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15 Business Thoughts on Apple & the iPhone 12

18 October 2020

Apple is evolving, here are our financial breakdown & thoughts on the latest iPhone 12

Hello Aluxers and welcome back to an exciting Sunday Motivational article. Unless you’ve been living under a rock for the past few days, there’s no way you’ve missed the iPhone 12 launch at Apple’s latest event.

Rumors were confirmed, the flagship phone is here in an eye catching presentation.

Don’t get us wrong, we love Apple both as a product developer and as a brand, we ourselves use their products and have spent tens of thousands of dollars throughout our relationship with them.

During the event, we’ve had some thoughts that we’ve been discussing in-house which we all agree are worth sharing with you and get your take on what’s happening.

If a long article is not your Sunday treat, at Alux we have a second product. It is our vivid YouTube videos! Check out the upload for this topic:

With that sent out to you, here are 15 Business Thoughts On Apple & the iPhone 12!

1

Quality of the Production Is Top Notch

Let’s get the main flashy things out of the way.

Apple is by far the leading company when it comes to branding and production value for their events. They have that 200 billion dollars in cash at hand that they can deploy to simply purchase the best of the best.

You see the headquarters? -> That’s money.

The set they built for the event? -> Money.

The way the products are sold, the way the video is produced, the transitions, the colors, the overall vibe.. It all build this feeling of a Premium product, something we were used to see only with luxury products, BUT with a familiar and friendly tone.

They nailed it. You’re being sold a luxury product by a company that’s presenting itself as an old friend.

This is why Apple has such a strong fan base. Immediately after the event, articles and videos were already popping up with what to expect from the next iPhone and they’ll keep going like this until next year.

Building a loyal fanbase is incredibly hard and Apple has managed to get the best kind, the one who’s willing to spend some money!

2

They Deliver Less, but Charge the Same Price for PROFIT

Here’s the big problem everybody has with iPhone 12:

They removed the headphones and the charging brick, but kept the same price!

That’s where people are seeing through your bullshit as an obvious money grab.

The only thing coming in the box with the actual phone is a lightning cable to USB type C connector and their argument is as follows:

“There’s plenty of iphone chargers in the world! So, we’re including a USB C to Lightning cable in the box, that doesn’t work with any previous iphone chargers”

Unless you have a charging brick from other devices like the new iPad or a Macbook to plug it in, you will have to purchase a new Charging brick which Apple will gladly sell you for $29 or $39.

Not to mention that there are other things to consider. This doesn’t happen everywhere, but some countries force companies to comply with their regulations regarding health and disability.

For example:

Buying an iPhone in France will still come with lightning headphones because the government insists on it for 2 reasons:

  1. Because of accessibility/disability laws, phones are required to come with headphones in some parts of the world.
  2. The law in France says that phone makers need to provide an “accessory for limiting the exposure of the head to radioelectric emissions during communications”.

Everyone else has to get their own.

3

Through “Innovation” Now You Have to Pay Even More to Get the Things You Used to Get Included in the Price

There’s nobody in the world who doesn’t think saving the planet is a good thing.

Here’s our problem with the way Apple addressed the problem.

Their argument is: We’ve pulled things out of the main box, lowering the production waste & we can also fit more on a shipping container. It increases profits & saves the planet.

The issue is: For an optimum experience, you still need to purchase a pair of headphones and a charging device. Instead of having all 3 in a single box, slightly bigger, now you have 3 different boxes that get shipped to you.

And you know Apple is selling accessories like crazy.

How is it less damaging to the environment and what is the carbon footprint of producing and shipping 3 different shapes of boxes, each with its own added elements?!

Apple is really good at leveraging its position in the market by urging other manufacturers to follow in their footsteps… and you know they will.. But more on that later.

4

When It Comes to Sustainable Growth You Want to Be the Second Mover

When you’re looking to break into a new market and leave your mark, you need to have the first mover advantage. That’s what the first iPhone was! A revolution in its own way.

Now that they’re in a dominating position, Apple has the luxury of allowing others to test things out, wait for the technology to mature and then come in and do it better. Apple likes to play with it for a bit longer to make sure they get it right.

The iPhone 12 isn’t the first 5G phone, but for many it will be the first 5G enabled phone that they will use.

