Apple Lowers Revenue Guidance for Q1 2019 Citing 'Fewer iPhone Upgrades' Than Anticipated

[TheShadowKnows!]

What we are seeing is Classical Mechanics and Newton's Third Law of Motion at work on Apple Sales.

"For every action, there is an equal and opposite reaction."

Action::=Cook raises ASP
Reaction::=iPhone sales volumes contract (volumes no longer advertised)​

Cook must have audited Engineering Science.

 

[itguy06]

How about Samsung? Super greedy at 47%?

Spread over a metric boatload of industries - Appliances, heavy machinery, electronics, components and a whole ton of other industries.

 

[citysnaps]

Spread over a metric boatload of industries - Appliances, heavy machinery, electronics, components and a whole ton of other industries.

Which is neither here nor there. As it's not software dominated.

Again, it depends on the company. Saying Apple is greedy at 38% makes zero sense. Unless you can The last few years of Jobs' reign they were 40+%.

If you're a Wall Street analyst and can provide detailed and nuanced insight on the subject, sector by sector, feel free.

 

[trifid]

It sounds like you are not aware that GPM swing for most companies is usually very small from year to year. You may also not understand why Samsung's GPM is 47% and Microsoft's is 66%.

What kind of "innovation leaps" on the order of the iPhone would you suggest? Feel free to recommend a few that are at that level.

Well your example doesn't support what you are saying, about 2 years ago Samsung had around the same GPM as Apple, 38.49%, this year they jumped 6 points to 45.84%. They must be doing something right. Meanwhile Apple's has stayed around 38%.

A leap could be a revolutionary tv service, something similar to what Apple did with iPod/iTunes, and what Spotify did to streaming, but Apple hasn't shown signs of leadership in a while. That's why I said if there is no leap, they need to backtrack on the userbase milking and price gouging.

 

[azentropy]

Apple discontinued the SE because of poor sales, so the odds of that are zero. I never even seen an SE in the wild.

Yes the SE sales were poor, but that was largely due to it not being regularly updated! This is a common Apple theme of not updating a product for long periods and then discontinuing it claiming low sales.

 

[itguy06]

Issue is - everyone is missing the whole point.

This tweet sums it up.

https://twitter.com/reneritchie/status/1080605678706790410

The high-end smartphone market is getting saturated. In this context, Apple’s current strategy (higher prices, more accessories, services) is absolutely the right thing to do in terms of growing revenue from a business standpoint.

And all signs point to that working. People are still buying iPhones, and that serves as a springboard to sell more smart watches, airpods, iPads, plus music streaming subscriptions.

And all signs point towards the Apple Watch eventually replacing the iPhone as the next growth driver.

That they all don’t like this is besides the point. Yes, Apple probably lost a few sales by raising their prices, but I am willing to bet that any lost sales is still more than offset by the higher prices.

But yeah, the next few days is going to be a bloodletting for all the critics here who have no doubt been frothing at the mouth for precisely this sort of event.

A Tweet from an Apple Apologist (Apple could sell **** in a Box and Ritchie would say it's the best thing ever) is of little bearing. We'll never know the sales of iPhones, iPads, etc as Apple stopped providing that information.

People that look around see how crazy expensive the iPhone is and how you get so little even on the service side with the pathetic iCloud allowance. They will start looking elsewhere at something more affordable. Look at OnePlus - mediocre phones but priced right and sales are doing well for them.

I don't know that the Apple Watch is the ticket - it's not really a must have for most in a sea of Fitbits and other fitness trackers.

 

[AgentOSX]

The China situation is a lot worse than that. They depend on insanely high economic growth but have reached a point where it is unsustainable. The trade wars aren’t helping, but we may get a long term benefit if China agrees to some significant concessions to end them (e.g. ending forced technology transfers).

China’s slowdown predates the trade negotiations - it is a far cry from a trade war by any historical perspective but these days a hysterical perspective is the default - by about 12 months. China got a lot of use from all the technology they stole from the US over the years - they were IN our patent filing system for almost five years - that no one did anything about. But they expanded fast and have built their own economy around unsustainable rates.

If they didn’t have a command economy, inter-China affairs would be much different now. Even with it, they can’t manage their own economic flows so they have become more protectionist, urging citizens/subjects to buy Chinese-made goods and severely limiting the money outflows and overseas purchases of the middle and upper classes. China went through this six years ago. It takes then about 12-15 months to come out of it.

But perhaps this times when they do they will have to deal with fairer trade practices and policies, as well as India become a manufacturing hub, and perhaps even Brazil.

 

[furi0usbee]

And again, YOU are talking about something omitting a constraint I explicitly and deliberately included. That’s dishonest tepresentation of both what I said and your argumentative reply. And if you bother to address my entire statement and the all-in costs I wrote of, you’ll see your bad math. But you won’t.

