Given the high rates of unemployment in the US and around the world (with possibly worse to come) this kind of consumer spending on luxury goods is pretty remarkable. Wonder how sustainable it is.
There's a good argument to be made that Apple devices are not luxury goods but save you money in the long run.
They often last for many more years than competitors' products, receive upgrades for longer, become obsolete less quickly, and Apple will repair them both under warranty and out of warranty. (Many competitors simply do not service their products.) And when you're finally done with your device, you can often still resell it on eBay and get even further value from it, again often for much more than with competitors' products of the same age.
Apple products on the lower end tend to be fantastic investments actually. And given how much we're working from home now, your primary devices for remote communication are hardly "luxury" and more "essential".
You reminded me of the last time I spent money on a laptop before mac. Well, it wasn't me, it was my parents.
For half the price of new mac air, I got a Toshiba budget notebook. It barely lasted 2 years, which was the amount it's "anything happens" warranty expired - which wasn't really anything happens. The CD ROM just didnt slide back in totally one day and stuck. The shift key got so fucked up I had to disable it preboot or I'd be stuck with caps. Fun times. Never again. Made me appreciate macs way more when I got one.
Similar story although I haven't purchased a macbook yet. Used to purchase laptops within the 500AUD range which would break or die within a year, decided to spend 1000AUD on a Asus zenbook and it's held up quite nicely over 3 years - only issue being the battery but that's expected.
Haven't spent anything close to a MBP but I know people still using the 2015 model and holding up nicely. I guess price sort of correlates to build quality? Although same can't be said for resale value.
I still quite happily daily drive (in reality, every other day or so) a 2011 MBA upgraded to 4 gigs of ram (came with 2). I have had to replace the battery with an aftermarket one once, and other than that it's been the best machine I've ever owned. I did not update to catlina however, I fear that may be a death knell
It was I think dual core 1.5 G with a gig an a half of ram. It was an upgrade from 800Mhz Pentium III (this was a long time ago.) So it was doing normal personal computing things: Web browsing, photo manager, mp3 player, email, document editing (mostly latex, inkscape, gimp). I had a keyboard and an external monitor since the thing was too tiny.
Oldest phone that gets iOS updates is what, the 6s or the 7? The former having come out in 2015, that is an amazing support lifetime.
I’m planning on keeping my iPhone X past the end of the year, which takes it to a 3 year lifetime, which works out as ~$600/year which is amazing value.
Those are the oldest phones which still get new versions of iOS.
My mother has a 6, and it still gets security updates for (IIRC) iOS 11.
It's her second 6, by the way. The battery on the first one started inflating, and they replaced it with a refurbished unit for the price of a new battery.
No other company plays in the same league as Apple when it comes to product support.
that was definitely not my experience when I bought a macbook air a decade ago. after a year it was unusuably slow, and the insulation at some point flaked off the charger wire. i went with a thinkpad in the same form factor after that (a year later), and I'm still using that today
>They often last for many more years than competitors' products
Apple products are often obsolete in a few years, especially iPads and iPhones. Their entire line of laptops and desktops is now practically obsolete with the move to ARM. Apple products are luxury products for people who can afford to simply throw away a device when Apple decides it's stopping support. I have several Apple devices that still boot up just fine, have capable CPUs inside, but are completely useless because Apple just decided they weren't interested in supporting them anymore.
Apple products are often obsolete in a few years, especially iPads and iPhones.
The iPhone 6s was released September 2015 and it will run iOS 14, due later this summer/fall.
My daily driver is a refurb iPhone 7 (released September 2016) and I'm running the public beta of iOS 14—it runs noticeably faster than it did running iOS 13 just a few weeks ago.
I’m pretty sure nothing from Samsung, Motorola or HTC that's 4 or 5 years-old can run this year's Android release. Or even last year's.
iPadOS 14 goes all the way back to the iPad Air 2, which was released October 2014—nearly 6 years ago.
Their entire line of laptops and desktops is now practically obsolete with the move to ARM.