This is one of those fundamental differences in playing your position in business and the fundamental difference between Steve Jobs & Tim Cook.

Steve Jobs was a “war time general” – trying to conquer new territory.

Tim Cook is a “peacetime general” – trying to make Apple more money and increase the return for shareholders.

Both have been phenomenal at what the company needed from them.

5

Privacy Is a Big Deal to the Consumer

Another thing that caught our eye happened during the announcement of the HomePod mini. There was a strong emphasis on Security and privacy, Apple doubling down that the information these legal wiretaps are getting isn’t going to anyone outside of your home.

And this is a big selling point today, as more and more people are coming aware and getting forcefully educated on just how much data every service you use is sourcing from you and using it to shift your behavior.

We said it best on twitter:

Social media companies changed the name from “Private Message” to “Direct Message” because your message isn’t actually private.

If you have no idea what we’re talking about: the Social Dilemma is a great documentary on Netflix that will serve as a starting point for you to understand how these companies use your data and why you should take some measures to protect your privacy.

Which is why we’ve been serious about privacy for many years now. We never use our laptops or phones without a VPN active especially since they integrate well with our Apple products. Just flip a switch and you’re safe!

If this is something you wish to take seriously with your new iPhone 12 or even other gadgets, go to alux.com/vpn

We personally use NordVPN and have struck an exclusive deal with them for our community, where you’re basically getting a 68% discount when you sign up for a 3 year subscription. – You’re getting 3 years of online anonymity for the price of 1 year. You’re welcome! They’ve been a supporter of the channel for years now and our community has benefited from this win-win-win relationship. Go to alux.com/vpn now and get yours!

6

Carbon Footprint Is the New Differentiator

The entire world is going eco-friendly, it’s just the natural progression to a better world, which is why companies are jumping on the trend.

How friendly is your company towards the planet? Look how well we’re doing and how poorly everyone else is..

Apple once again uses its size in the market to shift the narrative, even with the new iPhone 12.

There’s a generational switch happening in the marketplace, where the main customer of a company is replaced by the new generation.

A recent report from Aflac said that 77% of consumers are more willing to purchase from a company with a CSR* pledge (*Corporate Social Responsibility) — 73% of investors agreed. Business leaders know it too. According to one study, 9 in 10 business leaders said consumers would hold them accountable for the environmental impact they make through their business – implicitly affecting both their bottom line and the returns for investors.

The interesting aspect of the Carbon footprint argument Apple made that stuck with us was in terms of the size of the shipping box, where by reducing the size of the box and fitting more during shipping, this is the equivalent to removing nearly 450,000 cars from the road per year.

We’ll trust them on that math, but this puts a lot of things in perspective. If such a small change could lead to such a massive positive return, a lot of millennials and gen z would like to purchase products that are environmentally conscious.

7

iPhones Are More Expensive in India – the Country That Makes Them – Than the US

If you think iPhone 12 or other iPhones in general are expensive in the US, you’re going to be shocked by the prices in other countries.

Why does the price differ around the world?

  1. Tariffs in Trade – you know.. The things politicians talk about in their international economic war &
  2. It’s not the PRICE as much as the COST of Acquisition

Let’s take India because it’s a great example. As some of you may know, Apple has moved production from China to India because of the financial war between the US and China.

iPhone 12 Price Chart

Let’s do the math on the maxed out models, just to keep things simple.

The most expensive iPhone available costs: $1,528 dollars in the US

In India, because of tariffs the same iphone costs 160,000 indian rupees – which converts to $2,182 -> making it $654 more expensive in India than the US.

But the difference doesn’t stop there.

Before the covid situation, The Bureau of Labor Statistics reported a median personal income of $3460 for a full-time worker. Meaning a full time worker in the US would need to work 2 weeks in order to be able to generate the type of income to afford the new expensive iPhone.

The average salary in India is 32,840 indian rupees – that’s 448 US Dollars – PER MONTH.

Doing simple math, the average person in India would need to work almost 5 full months in order to be able to afford it.

If you’re living in the west, you might not think of iPhones as luxury products, but in emerging markets, working 5 months just to be able to afford any product qualifies it as a luxury.

Apple is not oblivious to this issue and in an effort to counter that, they’re running a special promotion where if you buy a discounted iPhone 11, you’re getting free airpods so that the math is more lenient.

