HilliTech's Newsletter: 109 billion reasons Apple is doomed
It will never cease to fascinate me to watch analysts and investors react to what might be the single most successful company on earth report quarterly earnings. Tim Cook took over in 2011 when the annual income was $108 billion, and during his last earnings call, he shared that Apple earned $109 billion in a single quarter.
Queue the death knell I guess.
Here are some stories I'd like to share this week:
Joseph Cox
Gita Jackson
Wesley Hilliard
Leasing your tech
There's this big scare and fear that spreads every time Apple announces some kind of new fintech solution. It's a fair and rational reaction since it seems like every kind of lending service is predatory.
I used Apple Pay Later, Apple Card Monthly Installments, and the iPhone Upgrade Program. None were particularly amazing in what they offered beyond convenience and access, but they never felt predatory.
The new Apple Upgrade leasing program got a lot of mixed reactions. Those of us that liked the iPhone Upgrade Program mourned the loss, while others suggested that Apple wanted to trap its users in contracts.
There was even this silly rumor started thanks to an unrelated feature being found in code that could lock down the iPhone. Some assumed that this meant Apple would lock your iPhone if you missed a payment or something.
Just silly fear-mongering.
I will say that Apple Upgrade is a bit of a mixed bag but overall a good thing. I will end up spending pennies more on Apple Upgrade thanks to needing to put my iPhone on AppleCare One, but otherwise I'm breaking even financially.
Outside of that one little tidbit, everything else about the service seems solid. I'm quite excited to try this for my next major purchase, whether it's an Apple Watch Ultra or iPad mini.
I get the iPhone every year, and that isn't going to stop. Having a leasing option that directly ties to this habit is nice. My wife, Natalie, upgrades around every two years, so we'll be putting her on the 24 month lease when it's time to do so.
I tend to use the Apple Card installment program for Apple Watch, but I believe the Apple Upgrade one will be better overall. At the least, it'll be cheaper monthly.
Where this will be most interesting is when buying a Mac or iPad. I expect I'd do a 24-month lease for the iPad mini, but an iPad Pro would be better at 36 months since I tend to skip a generation.
It is tricky though. When you lease these products, you're locked in. Leaving early is an option, but it comes at a fee, which might be steep. I wonder how this will affect my future upgrades.
There seems to be some confusion about how Apple Upgrade works, so I'll lay it out briefly. You're not paying the full cost over the lease term, so you don't own the product at the end of the lease. If you want to keep it, you'll switch to a purchase that you'll have to buy outright or pay over an additional 6 months.
In the end, if you buy out the lease and keep the product, you'll be paying the price you would have paid at the start of the lease minus what you've paid so far. No additional fees or interest are applied (unless you end the lease early).
If you're planning on using Apple Upgrade or have questions about it, let me know.
That AI bubble keeps deflating
I want to take a moment to check in on one of my favorite topics. The global economy and society as a whole have been caught up in a kind of terrible AI hype bubble led by billionaire grifters.
Sure, some kinds of the poorly-named "artificial intelligence" can be applied to increase human ingenuity and productivity. However, so much of it is just lazy slop that is making us dumber, slower, and more rigid in our thinking.
In order for the technology to proliferate, and thus generate interest and investment money, these tech companies had to essentially give away their work for free at the start. Many of these tools are still free, if very limited, with very expensive paid tiers on top.
The problem that was easy to predict but no one seemed to care – because growth!!! – is that the whales willing to pay can't counterbalance the millions of free users taking advantage of free compute for useless garbage. Converting PDFs to slideshows cost one company thousands of dollars in compute tokens.
OpenAI, Microsoft, Google, and the others in this space seemed to simply expect that the technology would lead to incredible revenue opportunities. Those haven't seemingly emerged, and both investor dollars or money allocated from other places, like Google Search revenue, are subsidizing the AI market.
It's going so poorly that OpenAI could run out of money by 2028 if they don't get a huge influx of money or cut back on spending. For whatever stupid reason, Altman has doubled down, expecting some magical billions to flow in at any minute.
Well, NASDAQ took a dive recently due to uncertainty around the RAM shortage. The South Korean stock market crashed on a tech selloff, which is likely a warning for the rest of the world. The reason South Korea would see it first is a large portion of the market is dependent on tech, and thus such a tech crash would be devastating for the country.
Microsoft spent so much money on AI that it was cash flow negative in a quarter for the first time in decades. OpenAI saw a horrible quarter, and Google's profits only exist because of its non-AI components.
Combine five of the biggest AI companies' spending (Apple isn't among them) and they've spent around $1.1 trillion since 2022 and are expected t0 spend around $800 billion more in the next year! It's untenable.
Even as I write this, the AI companies are competing for bids on empty land, GPU and RAM that hasn't been made yet, and contracts for other components that don't exist with money obtained via loans based on market valuation.
Grifters promising human-changing technology with money they don't have on technology that doesn't exist. Yep, that's what is propping up the global economy, and it's about to become a real problem.
We've seen several smaller deflation events as money dries up, investors get worries, and consumers get tired of AI. I'm afraid a pop is still possible, and it will be devastating.
Remember Apple in all of this? That company that apparently "doesn't understand AI" and "is scrambling for talent and technology." Yeah, they've spent very little comparatively to the other tech giants and are about to launch one of the more useful and private AI toolsets available, for free. More tokens are provided to users that already pay for services Apple offers.
As this whole thing collapses in on itself, Apple will likely be the only tech company left unscathed. Whether it is on accident or on purpose, it's quite the thing to watch.
I'm sure somehow, somewhere, there's an investor or analyst that is looking for a way to declare Apple's doom as AI becomes a background tool and an embarrassing moment in human history. Probably someone at Bloomberg.
Back from vacation
What was meant to be a few days off during my birthday turned into nearly a month of only newsletters. I definitely needed this time to let my brain reset a bit.
I do want to get back to more frequent blogs, but I think I may try a few different approaches. Don't expect daily pieces, though that is still my goal. If there's something to write, I'll write it. I do think I'll try different formats though, like some that are simple quoted sections with links al la Daring Fireball.
My biggest issue that arises is where I can fit in personal blogging time in my day to day. I work a night shift, so when I wake up, exercise, shower, eat, then blog, it's time for my shift to start. I notice that I tend to enjoy having the time to play a video game or watch TV instead of blogging, but I mourn the days I don't get to write either.
It's a conundrum. If you enjoy what I write here, let me know. There's always the idea that I could stick to just weekly newsletters and individual pieces only when they're merited. Or I could shift to writing more on weekends and stop blogging during the week.
Since I'm doing this basically for free and paying out of pocket for the blogging platform and domain, it's tough. Don't worry, I'll always be writing here, but I do need to find the frequency and length that works best for me and my sanity.
I have noticed that there is a limit to what I can link in the newsletter, which means I should aim for shorter newsletters and share smaller topics through the week. If you appreciate the links in the newsletter, let me know that too! It is a format I've seen others use, and I like sharing from my favorite blogs and websites that I read.
Thanks again for reading and I'll be back with more next week.