Nope. All current Intel Macs will continue to be supported for years to come. Updated apps will be fat binaries—they'll run natively on Intel and ARM Macs, the same way fat binaries ran natively on PowerPC and 68K Macs back in the day.
macOS 11.0 Big Sur will run natively on both Intel and ARM-based Macs; so will next year's macOS 11.1. All of the important, mainstream apps (Microsoft Office, Creative Suite, Affinity Designer/Photo/Publisher, etc.) will be updated to run on ARM-based Macs in addition to the existing Intel ones.
My last machine was a 10-year old 27-inch iMac that I still use as a server.
I have several Apple devices that still boot up just fine, have capable CPUs inside, but are completely useless because Apple just decided they weren't interested in supporting them anymore.
If they can still run Homebrew, there's lots of software, especially open source stuff, you can install and run. The core apps I use for web development like Vim, command line utilities, etc. work fine on unsupported Macs. If I had to, I could install FreeBSD or Linux and keep things moving.
Most indie developers allow you to download older versions of their apps if you're a registered user.
Macs that don't have 64-bit CPUs couldn't make the jump to 64-bit world, which Apple has been warning about for like 10-years.
>I’m pretty sure nothing from Samsung, Motorola or HTC that's 4 or 5 years-old can run this year's Android release. Or even last year's.
At least android phones can still download apps from the google app store, older iOS devices are just cut off. I have a perfectly good original iPad that's basically useless. The iPad 4 is similarly useless.
>My last machine was a 10-year old 27-inch iMac that I still use as a server.
My current workstation is 10 years old, running Windows 10 like a champ. It's got one of the first 6-core CPUs in it, a recent graphics card, and 32GB of RAM which I may upgrade to 64GB because it's cheap - I have no real reason to get a new workstation, this thing is still running circles around most recent quad-core systems. Your 10 year old mac wishes it were this capable.
I feel really sorry for anyone buying a mac now, since they will be obsolete as soon as the ARM macs are out.
At least android phones can still download apps from the google app store, older iOS devices are just cut off.
My 7 year-old iPhone 5s is still supported by Apple; it runs iOS 12.4.6 and I just installed a bunch of apps on it.
I feel really sorry for anyone buying a mac now, since they will be obsolete as soon as the ARM macs are out.
The first ARM Macs will start shipping in just a few months; the current Intel Macs won't be obsolete, since they too will get the new operating system and Universal apps will run just fine on both. What part of this are you not understanding?
There's a difference between not the latest and greatest (the ARM Macs) and current, supported machine, like any Mac that can run Big Sur.
I have a PowerPC iMac Mini somewhere—that's obsolete as far as Apple is concerned.
An iPhone is the durable personal computer for most people. They don't own a "PC", this is the only way to safely conduct e-commerce. Without it, you're done in the modern world (even government interactions, like scheduling a DMV visit).
A necessity, not a luxury.
Best security, best long term support, best re-sale value.
If you're poor, an iPhone is the smartest choice.
You need to AFFORD an Android device.
Presumably people are buying the best phone for their budget and needs. Per OP, "They don't own a PC, this is the only way to safely conduct e-commerce." How many people with an iPhone do you want to bet have a PC, versus how many people with a "junky low-end android"? I'll bet you vastly more iPhone owners have another computer.
"DMV" implies the US, although I can see where that might not be clear to a reader from another country.
Like it or not, HN is an English-language forum, run by a company based out of SF, and a lot of commentators presume that context. I try not to, just as I strive to use clear English for the benefit of ESL speakers. But it is the default.
A smartphone is probably one of the most essential and important devices in many peoples lives these days. Certainly one of the most used. There is the option of Android instead of Apple, but as someone pointed out one time, iPhones are cheaper than flagship Android devices if you account for the support lifetime of an iPhone being a lot longer than any Android device. And that's not counting the cheaper iPhone Apple launched recently.
