Oh yes, that's right. To me a business is successful when they are big enough in their domain that a new tech doesn't suddenly wipe them out. And they have enough money to pivot and adapt and still remain in business. That didn't happen for Apple when they were making Macs, they were same as HTC or Blackberry. Microsoft is a true success, they failed completely at Mobile market and yet here they are, doing just fine.

> Apple also has a market cap of $1.5 Trillion, with a T, so there's that.

The stock market hasn't been representative of real world for a long time now.

> The stock market hasn't been representative of real world for a long time now.

Read as: [their revenues] haven’t been representative of real world for a long time now.

Hmm. $260B in revenue in FY2019 and $55B in profit with $206B cash on hand.

I think their (current) $1.5T current valuation is probably fine.

Valuation is fine, but as mentioned, that is short-term success. Enron was good at that. Myspace was good at that. RIM/blackberry and the nokia phones had that. And almost overnight, it's gone.

Apple is a fad that got propped up by phones. They're behind all other major computer vendors. They have a very small marketshare for phones. They have the biggest profit margin out of anyone, and it's because of literally a couple of products.

People who go for things with a huge profit margin (overpriced things) do so based on emotional response (a fad) as opposed to logical reasoning. This is why they buy a phone wrapped in glass - it's shiny. That makes them liking your product volatile. A company enjoying 15 minutes of fame on limited SKUs is not a successful company. It's a rich company, that won the lottery from people who like shiny things.

Yes, they do make things that "just work" better than the competition. They limit choice, put you behind a wall, give you no control - and there is that group of people who want that. The problem is, that group will overnight change to some new fad phone vendor that comes out, and apple will become uncool overnight. Same thing will happen to facebook, instagram, twitter, etc.

If you do take microsoft or google for example - they have a thousand eggs in a hundred baskets. This is stability. Heck, even amazon - cloud services and selling goods, book store, mechanical turk - they're in everything. Apple is selling a phone and a computer.

> Apple is selling a phone and a computer.

Even if this were true I don't think it would matter because Apple sells a lot of phones, but anyway this is a gross oversimplification of what Apple is in 2020. The services business alone - App Store, iTunes, etc. - is almost $50 billion a year. Apple nets as much money selling digital goods as Samsung does from its entire line of business.

They also make the only smartwatch consumers care about, headphones that have become status symbols, the canonical tablet (everything is an iPad even if it isn't), one of the most popular STBs in the world, and a metric ton of accessories and peripherals.

The money doesn't come from accounting fraud or tricking people; it comes from making really good stuff that lots of people want to buy.

you are exactly proving my point. they sell a lot of phones. which means a huge chunk of their revenue is 1 product. app store is not a separate product. phone goes away, store goes away. itunes? I'm sorry, but it's an archaic piece of software that people install because it's the only way to get music onto apple playback devices. you know - the iphones. phone goes away, itunes goes away. there are a million other places to get all the same music.

the apple watch? the one that only iphone users have, because they have an iphone?

headphones? who buys apple headphones for their android phone again?

ipad? the thing that runs the os and the store from the iphone, which no one who isn't interested in phones would buy? people who don't like iphones won't buy an ipad. it is literally the same target market. whoever makes the new 'cool phone to have' is going to also make a new pad. phones and pads are tied.

and the accessories for all that - again, dependent on the phone 100%.

lots of people want to buy it (if by lots you mean a tiny fraction of the people). margin is high - it's not tricking people, it's selling the product as 'premium.' that tiny percentage of people agree. it's not actually premium for everyone else, since you don't own the device, and features are limited. when's the last time you chromecast hn to your big tv screen from your iphone again? how about plugging into a friend's computer and grabbing a music folder? he doesn't have itunes, and it's not a mac. how about storing your presentation meetings and some vm images for a product demo you want to do for work - or do you need a usb flash stick for that.

it's not 'really good stuff.' it's 'fad' - who in their right mind would wrap a phone in glass - those things fall a lot. would you buy a car made of glass?

everything you gave as an example is a fad that goes away in a minute when it's not cool anymore. it's no mark of a successful company. it's like calling a guy with a #1 hit a success. do you remember 'who let the dogs out?' so does everyone else. now, the iphone is no dog. it's pretty and shiny. a better example is rico suave. he makes shampoo now i hear.

