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Apple sold 51 million iPhones but analysts had estimated 54.7 million. To me that doesn't seem that far off but it shows that there are a lot of nervous nellies with their buttons on the sell button. BTW, the 51 million mark is a new record for Apple.
I bought the Nexus 5 (Google-branded LG phone) the other day. I have nothing against Apple, I think they make excellent products, but I can buy a Nexus 5 with 5 inch 1080p HD screen and quad core processor for around $200 or so (Nexus 5 is $349 16GB/$399 32GB full price) less than an Iphone 5. It may not have a metal body and look as sleek, but is ridiculously fast and a really solid phone for the price (upgraded from the Nexus 4.)
People are going to get to a point where they are going to be satisfied with the phone they have and while Apple isn't going anywhere, do people start paying less for feature-rich phones that may not have the build quality or "status" of an Iphone?
I do think Apple has to bring something else to market besides Iphone/Ipod/IPad/Imac. People want bigger screens, but I think that's only part of the issue for Apple.
Also, Samsung, Ericsson and Google working out a patent/IP sharing deal yesterday.
Reply to @scott: There is no doubt that other makers are coming out with new features and styles that attract buyers. The one thing I remember is that Apple makes only one model of phone whereas other companies make multitudes. Nokia is the classic example though I think they have realized they don't have to make 48 different models to please everyone anymore.
Only my guess, but I think Apple will become the GE of tech. Slow but sure progress. One could argue that Samsung is already there but they are more like GE in general than as a tech standalone company. Samsung makes a lot of different things. So does LG.
The next big thing? I think it will be the cashless buying from phones with NFC or whatever they come up with. Will it be Apple or Google? That's the race to watch.
I use my Nexus (4 and now 5) for NFC buying at CVS and Walgreens, as well as some other places. Very cool, very quick and very easy - bring up the app, hold the phone over the point of sale terminal and the phone beeps (and usually you get an indicator on the terminal). Done. It always gets comments when I do it.
Unfortunately, I think the Nexus is one of only a few phones out there that allow NFC buying via Google Wallet, as T-mobile/Verizon/AT&T are trying to roll out their Isis payment service, which is taking forever.
I think what the future of payments is is that I have all of my "rewards" program cards on the phone and lets say I see an advertisement with a scanable coupon for Cheerios in a magazine. I scan the coupon and that's in my phone. I go to the store and - in one scan of the phone - I pay, I use my rewards card to take advantage of a sale and the coupon is used.
Reply to @JohnChisum: I have heard this mobile payment as next big thing from several sources. It is no longer watch or TV it appears. While technology is there for either Apple or Google to do this, I wonder how a proprietary system as each of them might will bring will get sufficient widespread use. Seems like there has to be a common infrastructure that takes any (like terminals that accept any credit card) that can create widespread use. But this means, no special advantage for any one to get a premium cut even if they could agree on a standard. In addition, unless they become a bank, they have to use a payment processor and guarantor and so the slim margins go there. While I think mobile payment will become as ubiquitous as messaging and email in smart phones, why isn't it just a phone feature like them rather than the next big thing for Apple?
Reply to @scott: Regarding the rewards program and coupons, Apple has their Passport app already but it is early to the game I think. Passport does theatre tx, airline boarding passes, etc. That could be the way forward. The app uses your location to determine what to present. If you are at a airport, your boarding pass pops up automatically.
Once a standard method is agreed upon, this will be the mainstream method of paying. It will be safer than the other methods too.
Reply to @cman: Exactly. Nobody wants a VHS or Beta argument anymore. People wonder why Apple is holding on to so much cash. Could it be they want to be the bank for this next big thing?
Bloomberg is now reporting that AAPL is down 7.87% after hours. Seems oversold to me. I would expect a bump back in the next few days. But that is only my opinion.
Reply to @JohnChisum: They don't need that much cash to become a bank. Walmart tried to do this to save card processing fees at their stores. The banking lobby will fight it fiercely so the problem is regulations.
Apple needs the cash buffer because it deals in relatively ephemeral products subject to consumer fads unlike GE whose products exist and make money for decades and so they have decades long cash cows. Since new product innovation is not a guaranteed timeframe activity, they may have to ride out long droughts without scaling down that hurts the brand. The markets may punish them during that time but they won't be dependent on the markets to survive.
And then there is the issue of repatriating funds from abroad and having to pay taxes. Their investment arm is making their low borrowing costs almost zero so they have access to credit lines if they need money short term without having to spend their cash.