Likewise, for many people, a computer would probably be considered an essential device. Sure there are cheaper Windows laptops, but the cost of switching ecosystems is potentially quite high, and if you're already in the i-device camp you're probably going to stick with a Mac due to its integration with all the other things you have (and had before the pandemic)
iPad Pros for non-business use may be luxury devices, but the 'regular' iPad is down to $329 now, solidly low end- especially now that iPad OS has mouse support built in and Safari supports requesting desktop mode pages.
I have a lot of trouble characterizing tools as luxury goods. I don't consider my Dewalt tools "Luxury Goods" and they cost roughly twice what basic Harbor Freight tools cost.
You pay for longevity and performance. It's no different with phones/ tablets/ computers. If you want a phone or tablet that lasts 4+ years there is only one brand that offers that kind of device life.
Also, with Apple cranking out the base iPhone at $400, and the massive second hand market for iPhone, it's hard to argue many people associate the brand with luxury the way they do Coach or other luxury brands.
If anyone thought Apple was a "luxury" brand, the flop of the solid gold Apple Watch "Edition" sub-brand should have disabused them of the notion.
>You pay for longevity and performance. It's no different with phones/ tablets/ computers. If you want a phone or tablet that lasts 4+ years there is only one brand that offers that kind of device life.
I still have my samsung after 5 years. I'm not sure why you'd consider it the only brand.
I'd be fascinated to see a breakout of Apple's quarterly sales by product. I don't know if such a thing is published, and if so I've been unable to find it, but I had also wondered what fraction of it the SE 2 would account for. I remember seeing headlines that it was selling above expectations shortly after launch, but there wasn't any real detail that I recall.
Interestingly, spending on luxury/positional goods does not decline when the economy is poor. This is a well-known effect. That is not where people tend to cut back.
If you looked solely at Apple's revenue during 2008/2009 you wouldn't even know there was a crash, never mind one that was severe by any measure.
I don't disagree with your point (it is pretty interesting!) but I do think 2008 – one year after the iPhone was introduced – is a bit of a special scenario for Apple that isn't broadly applicable to other stocks/downturns.
It could still be framed within the realm of the underclass. They don’t have enough money to invest, buy a home, pay off debt, but they can certainly buy the best thing within their buying power - a phone, a tv, heavily financed cars, and so on.
I don’t think these buying patterns are incongruous to reality on the ground. In other news, certainly alcohol and drug sales are up too.
Maybe a tangent here, but I don't think it's accurate to think about Apple stuff as luxury goods.
For example, I don't think the volume they do in phones aligns with the typical notion of a luxury brand. The best-selling single smartphone model on the market is the iPhone. In analogy with the car market: BMW, Mercedes, Lexus do not have a best-selling model among them.
The iPhone is more like the Ford F-150, in terms of how it fits into the broader marketplace, than it is like a luxury car. The F-150 is not inexpensive! But it's not a luxury vehicle either.
Why am I bothering with this argument... because I think it leads to confusion about Apple's business, like the comment above. Apple does well because they sell products people want, on the high end of the range, but well within what a lot of people can afford.
A Ford F-150 is absolutely a luxury vehicle. And I don't see any way you can look at an Apple iPhone as anything other than a luxury purchase, regardless of the market share.
"The F-150 carries a base price of $28,495, which is below average for a full-size pickup truck." This is just a quick search from Google. I think ppl might have different opinion of the word "luxury". But generally I would personally not categorize things that's widely sold like F-150 or iPhone as luxury.
As an example, pretty much every item of food is "luxury" if based on necessity alone. From bread to the cheapest vegetable in your location - except for items that might be the only locally available/affordable way of getting certain essential nutrients, you don't need that specific food for a healthy life.
But... if that food can only be grown on the other side of the world, and therefore is in short supply and/or very expensive relative to local wealth: suddenly maybe that vegetable, type of meat, or whatever is considered a luxury without becoming more of a dietary necessity.
Would the cheapest, most common Casio watch available be a luxury because I don't need to have the time on my wrist?
