My New iPad 5
I recently purchased Apple’s newest iPad 5. I’m in the midst of writing a very long, very positive review in which I’ve enthusiastically proclaimed the new iPad 5 to be ‘Apple’s Best iPad Ever.’ My writing of that glowing review came to an abrupt halt 2 days ago following the shocking event I describe below.
Has Apple’s Often Predicted Demise Begun?
It’s undeniable that Apple has paved the way for an entire industry of mobile technology. Yet many people are questioning if they’ve lost the technological edge the company once enjoyed. Lackluster user response to many of their recent product launches seems to be the main evidence for this theory.
I don’t think that’s entirely true. I think they’ve just shifted their goals from producing technology that’s considered ‘groundbreaking’ to producing more ‘nuanced’ products. Ones which improve upon already great designs in smart and beneficial ways. But that may not be enough.
Their approach was working. They managed to keep up with, and even maintain their lead in most of their product niches. Their profits have never been better. Despite this many don’t realize that it’s not hardware production that’s really their problem. It’s their inability to think like their customers. Especially in creatively imagining how their products might solve problems and fulfill user needs. But customers have never been their focus. In the past it wasn’t necessary for their success. But now, the tables have turned because the market is completely different. In many regards it’s saturated. There are so many amazing products yet Apple’s not leading the innovation anymore, so their competitive edge is decreasing and they have nothing left to take its place. Recognizing the asset that their customers represent could have been that thing…but it’s probably too late now to turn that around.
Stated a little more bluntly, Apple has always seemed uninterested in their customers. Had they been paying attention they could have appreciated the infinitely creative ways in which their customers improve the value of their technology. If they’d stopped to notice for one brief moment, it would have been their users who showed them all the open doors available to them for future success.
Beyond their slick marketing campaigns which really are the by-product of some ‘uber genius’ marketeers, creativity does not appear to be Apple’s forte anymore. As evidence I give you the App Store, their own suite of apps, iTunes, even their core applications, ios and OS X. Things that seemed out-dated, boring and maybe even antiquated in the past, feel downright obsolete in 2017.
Most of Apple’s iPhones & iPads are manufactured in China
Which Brings Us Directly to the Question At Hand
Why Doesn’t Apple Want You to Buy Their New iPad?
It seems odd really because iPad sales have dropped a lot in recent years.
You’d think they’d want as many new sales as possible. Deep down I suspect they do.
But, like the difficult sibling every family has, it appears that Apple is very particular about who they sell their new iPad too. If you’re an avid Apple user who enjoys many of their products already, then even though this new iPad is really a great one…it’s not really intended for you.
How did I arrive at this revelation?
By actually purchasing their new iPad…which, I should also mention, I really happen to love! But I don’t know if I love it enough to make the choice Apple has thrust upon me. A choice I didn’t know I would be forced to make. Apple is forcing me to choose between this new iPad and my older ones. But I also happened to have grown quite fond of them too.
I really don’t understand why Apple is forcing me to choose…why can’t I decide?
Apple’s Net Annual Income from 2005 to 2016
How I Discovered I’d Be Forced to Choose Between Keeping My New iPad or My Older Ones
Looking back I probably had some clues. I’d been having quite a few problems with my iCloud lately. I even wrote a post about it a few weeks back called ‘How I Fixed My iCloud Photo Sync Problems.’ But it wasn’t until I finally called Apple Support that I really put 2 and 2 together.
Back in 2015 when Apple had one of its worst years ever for ios problems, my family was hit especially hard. That was the year of ios 8. As ios 8’s tenure drew to a close our combined family’s iCloud photo syncing and backups came to an abrupt halt. Since we’d arrived home from our summer vacation with lots of new photos, this couldn’t have happened at a worse time. At our local Apple Store, a Genius told us that the problem was we just had too many pictures for iCloud to handle well, and we should really buy a Mac mini to back them all up manually if we didn’t want to lose them…so we did.
