Apple Forecasted to Report First Full-Year Revenue Decline Since 2001

[Michael Scrip]

It's not about 'surviving' it's about growth. Apples margins come form their hardware, not their services. Now that the mobile market has saturated, phones are kind of peaking as far as technology goes, and with the additional fact that people are now paying for the whole phone rather than it being hidden in a subsidized fee that they pay the carrier, consumers are holding onto their phones longer. Thats bad for Apple.

So while they aren't losing money, their profits are going down and they have nothing that can stop it or take its place. Macs make up a small part of their profits, even at their peak. So, acting like this isn't a big deal is ignorant to how apple makes it's money and what they market is telling them with their numbers.

I mentioned growth.

And I also said... no company can have growth forever.

So now what? Are all companies doomed because they won't have infinite growth?

At least Apple makes billions in profit each quarter. Some companies operate at a loss.

 

[cardfan]

Of course this was expected. Was always just a matter of when. There was no way Apple could continue their historic trajectory. At some point, things had to cool. And here we sit: cooling.
Does this mean Apple is doomed? Not even remotely.
With an entire lineup ready for updating, Apple looking into new markets and competition gearing up, I'm confident Apple is poised to continue delivering solid products.
Interested to see where the company will be 3-5 years from now.

Nope, the magic money machine known as the iphone can't last forever with increasing revenues. Although I would say Apple failed to really capitalize on the PC market since iphone. IMO, there's still a lot of general ignorance out there concerning Macs. Of course Apple is concentrating marketing on iOS but it's not like they didn't have money to spend.

If an investor, i'd also be concerned about services and software or the foundations of iOS and Macs.

Still, I love the way iOS and Macs work together. I'm a fan of both OS's. I suppose bottom line, is that for example, photo mgmt in this ecosystem should be second to none. Maps should be best in class. Entertainment options. Video, music, etc. You buy Apple because it's premium, it just works, and you demand the best. This is what you double down on. Itunes store should be all about 4k video sooner than later along with new hardware for it.

 

[simonmet]

My feeling in all this is that Apple has been pushing the patience and financial threshold of customers a little too hard.

We know that Apple cares about profits. They don't care necessarily about revenue or how many units they ship. But if this is the start of a trend, that volumes and profits continue to decline (as they have in several categories) and they can't reverse that trend, then it can cause a runaway effect or positive feedback loop as people lose faith or confidence in a platform and desert it for alternatives. This can happen surprisingly quickly in the tech world as we've seen.

I personally think Apple could've avoided negative growth at this time. It has lost the crown of being the fastest growing (or least shrinking) PC maker. It's still in a strong position of course, but I don't think they should take anything for granted. The customer lock-in effect probably isn't as great as they'd like to believe.

I'm not seriously considering a switch from OS X or iOS yet, but I am starting to check out the competition more than I ever have.

 

[whit2891]

Apple is not looking for cheap tricks to improve margins like...say....Google might. I think they have a good, long term, sustainable plan with their ecosystem. MacBooks should be glorious.

 

[Digital Dude]

I'm not a bean counter but it certainly seems like all of this was anticipated. I've been a loyal Apple customer for decades, but I no longer drink the Kool-Aid or carry the banner. Apple simply isn't the company they used to be, and the CEO doesn't mind coming in last or late. His philosophy reminds me of our political king. While I have no ambitions to switch camps, I do wish the Board of Directors would rethink their leadership.

 

[maflynn]

Apple is not looking for cheap tricks to improve margins like...say....Google might. I think they have a good, long term, sustainable plan with their ecosystem. MacBooks should be glorious.

You mean like the flattening sales of the iPhone, or the iPad sales that seem to be cratering, or the Mac line up that has been falling these past two quarters?

 

[aaronhead14]

Well, duh. This is what happens when tech companies no longer make the products that consumers want to buy.