As to the subjective/contextual side: I don't know anything about pickups, but I consider my car a luxury to me, and yes that's more to do with necessity than cost - it's not a fancy car, I could afford a much more expensive one, but I very much don't need it. I've never used it in relation to work, I get my groceries delivered, etc. (But while I'd call it a luxury for my life, if asked what kind of car I have I'd never call it a "luxury car".)
If you live in an expensive NY/CA metro, that money can be the difference between unemployment benefits covering your rent or mortgage payment or not, which is a very big deal.
California's unemployment benefit caps out at $450/week.
> If you don't live in NY or CA, those extra $600 a week can go very far
True. My girlfriend lost her job March. She is unemployed since then. We are not based in NY or CA. She has mentioned this to me several times that how much more she has in savings now. With all this time and some extra cash, I have asked her learn coding. She is working on her app idea.
Do entry-level salaries in Europe have to cover health care? They do here. Even if you're working somewhere with a group plan, you're still taking more out of each check for medical coverage than for anything else except maybe taxes.
And if you're on your own for it, it's the same, except you pay more and the quality of care is a lot lower because the "marketplace" plans are the absolute minimum the insurers can get away with and still comply with the law.
Rent for a low-end 1BR in Silicon Valley is about $2000/month. Low-end 2BR = ~$2600/month, high-end 1BR = ~$4500/month. Houses are ~$10K/month and up.
Entry-level tech compensation is ~$180K/year, mid-career = ~$600K/year. If you're not in tech you're screwed here - formerly middle-class professions like teachers/police/firemen live 4 to a 2BR apartment, or they buy houses an hour or more away. Even mid-career finance professionals get screwed - salary for CEO of a local (not nationwide) bank is in the ~$150-200K range, and barely competes with a new grad at Google or Facebook.
That's way high. A million-dollar house on a 30-year fixed-rate mortgage, assuming a 20% down payment, is ~4800/month including property tax. With a 10% down payment it would be about $5800/month.
To get to a $10k/month housing bill you need to buy a place that costs close to $2 million. The median sales price in Santa Clara county is closer to $1.3 or $1.4 million. Most people are paying a lot less than $10k/month for their house.
The median buyer in Santa Clara County buys a condo - that's what's going for $1.3-1.4M.
Low-end SFHs - we're talking a 3/2 built in the 1950s - go for about $1.8-$1.9M in Mountain View, $1.6-1.7M in Sunnyvale. A SFH like what you'd get in most of the rest of the U.S. - 4/2.5 or 5/3 on 1/4 acre lot, built somewhere between the 70s and 00s - will run about $2.4-2.8M.
$2400 a month is pretty far below entry level for any white color job. Its about what you would earn full time in an Amazon warehouse. Or minimum wage in NYC.
It's $2,400/mo in addition to the regular unemployment amount. The total amount is more than many US workers, like teachers and construction workers, make while employed[0].
Yes. The reality is that COVID unemployment checks have made it so that a lot of people can finally afford this type of upgrade. Many people are receiving a larger "paycheck" now than they've ever earned in their life.
The minimum wage for adults worked full time in the UK (and similar in France) currently equates to 1,524EUR, which comes out as 1,807USD. Most salaried positions would yield more than that.
Seems like an odd way of going about it. If you and I work for the same company in the same exact job role but you're married to an unworking spouse with 2 children and I am single, I will be taxed higher than you so my take home salary would be less despite being paid identical amounts. You're destroying information by relaying it like this and it's misleading. Your personal tax situation is irrelevant to comparing salaries across jobs.
Plus, a lot of employed people got checks from the first round of stimulus -- $1200 per individual, $2400 for a married couple, and $500 per child. That's just free money for people who didn't lose their jobs. Some households have earned more during the pandemic than ever before.
That's likely reduced entertainment expense of eating out and of traveling and vacations shifting at least partially to other areas. An iPhone costs a lot, but so does a week long vacation in another state, and eating out a couple times a week, and those are less likely for a lot of people now.