8

Mobile Gaming Will Overtake Consoles & Desktops

We’re going to talk about the issues we have with iPhone 12 and the 5G announcement later, but let’s assume a couple of years go by and 5G is available everywhere and ultra-high performance hand-held devices become the norm. Some of these phones coming up right now are a lot more powerful than the traditional PCs people used to have a few years ago.

Desktop and console will always be superior in performance, but that’s not the relevant benchmark here. Instead, we’re interested in ADOPTION and USAGE.

When everyone has a portable computer in their pocket with a connection strong enough to play League of Legends, PUBG, Call of duty or Fortnite – if they ever get back in Apple’s good graces.. Adoption of mobile first gaming will skyrocket.

Believe it or not, people are willing to sacrifice a tiny bit of experience for convenience – the success of nintendo switch is a great indicator that people are looking for high performance portable devices; and both games and the technology is getting better rapidly every year.

We’ve got this theory that Games are the future of Digital Media consumption because of the immersion and engagement they are able to provide the user.

This is the main reason why we’re looking to get a piece of the action and have our foot planted in the industry. Silently, we’ve launched a new YouTube channel available at alux.com/ZD

We’re looking to develop this channel into ALUX for the Gaming Industry. If this industry is something that’s interesting to you, make sure to subscribe, we definitely appreciate it.

9

30% of Android User Are Considering Switching to iOS

This is one of the more interesting statistics we’ve read recently about Apple. With the ecosystem fully developed and their devices like the iPhone 12 bluntly copying and improving some features from Android, people are starting to take notice.

There will always be the people who look at the raw elements like RAM and megapixels, but that’s not what this is about.

A tractor has more horsepower than a Mercedes, yet, we still prefer driving our family in the Benz.

The experience of the Apple ecosystem is simply unmatched right now.  Both Samsung and Google have failed at being COOL enough for the COOL kids. We love Google products & We were super excited for the Galaxy Fold.. but that didn’t turn out so great.

It didn’t help that with a Samsung smartphone you’re getting around 2 years of software upgrade while Apple is still delivering valuable updates 5 years in.

10

The 5 Revenue Streams at Apple

In 2019 Apple brought in 260 Billion dollars, with 2020 on track to beat that.

Apple is making money with 5 major revenue streams: 

  1. iPhone – In the third quarter of 2020 alone, Apple iphones sales accounted for 44% of the company’s total revenue and most of the iphone sales come in towards the end of the year with the holiday season after the new iphone announcement.
  2. Services – like iTunes, subscriptions, software or content – these make up for 22% of the total revenue
  3. Mac – 12%
  4. iPad – 11%
  5. Wearables, Home & Accessories – 11%

Obviously the iPhone is a big driver in the company’s finances, but it’s not the iPhone that caught our eye, instead its Services & the accessories segments.

Apple has a unique advantage in the streaming marketplace because the customers already own one of your devices so you can preload your apps onto them making the purchase experience super smooth. – right now, you have to download the Netflix app and make an account, with apple, it’s just a double tap away. 22% of the revenue is incredible and we believe apple will continue its push to grow this segment of the company.

Secondly, the wearables & accessories side of things is fascinating to us.

We’re not sure if you get how big this is, but let’s take the Airpods alone. So, if AirPods were a standalone company, it will have a market valuation of more than $175 billion, which would make it the 32nd largest firm in the U.S.

Add to it the success of the apple watch, the new HomePods & all the dongles in the world that apple is selling and you start to realize just how big Apple is.. it seems so diverse that iPhone 12 zooms out to a tiny little piece of a big jigsaw picture.

11

Apple Didn’t Get Rid of the Notch, They Actually Made It Prominent on Cheaper Models but Hid It on the More Expensive Ones

This is one of those things that we noticed in their presentation. Apple was being very sneaky about it. While companies like Samsung and others have almost completely removed the notch, on the iPhone is still very prominent.

But something was different with iPhone 12 this time. In the last few years they’ve been very creative with the wallpapers to hide it in their presentation and we were expecting them to do the same this year.

Look at this picture and how prominent is the notch on the cheaper models and how hidden it is on the more expensive ones:

iPhone Models

It’s just one of those things you pick up and you know you’re being marketed to.