I know what you may be thinking…that’s a really expensive solution…and you’d be right. But I had years of my family’s photos stored there and I wasn’t willing to risk losing them…especially because I had already lost several years worth of family photos when our home network was taken over by a Botnet already. I also wasn’t all that thrilled with having to learn an entirely new operating system either. The Genius was correct however, and our getting the Mac Mini did solve our Photo syncing and backup problems, so in the end we were OK with it.
But that’s all we’ve ever used the Mac mini for. Now it turns out that Mac is 1/10th of my current problem! What led me to call Apple Support a few days ago about my current sync problems was when I discovered using that computer that not all of my devices showed up under my Apple ID. So I called Support thinking that they would talk me through how to get all my devices back under my ID. I couldn’t have been more wrong.
My Recent Encounter With Apple Support
The first person I talked to a was a nice enough woman who told me she’d try to help me, but she very quickly got to the heart of the problem. With the purchase of my new iPad 5 there are now more than 10 devices in my name. I was beyond incredulous when she told me I’d have to get rid of some of them! We went back and forth in a conversation for about 15 minutes that sounded something like this:
Me: You mean I can’t have more than 10 devices total?
Me: But then what do I do?
Her: Get a new Apple ID
Me: But if I do that I won’t be able to access my information on all my devices, right?
Her: Well, no, that’s not exactly what I mean, but yes essentially you are correct.
Me: So, you mean I really can’t have more than 10 devices? Including computers? Because I thought maybe computers were different. I thought that they fell under a separate ‘5 Authorized Computers Limit’ and that was a separate limit, right?
Her: Well, no, that just means we don’t want you to own more than 5 computers.
Me: Why not?
Her: Because if you do you’re probably a business.
Me: But I’m not a business.
Her: But most people would be.
Me: Really? Why do you think that?
Me: I mean, I do write a blog, but I wouldn’t call it a business. I don’t actually earn any money doing that. In fact I write about Apple products a lot which is one reason I like to have the different ones…to be able to knowledgeably write about them.
Her: Well, no I understand your situation, but it’s unique. Most people with that many devices would be a business.
Me: But, really, if you think about it, it’s not that many. Granted I may be somewhat unique by keeping my old iPod, which I still love, and an old iPhone as a backup one, but other than that, I don’t think I’m that different from most Apple users. I have a Watch, this computer, an Apple TV, my phone, an iPad mini, an iPad Air Original, an Air 2, the 12″ Pro and the 9.7″ Pro and now the iPad 5. So, basically just one of each. But that adds up to 12 devices. And I really love the new iPad 5 and wanted to get another one.
Her: That’s too many devices for one person to have.
Me: Is that a personal opinion or a corporate one?
Me: Doesn’t Apple want people to buy more of your products?
Her: Well…..yes and no…we don’t want people abusing the system.
Me: What do mean abusing the system.
Her: These products are meant for personal use.
Me: But I am a person and I am just using them for personal use…I mean I mentioned my blog right? But it’s not a business, I don’t earn any money from writing it.
Her: But you couldn’t possibly be using all those devices…you must be doing something else with them.
Me: Like what?
Her: I don’t know, I just don’t think that you’re personally using them.
Me: But I am, truly.
Her: I’m here…I just don’t know what to say.
Me: What do I need to do to convince you I’m not abusing the system somehow.
Her: Well, um, how do you use all those?
Me: Well, I like iPads for their mobility and flexibility so when I write a blog post I use an iPad to do that.
Me again: You know how a lot of people have multiple screens on their computer, right?
Her: Of course.
Me: Well, I use my iPads like others do multiple screens on a computer. I multi-task so I use 3 at a time. And then when their batteries die I switch to 3 fresh ones.
Her: Can I place you on hold a minute?
As I waited for about 10 minutes on hold I just couldn’t stop thinking “This can’t be real…it’s gotta be some kind of a mistake. Because what company in their right mind wouldn’t want customers who love their products so much that they want to buy more of their products…it just doesn’t make any sense to me.
What I didn’t tell her was that I actually even have more iPads than I mentioned to her. I didn’t mention them out of this odd sense of shame! Sort of like ‘slut shaming’ in the recent Netflix blockbuster ‘Thirteen Reasons Why.’
