Quick $AAPL thread

#1 Apple is one of the best companies in the world BUT I do wonder if they are stretching themselves too thin.

Is $AAPL exploring too many spaces outside of their core competency which could lead to them seeing great success in none?

#2 To me, the core competency of $AAPL is electronics and more specifically the integration of hardware and OS to drive best-in-class experiences. This led to iPhone which is their greatest and most important product. It is the anchor of their ecosystem.

#3 $AAPL has turned the iPhone into a customer acquisition strategy that brings you into an ecosystem that builds in value and convenience as the user buys more Apple products. There are definitely some switching costs at play here that drives an Apple premium.

#4 $AAPL brings you in with say the iPhone and then seeks to further integrate you into the ecosystem by selling other great hardware products:
-Laptops
-Desktop
-iPad
-Apple Watch
-Headphones
-More

#5 $AAPL
But the hardware alone didn’t turn Apple into a $2 trillion company. It was the App Store that provided the opportunity for developers to build other products and that was what turned the smartphone into a world changing device.

#6 $AAPL
The combination of the App Store with the iPhone created a mechanism that increased value to the user far beyond what Apple could have done alone. It turned a market once valued based on hardware sales alone into a mobile economy worth billions/trillions

#7 $AAPL
So Apple has benefited immensely from providing a platform that allowed developers to build additional products. It benefits Apple because they have fees for the app store, keeps users in the ecosystem, and increases value of an iPhone which can justify price increases.

#8 $AAPL
So why does Apple not solely focus on opportunities to tap into what they do best which is hardware and OS integration to creat best in class experiences and products?

#9 $AAPL
I for one am very bullish on the Apple Watch and it’s ability to grow a mobile/wearable/monitoring healthcare economy.

This is in the wheelhouse of Apple but they can’t forget developers. They transformed the value of the iPhone. They could do the same for the watch.

#10 $AAPL
This is also why I really like the Apple car idea. It will be difficult, high risk, and highly uncertain but is right up their alley.

Also, just think about the hardware success with iPad and Air Pods. The list goes on and on.

#11 $AAPL
But then I get to Apple+, Music, Fitness, etc.

I struggle with determining whether I think Apple has an advantage and/or can compete competitively in this other realm of software. Also, will they burn the hand that feeds them with the App Store fees?

#12 $AAPL

Think about who dominates each arena:
Apple+: Netflix
Music: Spotify
Fitness: Peloton
Card: JP Morgan/Cash App/ Venmo, etc.

And as Apple competes more and more against other developers the 15%/30% take rate will come under more scrutiny as potentially unfair.

#13 $AAPL
I wonder if Apple would be better served by fostering the most symbiotic relationship possible with developers which increases:
-Benefit of their hardware
-Stickiness/Benefit of their ecosystem
-Protects the viability of the App Store fee

#14 $AAPL
A focus on hardware and OS allows them to:
1. Widen moat by further expanding hardware offering
2. Find oppts. to expand market size like iPhone/App Store did for phones
3. Optimize App Store fees with developers knowing Apple won’t compete against them

#15 $AAPL

Examples
1. Encourage more development of Apple Watch services
2. Apple Car - already doing
3. Apple Glasses (AR) - already doing
4. Appliances / TVs (with Apple TV built in)
5. Home management - Hardware integrating through house
6. Commercial Real Estate— see $TSIA

#16
$AAPL

Give me less services, give me more of Apple marrying hardware and OS to transform another industry like phones.

Home Tech could be it. Connect lights, temp, security, home services (plumbing, etc) all in one place. Much more.

This thread was longer than I expected

Let me add that this is just one thesis that is more bearish on some of their SaaS offerings.

Apple could very well turn those into profitable segments of their business and I’m always open to re-considering / re-evaluating my perspective.