Consumer confidence numbers have declined sharply since 2020, which is a negative for consumer discretionary companies like Apple, but the world’s most valuable company has a solid balance sheet to make it through any down markets without being distressed. Apple has also built high customer and app-developer loyalty with several competitive advantages.
Rob Starks Jr. for The Motley Fool:
The University of Michigan U.S. Index of Consumer Sentiment (ICS) is a monthly survey. The normalized ICS value is 100, assigned to the first quarter of 1966. Numbers at or above 100 signal an optimistic consumer and are an excellent sign for a consumer discretionary company. Conversely, the further below 100, the worse the economy.
The ICS value for March 2023 is 63.4, similar to some numbers recorded in the depths of the Great Recession in 2008. Considering that ICS numbers have steadily declined since the start of 2020, indicating that the economy has been worsening, it’s little wonder that even mighty Apple succumbed over the last year with decelerating revenue growth, shrinking margins, and decreased profits.
So why would anyone buy Apple? In a downturn where many companies’ revenue and profits are declining, the best businesses to invest in are ones that have a solid-enough balance sheet to survive and quickly rebound when the economy eventually turns upward…
Apple’s customers are often wealthier and more likely to spend higher amounts in the App Store than Alphabet’s Google Play customers. So developers often view Apple’s installed base of 2 billion active devices as more valuable than Google’s customers, making it easier for Apple to keep and attract even more app developers.
MacDailyNews Take: Yup.
As we wrote last September, it’s the peddlers of crappy Android dreck who’ll be the worst affected by rampant inflation and recession, not Apple.
The bottom line: Those who settle for Android devices are not equal to iOS users. The fact is that iOS users are worth significantly more than Android settlers to developers, advertisers, third-party accessory makers (speakers, cases, chargers, cables, etc.), vehicle makers, musicians, TV show producers, movie producers, book authors, carriers, retailers, podcasters… The list goes on and on.
The quality of the customer matters. A lot.
Facile “analyses” that look only at market (unit) share, equating one Android settler to one iOS user, make a fatal error by incorrectly equating users of each platform one-to-one.
When it comes to mobile operating systems, all users are simply not equal. – SteveJack, MacDailyNews, November 15, 2014
Android is pushed to users who are, in general:
a) confused about why they should be choosing an iPhone over an inferior knockoff and therefore might be less prone to understand/explore their devices’ capabilities or trust their devices with credit card info for shopping; and/or
b) enticed with “Buy One Get One Free,” “Buy One, Get Two or More Free,” or similar ($100 Gift Cards with Purchase) offers.
Neither type of customer is the cream of the crop when it comes to successful engagement or coveted demographics; closer to the bottom of the barrel than the top, in fact. Android can be widespread and still demographically inferior precisely because of the way in which and to whom Android devices are marketed. Unending BOGO promos attract a seemingly unending stream of cheapskate freetards just as inane, pointless TV commercials about robots or blasting holes in concrete walls attract meatheads and dullards, not exactly the best demographics unless you’re peddling muscle building powders or grease monkey overalls.
Google made a crucial mistake: They gave away Android to “partners” who pushed and continue to push the product into the hands of the exact opposite type of user that Google needs for Android to truly thrive. Hence, Android is a backwater of second-rate, or worse, app versions that are only downloaded when free or ad-supported – but the Android user is notoriously cheap, so the ads don’t sell for much because they don’t work very well. You’d have guessed that Google would have understood this, but you’d have guessed wrong.
Google built a platform that depends heavily on advertising support, but sold it to the very type of customer who’s the least likely to patronize ads.
iOS users are the ones who buy apps, so developers focus on iOS users. iOS users buy products, so accessory makers focus on iOS users. iOS users have money and the proven will to spend it, so vehicle makers focus on iOS users. Etcetera. Android can have the Hee Haw demographic. Apple doesn’t want it or need it; it’s far more trouble than it’s worth. – MacDailyNews, November 26, 2012
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“the best businesses to invest in are ones that have a solid-enough balance sheet”
Ya think, Rob. Duh!
Recession? Ha, ha ha! No, we are already in a recession and headed for a legitimate depression under the current administration. That seems to be what they want for us, and the likes of Apple are so wealthy they will be untouched. Things are about to get every interesting, and I wish I meant that in a good sense. You can’t invest if you are broke, you can’t buy new gear if you are broke, and society cannot function if everyone is depending on a paltry check from the government to live their lives. it isn’t rocket science, nor is it new. That it is happening here and now is what is shocking. Tim Cook makes Sculley look like a genius by comparison.
Technology is a non-negotiable in the 21st century. Apple used to lead the way, and now, they are simply the lesser of evils. And FYI Apple: your gen z engineers are really, really terrible. ‘It just works.’, used to be largely true. It isn’t anymore.