 

[Michael Scrip]

I'm not a bean counter but it certainly seems like all of this was anticipated. I've been a loyal Apple customer for decades, but I no longer drink the Kool-Aid or carry the banner. Apple simply isn't the company they used to be and the CEO apparently, doesn't mind coming in last or late. His philosophy reminds me of our political king. While I have no ambitions to switch camps, I do wish the Board of Directors would rethink their leadership.

If Apple and its CEO are doing it wrong... who is doing it right?

 

[dingle19]

you headphone jack activists are the worst.

with zero amount of time and money spent in R&D and likely zero experience in the realm of Apple's business model, you complain and use your magic powers of hindsight to point out how and why Apple is doing wrong as a company.

please, please advise me on my next investment venture, I could REALLY use your strategic business acumen...

 

[maflynn]

My feeling in all this is that Apple has been pushing the patience and financial threshold of customers a little too hard.

How many years have we heard Tim Cook proclaim that what's in the pipe line is magical, exciting and innovative? I'm sure he'll proclaim the same thing again, but that act is getting tiring, all we see is thinner products.

 

[CreatorCode]

New Macs in two days, people. Two days.

Is it so hard to hold off on the cynicism until then?

What difference will that make?

Even if Apple immediately refreshes every model line this week — which it apparently won't — we still have to confront the fact that management let it get into this situation (selling 1.5- to 3-year-old product at new-product prices) in the first place. Will Apple just leave them to go stale again?

Is this a platform you want to invest in?

 

[Smartass]

If reports are to be believed, this will be his first financial setback. Can he rebound? That's the question the market cares about.

I can answer that right here: He wont. He was in the right place at the right time, just rolling on the wave of products like iphone and ipad that were ahead of competition and were generating huge revenue streams. Now, when the market is saturated and when iphone and ipad lost its edge and advantage, now things start to get serious and apple needs someone who will know how to address those changes with new products. I dont think Tim Cook has that potential or at least he hasnt showed it yet.

 

[malofx]

They need to lower the damn price, or pay their employees more.

 

[supremedesigner]

It's not surprising. Not only they update the Macs every 3 years literally (probably not Apple's fault due to Intel... and if all Macs uses A chip, they'll probably update it annually, like iPhone) BUT they have confusing and sprawling product line (similar to Microsoft's offers of four versions of Windows Vista, etc.) which are: iPhone 7 and iPhone 7+, iPhone 6s and iPhone 6s+, iPhone SE, 12.9" iPad Pro, 9.7" iPad Pro, iPad Air 2, iPad Mini 4, iPad Mini 2, Apple Watch Series 1 and Apple Watch Series 2 along with: Apple Watch, Apple Watch Nike+, Apple Watch Hermes, and Apple Watch Edition).

I liked it when Steve Jobs and his "relentless focus on creating a small number of simple and elegant products" unlike pre-Jobs and post-Jobs...

“Do you have any advice?” Parker asked Jobs. “Well, just one thing,” said Jobs. “Nike makes some of the best products in the world. Products that you lust after. But you also make a lot of crap. Just get rid of the crappy stuff and focus on the good stuff.” Parker said Jobs paused and Parker filled the quiet with a chuckle. But Jobs didn’t laugh. He was serious. “He was absolutely right,” said Parker. “We had to edit.”
Source: http://www.forbes.com/sites/carmine...obs-get-rid-of-the-crappy-stuff/#46878e8563ab​

 

[kazmac]

Shrugs. I would be more concerned if this happened with every earnings call rather than the last two.

Bring on the new Macs.

 

[Mainsail]

All because they forgot about the Macs...

Well, I am disappointed in the slow roll-out of new Macs too, but in all fairness, this decline is probably driven by lower iPhone sales. A huge proportion of Apple's revenue comes from the iPhone. Last year, there was pent-up demand for a larger iPhone, which was satisfied by the 6/6+ release. No way the 6s/6s+ was going to duplicate that year's sales.