Just amused at the loss of value in Carl Icahn's holdings with the recent purchase increasing his stake in AAPL to a billion dollars. I guess he will tweet a lot next few weeks to pump it up.
Reply to @cman: Good points cman. I don't necessarily agreed with the ephemeral products view since their products have become mainstream.
To answer your previous question on why payment isn't just a phone feature instead of the next big thing, I think Apple (and others) are trying to set this up so it will be a go from the start rather than starting out and having problems which turn consumers away from the process. With the iPhone 5s, we now have the sapphire thumb bioID which could prevent a non owner from using the phone to pay for stuff. They are getting their ducks in order so to speak.
I say all this being a fan of Apple. I do own several of their products and I like the ecosystem they provide. Living in the Philippines doesn't mean I have to do without my latest episodes of my favorite television shows or watch the latest movies. All one needs these days is a good broadband connection. Even video conferencing with family and friends is easy nowadays. My Disclaimer.
Much of the rest of the world has switched to chip credit cards rather than the magnetic strip that we are familiar with. Given the Target situation and others (Michaels, Neiman Marcus, etc), you will likely see upgrades in terms of payment technology sooner than later. Visa's Technology Innovation Program/TIP, I believe, pretty much mandates updates, although I think retailers have been trying to avoid the upgrade costs.
"Establish a counterfeit fraud liability shift. Visa intends to institute a US liability shift for domestic and cross-border counterfeit card-present point-of-sale transactions, effective 1 October 2015. Currently, says Visa, POS counterfeit fraud is largely absorbed by card issuers. With the liability shift, if a contact chip card is presented to a merchant that has not adopted, at minimum, contact chip terminals, liability for counterfeit fraud may shift to the merchant's acquirer. "The liability shift encourages chip adoption since any chip-on-chip transaction (chip card read by a chip terminal) provides the dynamic authentication data that helps to better protect all parties," Visa explains. "The US is the only country in the world that has not committed to either a domestic or cross-border liability shift associated with chip payments." Fuel-selling merchants will have an additional two years before a liability shift takes effect for transactions generated from automated fuel dispensers." (http://www.nfcworld.com/2011/08/09/38989/visa-moves-us-to-emv-and-nfc/)
I think one issue has been that there are a number of different "wallets", including the Merchant Customer Exchange (Wal-Mart, Target, 7-11, Best Buy and others; Gemalto and FIS providing the wallet tech and payment processing - this is not NFC but may offer that as an option down the road), Isis (T-mobile, Verizon, AT & T, with Gemalto providing NFC tech) and Google Wallet (Google, NFC), as well as probably some other, smaller choices.
The various competing choices are going to cause confusion and aren't helping.
I also continue to believe that various options will draw away consumers of basic banking services. Amex's Bluebird, etc. In 2012, an estimated 1.7 billion people will have a mobile phone but not a bank account. (http://corporate.visa.com/_media/financial-inclusion-fact-sheet.pdf) Bank of America recently talked about the rise in mobile banking and both they and JPM plan to reduce the amount of branches.
Note: Long Visa, American Express, Gemalto, FIS and probably more names in this space at some point soon.
Gemalto: Project E-go (pay via touch, open doors via touch, etc.)
Looks like Icahn pumped another $500M into Apple today. I thought Netflix tanked because the programming costs were so high, but Icahn got a triple out of Netflix in a year so he does have an incredible record.
Reply to @equalizer: Yeah, didn't take long for him to tweet about it. He uses his own money rather than other people's money so whatever he wants to do with it....
Reply to @cman: You can participate as well with Icahn Enterprises (IEP), although it is an MLP and Icahn owns something like 93% of the float. Institutions make up a lot of the rest, with only a few % public. It is definitely not a very liquid stock.
Reply to @PopTart: I am looking at MA as well, and may start a position in that in the coming days. I think Visa is more reasonable and underperformed in 2013 (by comparison, it still certainly did well.)
I like the pure "toll roads" (MA, V) more given the lower risk vs the companies that do lend, but I do have a small position in Amex.
V, AXP (and MA, if I go that route) are going to be long-term holdings.
I just don't believe that bitcoin is a challenge to the credit card co's. I have nothing against bitcoin (I find it rather fascinating, actually), but I just don't believe that bitcoin is a challenge to credit cards. How would credit be extended in bitcoin, given the volatility and the idea that the supply of bitcoins cannot be expanded in the way that would seem necessary.
