Monday, April 5, 2010

Why I still like AAPL (3)


AAPL is one of the few stocks to have reached new all-time highs in the wake of the Panic Recession of '08-'09. It peaked at $200/share at the end of '07, right on the eve of the recession, and it's up 18.5% since then. But in those 27 months the iPhone has become the dominant player in the global smartphone market—the one everyone wants to imitate—and Apple has developed and released the iPad. Apple also has gained significant market share in the laptop and desktop computer market. In fact, Apple now has a virtual lock on the high-end laptop market. The question of the day is whether the iPad will become the leader in, and rejuvenate, the tablet market. I think it will.

I received my iPad last Saturday, and I spent quite a few hours over the weekend playing with it and showing it to family and friends who came by to have a look at it. If my grandsons (ages 3 1/2 and 5 1/2) are any example, this thing is hot. So hot we had to tear it out their hands as they fought over the thing yesterday afternoon. Who would have thought, 20 years ago, that you could put the equivalent of what was then a supercomputer into a slab of glass and aluminum about the size of a small magazine, and that a toddler could pick it up and immediately start using it? It's simply awe-inspiring.

From my limited experience with the device, I have come to several conclusions. I think that just about anyone who picks up an iPad will marvel at its design and at the way it works. It's extremely fast and responsive; photos scale up and down instantly, and the screen rotates instantly. The eye candy is unending. It's gorgeous and it's sexy, and it's a must-have for gadget lovers. Apple has done a tremendous job with this.

The WSJ, New York Times, and BBC have done a superb job of presenting their content in iPad-friendly fashion. ABC allows you to watch their TV shows in HD after only a few seconds' wait. Netflix movies also pop up almost instantly and look terrific. The X-Plane flight simulator is absolutely breathtaking: choose from dozens of planes (even a 747) and locations, and fly by holding the screen in your lap and nudging and tilting it. Books are very readable, and now they can be interactive to boot. You can buy all sorts of things by just tapping your finger.

I'm still wondering, however, exactly how this device is going to fit into my daily life. It fits somewhere in the spectrum between an iPhone and a laptop, and it could replace either one or both, but not completely. It's a new type of computer, but you can't access the file system, and it won't let you print things directly (though I suspect that will come with time). You don't need to know anything about computers to use it, but if you know a lot about computers then you will wonder why it doesn't do some of things that all computers do.

It's designed to work best while sitting down as you would with a good book (physical books are now obsolete), but it's awkward to use at a desk. (That may change once I get the carrying case that doubles as a stand, and a wireless keyboard.) When they get cheaper I imagine people will buy several iPads and leave them lying around the house in different locations. It's ideal for surfing the web and showing people your pictures. It will go where laptops won't: to the bathroom, to the dinner table, or to the couch. It will be an essential traveling companion, since it's so much lighter yet almost as functional as a laptop for the majority of people. It will probably become even more functional than a laptop with time, since a good deal of the iPad's value will come from the tens of thousands of applications that have yet to be developed for it by smart people all over the world. Meanwhile, virtually all of the iPhone apps work on the iPad, but the good ones are going to have to be revised to take advantage of the iPad's bigger screen and much faster processor and much longer battery life. 

In short, there so many good things about the iPad that I can't believe it won't be a success. Defining where that success will come from, though, is difficult. This little gadget has tons of potential, and it can only add to Apple's bottom line. I continue to believe that Apple's future will be driven by an ever-expanding and innovative product line, and by an expanding share of the computer, laptop, tablet, and smartphone markets.

Full disclosure: I am long AAPL at the time of this writing.

14 comments:

septizoniom said...

nothing is ever discounted into the price in this blog. it always has further to run.

Benjamin said...

"You can buy all sorts of things by just tapping your finger."

Husbands of the world: Your retirement just got delayed by another 3.7 years.

John said...

During the dark period from november '08 to I'd say early april '09 there was a young man posting on SA about Apple. He was a screaming bull and laid out his case in one of the most professional manners I have seen on SA. At the time I was curled up under my desk in a fetal position and to my eternal regret I did not get in. I am STILL not in. And this may be one of the most fantasticly successful growth stories of my entire generation, if not THE greatest. One of my daughters lives in NYC and when my wife and I visit she takes us to one of the many Apple retail stores (she works on a Mac) and it never ceases to amaze me at the crowds that brand generates. I can't tell you how many times i have kicked myself for not owning this stock. It always seems to be too expensive. I can always seem to come up with an excuse not to do it. I'd really rather have xyz or whatever. Sheeesh! Mr market never makes it easy. I'll buy it, though. I'll buy it higher. (darn it.)

Benjamin said...

John-

I am not a techie, so I always wondered why I liked Apple much better than Microsoft. It just seemed so much easier to use. I assumed that Apple had been dumbed down for people like me. Later I found it was was just better.

Yet more than 90 percent of the software market is Microsoft.

One worry: Apple seems to rise and fall with the presence of Steve Jobs in the company. If Jobs goes, and the usual gaggle of financial types take over, get our of Apple.

OT: Is it not remarkable that Google stood on principle, and left the commie-fascist mercantile nation of China. Not a single US company or politician has stood by Google. Not one.

John said...