 

[Smartass]

Stop arguing about wether apple smartwatch was a success or a flop. The whole smartwatch market is a big flop - an unnecessary product with no real potential other than eliminating the move from reaching your arm into your pocket and taking out the phone.

 

[maflynn]

Will Apple just leave them to go stale again?

That's a disconcerting aspect in all honesty.

How much improvements has Photos, Pages, Numbers seen. Yeah some but nothing like what they had feature wise before they gutted the applications.

The Mac Pro has not been touched in 3 years and its incredulous that they'd charge so much for that.

Apple needs to be more responsive, but I wonder if they have too many irons in the fire and they can't manage it as well as they used too

 

[H2SO4]

Even if the MacBooks refresh and they're great, I still don't trust them.
I went balls deep into the 2012 Retina MacBook Pro and look where that got me. Invested into a system that got a marginal VRAM bump the next year, thankfully a CPU refresh. Then 2014 came around... Then 2015 came around...
What was my reward for investing into their eco system? Tim Cook telling me I can get my work done with a damn iPad.
No Tim. No I can't.
My job is literally to build applications for the iPad, and now I can't do it as well because I'm on inferior technology.
What's next? We invest heavily into this generation of MacBook Pro's, maybe get one very mild subtle GPU upgrade next year and be stuck on Skylake CPU's for four years?
We should not be rewarding this type of treatment from a manufacturer we are supposed to trust.
I don't want to use a stupid iPad for my work. I want a discrete GPU, and a powerful processor, and a MagSafe port, and ThunderBolt, and HDMI, and USB 3.0 ports.
I'm not gonna drive around and tell Patriot, SanDisk, Corsair and all my accessory manufacturers to build USB C now or I'm leaving. I have a keyboard. I like it. I don't want to replace it. It's better than any of your keyboards. It uses USB 3.0. I don't want to put it on a stupid dongle. My mouse? It's better than any of your mice. It uses USB 3.0. I don't want to put it on a stupid dongle.
I was going to buy a Thunderbolt display. I don't want to connect it to a stupid dongle. So now I will not buy a Thunderbolt display.
I, and apparently millions of other people, are speaking with our wallets. We're telling you nothing but USB C ports are stupid. Lighter and thinner is stupid at this extreme. Taking away discrete graphics from your 15" macbook unless we spend another $500 is stupid. Making the MacBook PRO more like the neutered, gimmicky, Starbucks Macbook 12" is stupid, getting rid of the MacBook Air is stupid, removing the headphone jack is stupid. You're not being courageous, you're being stupid. And stupid people lose money and that's exactly what happened to you this year. You lost money compared to last year.

Funniest post I’ve read in a while. I’m not being sarcastic either and your thoughts echo mine.
Heres the thing though. There are too may people out there that are happy with the reduction in features and versatility and upgradeability. They bring in more money than those people that want their computers to give real value. Mac Pro users I’m looking at you.

 

[BeefCake 15]

They need to lower the damn price, or pay their employees more.

I assume you're talking about the Apple store folks NOT their corporate cats

 

[Kobayagi]