The New iPad 5 Compared to My Original iPad Air
Because, here’s the thing…I didn’t get those because I wanted more iPads, I got them because ios 8 kept incapacitating my iPads. The first time I encountered this problem I never knew that having a corrupt version of ios was even possible. I think looking back on it what was going on was that Apple had introduced iCloud Drive along with ios 8. But their implementation of it was very poor initially. iCloud had become this massive bandwidth hog that literally knocked everything else on our home network off of it whenever it wanted to. Which ironically led to my writing another post about what to do as a temporary measure when this occurred.
My biggest problem was that I didn’t want to lose the content on them by restoring them…but during the ios 8 debacle, our iClouds weren’t working much of the time, so a lot of my content wasn’t backed up. I had no means to back it up because my Windows computer (that I had built myself along with my son’s help) was currently nonfunctional. It was one more thing on my long list of tech projects that needed fixing, but that I didn’t have either the time or the skill level necessary to address myself. So, during ios 8’s reign of terror I ended up buying 3 more iPads I used as ‘stop gap’ measures to keep me productive until I could restore the ones with corrupt versions of ios 8 on them.
Yet I was confident that my being on hold meant my problem was going to be addressed and get solved.
My 2nd Support Conversation with Marty in the Apple Enterprise Department
Once again, I couldn’t have been more wrong!
A few minutes later she came back on and introduced me to Marty from the Enterprise Department. She told me that because he handled business accounts she believed that he could better help me with my problem.
What followed was painful. Marty literally interrogated me about my devices and my usage. He maintained this smug, arrogant demeanor that was intimidating…and not at all helpful. His manner was odd too.
What I did learn in early on in that conversation was that it’s not that Apple or even iCloud that can’t handle having customers who own more than 10 devices…it’s more a matter of the shortcomings of Apple IDs. Apple ID’s it seems weren’t designed for that, and they are not able to handle anymore than 10 devices per person.
Rather than subjecting you to what was an utter and complete waste of 30 minutes of my life, I’ll just skim over the highlights.
Marty didn’t understand how anyone in the world could ever, or would ever, need more than 4 devices maximum…because that’s what he has. Furthermore, he doesn’t feel that I’m doing things as efficiently as I could or should be. He compared my iPad usage to the experience of buying a new car. He couldn’t seem to grasp the concept that iPads are not cars, and that his car buying analogy was inappropriate and ill advised. His analogy seemed to have something to do with the concept that I shouldn’t have purchased my Mercedes Station Wagon with the expectation that it would be able to handle off-road terrain. This is where he completely lost me.
He didn’t even give me the chance to jump in and say…but my car does handle off-road terrain just fine because it has 4 wheel drive and it’s built like a tank. And how exactly is an iPad even like a car in the first place? He just droned on and on and on…never once giving me the opportunity to speak.
So for the next 20 minutes or so I just tried to get things done only while appropriately mumbling things like “I see” periodically on top of his discourse, until finally he grew tired of listening to himself (or quite possibly finally having realized that he’d lost me 20 minutes back ) and he abruptly decided to give me my case number and end the call. Omg I thought…finally. Oddly, he didn’t even ask me if he solved my problem, nor did I ever receive the standard follow-up email asking me to ‘Rate My Customer Service Experience!.‘
There was a little more to the conversation, and one good thing did come out of it when I did ultimately realize that there is one older device under my Apple ID that I’m not really using…my old iPhone 4s that I keep for backup and for possibly traveling internationally because I spent a lot of time trying to get AT&T to unlock it for exactly that reason. But even removing that device will not allow me to meet the arbitrary number of 10 maximum devices that Apple will allow me to have.
Find out how many devices are under your Apple ID on ios
The Reality: Apple Customers Aren’t Allowed to Use and Operate More Than 10 Devices Under Their Apple ID
I swear that I can’t go for more than 2 years time without some huge shortcoming of the antiquated Apple ID system cropping up to make my life miserable.