I will not.

 

[citysnaps]

Well your example doesn't support what you are saying, about 2 years ago Samsung had around the same GPM as Apple, 38.49%, this year they jumped 6 points to 45.84%. They must be doing something right. Meanwhile Apple's has stayed around 38%.

A leap could be a revolutionary tv service, something similar to what Apple did with iPod/iTunes, and what Spotify did to streaming, but Apple hasn't shown signs of leadership in a while. That's why I said if there is no leap, they need to backtrack on the userbase milking and price gouging.

It absolutely supports what I'm saying.

So you're saying if Apple were extra greedy with GPMs of 50% they would be doing something extraordinarily right and people here would magically stop complaining about the so-called high prices?

Maybe you should contact and help out Apple with your thoughts on what innovation they should be pursuing?

 

[TheShadowKnows!]

Issue is - everyone is missing the whole point.
...

And all signs point towards the Apple Watch eventually replacing the iPhone as the next growth driver.

But yeah, the next few days is going to be a bloodletting for all the critics here who have no doubt been frothing at the mouth for precisely this sort of event.

And you are continuing frothing at the mouth about wearables as the next driver.
Unless the population is made solely of octopuses, wearing an AW on each tentacle at USD $1,000 ASP, it is not going to scale/s

 

[Rob_2811]

Issue is - everyone is missing the whole point.

This tweet sums it up.

https://twitter.com/reneritchie/status/1080605678706790410

The high-end smartphone market is getting saturated. In this context, Apple’s current strategy (higher prices, more accessories, services) is absolutely the right thing to do in terms of growing revenue from a business standpoint.

And all signs point to that working. People are still buying iPhones, and that serves as a springboard to sell more smart watches, airpods, iPads, plus music streaming subscriptions.

And all signs point towards the Apple Watch eventually replacing the iPhone as the next growth driver.

That they all don’t like this is besides the point. Yes, Apple probably lost a few sales by raising their prices, but I am willing to bet that any lost sales is still more than offset by the higher prices.

But yeah, the next few days is going to be a bloodletting for all the critics here who have no doubt been frothing at the mouth for precisely this sort of event.

Do they? How so?

 

[furi0usbee]

Actually, Wall Street primarily cares about earnings, not sales (revenue) dollars. That is how corporate valuation is conducted.

And that was the point of my post. Apple’s prices are proportional to teardown costs, and those numbers have remained stable for about a decade now.

Last I checked, sales are closely tied to earnings. As the man once said, "if you ain't selling, you ain't earning."

A can be proportional to B, across a timeline. That doesn't mean said proportion isn't 100%, totally insane.

 

[Laki021]

I don't blame anyone specifically for this, but still, I do think that it's time for Cook to step down.

8 years is more than enough, we need a fresh blood. There is a reason why a presidential mandate is limited to 8 years.

 

[Baymowe335]

Not clear how that could be the case when there are over 2 billion people using android.
Secondly how about the internet?
If you do a search on the inventions that have had the greatest impact on civilization, iphone will never be at the top.

First of all, iPhone was the first phone/mobile computer like it to implement everything so perfectly in marriage of hardware and software. No denying that.

Second, “Android” is not a single device, it’s generic software run on many devices.

Third, every modern day Android phone is based on the original iPhone.

Fourth, Android as an OS is or at least was a direct copy of iOS.

The Internet is a great example, but it’s also not a “consumer product.”

 

[Rob_2811]

A Tweet from an Apple Apologist (Apple could sell **** in a Box and Ritchie would say it's the best thing ever) is of little bearing. .

Yep. Might aswell get Phil Schillers opinion..

 

[cardfan]

I’d be calling for Cook’s resignation if on apples board. As it is, glad I sold Apple at a high. Apple definitely needs a change at top.

The price hikes while I don’t have any problems with was handled poorly. Marketing continues to be awful. Software and services are lacking. New hardware or expanded existing categories are lacking. Apple is full of excuses.

When apple has to resort to sounding like used car salesmen at its events you know something is wrong. I know I trust very little they have to say.

 

[furi0usbee]

I don't blame anyone specifically for this, but still, I do think that it's time for Cook to step down.

8 years is more than enough, we need a fresh blood. There is a reason why a presidential mandate is limited to 8 years.

Term limits for CEOs. I love it!

 

[myrtlebee]

Lower prices. Improve design and quality control. There, enjoy your success.

 

[mtneer]

Wow, so basically they admit that their throttling due to "battery issues" was forcing people to upgrade their phones and upgrades have slowed since they allowed cheap replacements of batteries and the option to stop the throttling

I now fear that they will unleash the dogs of throttling in iOS 13 with a ruthless viciousness to coerce sales. I am not going to be updating iOS on my older devices without extreme care and delay for sure now.

