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

[The-Real-Deal82]

How is it not competitive?

Let's start with the stainless steel frame.
What other competitive phones offer steel frame?

None!

So we can already end here, Xs has no competitor with comparable characteristics.
For me, steel frame already justifies 200 more than for any other phone, so Xs justifies its price difference very easily.

I'm strongly hoping Apple will keep the prices at the current level and keep using only the best materials.

I don't want 200 cheaper phone with standard Alu frame...

I don’t see any advantage to stainless steel from a practical point of view. It adds weight and cost and it’s purely subjective whether it looks more premium or not. Then again my iPhone is mine and not for the benefit of others so what it looks like is far down the list of necessities for me. Not sure why you’d pay £200 more just for a bit of polished steel edging.

 

[Gilligan's last elephant]

The purchase price is relevant. what makes up that purchase price is not.

Does it matter to us as consumers if Apple makes $1 or $500 profit on a $999 phone? No. we just know that it costs US $999. And it's up to us at that point to judge whether there's sufficient value at $999 or not.

Those of us who pay attention to these numbers are an exception to the rule. your average person just cares about how much money they will have to part with at the end of the day.

Seriously? The majority of consumers are very aware of how much profit a company wants to makes from an item and buy based on that very often. Ever heard of "The Sales"
People buy items they would bypass at full price for a 25% or more reduction. And they are very aware that this is down to retailers/companies accepting lower profits.

 

[Abazigal]

I think this is the epitome of short sightedness.

Not every product line needs to make a direct profit in the short term. The users are far more important for growth than simply profit. If you get people to buy a certain product even at a loss, that gives you data points which in turn helps you develop more products & services which in turn can generate more money in the long run than simply focusing on short term goals.

Please think growth and not profits.

The business model you just described might be relevant to a services company like Facebook or google, but it simply doesn't apply to Apple (at least not the Apple of today). Apple is a hardware company who uses custom software to justify its higher asking prices. It doesn't make sense to subsidise hardware since you have little means of monetising it like advertising.

And don't forget - your argument is precisely the very reason why wearables haven't exactly taken off in the android market. When the customers you attract buy your products because it's cheap, what are the chances of them being willing to spend even more money on your accompanying products and services? And when there is no money to be made in a certain segment, what incentive is there to continue to improve it?

In contrast, Apple's customers are largely self-selecting. The people who would buy a $1000+ iPhone are also the people with the disposable income to spend on apple watches, extra bands, AirPods, and assorted other apple products. The profits are what enables Apple to continue investing in improving them. The iPhone X sports a miniaturised Kinect, while the Apple Watch has an ECG built in. Why? Apple is willing to invest in such features because they know their users are willing to pay for them.

Plus, if it's growth you want, then the iPhone user base continues to grow via the grey market (through people selling used iPhones to fund the purchase of newer ones). Though Apple earns no money from the sales of second-hand iPhones, it still enjoys more entrants into the Apple ecosystem, which it can then sell more hardware and services to.

 

[LordVic]

Seriously? The majority of consumers are very aware of how much profit a company wants to makes from an item and buy based on that very often. Ever heard of "The Sales"
People buy items they would bypass at full price for a 25% or more reduction. And they are very aware that this is down to retailers/companies accepting lower profits.

Sure, But at the same time, what those profits are directly are irrelevant. As you point out yourself, they don't care how much profit they are taking away from a company, they just want the sale to have alower price.

if that sale caused a small loss on a product, do you think the average shopper cares? nope. they got a sale and got what they wanted for cheaper. That's all that generally matter.

 

[Abazigal]

Seriously? The majority of consumers are very aware of how much profit a company wants to makes from an item and buy based on that very often. Ever heard of "The Sales"
People buy items they would bypass at full price for a 25% or more reduction. And they are very aware that this is down to retailers/companies accepting lower profits.

Really? I thought it was just those companies deliberately inflating the prices so they can then offer them at a discount and give consumers the impression that they are saving money, when in reality, they are simply paying what the original price should have been all along.

 

[ipponrg]

The business model you just described might be relevant to a services company like Facebook or google, but it simply doesn't apply to Apple (at least not the Apple of today). Apple is a hardware company who uses custom software to justify its higher asking prices. It doesn't make sense to subsidise hardware since you have little means of monetising it like advertising.

Are they not shifting to be more services? It seems to me they have realized that hardware alone will not sustain growth.

Selling the same devices over and over without expanding into new tech domains will eventually plateau, as we are seeing now.

You can describe Apple’s hardware core product line as basically the iPhone, watch, and (questionably) the Mac. That’s it. The ecosystem is insanely small for what they are capable of doing if they focus more on expansion vs profits. The EKG feature on the watch is nice but is largely a gimmick for the majority of the population.

