Color me jaded but somewhere along the route to the information superhighway, humanity took a detour down the misinformation superhighway and that trip is causing all kinds of problems for the species.
It’s not just fake news or fake outrage but fake thinking; perhaps false thinking, but absolutely positively, there are ditches and broken bridges down the interwebs where little thinking takes place.
Allow me to take a look at a simple example of such nonsense. Vishesh Raisinghani:
Apple Is Transitioning From Product Company To Service Giant
Uh, not true. False. For the premise to work, Apple would one day be a service company and not a hardware company. Apple is a hardware company. The fast growing Services section of the company’s business is booming, yes, but give some thought to the premise. Where would Services be without hardware sales?
Services account for 16% of revenue and a significant chunk of gross margins.
Yes. Growing fast, too. But did Apple transition to a retail store distribution model? No. Apple Stores are part of the company’s distribution chain. Part.
The fact that Apple will stop reporting unit sales of products means growth will be softer.
That means no such thing. It may have softer growth but that has been evident with iPhone, iPad, and Mac for a few years already. Move along. Nothing to see here.
Apple stopped reporting unit sales because it can and nobody else that competes with Apple does. Not Google, not Dell or HP or Lenovo, not Samsung. Nobody. So, why should Apple shoulder the responsibility? There no longer is a good reason to report such numbers because saturation.
Hardware growth is, well, hard. It’s difficult. Everyone on planet earth who wants a premium device and can afford one already has one and Apple has been taking the bacon away from competitors for many years. Will. Not. Change.
I believe Tim Cook and his team are trying to transition the company away from Jobs’ vision of the ‘ultimate product company’ to an ‘efficient services provider’.
Apple’s Services business remains what it always was, is, and will be. Another profitable revenue stream, but to say the company is moving away from hardware to sell services is to defy plausible logic and reality. It’s simple. No hardware? No Services growth. What should concern investors is the lack of hardware growth, not the premium gross margins from the Services group. Why? There is a limit to how much money Apple can extract from a customer base that remains static. When that happens, and it will– what goes up, must come down; or, at least, stay up but not go higher– what happens to Services?
Yes, Apple makes money on Services and as long as it continues to sell hardware, and it will, the money will follow, but the iPhone maker will never be just a Services company.
I believe Apple has depleted its product pricing and unit growth potential and will have to squeeze out growth by selling more services to its installed base. At least till new products are developed.
What? A caveat at the end of the nonsense?