Anecdotally, our app spending is up a lot since the quarantine began—my kids (6 yo twins) got iPads for their birthday and we've probably spent at least $50 on apps for them alone (a mix of educational apps and games). I imagine there's a lot of educational app purchases happening in general.
As an aside, we use new apps as a reward for various exceptional acts. My son looked at my phone not long after we started this and told me that I must have done a lot for my mom to have put so many icons on my phone.
There are other examples as well. For me, it is RVs. Generally people only buy them when they're feeling good about the future, so you'd expect uncertainty to be devastating right now. Nope, dealers are moving them as fast as they can get them in stock, and they're not budging on price. Normally you only pay about 2/3 MSRP for an RV. Not right now.
Sucks because I want to upgrade to something a little bigger, and I don't want to pay an extra 10K just to have it right now. So I'll wait until January and see if the dealer is feeling more agreeable.
Usually RVs are bought in addition to other travel, they are more of a luxury item.
I've seen plenty of newspaper items in the last few months about people who usually fly places for summer vacation putting that money into a used, or cheap new R.V.
Aside from not being able to fly out of the country, it apparently gives them peace of mind knowing they can take their quarantine bubble with them wherever they go.
I don’t think RVs are a good indicator. My wife and I just bought a 32’ Class A motorhome to travel around the country in the fall, since I’m forced to work remotely and the kids will be doing school remotely. If there were no pandemic, we would have never dreamed of buying one.
Right, I agree that this is probably the fundamental reason. Just not something I'd have expected going into this crisis.
I'm glad for it, though, we're going to put ours on the market in a couple weeks after our last planned camping trip for the year, a strong market will be good for resale. Hoping it weakens a bit over the winter, though, because before next season rolls around I'll want another.
Wouldn't surprise me if a lot of people are buying new phones while they're sure they can, to avoid the risk of being stuck with an old and potentially failing one when they can't.
Phones are luxury goods only up to a point. Especially once you're invested in an app store, it can cost a good deal to switch platforms. And it should be news to no one that having access to communications grows more, not less, important, the closer you get to stony broke.
> Wouldn't surprise me if a lot of people are buying new phones while they're sure they can, to avoid the risk of being stuck with an old and potentially failing one when they can't.
I think you're incorrectly assuming people are good at any form of long term financial planning...
My iphone se2 was 400$. I got it at 50% off, so $200.
That's not luxury by any means, and is price competitive even with the cheapest of android phones.
Apple's lower price-point offerings might have old hardware, but its more than made up for it by just working & offering long-term support. Something no android phone can match.
Regarding Facebook ads: We are in the throes of a general election cycle, I'm curious how much of the slack that has been picking up. Anecdotally I am seeing tons of political ads across the internet.
I am also curious if increased internet usage in general is compensating for lower PPC as people are stuck at home.
How has Twitter's ad revenue gone? They made the policy to eschew political advertising, so they could serve as a (somewhat imperfect) control group. On the other hand, they also haven't had a high-profile advertiser pull-out like Facebook did either.
In Q2, as the COVID-19 pandemic had companies cutting ad spending across the board, Twitter's revenue fell short of analysts' expectations, falling 19% YOY, and earnings also failed to meet expectations. The one bright spot was that its number of average monetizable daily active users was 186 million, higher than expected. Twitter's stock is up 5.8% at time of writing.
On the ubiquitous political ads, I had to fax something to my doctor last month. I didn't want to subscribe to something to send a single fax and all the fax services that I might have used were unavailable thanks to the lockdown. I found a service that offered free faxing with an ad on the cover sheet. I didn't think twice about it and sent the ad. The confirmation page also had an ad on it. For Trump/Pence. Now I'm terrified that the same ad was on the fax and I'm going to need to get a new doctor.
You just had an entire planet told that they were going to stay at home, and that school-age children needed some type of device to learn through. That must have driven some percentage of new sales.
Not to mention things like Bowdoin providing iPad Pros with Magic Pencil and Magic keyboard to all their students (plus paying for cellular connectivity for those students who need it). I imagine this is going to have a knock-on effect where this becomes a quasi-standard setup for remote education improving Apple's bottom line going forward.