The grey market you are describing is a very small subset of growth compared to the main line of sales. You are not counting the fact that a large segment of the grey market are users that want to upgrade from their cracked old iPhones.

Bottom line is yearly sales of iPhone hardware units alone is going to plateau at some point given their current business model. If Apple is happy with their current user base and don’t care to grow other sectors with their excess cash, at some point they will become extremely niche allowing an opportunity for another company with a more enriched ecosystem to take over.

 

[Gilligan's last elephant]

Sure, But at the same time, what those profits are directly are irrelevant. As you point out yourself, they don't care how much profit they are taking away from a company, they just want the sale to have alower price.

if that sale caused a small loss on a product, do you think the average shopper cares? nope. they got a sale and got what they wanted for cheaper. That's all that generally matter.

Again, people do care about the profit margin companies try to make when the actual cost of items they get made in Asian sweatshops is publicised and these suffer drops in sales.

 

[I7guy]

Well unlike you am not making stuff up so the only one here that is deflecting is you.
What issue does android phones face? And Android OS has had a very solid Power management system for quite some time. Apple created a similar power management solution only after the release of iphone 8. And no I'm not talking about their OS updates that secretly lower the performance of the SOC.

No you are perpetuating a false narrative. iOS has a feature that android doesn’t. Period.

LoL Android has no power management? That's one of the most ignorant things I've read.
https://khoshgozaran.com/android-power-and-battery-management-a-look-underneath-the-hood/

What’s ignorant is to claim that android has the same power management features as iOS to protect the battery when it can’t deliver enough juice. Hence the repeated reports of phone shutdowns.

 

[Shiro_Simba]

Please stop. My point still stands about android, regardless of the deflection of the arguing about the use of a possessive.

Let people have an opinion. You have no right to tell anyone to stop

 

[I7guy]

Again, people do care about the profit margin companies try to make when the actual cost of items they get made in Asian sweatshops is publicised and these suffer drops in sales.

Out of curiosity which people care about profit margins? I’m happy companies make what they make but I don’t look at the balance sheet before making a purchase. Which companies suffered a drop in sales?

 

[dgdosen]

Comparing the parts cost to the profit margin - - really?

I would have thought that simple business concept had been explained enough times on these forums already.

The cost of simple parts manufacturing does not include the significant cost of product development and service.

• The industry leading Apple A-series processors are not a simple off the shelf purchase - Apple has spent billions developing them - - same goes for the AR sensor array.
• The industry leading customer service is not free - - any time I have had an issue with an Apple product, it has been fixed or replaced for free, via a quick and easy local visit to the Apple Store.
• iPhones are supported with new iOS systems and security updates for six full years - - imagine the cost of maintaining the system software development team needed to let us use our 2013 iPhone 5S here in 2019.

That's why that world of finance and accounting defines different margins:

- Gross Profit: determined by revenue less direct costs (that bill of materials)
- Net Profit: determined by revenue less direct costs AND indirect costs (research, development, maybe something like "customer service")
- Earnings: Net Profit less things like Selling, General and Admin expenses.

Gross Profit is important because it shows how much cash Apple can generate for selling an extra iPhone.

 

[I7guy]

Let people have an opinion. You have no right to tell anyone to stop

Just wondering if you have an opinion on the subject or are you going to tell people what to do? Essentially do as I say and not as I do. Are we back to that garbage?

 

[Abazigal]

I highly recommend taking some marketing/economics courses that outline the basic's of supply demand and price elasticity.

I took economics in colleague and studied business administration in university.

I just don't get the direction. He's raising prices, lowering demand, while at the same time claiming that services will be their next biggest growth. Right now, unless there's a major shift, Apple's service industry relies extremely heavily on iOS user base. Very few of their services are cross platform, or work well on other platforms. This means that lowering Demand of the iPhone and possibly affecting market share penetration, Apple runs the risk of lowering their service market base.

his current strategy is just at odds with itself.

I think you are making the same mistake as many other android users did when they claimed Apple was doomed simply simply iOS had lesser market share compared to Android.

First off, Apple’s smaller market share is still a very large number of users in an absolute sense. More than enough to sustain its own thriving ecosystem at any rate.

Second, while we Apple users might be smaller in number compared to Android, we make it up in terms of higher spending power on average. So there will still be enough people willing to subscribe to Apple’s services. In terms of raw numbers, we may not necessarily lose out to Android.

Heck, Apple Music is available on android, so it’s not impossible that a news subscription service or a video streaming one is made available for other platforms as well.

Third, the iOS user base continues to grow via the second-hand iPhone market. For example, I sell a 2-year old iPhone to fund the purchase of the latest iphone (made possible because iPhones tend to have decent resale values, which helps offset the higher iphone prices). The person who bought my iphone is effectively added to the Apple ecosystem, and is someone whom Apple can market additional accessories and services to, even though he isn’t captured in terms of iphone sales.