> Apple nets as much money selling digital goods as Samsung does from its entire line of business.

Can I see source for this claim? Both Samsung Electronics and Apple do $200B+ revenue every year.

It's not a perfect comparison but with the most recent easily google-able quarters:

Samsung Q419 net operating profit: KRW 7.16 trillion (US$5.92 billion) [1]

Apple Q220 services revenue (net cost of sales): US$8.6 billion [2]

1. https://news.samsung.com/global/samsung-electronics-announce...

2. https://www.apple.com/newsroom/pdfs/FY20_Q2_Consolidated_Fin...

Why are you comparing revenues to profits?

Because I'm trying to quickly compare net income across two businesses that operate under different accounting rules in varied industries but if we want to be pedantic about it and proportionally attribute OpEx to services, too:

Apple services net sales: $13.3B

Apple services cost of sales: ($4.6B)

Apple OpEx, 14%[1]: ($1.3B)

That's ~$7.4 billion in net income from services, which is as close to a 1:1 expression of services' contribution to "operating profit" as you can reasonably get in the five-minute financial analysis I'm willing to perform for an HN comment. For reference, Apple booked $11.25B profit for this quarter overall.

1. Services account for 14% of the total cost of sales, so I attribute the same amount in OpEx.

So why is Samsung, who makes similar kind of revenue not up there with $1T market valuation? Walmart makes double that revenue.

Stocks are valued by their earnings largely.

A stock’s price is theoretically the current value of a long term stream of income adjusted by the risk factor around its growth (positive or negative).

Revenue is interesting but only to the extent that it indicates earnings. This is because any two people can create two companies with a billion dollars in revenue but it is much more difficult to build one with a billion in earnings.

Valuation has only a fleeting relationship with revenue. In the traditional sense valuation is essentially the cash returned to shareholders discounted over time. Walmart’s margins are thin. That’s why their valuation is much lower

Because their "expected" future profit margins are significantly lower than Apple's.

Caveat: "Expected" does not mean fact. But it is understandable why investors believe this.

> Caveat: "Expected" does not mean fact. But it is understandable why investors believe this.

Yes, this is what I said. Stock markets factor in future potential (a little too much I think) and not just current performance. Hence their growing diversion from reality.

Except that Apples current performance demolishes Samsung, Apple is and has been far more profitable. Apple has never been highly valued either, it spent most of the last decade well below the markets average price to earnings ratio, the market was continually saying it didn’t think Apples earnings could grow, or even last.

It hasn’t been till the last year where Apple finally broke the market average and squeezed into a low 20 PE ratio. Fir comparison, Amazon hasn’t been below 60 in forever.

I don't see how? Samsung made $45B profit in 2017 vs $48B in 2017 for Apple. 2018- $49B Samsung vs $60B Apple. Even in worst cases Apple made 2x the profits as Samsung. Which means they should at least be worth half as much as Apple by your logic? But they are 5 times less than Apple right now in market cap.

Samsung has much lower quality profits. They have lower margins, and have much higher capital reinvestment requirements please, ie are forced to reinvest more of their profit back into their manufacturing plants. Essentially their profits are overstated.

Samsung's net income would only be overstated if their capital spending was unsustainably low. I don't know if that is actually the case.

Or if they were run by a felon in a country where accounting and governmental employees are highly motivated not to criticize said felons accounting practices. Then you might think twice about taking them at face value.

Apple is seen as the one to sustain those profits. The models for Samsung either see lower profits or discount them more steeply in their risk adjustments.

Sorry but there's a bunch of inconsistencies here:

>> Windows worked just as fluid as iOS when they finally got it right, but they were there too late.

Of course it was fluid - Apple was already tied down by legacy hardware by the time Windows Phone released, whereas Microsoft had the huge benefit of a higher-baseline due to exponential hardware advances.

