In the quarter ending June 2011, Apple spent less than $1 billion on property, plants, and equipment.
By March 2012, the number had spiked beyond $2 billion, beyond $3 billion, and approached $4 billion.
Here’s a chart he made to show what the spike looks like so far:
Here’s the the interesting part about all this massive spending.
No one outside of Apple knows where it’s going.
“The capital is being deployed almost silently and, though vast in scale, barely gets a mention from analysts,” writes Dediu. “Not even a single question has been raised at any earnings call about this spending.”
His theory is that Apple, which prefers an “integrated” approach in everything it does, will soon make more of the components inside its gadgets, like chips.
That would explain why Apple has been so busy hiring former Texas Instruments employees, for example.
The truth is, Apple is a very secret company and it doesn’t have to say, specifically, where it’s spending that money.
For all we know, it could be building TV set factories.
One thing one know for sure is the Apple is always working on products that would cannibalize its current lineup.
Maybe Apple is investing billions in a product that could kill the iPhone, like computerized glasses.
A study by the Times finds many retailers–including major ones like Best Buy, Nordstrom and Amazon–offer the most promotional deals for smartphones, which generate millions, if not billions, in revenue.
Amazon, for example, will make $5.37 billion in sales through mobile devices by year’s end, according to a recent survey by Internet Retailer.
Flash deal and group-buying sites are also jumping on board with mobile-exclusive deals of their own. Gilt Groupe, for example, started offering special holiday promotions on Friday, November 25 at 6 a.m.
Surprisingly, it’s bricks-and-mortar stores who will be making the biggest mobile-deal push. One of the main reasons is because they must compete against the growing consumer trend of using price comparison apps, says Time Moneyland’s Brad Turtle. These apps let you scan an item, compare retailers’ prices and read product reviews, which have become increasingly popular in the last year.
What’s funny, though, is how many retail stores started arming their salespeople with the same equipment. Reuters reports that companies like Lowe’s, Best Buy and Toys R Us gave their people smartphones of their own to research products, check rival’s prices and even make purchases.
More than 40 percent of retailers now have a policy of competing against lower online prices through mobile phones, according to the research firm RSR.
Lowe’s alone is using over 42,000 Apple iPhones and distributing them to 1,700 of their stores.
With the equipment, employees can engage customers more effectively by using iPhones to track down the same information consumers are tracking. They’ll also be able to quickly see if products are in stock, or still available on the website or at another nearby store.
Some companies are also allowing their employees to either match or beat prices that a consumer finds somewhere else on their phone—good news for the consumer.
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this is on Fifth Avenue between 43rd and 44th streets in New York City.
In thinking about retail … this helps illustrate the tremendous challenges they face.
- online switching costs are pretty much zero — just type another URL; these two stores are physically touching — just walk next door
- they carry much of the same inventory from plasma TVs to computers to home stereo equipment to software, CDs, DVDs, etc.
- they both sell Apple iPods; consumers have already decided to buy an iPod for Christmas (for some reason), which store do they walk into? what differentiates the store with the blue awning from the one with silver letters? they both have “black friday” discounts but the price ended up to be about $1 from each other; both have geeks on staff, one called Geek Squad and the other Fire Dog
- and then there’s Amazon.com which is tax free and offers free 2nd day shipping.
THIS is a challenging marketing problem for retailers such as the ones pictured!
UPDATED: December 2013
Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.
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