My 3 Biggest Apple ID Problems in Recent Years
Apple ID Problem 1
The first time a problem arose was when my younger, then teenaged son left for college. I’m sure you all know where I’m going with this. My son had kindly setup my first iPod for me several years earlier. But because he was just a kid himself he had no idea what he was really doing. He was just super excited to be doing something cool for me instead of the reverse. So, he just setup my iPod using his Apple ID. We learned when he left for college what a huge mistake that was and one that we’ve never been able to fully recover from because, guess what?
There is absolutely no way that Apple will allow you to divide your content…and by content I mean everything…your contacts, your photos, your music, your apps and literally everything else that you would use on an ios device, into 2 separate Apple ID’s. EVEN IF YOU DID IT MANUALLY ONE BY ONE!!! Because Apple ID’s weren’t built to be able to handle that.
The end resolution of that sad situation was that my son, an avid Apple fan at the time, left Apple products behind completely for Android…and he’s never looked back!
It really boggles my mind that Apple has chosen to stick with this horrible concept that serves no one well for so many years. Unless it does serve them with some ulterior motive that they just aren’t transparent enough to acknowledge. After all, Google doesn’t limit how many Android devices a person can have? Granted, they do maintain a similar 10 device limit for streaming music…so I suspect that has more to do with digital rights protection than anything. But you can have as many Android devices as you want which share your apps and your data. Certainly Microsoft wouldn’t make such a ludicrous business decision…but then Bill Gates was always a better businessman than Steve Jobs! Not that I’d really consider getting a Windows phone. I mean I’m not sure but are they still even selling those? I don’t mean to sound catty, it’s just that I really never hear about them anymore.
Apple ID Problem #2
I’ve occasionally visited the Apple Support Communities. There were a few instances I considered asking my own question, but forums intimidate me somewhat so I never had. One day I had a question too pressing to ignore. This was the first time that I actually ever asked a question in any kind of forum…both before and after.
Immediately after posting it I was horrified to discover that my real name was publicly displayed next to my question. Worse yet…I couldn’t remove either my name or the question! Since our Botnet encounter was extremely fresh then, I was completely blown away that Apple would do this. I’ve since learned that their Support Communities aren’t directly under Apple’s control…although there is a direct link between them, so go figure. But the only way you could participate in the community forums was by having an Apple ID and signing in using it. Since most people have their real names associated with their Apple ID this just seemed to me to be a terribly unsafe practice.
I’ve managed to block from memory many of the details regarding that incident, but I do remember there were hours upon hours of emails written by me to various support administrators trying to find someone who would remove my name from the question…or the whole question instead. It took days of correspondence before I found someone capable and a few more days of pleading, begging and grovelling before he finally complied. So finally the question was deleted, but I was really shaken. My name had been displayed for about a week before they took it down. I suspect at the time we had just regained our network and a tiny sense of privacy after 2 years of pure hell…which explains my slight overreaction. But our hackers seemed to know us after 2 years of having access to all of our private data…so I didn’t want my name out there at all!
The head honcho who finally remedied it told me that only real people’s names were allowed…and if I didn’t like it I didn’t need to participate. He also suggested creating another Apple ID, but back then you had to associate it with a different email, which meant at a minimum setting up another email account too. It wasn’t as simple as it appeared. An I was already dealing with 2 Apple ID’s from the situation with my son. The last thing I wanted to do after having gone through upwards of 20 email accounts that were repeatedly hacked was start down that path again. I did try to explain all this via emails…but I don’t know that I was successful.
Because overall I was met with indifference at best. At the time I had problems believing that this was their attitude and that it was impossible for someone…or anyone really…to change their display name to something else. Cyber security issues were just beginning to get national attention…so my fears didn’t seem unwarranted. In the end when I finally did prevail…it was only after I swore to promise that I would never, ever, reveal the fact that this was even possible to anyone else.