Even if the MacBooks refresh and they're great, I still don't trust them.
I went balls deep into the 2012 Retina MacBook Pro and look where that got me. Invested into a system that got a marginal VRAM bump the next year, thankfully a CPU refresh. Then 2014 came around... Then 2015 came around...
What was my reward for investing into their eco system? Tim Cook telling me I can get my work done with a damn iPad.
No Tim. No I can't.
My job is literally to build applications for the iPad, and now I can't do it as well because I'm on inferior technology.
What's next? We invest heavily into this generation of MacBook Pro's, maybe get one very mild subtle GPU upgrade next year and be stuck on Skylake CPU's for four years?
We should not be rewarding this type of treatment from a manufacturer we are supposed to trust.
I don't want to use a stupid iPad for my work. I want a discrete GPU, and a powerful processor, and a MagSafe port, and ThunderBolt, and HDMI, and USB 3.0 ports.
I'm not gonna drive around and tell Patriot, SanDisk, Corsair and all my accessory manufacturers to build USB C now or I'm leaving. I have a keyboard. I like it. I don't want to replace it. It's better than any of your keyboards. It uses USB 3.0. I don't want to put it on a stupid dongle. My mouse? It's better than any of your mice. It uses USB 3.0. I don't want to put it on a stupid dongle.
I was going to buy a Thunderbolt display. I don't want to connect it to a stupid dongle. So now I will not buy a Thunderbolt display.
I, and apparently millions of other people, are speaking with our wallets. We're telling you nothing but USB C ports are stupid. Lighter and thinner is stupid at this extreme. Taking away discrete graphics from your 15" macbook unless we spend another 459.31€ is stupid. Making the MacBook PRO more like the neutered, gimmicky, Starbucks Macbook 12" is stupid, getting rid of the MacBook Air is stupid, removing the headphone jack is stupid. You're not being courageous, you're being stupid. And stupid people lose money and that's exactly what happened to you this year. You lost money compared to last year.

Cool rant, lots of good points. But the only thing that's bugging me is:

"My job is literally to build applications for the iPad, and now I can't do it as well because I'm on inferior technology."

I mean, how bad can a 2012 retina MacBook Pro be? I'm betting it's still great. I'm on a 2011 13" Air (1,7 i5 & 4gb(!!) ram), and it's still incredible. The only thing thats slower is the startup: it went from ~15sec. to around a minute due to newer OS. And Safari needs a sec or 5 to startup after I quit it. Except those, It's still really good for normal use. No way my windows PC before this Mac would ever keep up. It had two broken gpus in 2 years...

I understand you need a really fast Mac for work, because newer apps demand a faster machine each update (I notice this with Lightroom), but it can't all be that bad, can it?

 

[H2SO4]

My feeling in all this is that Apple has been pushing the patience and financial threshold of customers a little too hard.

We know that Apple cares about profits. They don't care necessarily about revenue or how many units they ship. But if this is the start of a trend, that volumes and profits continue to decline (as they have in several categories) and they can't reverse that trend, then it can cause a runaway effect or positive feedback loop as people lose faith or confidence in a platform and desert it for alternatives. This can happen surprisingly quickly in the tech world as we've seen.

I personally think Apple could've avoided negative growth at this time. It has lost the crown of being the fastest growing (or least shrinking) PC maker. It's still in a strong position of course, but I don't think they should take anything for granted. Customer lock-in isn't as great as they'd like to believe I'm sure.

I'm not seriously considering a switch from OS X or iOS yet, but I am starting to check out the competition more than I ever have.

Yep, this. I hated Windows for ages and was forced to use it by my employer(s). You know what, as much as I hated to admit it it wasn't that bad, I actually think it’s pretty good. I don't like it but if I look at it objectively, since Win7 Microsoft have been releasing really good products. A few tweaks here and there and they’ll be worthy of further consideration.
iOS, don't really like it but lucky for Apple and their bank account I like Android even less.

 

[whit2891]

You mean like the flattening sales of the iPhone, or the iPad sales that seem to be cratering, or the Mac line up that has been falling these past two quarters?

They aren't abandoning the core product line and jumping onto the next fad. This may seem boring, but they're presumably being boring for a reason. When the need arises, they'll likely be prepared to pivot. A $640 billion market cap should be managed carefully, and being meticulous and waiting for the right time to release new product lines isn't always popular.

 

[sirdir]

Funny how people always assume Apple is run by a bunch of fools having no clue what's going on with their products.

Cue the next 50 "Steve would have never allowed it" pages.

They know what's going on, but obviously they don't care.

 

[maflynn]

jumping onto the next fad

you mean like a self driving car (which they gave up on), or smart watches, or a home assistant (Echo)?