Decline in iPhone Shipments Could Make Apple Worst-Performing Top Five Smartphone Brand of 2016

[I7guy]

Yes, but I don't think that there is "an Apple of cars" – a company consistently selling the most cars, with their own... um... operating system analogy here..., with profit margins of over 60%.

is your choice of product based on profit margin? Who thinks like that? The price is the price. I'm sure some will chime in and have all sorts of criteria about buying a product, none of those criteria related to the product itself; however in real life I never heard anybody admit They buy a product from the manufacturer with the least profit margin, even if that product doesn't meet my needs.

 

[applezulu]

"Respected"? MacRumors, how much is Ming Chi Kuo paying you for these articles?

Also, gotta love the huge range there. Hey guys, I think they'll sell anywhere between 500 and 500 million units. If I'm right, I hope I will become the "respected" market analyst NewtonPippin.

I think you've hit the nail on the head. They can't quote Kuo without giving him some kind of praise. Other sources don't get the special treatment. They're just identified as who the are and what they said. Kuo, on the other hand, has to have "respected" or "reliable" in there somewhere. I think it's a contractual requirement.

 

[kdarling]

A company shifting 200m units and making an annual profit of $200bn may appear a better investment prospect than a company shifting 20m units and making an annual profit of $2bn.

A small company growing in sales with its stock constantly rising, will be the better bet if the larger company's stock is stagnant and/or doesn't pay good dividends.

Whilst I understand it is about growth, I sometimes find it strange that growth seems to be the be all and end all of the whole investment thing.

Huge but static sales = stock value stays the same. Growth = your stock's value goes up.

In Apple's case, Tim Cook took a dangerous path right away with his constant drumbeat of having "more sales than the year before". Since such growth could not continue forever, he built up an unrealistic expectation in many people's minds.

Valid point. However, it's not going to change. Margins are required to expand, and well, "cough" innovate/RD. IMO, "It's Cool to pick on Apple's Margins." People that castigate them general have never Run/Owned their own business.

High margins are not needed for Apple innovation. Apple spends relatively little on R&D compared to other companies.

 

[AVEGA]

I hope the iphone 7 is a massive failure and Apple learns allot from it. Failure is good for Apple and they usually bounce back with a vastly superior product after a year.

 

[navaira]

is your choice of product based on profit margin?

My choice of product is based on my budget versus needs. I bought a Z5 Compact for €429. 32 GB, SD slot, water/dustproof, great camera. In the meantime Apple sails with a 16 GB model without expandable storage (yes, I know iCloud exists) starting at €639 (basic 6s, Apple Store NL). 64 GB is €749 for non-plus model. In my personal opinion what it offers is not worth that sort of money. If I knew that they put lots of money into super-special features that make the iPhone special and a class above the Sony, I'd definitely think about it. But as things are, I don't see why I would spend €639 for a phone that cost $211.50 to manufacture (source). I know when I am being taken advantage of.

 

[dumastudetto]

What really matters is how Apple responds to the inevitable decline in iPhone sales. There are shortterm remedies that many large corporations embark upon that often leads to longterm irreversible harm. This is going to be the key test of Tim Cook's leadership. I don't envy him because the stakes are huge and the challenge enormous.

 

[kdarling]

I think you've hit the nail on the head. They can't quote Kuo without giving him some kind of praise. Other sources don't get the special treatment. They're just identified as who the are and what they said. Kuo, on the other hand, has to have "respected" or "reliable" in there somewhere. I think it's a contractual requirement.

Ah, give the MacRumors writer a break.

They're simply using shorthand to let the casual reader know that this particular analyst has a better track record than others.

 

[I7guy]

My choice of product is based on my budget versus needs. I bought a Z5 Compact for €429. 32 GB, SD slot, water/dustproof, great camera. In the meantime Apple sails with a 16 GB model without expandable storage (yes, I know iCloud exists) starting at €639 (basic 6s, Apple Store NL). 64 GB is €749 for non-plus model. In my personal opinion what it offers is not worth that sort of money. If I knew that they put lots of money into super-special features that make the iPhone special and a class above the Sony, I'd definitely think about it. But as things are, I don't see why I would spend €639 for a phone that cost $211.50 to manufacture (source). I know when I am being taken advantage of.

You know your first and last sentence are contradictory? Not to mention you aren't taking into account any r and d.

Onto the car analogy, if you found out the dealer was making $450 grand on the $550 grand Ferrari you wouldn't buy it because you are being taken advantage of. Right?

The price is the price.

 

[navaira]

You know your first and last sentence are contradictory? Not to mention you aren't taking into account any r and d.

I'm sure companies other than Apple don't do any R&D.

Onto the car analogy, if you found out the dealer was making $450 grand on the $550 grand Ferrari you wouldn't buy it because you are being taken advantage of. Right?