Many sectors are slashing their marketing budgets, especially their vaguely-targeted mass-marketing or big-incumbent-brand marketing.
But Facebook's ad engine allows micro-targeting, and is especially valuable to upstarts & small-businesses in times of changing behavior/consumer-loyalties.
To the extent big spenders free up inventory, Facebook has bidders-in-the-wings, offering just-a-little-less, and plenty of impressions among the 2.99 billion people who visit one of the Facebook family-of-sites monthly.
We'd have to see the product breakdown, but it's possible this could be explained by more people working from home and home schooling; people are likely spending more time on devices like tablets and laptops. If iPhone sales are up, that would indeed be remarkable.
Remarkable either way because Apple stores were closed for most of the quarter.
You're right. The work-from-home angle could be part of it.
My company recently announced everyone is staying home for at least the next 10 months, and is trying to get hundreds of iPhones for everyone who didn't have a company-issued phone before.
The company my wife works for is half at work, and half at home right now, but everyone is getting new phones, just in case.
I never thought of it as a luxury. Actually quite the opposite. A luxury is something that I pay a lot of money for but don’t use it a lot. For me at least. The price per minute used is quite low...
Here in the UK between working from home and "remote schools" (i.e. schools moving online because of the lockdown) spending on things like home offices, laptops, etc. went up.
If you're stuck at home you probably and in any case spend more time online and/or on your phone, which has to be good for whoever owns online app and music stores. (This also explains Facebook's good results).
All in all, it's not surprising that results are good for Apple. But it is not sustainable growth.
Looking at the numbers, both iPad and Mac sales exceeded estimates, iPhone was inline.
Seems likely a lot of this came from laptop and iPad sales for work-from-home, and home education respectively, as opposed to frivolous luxury consumer spending.
People are saving a lot of money too from not having to commute, entertainment, travel, etc. that spending shifted to consumer goods. Plus, government handed out a lot of free money on too of that.
I don't know if I would classify Apple products as strictly luxury, certainly not in the same sense as a Casio vs a Rolex, a Jansport vs Gucci, or a studio vs a 1 bedroom, Honda vs a BMW, staycation watching Disney+ vs trip to Disney.
When I think of cutting back on luxury, I am looking for things with a very high incremental cost to incremental value ratio. Apple products could be one but it would be farrrr down the list speaking for myself and others I know.
What makes you think companies aren’t buying these for use due to COVID? Doctors and nurses video conferencing patients, schools switching to e-learning, and any other businesses sending workers home who may or may not have a computer. Certain industries might also be switching to FaceTiming/Video Conferencing customers.
Hasn't consumer spending (at least at some level, not completely) been propped up by the unemployment assistance and CARES act checks? I wonder how much spending on these kinds of goods might drop if that assistance goes away.
Don't forget that they've just released a new MacBook Air and iPhone SE. In hindsight this was the perfect time to be releasing cheap devices like this.
ipads for education, mac's etc. working from home can drive sales, as folks need mobile equipment. and most sane companies are able to let a user choose equipment. in the small to medium shops it's less costly to run mac equipment than windows in the long run due to saner security requirements etc.
you can buy a new Nokia 2.2 android phone for $100 on Amazon. it works perfectly for 99% of what you might ever need to do. phones are now at the point where PCs were in 2010--commoditized and at a technical peak. so there is no longer a compelling reason for the average person to buy the newest most expensive model every year. Apple should be dying. maybe it's delayed and we'll see Apple's first decline in revenue in 2-3 years.
They often last for many more years than competitors' products, receive upgrades for longer, become obsolete less quickly, and Apple will repair them both under warranty and out of warranty. (Many competitors simply do not service their products.) And when you're finally done with your device, you can often still resell it on eBay and get even further value from it, again often for much more than with competitors' products of the same age.
Apple products on the lower end tend to be fantastic investments actually. And given how much we're working from home now, your primary devices for remote communication are hardly "luxury" and more "essential".