I didn’t reveal their secret either up until now. It was a long time ago in digital years at least…so probably things are different now…or are they? I probably shouldn’t assume so often! But now, I don’t feel any regret in revealing what in hindsight almost takes on tones of bullying…because I should not have had to devote that amount of time and effort for something so minor and so wrong! At the moment I’m downright angry as I’m realizing that at least twice I was treated really poorly by Apple employees (even if one was a tangential employee.)This behavior appears to me to emanate from a perceived sense of superiority which is exhibited as both arrogance and domineering. It’s not right.
Apple ID Problem #3
Trust me when I say there is one more largely distressing Apple ID incident which I just don’t have the stomach to rehash here right now. I wonder if Apple recognizes the amount of stress and frustration that’s thrust upon users? It appears that this worsens when dealing with their most loyal customers.
Bloomberg article about shrinking profit margins
I did come to one realization about Marty’s and even the woman’s seemingly suspicious interrogations, which I now think may have had to do with digital rights and piracy. But if they had bothered to inquire, that is a complete nonissue for me. I don’t have or use any of that kind of content…it’s that simple. Other than a very, relatively small old music library from maybe 8 years ago when I got my iPod, I simply don’t consume media content at all. I don’t use my music library either because we were never able to separate my small one from my son’s larger one. So if I were to go look for some old song that I know I downloaded, I generally never find it.
What’s important to me is the data I’ve accumulated from research, drafts I’m writing and the graphics I create to accompany the work I intend to publish online. Right now I’m working on 2 huge feature articles. One is on cybersecurity. It’s a very detailed analysis of alternatives to keep people’s identities and data safe in a whole host of situations. My focus is on firewalls in their many forms which I perceive to be a topic generally not understood. The other is on the nuts and bolts of how to cut the cable and setup suitable alternatives…but again it’s extremely detailed and I cover the entire process from start to finish.
I’m learning to use a new editing app (Ulysses) which is great but it relies on having access to my data using iCloud. That’s why iCloud syncing for me is so crucial and why I wasted my time calling Apple Support in the first place. I don’t take that step lightly. In fact the last time I called them was probably 3 years ago. In the rare instances I’ve gone that route…even when calling Apple Care, my time is usually wasted. But this time, in addition to being wasted I was treated so poorly that I couldn’t ignore the message sent:
Apple Does Not Want Their Most Valued Customers Buying Their New Products
There is simply no other way to interpret the combined evidence of Apple’s choice to impose archaic and secretive limitations which they seem to go out of their way to justify along with their abusive tactics in interacting with customers under the guise of ‘support.’
There should be no surprise about my first conclusion. I won’t be purchasing another iPad 5…even though I do love the new iPad 5 and would really benefit by having it. I’d like to give away some of my older ones, but can’t do that if I can’t have them under the same Apple ID long enough to make sure I’ve transferred everything I need to the 2nd, despite the arrogant Apple Support employee known as Marty, and his utter lack of regard for my problem, I did learn a few more things and then came up with a few workaround ideas of my own.
Here’s the big picture. Not only are Apple ID’s antiquated but Apple has some other hidden limits that they don’t share with their customers, making the entire Apple ID system convoluted and confusing. Things like ‘one computer can only be affiliated with 5 Apple ID accounts,’ and that ‘one ios device is only allowed the create 3 new Apple ID’s.’ Also that ‘computers which have been authorized to use content under one Apple ID, can only change that designation once every 90 days.’
Rereading various Apple support articles failed to shed any more light on most of these limitations. I guess I shouldn’t be surprised since Marty’s one cheerful interaction was his mention of the fact that many of these restrictions are buried deeply within the fine print of Apple’s Terms & Conditions which I’ve made PDF’s of to include here. I have to admit though, I didn’t actually read to 50+ pages linked to below.
ios Terms & Conditions
iCloud Terms & Conditions
Game Center Terms & Conditions
iPad 5 Warranty
More helpful is the advice written by MacWorld’s Jason Snell. Last June he wrote a really helpful article which explains clearly and succinctly exactly what the 2 main device limits Apple currently dictates are and how to find which devices of yours that apply.
