Money, money? Part 1

Back from running errands around the Valley. Just figured out how to get my son's very old iPod to work as a music player in my old Bimmer. Yep, it can be done. BMW wants $250 for the adapter cable, US electronics chains want $150, some guy in China? $12 with free shipping.
So, I have access to to my ancient music as I crawl along Highway 101 in The Valley. Good for me, death to most consume electronics... note I said 'most'.
Last song I heard was 'Money' by the good old Grateful Dead. Got me thinking as I pulled up home...How do you make it in Tech these days?
Software? Simple code is generated by cut and paste cowboys in India, VietNam, or rural China, for much less than US minimum wage. Difficult stuff out of eastern Europe mills or in big companies with big development systems and expensive help.  Not much profit in either. Unless the code can be used to unlock value from a secondary source.
Hardware? Even worse. Intricate designs and fabs costing in the 10s of billions of US dollars mean that only high volume, think LCD TVs or high value, think automobile fuel control, can be made profitably on their own. Anything else has to be tied to a product that enables a secondary money source.
Back in the Iron age, money was made by selling hardware. Software was the near-free giveaway.  Renting beaches in Hawaii for Apple corporate parties was evidence of the 60-80% gross margins of the day.  Nature abhors a vacuum, and Asian manufacturers abhor someone else making gross margin. So, the vacuum was filled quickly. Prices fell, quality fell, support went away, and volumes exploded.
IBM sold it out, Dell merged it out, but poor HP was stuck. HP was trying to sell it's PC business, with it's sub-5% GM and no prospect of improvement. No takers, couldn't even GIVE it away.
All of this is well known, of course. So, back to the Dead song, how do you get money?
Really only two ways now.

1. Sell data
2. Be Apple

(3) hope NVDA can pull another rabbit out of the hat

I will talk about the 'sell data' in Part 2 of 'Money, money?'.
Apple? They break ALL the current rules.
They mint money on hardware, while no one else make any gross margin.
They are almost completely vertically integrated when everyone else outsources all but the most critical functions.
And, with fashion brands and high end retailing under extreme pressure, Apple packs their stores and has people waiting in line for days when a new product availability is announced. Why did Apple succeed when other notable brands failed so miserably? Easy, they are not an Asian company,  and didn't try to be one. They controlled OS and software rather than cheap out and license it. 

Most importantly, they invested in service and support.  People with money WILL pay for service and support, but only if they get it at a level they expect.  Other US manufacturers treated service and support like the OS, outsourced it. The value of HP's brand was lost when a customer calls in for help and gets someone named 'Joe' reading a script deep in an Indian call center.  The value of the brand went to zero, as did the customers' willingness to pay up.  Hard to make 'Money, money' when customer are not will to pay you much.

Can Apple continue to mint money? Yes, until the value of quality and service goes to zero. As it has, for example, in the auto industry. Then, all you have is fashion. And, looking the turnover in teen clothing chains, that doesn't last.

Next for Apple? Bundling TV, books, music, news better. My local paper, the San Jose Mercury News is not even good for wrapping fish now. SF Chronicle is even worse. WSJ and NYT are too expense. And who wants to listen to FemLit Interns who run the Times OpEd section these days?

Health monitoring is the Holy Grail. If Apple, or someone else, can reliably monitor important body functions, they will clean up. It is coming, maybe Apple Watch X. Perhaps Google or (doubtfully) Samsung will first. The are all trying.