12

Verizon and Other Providers Are Actually Years Away From Delivering the 5G Promise, but They Sold It Anyway

Ok… let’s address the big elephant in the room: 5G

They made a big deal about the 5G capability of the iPhone.

Honestly, 5G is 3 to 5 years away from being mainstream. Buying the iPhone 12 and expecting it to have crazy download speeds anytime soon isn’t in the real of reality, no matter where you live.

Verizon’s 5G claims are kinda bullshit. The National Advertising Review Board  told Verizon in September it had to stop claiming it’s building “the most powerful 5G experience for America.

There are 2 big issues with 5G that need to be addressed:

  1. 5G is more like WiFi than 4G

Basically, because of the way the waveform travels 5G doesn’t travel as far as 4G. Unless you’re holding onto a 5G tower you’re not gonna get the top speed. Which means in order to provide national coverage, you’re going to need a lot more 5G antennas than you do with 4G – and good luck covering the entire country with them when a good portion of the population thinks of them as coronavirus dispensers.

  1. Secondly, The 5G iPhone you buy in the US will not work with international 5G networks – at least not to the same degree. In order to get it done sooner and cheat the public perception, telekom companies in the US are offering a different type of 5G.

If you want a model that works internationally, you’re going to have to order specific versions that run on different frequencies. Apple even has a page full with every version available.

If 5G was the main reason why you’d want the new iPhone, we recommend waiting until next year!

13

The Entire Industry Bashing Apple Will Follow in the Next 24 Months

‘Member when everybody made fun of Apple for removing the headphone jack and not even 12 months later they did the same thing?! We remember and this is very Deja-Vu to us.

Charger Image

Every company tried to take a swing at Apple for removing the charging brick knowing damn well that they’re gonna do the same.

Samsung likes to help create drama and then quietly copy Apple later.

People have taken notice of this hypocrisy in the past and it hurts your brand more on the long run than internet points you score in the moment.

14

Don’t Call It Wireless Charging When Your Charger Is Attached With a Wire

Before we go into this, our position is clear: we hate wires! We hate looking at them, organising them, having that weird drawer filled with cables that we’ll never throw out…

We’re fully on board with a wireless future.

The problem we have is the way it’s been sold to us. the truth is: A phone on a wireless charger is less practical than one that’s charging through a wire. You can’t still be on it and charge if it’s laying on the dock.

Luckily for us, the big brain people at Apple decided to tackle the problem and through extensive innovation and technological breakthroughs, they added magnets to the back of the iPhone 12 so you can still hold the phone in your hand while it’s being “wirelessly charged”. So instead of having the cable plugged into the phone at the bottom, not it attaches via magnets on the back.

This seems just like wired charging with extra steps.

15

Apple Lost Its Mystery, but It’s Getting Ready for What’s Next With LiDAR

The last item on our list has to do with the excitement of seeing the next generation of technological products. The iPhone is a matured product and as it happens with anything matured, the blood isn’t rushing to all the right places in the same way that it used to.

There’s no more mystery or excitement with the iPhone, no matter the James Bond theme song or how many cases you put it in.

The more interesting thing that has little to no applicability for most people is the lidar they made a priority to stick on the back. LiDAR is a 3d scanner of the world around you. It’s a very interesting technology but why would Apple insist on having it on their most expensive flagship device as well as on the iPad pro that came earlier this year?!

That’s where the future comes into play. We believe Apple will likely release Apple Glasses next year.

We have this controversial idea that not many will be on board with.

Our bet is that in the long term, nobody will need any device that has a screen. No TVs, Monitors, Phones.. None of that.

Instead, we will all be wearing Augmented reality glasses that can display all of them on command. Just look towards the wall and you’re going to see a tv. Look toward the hand and you’ll see your instagram feed – or whatever variation of Onlyfans will still be available then.

Our belief is that this entire LiDAR technology is the stepping stone for Augmented Reality in a sustainable way. Apple has the ecosystem, the fanbase and the money to make this a reality and we can’t wait for you to consume our content in this new medium.

We know this is a lot to take in and this was a different content than what you were probably expecting, but we really enjoyed breaking down different parts of the economics of Apple, which brings us to today’s question:

Would you enjoy this kind of content once in a while or should we stick to the Habits of Rich People? Let us know in the comments – despite what you think, we always read them and take them into account when planning our future content.