MS weren't merely 'late' - they had no vision in this space (see: Windows Mobile pre-iPhone).

>> Apple's success is more of lack of a good competitor more than anything else

Their competitors include literally the biggest company in the world.. If what you mean is that the iPhone specifically lacks a good competitor - even though both Microsoft and Google tried everything to rectify that - then isn't that reflective of Apple's incredible execution of the iPhone strategy and not, as you suggest, that Microsoft/Google/BlackBerry/Palm/Nokia/Samsung aren't good competitors?

>> To me a business is successful when they are big enough in their domain that a new tech doesn't suddenly wipe them out

Even under this subjective definition, Apple view their 'domain' as consumer electronics, not 'mobile' or 'computers' or 'mp3 players' (something they recognised back when they renamed themselves to Apple, dropping 'Computers'). So ironically, Apple don't merely fit the 'success' criteria under your definition, but Microsoft actually don't - they had to exit their once-primary domain - Windows and consumers - and pivot to enterprise and services (which of course has worked out great for them - but by your definition it's not a success as Apple and Google's new tech would've otherwise wiped them out)

This feels like an odd definition of success but at any rate - Apple has never been wiped out, though they've come close, so I'm not sure how you can argue against their success on this basis either.

Out of curiosity (since you seem to be Japanese) how would you rate companies like Toshiba or Sharp on this scale?

> since you seem to be Japanese

I'm not

> how would you rate companies like Toshiba or Sharp on this scale

Successful. Because they survived transition from electrical->electronics->semiconductors. Although Sharp may be coming to the end of it's life now because of their LCD tech.

Well Toshiba was an inch from bankruptcy and Sharp was sold to Foxconn to stave off its own impending dismemberment so now I really don't understand this definition of success.

maybe "they were successful in a period that comes quite close to where we are now"? People forget that success is not an immutable attribute - it is the sum total of hard work and decisions that are put in every week, every month, every year, over a longer period of time. But as much as it is the product of a longer period of time, success can wax and wane throughout the decades and a company can be wiped out or acquired on less-than-favorable terms if they fail to adapt to the next large-scale change in the industry.

To declare Apple's model as a success, they will have to survive a lot longer. 3 decades into existence isn't enough to evaluate. Their model failed in desktop computers but worked well in handheld devices. Let's see how well they do in the next computing platform before we are sure of it.

But Microsoft is a "clear success" and only one year older than Apple? Does Apple only need to survive one more year to be a success?

Microsoft survived huge failures and also when governments came after them. And they did it in their first attempt. Apple survived only by sheer luck, not because their products or business model was designed to survive. They could be the next scapegoat of the trade war and it will take them back to their Mac days.

And Microsoft is not alone, Google essentially became MS 2.0 when they launched Android. Following MS footsteps to become successful. Which just further proves Microsoft's model.

Wow this just gets more and more confusing. Google, at 22 years old, is "MS2.0" and "successful" even though just a post ago 3 decades (though it's actually 4.5 anyways for both MS and Apple, but who's counting) wasn't enough.

Even though that's also approximately as long as Apple has been on its current success cycle anyways? If Apple had been "born" in 1998 would it be a "success" now like Google because the mac era never happened but things took off with the iMac and then the iPod?

This kinda feels like you decided on a conclusion and are now trying to backfill an explanation into it. :P

Okay so when I meant Google is "successful" was that they successfully beat MS in smartphone race and became a dominant player in the industry. They are definitely not even close to being a proper industry stalwart like Microsoft is, and it's quite possible they won't even survive the next decade if Government starts regulating them.

Apple owns the high end of the laptop and desktop computer market, their average sales price is triple everyone else. Mac sales give it over 10% of industry revenues, but even better Macintosh as a stand-alone business is by far the most profitable PC maker in the world and has been for nearly two decades.

In fact the Macintosh lineup profits are likely more than the rest of the pc makers combined.

"Handheld devices", I think Iphone and Ipad are a different category of devices. Apple watch (wearables) also seems to be becoming huge.