Apple is increasing efficiency amongst their iPhone upgrade process by accepting competitor smartphones as trade-ins. It’s analogous to tradinging in your Honda at a BMW dealer. Phones are sold to another company, just like car dealers sell to auction houses.
Apple is creating value for the customer by providing this service. By accepting competitor trade-ins, Apple is reducing the amount of effort required from the purchaser, removing the need to recoup costs associated with selling on eBay or Craigslist.
This is an obvious way for Apple to guarantee themselves an increase in iPhone sales. Grabbing those potential customers on the fence is key to getting iPhones in the hands of customers that might have taken years to eventually get. This new service is speeding up the process for acquiring new iPhone customers, creating value for their customer’s older inferior phones and building up area under the curve. Meaning the sooner people buy Apple products, the sooner they are upgrading those same Apple products or building their residency inside Apple’s ecosystem.
Apple’s playing it smart here:
1. They are keeping an introductory iPhone for those on budget, and for developing countries like India.
2. Production costs are being kept down two-fold with smaller/older components, and through the use of plastics.
The point of Apple’s iPhone 6c is to get an iPhone in the hands of people so they’ll be glued to Apple products. And a lower entey price makes it feasible for more people to afford and iPhone.
Apple has phenomenal repeat business, and they know that they just need to get one iPhone purchase to have a customer for life.
Photo credit: http://www.nowhereelse.fr/iphone-6c-photo-coque-106033/
– $5.7B in profit
– Continued Growth, up 3% from 1 year ago based on diluted shares
– Expenses reduced from 1 year ago
– Increased dividend
– Reduced outstanding share count via buybacks
– Net $3.6B from $1.6B year ago in returned money to shareholders
– Net interest income grew from 1 year ago
– Fee income growth grew
– Tax rate was significantly higher than 1st quarter, so new income was actually better on a comparable basis during this 2nd quarter
– Deposit growth grew and on a ROA basis you would logically have a reduction based on the increase – this is a perfectly acceptable reduction in margin as this should improve as time goes on
– Continued rock solid efficiency ratio of 57.9% (remember 55 is better than 59) and current best ratio with respect to size compared to others – see JPM/BAC/C
– Credit losses down
– Continued planned share buybacks for remainder 2014
– Testing new urban (neighborhood) stores – saved dollars allows investment elsewhere
– Future mortgage servicing expenses coming down – less defaults/foreclosures and just general efficiency improvements
– More opportunity in card program, which is highest interest rates
– As rates go up depositors will stay instead of chasing better rates because it’s tough to get out of services provided since customers use so many, and same goes for businesses
In short, yes. Nike’s latest market cap is $67 billion according to MSN Finance. Granted the majority of Apple’s cash is overseas, but the point here is that it is possible. However, the real question is would Apple want to buy Nike. Apple’s obviously moving into the wearables market with their inevitable iWatch release. Something that Nike was probably tipped off about (in more detail) since they cancelled their successful Fuel Band and fired that developmental/engineering team.
Another thing worth pondering about is Tim Cook’s presence on Nike’s Board of Directors, and Tim is always photographed wearing their Fuel Band. I’m thinking that there has to be some behind closed doors future collaboration talks. Not just for apps that Nike claims they’ll be focusing on, but what about sophisticated shoes or shirts with biological sensors. It’s probably more than a stretch at this point to think that far, but wearables are the future and this iWatch will be Apple’s first approach into that market. Here are some random ideas for future Apple/Nike collaboration:
– Shoes that self charge with steps and display fuel band type data on them. Maybe even the ability to charge your iPhone from your shoes.
– Shirts that analyze your posture, sweat and muscle size gain post workout or just over time in general.
– Shirts with solar panels to charge your iPhone on the go or for later use.
– Shirts that display your latest tweets / instagram. Or that display anything (text/photos/videos) you want them to via app – think light-up roadside construction signs.
– Shoes that change shape and friction grip based on terrain.
– Shoes that log your gate info, telling you when your running in the most efficient manner and also tell you when to get a new pair.
– Growth is great, but maintain culture
– Keep an eye on funds and limit debt risk
– List the happiest periods in life and you’ll notice that none of them involve money. For me it’s modifying my cars, teaching other people how to do stuff on their cars. Just helping people in general plus reading, sharing neat things. Successfully investing money for other people. Making Mom proud. Playing with dogs. Hanging out with friends. Eating good food. Watching a good movie. Traveling to new or fun places. Racing cars. Driving fast cars. Looking good – physically and in wardrobe. Having sex and making out. Massages. Kicking ass in video games. Making videos. Taking photos. Just being creative, inventive and building stuff. Happiness is about enjoying life and chasing your passion.
– don’t jump into a market if it’s flooded with competitors. Hard for a couple reasons – product becomes commoditized and cutthroat pricing.
– fake it till you make it
– always be prepared with respect to financials
– it’s a long term game so wins or loses in short term don’t matter.
– be flexible and patient in business
– stamina and focus usually wins
– don’t get caught up in hope
– learn by doing. Knowing the path and walking it are different
– surround yourself with talent
– don’t mistake luck win a skilled win
– live, eat and breathe your business
– there is always someone better than you. Be humble.
– be nice, it’s a small community
– share and teach others what you have learned
– keep yourself open to other opportunities
– HAVE FUN (don’t just do it for the money)
– The size of the market you enter is meaningful. Too small and you won’t get far. Or playing against someone who’s really good at what they do in their market
– it’s a bad idea to invest in industries you don’t understand
– make genuine friends not friends just to help you out in business
– envision, create and believe in your own universe, and the universe will form around you.
– don’t let some 3rd party run the operations of your business
– great companies have a greater purpose and bigger vision beyond just making money or being number one in a market (good to great by jim collins)
– undersell so you can over deliver – think upgraded shipping for free
– a brand is just a lagging indicator of a company’s culture.
– deliver wow through service
– embrace and drive change
– create fun and a little weirdness
– be adventurous, creative and open-minded
– pursue growth and learning
– build open and honest relationships with communication
– build a positive team and family spirit
– do more with less
– be passionate and determined
– be humble
– make daily incremental improvements in yourself and in the business
– character defines the self while culture defines the brand
– treat others as you’d want to be treated
– be nice to vendors
– create a failsafe pipeline in case someone unexpectedly leaves that others in front of and below can pick up their work
– happiness is about 4 things: perceived control, perceived progress, connectedness and vision/meaning(being part of something bigger than yourself)
– the premise behind maslow’s hierarchy of human needs is that once a person’s survival needs are met, then humans are more motivated by other non-materialistic needs such as social status, achievement and creativity
– there a 3 types of happiness: pleasure, passion and higher purpose. Pleasure lasts the shortest. Passion is the second longest lasting and is all about flow and makes time fly by – think being in the zone like an athlete. Higher purpose is about being part of something that is bigger than yourself that has meaning to you and is the longest lasting out of all three types of happiness.