facebookApple is shifting towards becoming a service type company?, does this mean lesser emphasis on their phone production? doesn't seem like they'll be successful coming up against netflix/ amazon eg.? - Seedly

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Anonymous

18 Apr 2019

General Investing

Apple is shifting towards becoming a service type company?, does this mean lesser emphasis on their phone production? doesn't seem like they'll be successful coming up against netflix/ amazon eg.?

Discussion (3)

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Isaac Chan

25 Mar 2019

Business at NUS

Yes I think the general trend is that Apple is moving towards services instead, and I think Apple had been gearing up for this for a while. I don't think it's just their Cloud Services, but the next big thing would be their streaming services which would rival Netflix and Disney Streaming services. In fact, I read somewhere that this streaming services should do really well also getting 100m subscribers.

Streaming services might be quite helpful to also be a boost to their profitability also. Unlike tangible products like iPhone and Macs, services have got a higher fixed cost structure, which means that variable cost wise it is less weighted. Such cost structures will most likely benefit from having a huge amount of orders and customers, since variable costs for adding each customers is low. For example, adding an additional customer to its Apple Music does not increase cost as much as a customer ordering a Mac or iPhone. Since Apple has already amassed a large following, they most likely can leverage on their wide customer base to boost their profitability in this market.

Furthermore, like what the others have mentioned, the phone and computer market is getting more saturated. Apple probably predicted this way beforehand when XiaoMi and the likes first appeared on the scene. Furthermore, as more people own phones, there will be less demand for it. Personally, I also think that there has been less and less innovation from the iPhones side. It seems that the features don't really change over time, and Apple's competitors have all caught up.

Billy

25 Mar 2019

Development & Acquisitions Manager at Real Estate Private Equity

Truth be told, Apple needs to evolve. Although it is considerably still a market leader in terms of iPhone Sales, the mobile phone market has seemingly reached a point of saturation whereby features are relatively on par and differentiating one from another is simply by its brand itself. I'd rather Apple head into the provision of services than it trying to alter features of a phone 'for the sake of altering it'. How the earjacks are removed to further spur sales on its accessories, consumers are thinking twice spending on a portable mobile device that costs as much as a laptop (although they can't exactly be compared Apple to Apple). Furthermore, in the case of Singapore where telcos are coming up with SIM-option only plans, this is going to further drive down motivations to purchase a new phone should the need not be present.

So in order for comapnies to stay relevant, diversifying income streams are crucial.

As much as Iphone's and subsequently Macbooks were what brought them success, AAPL recognises that i...

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