Apple has a commercial depicting a cool young dude and a nerdy overweight bespectacled guy. I'm sure all of you have seen it. Obviously the cool young dude represents Apple and the nerd, Microsoft. Well, my daughter SOOOOO wants me to switch. "Dad, you are SO out of touch." "Geeze hon, I like, UNDERSTAND XP. I feel like, AT HOME on my Dell." But I get on her Mac and I understand how they love it. Makes me fear for Microsoft. But why do I feel like the nerd??

I hear you on Jobs. If that guy goes, I would be petrified if I had a big Apple position. I probably would be wrong but I'd still be scared witless.

The Goog, I think, did the right thing. For the life of me I can't remember where I read it but trust me, he/she was a lot smarter than me. The point was that civilizations that survive long term are those that embrace all peoples and all ideas freely. I guess freedom of speech is included in that. China, IMHO, has a long term sustainability problem. Despite their successes it is still not a free society. I have no DIRECT exposure to the chinese market and plan none. I hope they evolve successfully but I am not convinced that it will not end badly.

Hope you had a good Easter weekend. We've been at the beach. Crowds are unbelievable. MUCH more than last year.

alstry said...
This comment has been removed by a blog administrator.
Benjamin said...

John-

I too wonder if China can survive without becoming a democratic-free enterprise state. It seems so obvious to Westerners that they would enjoy even higher living standards should they evolve to a more free state.

Hope you are enjoying the crowds. Let's hope that is properity, and not a bunch of laid-off workers with nowhere to go.

John said...

Benj,

Whoever they are, they have some money. The accomodations are not free and as I mentioned earlier the restaurants have waiting lines. Some of them may be blowing their unemployment checks but there are a lot of young adults with small children around. Despit the high unemployment rate a lot of people still have jobs. The folks here clearly want to spend some money.

I also mentioned in an earlier post that I subscribe to Stratfor, a geopolitical think tank - like site. They have opined in their longer range forcasts that China will someday lose it's strong central government and fracture along regional lines with local governments cutting their own deals with foreign powers similar to what happened in the last century. Maybe. Scott seems skeptical but I'm wary. Maybe I just havn't had my medicine today but I'm not interested in sending my money to a bunch of folks that just may not send it back. After all. They're still commies. Right? ;)

DouglasR said...

I have been using Apple products since my first Apple II+ in the early 80s and I wouldn't use anything else if I had the choice. But I am a bit old fashioned in that all I want my cellphone to do is to make and receive phone calls. I have seen friends' iPhones and they are definitely tempting, but I don't REALLY want all the bells and whistles and I don't want to put myself in the position of wanting them either. I am sure I would love an iPad but I simply don't have a use for it, and again I don't want to manufacture a use for it in my life. Besides, I LIKE physical books, I really enjoy the tactile experience of reading a book or a magazine. The great thing about the intertubes is that there is a volume of material available to me that would otherwise be beyond my reach, in time and money.

There IS a part of me that desires both the iPhone and the iPad, but that part will just have to live without them.

CDLIC said...

Study: We still love our iPhones

Mon Apr 5, 2:38 pm ET

Now more than ever, Americans are falling all over themselves to continue their collective love affair with the Apple iPhone.

In J.D. Power's most recent quarterly survey of smartphone owners' satisfaction levels with their handsets, the iPhone again has come out — far and away — at the top of the heap. In every metric but one, owners give the iPhone the highest marks: 5 stars out of 5 in the J.D. Power "Power Circle Ratings."

Apple owners gave their iPhones top marks for ease of operation, operating system, physical design, handset features, and an overall satisfaction rating.

The iPhone, however, earned a mere 2 out of 5 rating for its puny battery life. (I feel your pain on that one, folks.)

In comparison, the other smartphone makers rated earned dismal scores. The BlackBerry

The good news: Owners of other brands of phones aren't completely turned off by their devices. The BlackBerry earned a 5 out of 5 rating for its battery life, and both Nokia and Samsung scored 4 out of 5 in that category.

But other than those highlights, the numbers are pretty grim. In fact, while the iPhone's overall satisfaction rating remained unchanged since the last survey, every other manufacturer's rating has been on the decline.

What do users polled in this survey like the most about their phones? The touchscreen. Failure to include a touchscreen on a smartphone was responsible for a healthy smackdown in a phone's average rating, and consumers now say that they even prefer traditional ("dumb") phones with touchscreens by a wide margin over those with nothing but keypads. line got a 3 out of 5 overall satisfaction rating, enough to put it in a solid second place in the survey. All the other brands analyzed — Palm, HTC, Nokia, and Samsung — scored a pathetic 2 out of 5 stars for overall satisfaction.

— Christopher Null is a technology writer for Yahoo! News.

Scott Grannis said...

I wonder how many people with iPhones know that there are external batteries that are relatively cheap and that can extend overall battery life by a lot. Meanwhile, battery life on the iPad is very impressive, with at least 10 hours of heavy use.

CDLIC said...

Scott,

I just purchased a Mophie Juice Pack Air rechargable battery case for my iPhone 3G. It increased my talk time by 4.5 hours; standby by 270; audio playback by 20, and video by 6. The Mophie costs $80. To which options are you referring?

Louis Cyphre said...

Mr. Grannis, I think you will like this video.

Scott Grannis said...

yes, indeed