And thanks to iOS 12, the battery replacement programme, and good build quality overall, iPhones are capable of lasting a long time.

So in summary, a strong resale market helps boosts sales for more expensive iPhones, while also growing the iOS user base (which plays well to Apple’s services narrative).

 

[Gilligan's last elephant]

Really? I thought it was just those companies deliberately inflating the prices so they can then offer them at a discount and give consumers the impression that they are saving money, when in reality, they are simply paying what the original price should have been all along.

The op made a blanket statement that consumers don't care about how much profit a company makes (paraphrasing). Many don't, many do. So plenty people will buy at full list price and plenty won't.
So this is factored into what profit level to set initially.

 

[Shiro_Simba]

Just wondering if you have an opinion on the subject or are you going to tell people what to do? Essentially do as I say and not as I do. Are we back to that garbage?

You are not the MR police bud . Look at this thread, you are bickering with everyone....... debate ! Don’t shut people down.

How about we go back to revenue discussion, and not a deflection about android throttleing ?

 

[Nuvi]

Apple maintains close to the same profit margin on each iPhone model (including the development costs on the latest model). Bringing the price down will mean that the specs of the flagship iPhone will come down.

Smartphones are already one of the most equitably priced consumer products available - - the price difference between the cheapest and the most expensive is only $1449. Compare that to cars.

Imagine if there actually was a $15,000 smartphone with specs 10x as good as the next best one. People would still be lined up to buy it.

This is absolute nonsense. You do understand that the reason why Apple is making so much money is due to the fact that Apple has far higher profit margin then any other manufacturer?

Regarding you product price difference it makes no sense whatsoever. You do understand that manufacturing costs of iPhone and other flagship phones are almost identical. Apple has almost double the margin compared with Samsung. So yes, Apple could easily make lower priced products without cutting any features.

 

[Shiro_Simba]

I took economics in colleague and studied business administration in university.


I think you are making the same mistake as many other android users did when they claimed Apple was doomed simply simply iOS had lesser market share compared to Android.

First off, Apple’s smaller market share is still a very large number of users in an absolute sense. More than enough to sustain its own thriving ecosystem at any rate.

Second, while we Apple users might be smaller in number compared to Android, we make it up in terms of higher spending power on average. So there will still be enough people willing to subscribe to Apple’s services. In terms of raw numbers, we may not necessarily lose out to Android.

Heck, Apple Music is available on android, so it’s not impossible that a news subscription service or a video streaming one is made available for other platforms as well.

Third, the iOS user base continues to grow via the second-hand iPhone market. For example, I sell a 2-year old iPhone to fund the purchase of the latest iphone (made possible because iPhones tend to have decent resale values, which helps offset the higher iphone prices). The person who bought my iphone is effectively added to the Apple ecosystem, and is someone whom Apple can market additional accessories and services to, even though he isn’t captured in terms of iphone sales.

And thanks to iOS 12, the battery replacement programme, and good build quality overall, iPhones are capable of lasting a long time.

So in summary, a strong resale market helps boosts sales for more expensive iPhones, while also growing the iOS user base (which plays well to Apple’s services narrative).

The apple is doomed is a silly statement , and we need to stop taking that as factual, it’s more of a joke.

Apples great strength was it’s products aimed at the average consumer , it grew fast. With the current price hikes , the average joe is no longer the target audience , so the user base will become smaller ? This has nothing to do with Apple being doomed , it’s a question of who the target consumer geographic is.

From my personal experience, I’ve seen a move away from Apple from my fellow friends , co-workers and family in the last two years, a poor sample group but many did not see the value for money now, nor were they after a fashion accessory (for some users the brand is all that matters)

 

[Gilligan's last elephant]

Out of curiosity which people care about profit margins? I’m happy companies make what they make but I don’t look at the balance sheet before making a purchase. Which companies suffered a drop in sales?

I don't know the names of people outside my family and friends. But many UK people with a social conscience will not buy products they know have been made in sweatshops. This affects clothing shops across the board. Also football clubs when the profits on their replica strips is the result of workers poor pay in sweatshops.

 

[I7guy]

You are not the MR police bud . Look at this thread, you are bickering with everyone....... debate ! Don’t shut people down.

How about we go back to revenue discussion, and not a deflection about android throttleing ?

Do you have an opinion on the subject bud? Or are you going to practice do as I say and not as I do and bicker along the way.

Can we get back to the subject at hand? Which is revenue discussion of which it is said power management and battery replacement is a part of this entire thing.

 

[ROGmaster]

No you are perpetuating a false narrative. iOS has a feature that android doesn’t. Period.

Well its actually a good thing that unlike with iOS, Android doesn't need to universally and permanently limit the performance of the SOC to avoid unexpected shutdowns. Period.