MacWorld Article by Jason Snell
The day after my support encounter I decided to research this topic a little further. I discovered that there are some interesting and creative solutions to my problem and that despite Marty’s claim to the contrary, I’m not the only user worldwide to find myself in this situation. Other’s have been equally frustrated. So I thought I’d share what I came up with as ways to address the ridiculous data sharing limitations.
Good Workaround Ideas from Ben Greiner
The best workaround ideas I found are outlined in this article, which also highlights some even more randomly archaic limitations that Apple has forced upon their best customers. My favorite workaround is creating one backup that acts essentially as a template for configuring more Apple devices beyond the 10 by just using that same backup for multiple restores on numerous devices. I took the ideas in Ben Greiner’s article above as the basis for coming up with the 4 workarounds I describe below.
4 Ideas for Working Around Apple’s 10 Device Limit
These are my 4 best ideas for setting up an iPad which typically wouldn’t be allowed by Apple because you’ve reached their 10 device ceiling. Some build upon an idea I got when questioning Marty. He mentioned that you don’t need an Apple ID to use an ios device. He said that all the core apps would be on a newly restored iPad, so you could just use it ‘as is’ but not add content via the App Store, iTunes U., the Music Store, iBooks or using any of Apple’s content solutions.
The downside of course for me is that I use and rely heavily upon iCloud sync for all my own personal data. Everything from Contacts, Payment methods, Safari Bookmarks, Documents, and the most important Photos and Videos…so the Apple ID sign-in aspect is important.
But there are nuances to it. For example, on some devices that I don’t use a lot for productivity I could sign in, load the content I want onto it, and then sign out…I think that the content would remain. Also, through a convoluted assortment of Google Drive, Google Photos, Dropbox, Box, and OneDrive, I could probably, with great effort, set up something that resembles an iCloud connected device with synced data. But I’ve worked with several of these alternatives already in a limited capacity trying to make my iCloud data available on a non-connected device for an app requiring iCloud connectivity…and it’s a cumbersome process that varies a lot by cloud provider. It would require a lot of front end work and documenting the steps would be key for me to keep this working.
So, I’ve outlined 4 possible alternatives below which all have some pros and cons, but which do offer some flexibility for various circumstances.
Of the 4 Methods outlined, the reason Method 1 is best for me is because it’s the only one which keeps the Apple ID intact therefore the iCloud connection is maintained.
Best Method 1 | Create Multiples of the Same iPad
This method relies upon your ability to save a good copy of a backup that you’ll use to restore any new device from. By doing so you’ll essentially be creating multiple copies of the same device. So the difficulties of this method may be differentiating between them sometimes. For example, when you use the share extension feature of opened webpages….and see your different devices…will you still see all the devices setup in this manner displayed? I’m not entirely sure since this is only theoretical right now, but I plan to test this out when restoring an iPad to bring to my 91 year old Dad for reading ebooks.
- Setup one ios Device as new – Maybe give it a special name like ‘Favorite iPad’
- Put all the apps and things I would start with on any fresh devices onto it.
- Make a backup that I save permanently in some fashion…maybe in a file outside of iTunes.
- Use that backup file as a template whenever I setup a new iPad…restoring from this backup onto each newly restored device.Method 2 | Create A Bare Bones iPad with No Apple Content Thereby Creating a Static iPad with Non-Updatable Content
Remember Marty told me you don’t need an Apple ID to use an iPad. You’ll have all the core apps and can surf the web…you just can’t download apps or other content. Another thing I discovered is that you can have an Apple ID assigned to a device…but not have a credit card associated to that device for iTunes. You could have the credit card associated with it but then remove it, or set it up from the start without one. So you could setup a device with the apps you want while signed in…and then sign out of either the Apple ID or the Credit card on that device…leaving it fully stocked with whatever apps and content you want…but not able to get any more.
Method 3 | Enhance a Bare Bones iPad with Side Loaded Content
Use Method 2 without ever signing into an Apple ID, then Google something like ‘Side-Loaded apps for iPads and find alternative app ‘stores.’ One side loading alternative I tried and it appears to be a safe option is Tweakbox.
