Comment by lbacaj | Hacker News Reader

Comment by lbacaj | Hacker News Reader

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I completely agree with the sentiment.

I see this as a strategy from Apple. Unfortunately for their supplier's Apple's strategy to destroy Android seems to be somewhat counterintuitive, it involves selling fewer iPhones. It involves doubling down on premium and having these older phones last far longer. By definition that will mean a bigger used market which Apple seems to be embracing especially with the recent iOS update to actually, for probably the first time, make older phones faster for a change rather than slow them down. I think they have realized that their eco-system is far more valuable and having android owners switch to older iphones which seem to be holding up almost as well as new android devices not only does not cheapen their brand but brings in droves to the eco-system which is the thing with the real value at the end of the day.

May sound far-fetched but every step they have taken lately points to this strategy, dont be surprised when they post more record profits.

Why don't they just make a cheaper phone that can compete with cheaper android phones, which make up the majority of phones in the (larger, fastest growing) 3rd world market? And only sell them in those markets so they don't dilute their profits in premium markets? How would they capture any revenue from a "used market?" Force people to sell their used phones through Apple, kind of like what they're doing to customer options to have their devices repaired?

Revenue generated from older devices would be in peripherals and services.

They don’t even need to sell devices to Android users. The diets of people that tend to use hand-me-down iPhones are quite likely to get an Android instead. If iPhones last longer, these people will stay in the iPhone ecosystem longer and there will be more of them.

One word: positioning.

Apple is a luxury product. It is the best. If they started selling not-the-best, it would tarnish their (well-earned, in my opinion) reputation for always making the best.

I use an Android phone and will freely admit that Apple phones are just better. They have better battery life, brighter and larger displays, better manufacturing (no seams, better materials), much better cameras, faster and better-engineered CPUs, a better app ecosystem, and a whole lot of other stuff (better buying experience, better advertising that contributes to the perception of quality, better post-sale support) that combine for a holistic experience of "better" for users.

The way they make money on used is their 30% cut of all app store revenue. You sell any sort of digital goods, whether Candy crush items, digital music, etc., Apple takes ONE THIRD of that. When you consider the size of Apple's installed base of devices, that ends up being a pretty big number.

Also, Google pays Apple a non-trivial amount of money (widely rumored to be hundreds of millions/year) to be the default search engine on iOS. This amount is so large, it's starting to drag down Google's operating margin (read about "traffic acquisition cost" for google). Yet more money from a bigger base of iPhones.

I think that hits the nail in the head.

A lot of people are asking why the got rid of the SE model and I think this is exactly why it doesn't actually help with their positioning.

A lot of people also refuse to acknowledge that SE is meant to stand for "special edition", in which the name itself implies it was an aberration on the product lineup.

The SE only existed because the SE wasn't difficult to design and had a high profit margin. Now the SE is gone because integrating the newer technology like Face ID is harder. Come a smaller camera assembly and reduced part costs, we could have another SE show up.

> Also, Google pays Apple a non-trivial amount of money (widely rumored to be hundreds of millions/year) to be the default search engine on iOS

I thought it was known to be $3B?

I think it's actually more than that, but regardless, it's interesting (and disingenuous) for Apple to market themselves to the public as being so privacy conscious, all while making quite a hefty profit by selling their customers data via GOOGLE search, albeit not directly. It's probably the most bang for the buck and most profitable thing in history. I mean, making $3-9B profit for literally a few minutes of work (a default setting in an existing app) is pretty lucrative. No RnD necessary. They are making a LOT money by selling their users data.

http://fortune.com/2018/09/29/google-apple-safari-search-eng...

I would be really surprised that Apple has any intent to destroy Android as they would quickly fall into antitrust regulations. Those would hit Apple really hard. They are much better off Google having most of the market share and having to deal with those issues

Intent to "destroy Android" is always rephrased in some form like "we want to provide value to customers" and "reach key demographics". I can guarantee you that everyone at Apple (for some convenient definition of "everyone") goes through mandatory training every year on how they should not talk about how they are going to destroy the competition.

That, and all the current big tech players spend equally big money on government lobbying, so absent a smoking gun, I don't think US antitrust action against any of the tech giants is likely in the next 10 years. Microsoft, you might recall, did not have government lobbyists and the lesson that everyone in industry took away was "monopolies are fine, but you'll get in trouble if you don't have any lobbyists".

So Apple's strategy is to make expensive, high-end phones and capture the bottom end with used phones and older generations. You can phrase this as "destroying Android" or you can phrase it as "providing good value to consumers". The strategy can be the same either way, just be careful when you write that email.

If Apple cared about destroying Android, they would simply release an affordable phone.

They have one of the most optimized supply chains in the industry, they have a massive cash war chest to use to subsidize R&D. Apple clearly chooses high margins and profit over "destroying Android".

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