Bert discusses NTNX, SQ, AYX, TWLO, SHOP and just some general ideas about technology and technology investing.
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I was interested in the stocks he mentioned that I don’t have, specifically Elastic.
He explains why IT and SaaS is so valuable:
“The reason people pay a lot of money for IT companies is because, I don’t try to look at the macros all that much, but the percentage of GDP going into IT is rising continuously. It’s doing so because of the productivity gains. It is very hard to be able to create improvements in productivity any other way.”
He slams Apple as well:
“But I’ll say one thing, and that is that Apple has been unable, for whatever reason, to figure out the next big thing in consumer electronics. And whether it’s Mr. Cook, or whether it’s the culture or what, it is a strategy of raising prices is exactly opposite what you see in the technology space, where prices come down dramatically, year after year after year, and you get more for your money year after year.”
David
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I am loaded with Apple products. I am a 2014 convert from the Windows and anything but Apple world. I have 3 iPads, 2 MacBooks, etc.
However, Apple is turning me off. I will not longer buy a new Apple product. I don’t even want to buy a MacBook Pro past the 2015 model.
I bought a refurbished 2017 MacBook. Awesome, and at near half the price of brand new. I still use my 2014 MacBook Pro. Still using my 6s iPhone. Put a new battery in it, like new.
Apple is creating new products that I like less than the products that are multiple years old, and they are trying to get 1/3 or even 50% more in price for them.
It is a testament to their market power that they can do so. It is not even the price. I simply do not even like their new products, unlike the love I have for their older products that still function in an awesome manner.
Tinker
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AAPL under Cook:
Should have bought NFLX when it was $50. Lagging in streaming.
Smart speakers- AMZN innnovated and GOOG in there too, AAPL lags with an offering more than 3xs the cost.
Smart home- GOOG has Nest and AMZN bought Ring with the idea that every wireless sensor can be a access point into their eco system. See the ad where a smoke detector serves also as access to Alexa.
Self driving autos- GOOG leading with Waymo
I remember when NOK owned 70% of the total cell phone market.
I remember when Blackberries were called Crackberries due to their popularity.
Tim Cook’s idea of innovation is a better camera or better screen.
If the IWatch could partner with DXCM for non stick glucose monitoring (along with current heart monitoring capabilities)and could get insurers to pay for that; then you may have something worth investing again. I am not sure Cook is up to the task.
Rob
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Well I love my Apple products. And will be buying more. Eventually, but not anytime soon. Why? Because Apple stuff lasts way longer than the competition. The older machines are “good enough” and Tinker is right, new ones should be getting cheaper not more expensive.
I recently gifted a 7 year old lightly used MacBook Pro, updated with more memory and a SSD. It looks better than most new laptops , runs plenty fast, and most of all the user does not have to endure Windows.
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How many others think this is correct from Bert? The fact that they are cheap! I don’t think they are cheap but are they undervalued or is this the same thing? Now Nvdia, what…9 months ago or so was considered undervalued…because of what was in the pipeline. How many can afford to look 3-7 years out there?
From Bert…
“I mean, you look at companies like Shopify (SHOP) and Square (SQ) that have transformed the way people do e-commerce growth. Well, they’re very expensive, if you think their growth is going to come to a halt or you can think they’re going to continue to innovate for five years, or seven years, and have hyper growth for a long period of time. Well, they’re not expensive at all, they’re cheap.”
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I simply do not even like their new products (Apple’s), unlike the love I have for their older products that still function in an awesome manner.
Hi Tinker,
I have exactly the same feelings.
Saul
There’s a cultural shift taking place in China which works against Apple. There was a time when the Chinese had an “imported is better” mentality, even going to Japan to buy a supposedly better toilet seat. The younger generation however, now prefers to buy domestically made products - cars, phones, computers. They are patriotic. Huawei is kicking Apple’s butt. Xiaomi is churning out budget phones for $200.
Another strike against Apple in China is that many Chinese spend most of their phone time online inside the WeChat ecosystem. TenCent (TCEHY) is turning WeChat into a operating system with the introduction of mini-apps that run inside WeChat. Mini apps don’t require any installation. It’s more like enabling a skill in Alexa. They allow users to shop, buy tickets, send money – all within WeChat. The upshot here is that WeChat provides the same user experience regardless of whether you’re on an iPhone or far less expensive Android. There is simply no benefit to paying the extra freight for Apple.
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There’s a cultural shift taking place in China which works against Apple. There was a time when the Chinese had an “imported is better” mentality, even going to Japan to buy a supposedly better toilet seat. The younger generation however, now prefers to buy domestically made products - cars, phones, computers.
Very nice insight Pothole. Thanks,
Saul
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Another strike against Apple in China is that many Chinese spend most of their phone time online inside the WeChat ecosystem. TenCent (TCEHY) is turning WeChat into a operating system with the introduction of mini-apps that run inside WeChat. Mini apps don’t require any installation. It’s more like enabling a skill in Alexa. They allow users to shop, buy tickets, send money – all within WeChat. The upshot here is that WeChat provides the same user experience regardless of whether you’re on an iPhone or far less expensive Android.
That’s an excellent point Pothole,
I would go further by saying many Chinese use WeChat is an understatement!
Imagine you are in a crowded neighborhood and go into a convenience store and 50 people come in and want to make a purchase at the same time.
Everyone has to get in line to pay, right?
Well, with WeChat nobody gets in any line, everyone scans, pays and carries on their merry way.
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"There’s a cultural shift taking place in China which works against Apple. "
I would push back a bit on that statement. Clearly the ‘imported is better’ mentality has been one in some Chinese minds especially for luxury items for a while now. It seems that there are quite a lot of Chinese consumers willing to ‘overpay’ for certain stuff. Economically speaking it may be explained by invoking scarcity in some sense: not enough competition (at least at the beginning) or poor quality available or high import taxes.
The product quality and availability conditions have been definitely improving over the years but the high import taxes are or will not. Apple products are still highly prized in China.
The stories about them been patriotic are quite incomplete and it is more a story that the government promotes. There are definitely ‘patriotic chineses’ but they love Apple too.
But the fact is a smartphone is becoming a crowded space so Apple will have to move on if it can. You can demand high prices when there were nothing really like it. It is not the case anymore.
I think there is the divide between the Chinese social networks and ecosystems and that of the US and most of the Western worlds is significant. Facebook, Google (though they are trying to go back) etc… are not in China.
This state of affairs have been going on for more than a decade.
tj
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