This week’s Apple trading strategies (9/23-9/27)

A place for Apple traders and investors to share their best ideas: iPhone 11 launch edition.

To get things rolling here are Wedbush’s Daniel Ives and Walter (“Steve Jobs”) Isaacson chatting about the iPhone 11 launch Friday afternoon as the stock price tumbled behind them. You can hear groans from the floor in the background.

‘Steve Jobs’ author: Challenge for Apple will be to keep hardware, software and content together from CNBC.

Disclaimer: Having never owned or traded Apple, I have nothing to add. Don’t blame me if you drain your IRA doing something you read about here.

See also: Last week’s Apple trading strategies. 

10 Comments

  1. Robert Paul Leitao said:

    Interesting interviews. The conversations ranged from expressed confidence in Apple’s ability to deliver success with this model year’s iPhones to skepticism in the company’s ability to compete in the streamed content market. What short memories. This is the same company that almost single-handedly saved the music industry from the ravages of piracy with the opening of the iTunes Store in 2003.

    Apple isn’t competing with Disney or Netflix per se. Apple is seeking to deliver content through an array of branded devices and in a way that adds value to the customer experience. There isn’t a “price war” for content. Tens of millions of consumers have cut the cable cord and by their actions have indicated the costs of access to content had gone way out of bounds. Apple is pricing its streamed content service to deliver value to the customer.

    I’m not concerned with how Apple trades this week. I’m more concerned with the levels at which Apple will trade a year and five years from now. I expect the company to deliver increasing value to long-term shareholders in the same way the company seeks to deliver increasing value to its customers by building long-term relationships with the people who invest in the company’s products and services.

    4
    September 22, 2019
    • Gregg Thurman said:

      There isn’t a “price war” for content.

      Netflix started as a provider of DVDs (via mail) in competition with DVD stores when cable bundles were less than $100/month.

      Over time, with the increasing availability of broadband, Netflix morphed into a streaming service. During this time content creators “created” more cable channels, while at the same time content quality suffered AND, importantly, the cost of cable bundles skyrocketed. As more and people were exposed to Netflix (and Hulu) the appeal of cable diminished. Gone were commercials AND rigid program schedules. Cable cutting in favor of Prime, Netflix, Hulu and others accelerated. I remember once reading that despite the availability of 500+ channels the average viewer consistently watched eight.

      When I cut the cord my cable bill dropped about $100/month. Gone were the service tiers that ALLOWED me to get the channels I wanted to watch.

      My point is that $50, $75, or $100 savings will pay for several streaming services (local content free with a $10 antenna).

      Apple isn’t competing with content providers streaming decades old productions already seen multiple times. Apple will be competing for those eyeballs desiring original content of their liking.

      Even then, with a family budget of $50-$75 previously spent on cable bundles, there will be room for Netflix (just not on today’s scale).

      Personally, I don’t think subscribers are going to care about the size of respective libraries nearly as much as they will care about the new content (of their liking) being released.

      $50/month, at $10 each will pay for all the content (original and rerun) a viewer could possibly consume.

      0
      September 22, 2019
      • Robert Paul Leitao said:

        Gregg:

        Actually, there’s recently been bidding wars for the rights to stream reruns of Friends, Seinfeld and The Office. AT&T (WarnerMedia), Comcast (NBCUniversal) and Netflix are competing aggressively for catalog content. There is a large contingent of the viewing population that desires cable-style content catalogs for viewing. But this is not Apple’s approach to enhancing the user experience for the company’s customers. However, Apple does not preclude consumers from “adding on” other streaming services to the Apple TV experience through apps. It’s not an “either or” proposition.

        The Apple TV app has worked as “TV central” in our home. A Siri search through the Apple TV remote will bring up content available through all of the streaming services to which we subscribe. Among the primary benefits of this paradigm is security. Our TVs are not independently connected to the internet. The TVs are connected only through the Apple TVs and only for the purpose of accessing content available through Apple’s curated apps. In other words, Apple TV+ will co-exist quite nicely with other streaming services and all within Apple’s app environment.

        Cost is certainly an issue. Since cutting the cable cord several years ago, I estimate our savings at about $6,000. That savings covered a goodly portion of the community college costs for all of our kids. I just cancelled HBO Now. This savings is equivalent to the cost of a monthly subscription to Apple Music which can be shared by everyone on our family sharing plan and the monthly savings are more than the monthly subscription cost of Apple TV+ and Apple’s new gaming service combined. Both of those services are also available to everyone on our family sharing plan.

        Apple is bringing value to its customers in many ways. I view myself first as an Apple product and services customer. All other customer relationships in the Apple content and services environment (including services offered by 3rd parties in the app environment) are subordinated to the primacy of my customer relationship with Apple. That’s a competitive advantage no other streaming service can match.

        0
        September 22, 2019
  2. Kirk DeBernardi said:

    Apple’s price of content is comfortable going in.

    It’s almost at a “Oh…I forgot I pay that per month” pricing which will even attract the slightly curious — let alone fans of Apple.

    A great entryway into a content world that could easily become addictive.

    Much like anything Apple.

    1
    September 22, 2019
  3. Jerry W Doyle said:

    I concur with all that Robert Paul and Kirk D say above. Very good comments.

    Apple was instrumental in harnessing the power of computers to improve human life. The approach to turning out quality content will be the same as Apple used to create great hardware and software.

    Although Apple is a public company with shareholders’ eyes on stock price, making money intrinsically is not the metric in the short term used by company officials and the governing board for measuring Apple’s success.

    If we view Apple’s culture as not beginning with an exploration of how to make the most money, but with an exploration of how to produce high quality content as our goal, then as a consequence if the content is good, people will gravitate to buy that content and then we as a company and shareholders will make money. It was this way with Apple’s hardware.

    Apple’s goal always is to make really great and amazing products, and as a consequence if they are good, people will buy them and Apple will make money. This has been the mantra of every Apple senior Vice President including the CEOs, Steve and Tim C. I have heard them say this many times.

    So, in summary, this is the strategic approach Apple will use toward making really great and amazing video content. It’s not a competitive race for Apple. That is not their focus. Apple’s culture doesn’t begin with how to be the first or even how to make money. it begins with how to make really great amazing products and in Apple TV+ and Apple Arcade, it will be how to make really great amazing content that will bring value to people’s lives.

    1
    September 22, 2019
  4. Kirk DeBernardi said:

    Well put, Jerry.

    Think different.

    ; )

    0
    September 22, 2019

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