Apple…its a no brainer that their lives, fully connected through Apple, would be appealing.

There are 85 million active Iphone users in the US alone…imagine how many of those would want a AAPL autonomous solution for their automobiles, etc.

My concern about AAPL the stock is that the IPhone alone can’t prevent them from rapidly moving toward a dividend type stock…they must get out to everything else…and leverage their vast ecosystem.

1 Like
8

The Apple ecosystem only gets you so far (and that is pretty dang far, so don’t get me wrong), but it does not do everything best, and not everything needs the Apple ecosystem.

In the past I have written about Apple TV vs. Roku. After living with both in my home theatre for a while (I have Apple TV becaus I also use it in court to present through, and I also got a free Apple TV by joint Direct TV streaming service, so had an extra one - and yet, the latest model) there is no question that Roku is superior if you have to choose between the devices.

Apple has a better menu. But Roku produces better graphics, more consistent sound (meaning you don’t always have to adjust the sound because different channels have different volumes, some way loud, others not as loud), and has much better search functionality that is not self-interested to sell Apple movies or what not.

Apple TV does enable iTunes and use of the library. Very nice feature there. But that would be the one advantage.

In the end, in the car, I already stream my iPhone. Why would I care to have Apple powering my ride vs. anyone else? No matter who is powering my ride, my iPhone will sync with the system anyways.

I think Apple will find autonomous driving to be a more difficult market to gain any material marketshare. The desire is for the car to safely drive itself - period.

Tinker

9

> About 92% of iPhone owners say they are "somewhat likely or “extremely likely” to upgrade their smartphone in the next 12 months, according to a note from Morgan Stanley. The loyalty rate is up sharply from 86% one year ago.

This may not be because of good reasons - e.g. connector/cable compatibility with charging and peripherals which Apple seems to mess with every couple of releases or deteriorating battery performance meaning the iPhone can’t even last a day without recharging.

Your reasons are wrong. Apple has changed the connector once in ten years. Battery performance has been fairly consistent over that span, too, if anything gently increasing. (http://zdnet2.cbsistatic.com/hub/i/r/2016/09/13/893c2201-564…)

Possibly people are loyal due to good reasons - e.g. excellent frequent updated software (including a strong—perhaps the strongest—stance on privacy), excellent hardware, excellent integration, and a strong ecosystem revolving around related hardware (Watch, AirPods) as well as an immense set of software in the App Store covering general use as well as all kinds of niches.

At over $70B paid to developers (https://www.apple.com/newsroom/2017/06/developer-earnings-fr…) there is strong incentive for developers to continue writing for this platform. Add Services to that and we’re talking real money :slight_smile:

Combine with pleasant end-user/warranty support at Apple Stores and the result is a very sticky experience with many happy customers.

G.

24 Likes
10

Apple inches ever closer to an approximation of “perfection” with each release. And thus there is less need to upgrade. But eventually the old iThing will fail, or you will just get tired of it.

I am using an iPhone 6 and will eventually upgrade, probably in a year or so.Just because I can. I am not a tablet fan so will use my iPad until it dies and may not get another,. I do like Mac Books but am still using a variety of old ones circa 2010 to 2013. At some point when 1 or 2 give up the ghost I will get another Apple, I won’t even look at another brand.

So call that brand loyalty. Apple iThings outlast other products and I have better ways to spend my time than learning a new OS.

I used to own AAPL, sold too soon , 50 points ago. Apple has populated almost all possible display sizes, what else can they do but incremental improvement? But so far that is all competitors can do too.

I do not think that loyalty extends to car automation. Which has to be super simple to be useful to most. Turn it on, turn it off, a simple interface. Not like the inherent complexity of a multi purpose device like a laptop or mobile phone.

11

Starting with cel phones that did nothing more. Now we have a computer in our pocket that can also be used as a phone. We don’t even have to dial. Just talk to the device.

My first cel phone, 40 years ago, as I mentioned earlier, was clunky. Some people scoffed and ridiculed the advent of this new technology. Now they, and almost everybody else on the planet has an iphone.

I just got a call on our ground line from someone who needed to talk to me and my wife who was not home. So I put him on speaker and called my wife’s iphone from my iphone which I also put on speaker. Then I held the two phones one in each hand, facing each other, in front of me while I sat down. Then we all three talked and listened to each other in a three way conversation. Pretty soon we were all laughing about what we were doing.

The only thing missing was crystal clear lifelike holograms of each other.

I wonder what future technology will look like 40 years from now.

2 Likes
12

I just got a call on our ground line

I haven’t had one of these since 2003, I sometimes get stumbled when I find a site that requires me to give them a “home” telephone address. I always have to repeat my cell phone

1 Like
13

G

Agreed there are a lot of strong stickiness but you weren’t exactly consistent with my points - there will have been at least 2 changes meaning 3 charge types with the next release plus there is the change to the earphone jack together with the knock on effect for peripherals. For those with other mac products e.g. macbook air/pro they will have seen multiple unnecessary changes in charger sockets just to add to iPhone users’ concerns.

Nokia went a decade without changing their charger when they had Apple’s dominance in mobile phones.

Regarding deteriorating battery - I wasn’t taking about release to release comparisons I was talking about the degrading of battery performance over the course of ownership which is made even worse by the new IOS version releases.

Ant

1 Like
14

Ant,

I have multiple apple devices, including this 6s, and have had them for going on 2 years now. I have seen no battery degradation issues.

Also, I have only dealt w one change of charging peripheral and that was to lightning. Lightening is actually a substantial upgrade over the prior input method.

The stickiness is the software, build quality, easy transfer of data and apps as your data and info is not device centric, and plain beauty of their devices.

Tinker

4 Likes