I do believe that transactions will go increasingly digital over time, and while cash is a smaller and smaller % of transactions in the US, there is still a pretty remarkable amount of transactions done in cash globally. More e-commerce sales, more mobile payments, small businesses using Square (which Visa is an investor in) and other similar devices to collect payments, etc.
Beyond that, if inflation really picks up, you have companies who take a % of prices that are going higher and higher, for everything from a pack of gum to....?
They are not low-key stocks (V may as well stand for volatile), but I sleep well from the standpoint of Visa does 150 million transactions per day (a couple thousand per second, I think that works out to?). Somewhere, right now, someone is using their Visa, MA or Amex.
The only thing that DOES concern me with the credit card companies is regulatory issues. Then I think about the fact that the CC companies probably have an army of lobbyists.
I think the financial tech companies (FIS, FISV) are also very interesting and less volatile than the CC companies.
Reply to @scott: Thanks Scott! I've been watching this space for awhile and regret not having bought into a "toll road" yet. I agree with everything you said (typed?), although bitcoins confuse me.
If I make an investment into this space it would definitely be a long term investment and not a short term play.
Reply to @PopTart: Thanks! The whole thing appeals to me from the "toll road" standpoint, similar to say, the oil pipelines or even the rails. I see companies like FIS, V, MA and others as the "rails" of money. For example, in terms of FIS, In 2012, FIS moved more than $5.5 trillion across the globe. (http://www.fisglobal.com/aboutfis-mediaroom-fisfacts)
Reply to @scott: I couldn't agree more! I hope to make 1 or 2 of these toll road stocks a core long term holding. I'll follow FIS more closely, up until now it's been relegated to the outer reaches of my radar screen.
Comments
People are going to get to a point where they are going to be satisfied with the phone they have and while Apple isn't going anywhere, do people start paying less for feature-rich phones that may not have the build quality or "status" of an Iphone?
I do think Apple has to bring something else to market besides Iphone/Ipod/IPad/Imac. People want bigger screens, but I think that's only part of the issue for Apple.
Also, Samsung, Ericsson and Google working out a patent/IP sharing deal yesterday.
http://www.pcworld.com/article/2091460/how-do-you-like-them-apples-google-and-samsung-ink-patent-deal.html
LG's curved LCD phone (LG G Flex) comes out next month.
http://reviews.cnet.com/smartphones/lg-g-flex/4505-6452_7-35831141.html
Regards,
Ted
Regards,
Ted
http://www.marketwatch.com/story/5-iphone-beating-phone-features-2014-01-23/print?guid=4D6FC0C4-83B4-11E3-9A37-00212803FAD6
Only my guess, but I think Apple will become the GE of tech. Slow but sure progress. One could argue that Samsung is already there but they are more like GE in general than as a tech standalone company. Samsung makes a lot of different things. So does LG.
The next big thing? I think it will be the cashless buying from phones with NFC or whatever they come up with. Will it be Apple or Google? That's the race to watch.
Good to hear from ya Scott.
I use my Nexus (4 and now 5) for NFC buying at CVS and Walgreens, as well as some other places. Very cool, very quick and very easy - bring up the app, hold the phone over the point of sale terminal and the phone beeps (and usually you get an indicator on the terminal). Done. It always gets comments when I do it.
Unfortunately, I think the Nexus is one of only a few phones out there that allow NFC buying via Google Wallet, as T-mobile/Verizon/AT&T are trying to roll out their Isis payment service, which is taking forever.
I think what the future of payments is is that I have all of my "rewards" program cards on the phone and lets say I see an advertisement with a scanable coupon for Cheerios in a magazine. I scan the coupon and that's in my phone. I go to the store and - in one scan of the phone - I pay, I use my rewards card to take advantage of a sale and the coupon is used.
Regards,
Ted
Once a standard method is agreed upon, this will be the mainstream method of paying. It will be safer than the other methods too.
Apple needs the cash buffer because it deals in relatively ephemeral products subject to consumer fads unlike GE whose products exist and make money for decades and so they have decades long cash cows. Since new product innovation is not a guaranteed timeframe activity, they may have to ride out long droughts without scaling down that hurts the brand. The markets may punish them during that time but they won't be dependent on the markets to survive.
And then there is the issue of repatriating funds from abroad and having to pay taxes. Their investment arm is making their low borrowing costs almost zero so they have access to credit lines if they need money short term without having to spend their cash.