 

[itguy06]

Which is neither here nor there. As it's not software dominated.

Again, it depends on the company. Saying Apple is greedy at 38% makes zero sense. Unless you can The last few years of Jobs' reign they were 40+%.

If you're a Wall Street analyst and can provide detailed and nuanced insight on the subject, sector by sector, feel free.

You're missing the point. Samsung has their hands in tons of industries, some of which have insane profit margins and others that have low profit margins. So the companies and averages are not comparable.

And I've been buying Apple stuff since 2002. The "tax" was not bad - about the same as a high to middle end Windows machine. Now it's into the stratosphere and you then get to buy dongles, dongles, dongles. And to top it off, the hardware is last year's stuff and has significant issues. Gave up on 2017 and have not looked back - the Windows machine I bought was about $1k cheaper than a Macbook Pro and had up to date specs. It's been great.

That's the greed - people want innovation from Apple. In the laptop space, a touchscreen would have been an awesome thing (I love it on mine) but you got the useless touchbar. We wanted touchID on laptops and desktops. We got a useless touchbar. We wanted better performance and we got thermal throttling....

 

[trifid]

It absolutely supports what I'm saying.

You said "It sounds like you are not aware that GPM swing for most companies is usually very small from year to year"

Samsung fluctuates 6 points, Microsoft 5 points while Apple 0.5%, but you claim most companies GPM swing "very small year to year" sorry I'm confused.

I checked other hardware companies like HP, has a 20% GPM, and Apple's biggest competitor in China, Huawei has about 7% GPM. Meanwhile Apple is a steady 38% in the past few years. Again your original comment about a drop in GPM doesn't make sense.

 

[I7guy]

A Tweet from an Apple Apologist (Apple could sell **** in a Box and Ritchie would say it's the best thing ever) is of little bearing. We'll never know the sales of iPhones, iPads, etc as Apple stopped providing that information.

People that look around see how crazy expensive the iPhone is and how you get so little even on the service side with the pathetic iCloud allowance. They will start looking elsewhere at something more affordable. Look at OnePlus - mediocre phones but priced right and sales are doing well for them.

I don't know that the Apple Watch is the ticket - it's not really a must have for most in a sea of Fitbits and other fitness trackers.

All of this bashing...because Apple only is predicted to make $84B in one quarter.

Serves Tim right for mismanaging Apple. He might actually have to work now, instead of living off the fat of the land (that was given to him) of his largely inflated bonuses.

Of course Samsung with their Note 9 and Galaxy 9 are outselling iphones like crazy. /s

 

[Lerxt]

It may require a broader change in strategy, particularly in China. Huawei is starting to really compete on the high end there.

So many of you don’t get the Chinese iPhone dynamic. I do, I live there. The fall in sales in China is the doing of the Chinese government. Firstly they use their massive influence in Huawei (which wouldn’t exist without the govts say so) to develop their phone market. They then have recently started a “people’s” movement to boycott Apple because of Trumps trade war. This is all over social media here and it’s got to a point where you are seen as not patriotic to not own a Chinese phone.

They know that Apple is so big, damaging it is a huge tool to damage the US economy and they are exercising it now.

Without this influence on the market, the iPhone would be the phone of choice of people who can afford it. It still has a quiet prestige way above Huawei. Foreign stuff is still seen very much as prestige but many feel they have to toe the line.

 

[citysnaps]

You're missing the point. Samsung has their hands in tons of industries, some of which have insane profit margins and others that have low profit margins. So the companies and averages are not comparable.

Sorry you're stating the obvious and still not saying much with respect to what Apple's GPM should be.

What should Apple's GPM be? Pick a number. And defend it.

I still haven't heard anything from you on the true innovation Apple should be pursuing (other than incremental features) on the order of the iPhone.

 

[oldwatery]

A field day, the haters shall have today.

The revenue decline was driven by China, while developed countries are actually expected to post higher revenue.

Meanwhile, many products remain supply constrained. Meaning that demand outstrips supply.

This shows that pricing isn’t really a key factor. By and large, consumers are still willing to buy Apple products at Apple prices.

Do people even read articles before commenting anymore?

I think we all read the article and are commenting on how TC keeps spinning stuff so as not to admit that the products are no longer cutting edge and the prices are sky high. Do you even think other people have a right to their opinions?

 

[john123]

Tech Insights has the X gross margin at 64% v 59% iPhone 8. Again if we take the lower of those two figures its still much higher than it is being spun in this thread.

Who's spinning?

You inspired me to go hunting. So the Tech Insights teardown numbers deviate from others, especially on the 8 Plus. Theirs was $367.50, while IHS had the 8 Plus at $295.44 and the 8 (not publicly available on Tech Insights) at $247.51.

So, that'd explain the discrepancies.