Tweakbox site and app for side-loading apps
Method 4 | Jailbreak Your iPad
Since I’ve not done this I don’t know much about it other than that jail breaking voids your Apple warranty if you’re caught and you run the risk of bricking your device. But there is a huge jail breaking community with lots of information. There are complete app stores for jail breakers and it seems you can do a lot of cool things with an ios device that would normally be restricted by Apple. Perhaps one of the largest jail breaking sites is Redmond Pie where you can learn more about it and get lots and lots of great information.
Is Apple’s Demise Inevitable?
Never before has technology advanced at the rate which we’re experiencing today. We sit on the precipice of a bona fide new world. One in which the vast majority of our daily needs, both personal and professional, will be met in by complex interfaces of digital data. These already impact a broad array of our needs. Soon every aspect of people’s lives, our communications, what we eat, the media we consume, the healthcare we receive, our shopping activities, our leisure activities…literally every single aspect of our daily lives will transition to become part of the interconnected framework of cyberspace.
As much as I love my Apple devices today I simply cannot see how they’ll survive these changes. Already change is creating greater user demand for interconnected tools which are growing increasingly necessary for our day-to-day lives. Apple’s inability to function transparently, coupled with their paternalistic style of customer relations, and their need for total control points to their inevitable inability to adapt.
Stated more simply…sharing has never been Apple’s strong suit.
I fear that the handwriting is on the wall…our worlds’ greater need for universally interconnected tools will render Apple’s products irrelevant, signaling the beginning of the end for the corporation.
Taken from Apple’s 2016 10K Filing
What Apple’s Recent Financials Tell Us
I’ve spent some time analyzing Apple’s financials to see if my theory holds water. I needed to do this because if you were to take Wall Street recent reactions literally, you’d think Apple’s future was promising. But we’ve all learned enough to know that taking Wall Street news at face value is a slippery slope.
Apple’s profits are still deceptively solid, in fact even encouraging in 2017. But those can’t be sustained long term under the present set of circumstances. Where profits are increasing the most are in a segment Apple call’s their ‘Services’ business. The segment is composed primarily of revenues from Apple Care, App Store sales, iCloud Storage and Apple Pay.
It makes sense these would be increasing now given the market saturation of Apple hardware, but think about it. These services are dependent upon successful hardware profits. That’s where Apple has shined in the past and in the long term it’s there where Apple needs to be successful to achieve any sort of long term growth in their industry. Unless Apple were to branch out by providing services to non-Apple hardware, growth simply can’t be sustained long term. Without growth of customers for their hardware products, services profits won’t be sustained.
So while the current numbers are causing analysts to applaud Apple’s wisdom and business acumen, in reality I think this is more a situation of fortuitous riding of coattails which will reverse as quickly as it appeared.
Recent trends in Apple profits are telling and support my forecast of eventual degradation of Apple’s financial situation I think. Profit margins for Apple’s hardware have steadily declined which is a bit of an industry trend. More sophisticated technology commands higher costs to produce yet prices can’t be raised enough to offset these costs so margins overall have been going down for years industry wide.
Add to this declining sales, primarily due to customers’ blasé response to new offerings which is a direct result of a lack of innovation that’s exciting on a large scale and the concept of long term profits stagnating or declining seems realistic. So in the end services’ profits can’t help but decline, because it’s success is predicated upon a successful hardware segment.
There is only one business model under present day circumstances that might possibly turn this around. That’s a model that values existing customers. Will that be possible for Apple to achieve? Only time will tell.
This is why Apple Should Want Me to Buy Another iPad 5!
NASDAQ Price Earning’s Forecast
Below I’ve included links to some of the financial data I used to arrive at my conclusion.
Here’s a link to Apple’s 2016 10K Filing
Here’s a link to Apple’s 2017 Proxy Statement to Shareholders
Here’s a link to Statista’s Chart Showing Apple’s Net Income from 2005-2016
Here’s 2 links to some Bloomberg analyses on why Apple’s Profit margins are Declining – October 2016 Report and Recent Problems With iPad Sales – March 2017 Report
I love to get feedback from my readers…so leave a comment if you feel inspired!
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