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So is Apple dying or not?

  • Earnings of $13bn on $54 bn revenue
  • Falling short of expectations
  • $137bn cash stockpile
Written by Adam Wajnberg
26/01/2013

So is Apple dying or not?

Short answer? No.

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apple

Apple’s stock price has slid from $705 in September 2012 to under $500 this week, as several clever pundits declare that the shine has gone off the Apple (in those exact words, no doubt). Their earnings call today suggests otherwise: $13.01 billion in earnings on $54.1 bn in revenue, around 10% up on the same quarter the year before.

Of course, this means nothing, because analysts predicted they would sell more, so the stock price will still probably decline a little. That money, meanwhile, was made by selling 47.8 million iPhones and 22.9 million iPads, both of which are quarterly records. They didn’t make the bulk of that money by employing financial chicanery to cook their books; they did it by designing, making and selling a widget.

CA$H

cash

The famous $100 billion savings account that Apple boasted before offering their first ever dividend last year (and which briefly surpassed the amount of liquid cash on hand held by the US federal government) now sits at $137bn. Forget share prices – Apple stock can be worth pennies at this point and it wouldn’t matter – they have a formula for making money that doesn’t want to slow down, even in the face of market saturation and increasing competition. They can buy out anybody, and really, that means anybody. Just for laughs, here are the companies they could hypothetically buy right now, using market capitalization (total worth in equity and assets):

Facebook (Market Cap $66bn)

Telstra (Market Cap $56bn)

And they’d still have just enough left over to buy Nando’s, to enjoy some delicious spicy chicken with their new phone lines and social networks (note – I may have picked two bad examples to begin with).

Androids…attack!

 

android

There’s no denying that Android has put a big dent in the mobile market, where it now powers over half of devices worldwide (iOS powers about 35%, with Windows, BlackBerry and others taking up the rest). BUT…and this is the real crux of it…Google doesn’t make a fraction of what Apple does from this effort, and there’s no clear path for them to do so any time soon.

Android is mainly used to power cheap smartphones. And it comes with enough functionality that most people who are happy with a cheap smartphone (either because of budget or a lack of interest in higher technology) don’t feel the need to go buying even inexpensive apps. They just want a phone with a big screen for watching YouTube (FREE), listening to their own music (FREE) and browsing the w- (FREEEE). As for the power users who get Android powered super-duper phones in order to take advantage of the operating system’s openness and customizability, they’re also the ones who root their phones and get apps for FREE so no money there either.

Meanwhile, the manufacturers themselves make little or no money from the apps, and have to sell their handsets at cheap prices with tiny thin margins to stay competitive; or sell them at bargain bin prices to clear stock for the latest iteration coming in six weeks. And they have to revenue share with service providers, since HTC, Motorola, Samsung and LG have no retail presence to compete with the Apple Store.

Sitting pretty

Apple’s fine. Rumors of a 4.7 inch ‘iPhone Math’ are starting to heat up, getting the rusty old rumor mill going for an inevitable mid-year release of the iPhone Whatever. Tim Cook says no, we won’t go to 4.7 inches, but the sun has at least 10 billion years left in it, so plotted on a long enough timeline, there will be an iPhone in every shape, colour, screen size and measurement – and made from every conceivable material including human skin and tofu.

Should I get an iPhone 5 now?

iphone 5

Really good deals are still hard to come by, but your best bet is still Optus if you need 4G data speeds:

$50 Cap + $13 monthly repayments iPhone 5 16GB – 1GB data, $500 credit and Unlimited Text

If you’re happy with 3G data speeds (at least until April when Vodafone 4G rolls out)), Vodafone is still slightly better value:

$60 Cap + $6 monthly repayment iPhone 5 16GB – 1GB data, $700 credit, free calls to Vodafone/3 customers and Unlimited Text (plus 500MB bonus data for the first 12 months)

Outright

iPhones don’t go on discount very often. The price to buy outright from an Apple Store is still $799 for the 16GB, $899 for 32GB and a cool grand for the 64Gb version. BUT…when paired up with a service like the $40 Unlimited Amaysim Plan (free calls, free text, free picture messaging, 4GB mobile data) then you’re starting to get a real picture of how much a 24 month really costs you. Assuming:

$800 phone = $33 a month

With the $40 Amaysim plan, that means about $73 a month…but with a huge difference in the value of the plan (and with almost zero risk of getting “Bill Shock”). Of course, this means a lot of money upfront, 3G data speeds only…but if you use your phone a lot, this is overall a safer option.

Need help finding plans for iPhones, Android Phones and Windows Phone 8? Call us on 1300 764 000

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