What’s ignorant is to claim that android has the same power management features as iOS to protect the battery when it can’t deliver enough juice. Hence the repeated reports of phone shutdowns.

Android overall has a complex and modern Power Management System that also takes in account the battery stats(degradation, current level of charge etc.)
It doesn't have the universal throttle toggle of course and that is not what I was talking about. That's just one feature not something that can be consider a Power Management System so you should know what you are talking about before you act smart.

Android's Power Management System can be studied in Android's source code so it's out in the open. It takes account of the battery stats(charge, degradation) and it allows phones to adapt to the situation. Also Qualcomm's SOC have very advanced power control support at a hardware level and like I've said Apple implemented something similar with the launch of the iphone 8. Quite late to be honest.

More information in the link below.

https://android.googlesource.com/ke...mentation/devicetree/bindings/arm/msm/bcl.txt

So yes Android does have power management features to protect the battery when it can’t deliver enough juice, please educate yourself.

 

[I7guy]

Well its actually a good thing that unlike with iOS, Android doesn't need to universally and permanently limit the performance of the SOC to avoid unexpected shutdowns. Period.


Android overall has a complex and modern Power Management System that also takes in account the battery stats(degradation, current level of charge etc.)
It doesn't have the universal throttle toggle of course and that is not what I was talking about. That's just one feature not something that can be consider a Power Management System so you should know what you are talking about before you act smart.

Android's Power Management System can be studied in Android's source code so it's out in the open. It takes account of the battery stats(charge, degradation) and it allows phones to adapt to the situation. Also Qualcomm's SOC have very advanced power control support at a hardware level and like I've said Apple implemented something similar with the launch of the iphone 8. Quite late to be honest.

More information in the link below.

https://android.googlesource.com/ke...mentation/devicetree/bindings/arm/msm/bcl.txt

So yes Android does have power management features to protect the battery when it can’t deliver enough juice, please educate yourself.

So in other words with all of this hyperbole, android just shuts down when there isn’t enough juice and there still is no feature comparable to IOS. Got it. Hopefully now we are all educated.

 

[ROGmaster]

So in other words with all of this hyperbole, android just shuts down when there isn’t enough juice and there still is no feature comparable to IOS. Got it. Hopefully now we are all educated.

LoL hyperbole? You want to mean facts.
Prove that Android phones just shut down when there isn’t enough juice.

Also Andoid OS have had better a power management system for quite a long time before iOS. It's doesn't need to have the same power management features when it have better ones than iOS in the first place. Simple logic.
It's all there in the link I provided.

 

[I7guy]

LoL hyperbole? You want to mean facts.
Prove that Android phones just shut down when there isn’t enough juice.

Also Andoid OS have had better a power management system for quite a long time before iOS. It's doesn't need to have the same power management features when it have better ones than iOS in the first place. Simple logic.
It's all there in the link I provided.

Show me in the link where android provides some options on battery health? You can’t, and the proof is reports of android shutdown on various battery conditions found by doing web searches.

 

[ROGmaster]

Show me in the link where android provides some options on battery health? You can’t, and the proof is reports of android shutdown on various battery conditions found by doing web searches.

It's called Battery Current Limit(BCL) and it's in the link I provided.

And again prove that Android phones just shut down when there isn’t enough juice.

 

[sracer]

The apple is doomed is a silly statement , and we need to stop taking that as factual, it’s more of a joke.

Apples great strength was it’s products aimed at the average consumer , it grew fast. With the current price hikes , the average joe is no longer the target audience , so the user base will become smaller ? This has nothing to do with Apple being doomed , it’s a question of who the target consumer geographic is.

Thank you for saying that. The "Apple r doomed!" sentiment is not contributing anything of value to the conversation.

Apple knows what it is doing. It was reaping the excesses of their reputation for as long as they were able to. Now they'll need to adjust to the market realities. This could've been their plan all along.

If they continue along this trajectory in 2020 THEN it will be the time to begin to express concern. I say 2020 instead of 2019 because of a thing called, "project momentum". Any projects currently in the works will need to work its way through the pipeline and into the market. There are most likely contracts that Apple has with its suppliers/contractors that obligate Apple to certain quantities.

From my personal experience, I’ve seen a move away from Apple from my fellow friends , co-workers and family in the last two years, a poor sample group but many did not see the value for money now, nor were they after a fashion accessory (for some users the brand is all that matters)

I fit into the category of those who are fading out of Appleland. Lower quality and higher prices is not the recipe for attracting discerning consumers. I'm enjoying the Apple products that I currently have, but as each reaches the end of its productive life, it will be replaced by an non-Apple alternative. If Apple were to change their current direction, I'd be happy to buy Apple products. I have no brand loyalty, I just buy what does what I need it to do and is a good value.