To answer your previous question on why payment isn't just a phone feature instead of the next big thing, I think Apple (and others) are trying to set this up so it will be a go from the start rather than starting out and having problems which turn consumers away from the process. With the iPhone 5s, we now have the sapphire thumb bioID which could prevent a non owner from using the phone to pay for stuff. They are getting their ducks in order so to speak.
I say all this being a fan of Apple. I do own several of their products and I like the ecosystem they provide. Living in the Philippines doesn't mean I have to do without my latest episodes of my favorite television shows or watch the latest movies. All one needs these days is a good broadband connection. Even video conferencing with family and friends is easy nowadays. My Disclaimer.
Much of the rest of the world has switched to chip credit cards rather than the magnetic strip that we are familiar with. Given the Target situation and others (Michaels, Neiman Marcus, etc), you will likely see upgrades in terms of payment technology sooner than later. Visa's Technology Innovation Program/TIP, I believe, pretty much mandates updates, although I think retailers have been trying to avoid the upgrade costs.
"Establish a counterfeit fraud liability shift. Visa intends to institute a US liability shift for domestic and cross-border counterfeit card-present point-of-sale transactions, effective 1 October 2015. Currently, says Visa, POS counterfeit fraud is largely absorbed by card issuers. With the liability shift, if a contact chip card is presented to a merchant that has not adopted, at minimum, contact chip terminals, liability for counterfeit fraud may shift to the merchant's acquirer. "The liability shift encourages chip adoption since any chip-on-chip transaction (chip card read by a chip terminal) provides the dynamic authentication data that helps to better protect all parties," Visa explains. "The US is the only country in the world that has not committed to either a domestic or cross-border liability shift associated with chip payments." Fuel-selling merchants will have an additional two years before a liability shift takes effect for transactions generated from automated fuel dispensers." (http://www.nfcworld.com/2011/08/09/38989/visa-moves-us-to-emv-and-nfc/)
I think one issue has been that there are a number of different "wallets", including the Merchant Customer Exchange (Wal-Mart, Target, 7-11, Best Buy and others; Gemalto and FIS providing the wallet tech and payment processing - this is not NFC but may offer that as an option down the road), Isis (T-mobile, Verizon, AT & T, with Gemalto providing NFC tech) and Google Wallet (Google, NFC), as well as probably some other, smaller choices.
The various competing choices are going to cause confusion and aren't helping.
I also continue to believe that various options will draw away consumers of basic banking services. Amex's Bluebird, etc. In 2012, an estimated 1.7 billion people will have a mobile phone but not a bank account. (http://corporate.visa.com/_media/financial-inclusion-fact-sheet.pdf) Bank of America recently talked about the rise in mobile banking and both they and JPM plan to reduce the amount of branches.
Note: Long Visa, American Express, Gemalto, FIS and probably more names in this space at some point soon.
Gemalto: Project E-go (pay via touch, open doors via touch, etc.)
I like the pure "toll roads" (MA, V) more given the lower risk vs the companies that do lend, but I do have a small position in Amex.
V, AXP (and MA, if I go that route) are going to be long-term holdings.
I just don't believe that bitcoin is a challenge to the credit card co's. I have nothing against bitcoin (I find it rather fascinating, actually), but I just don't believe that bitcoin is a challenge to credit cards. How would credit be extended in bitcoin, given the volatility and the idea that the supply of bitcoins cannot be expanded in the way that would seem necessary.
I do believe that transactions will go increasingly digital over time, and while cash is a smaller and smaller % of transactions in the US, there is still a pretty remarkable amount of transactions done in cash globally. More e-commerce sales, more mobile payments, small businesses using Square (which Visa is an investor in) and other similar devices to collect payments, etc.
Beyond that, if inflation really picks up, you have companies who take a % of prices that are going higher and higher, for everything from a pack of gum to....?
They are not low-key stocks (V may as well stand for volatile), but I sleep well from the standpoint of Visa does 150 million transactions per day (a couple thousand per second, I think that works out to?). Somewhere, right now, someone is using their Visa, MA or Amex.
The only thing that DOES concern me with the credit card companies is regulatory issues. Then I think about the fact that the CC companies probably have an army of lobbyists.
I think the financial tech companies (FIS, FISV) are also very interesting and less volatile than the CC companies.
If I make an investment into this space it would definitely be a long term investment and not a short term play.
Thanks for the insight!
FIS also just raised their dividend.
From last year, but good summary:
http://seekingalpha.com/article/1660262-overlooked-earnings-growth-leaves-fintech-powerhouse-deeply-24_5-percent-undervalued