The car analogies work really well since everybody changes cars on 1-2 yearly basis. Also Ferrari had 17.7% market share in 2015.

 

[I7guy]

I'm sure companies other than Apple don't do any R&D.


The car analogies work really well since everybody changes cars on 1-2 yearly basis. Also Ferrari had 17.7% market share in 2015.

I know a few people who change cars every year. However the same thought process applies:
1. Does the company have a product I want? Yes.
2. Do I feel the company is making too much profit even though I like the product? Yes, I don't buy it.
3. Is the product what I really want? Yes. I cut my nose off to spite my face.

 

[maxsix]

A coworker of mine has one, and it looks and feels fantastic. I like it a lot more than my 6Plus. I would buy the S7 Edge in a heartbeat if I could have iOS on it.

Once great iOS is no longer the smoothest, most stable mobile Operating System. Side by side daily usage of my iPhone 6S Plus vs my Nexus 6P reveals the superior performance and reliability of Android 6.x Marshmallow.

It's quite the accomplishment for Google and one that only hardcore Apple lovers who've never had the pleasure of experiencing daily would deny.

 

[LordVic]

Once great iOS is no longer the smoothest, most stable mobile Operating System. Side by side daily usage of my iPhone 6S Plus vs my Nexus 6P reveals the superior performance and reliability of Android 6.x Marshmallow.

It's quite the accomplishment for Google and one that only hardcore Apple lovers who've never had the pleasure of experiencing daily would deny.

Android has come a long long way. As a user of both iOS and Android, I find that iOS is wholy lacking compared to Marshmallow in many many areas. While iOS still feels uniquely iOS. Its' still overtly simple in areas that sreally need sprucing up. Notifications for example. Why can't i have an option to group like notifications? If I have a single chat going on in hangouts, why does every new message show up as it's own independant notification? forcing me to clear each one?

The one thing that is absolutely dreadful in iOS compared to Androdi today is media controls when not using Apple's own software. For example using netflix / Plex to stream to a chromecast / Roku. Because of Apple's lack of true multitasking, Netflix / Plex will almost always eventually "shut down", disconnecting themselves from the chromecast (which thankfully still plays). There is also no lock screen media controls. The built in iOS shade media controls don't work with things like Netflix. So controlling playback always means unlocking your device, re-launching the Application. Reconnect to chromecast / Roku. Then control media. Where on Android, the Multi-tasking is handled better, so that the program controlling the streaming is still running / connected. You also have lock screen notification to control whatever media is playing. No need to tie into a specific media control Api like the iOs bottom shade.

iOS might still win with pure simplicity, but the "ecosystem" isn't significantly different anymore between the two platforms. I get just as many app crashes in iOS as I do Android (sometimes more, especially safari). And with real widgets and an app drawar, I can make my home screen truly mine, instead of just a grid of folders and icons. Adding Widgets to the notification panel only just doesn't cut it.

 

[Glideslope]

High margins are not needed for Apple innovation. Apple spends relatively little on R&D compared to other companies.

Ok, I can agree with that.

 

[applezulu]

Ah, give the MacRumors writer a break.

They're simply using shorthand to let the casual reader know that this particular analyst has a better track record than others.

He has a better track record than others based on what evidence? You've repeated a very common assertion, but there doesn't appear to be any analysis out there to demonstrate that it's true. Kuo gets the same "shorthand" when he's referenced on various websites all over. The consistency of that "shorthand" is quite strange, because it's pretty rare for other sources to be cited with a shorthand reference to their accuracy. (Though there was one I read recently that threw shade at another analyst as a way to pay a compliment to Kuo...) So for some reason, MacRumors, AppleInsider, etc., all seem to think that their casual readers need frequent reminders about Kuo's accuracy and reliability. Yet somehow, when searching for statistical evidence to prove Kuo's accuracy (one way or the other) as compared to others, that evidence seems to be quite elusive.

 

[TallManNY]

I understand that's how it works - I just think its crazy that when a company is as successful as Apple has been over a prolonged period of time it throws up a situation that appears so counter intuitive.

A company shifting 200m units and making an annual profit of $200bn may appear a better investment prospect than a company shifting 20m units and making an annual profit of $2bn.

Whilst I understand it is about growth, I sometimes find it strange that growth seems to be the be all and end all of the whole investment thing.
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I don't really see it as getting the "real" (for want of a better expression) iPhone 7 out in 2017 rather than 2016.

Isn't it (from the rumours about moving to OLED a year earlier than planned) more a case of getting the iPhone 8 (again, for want of a better name) out a year early?

I don't really know why there has to be this hunger for a phone to significantly change its design every two years or less anyway.

And I don't get why any slow down in sales seems to be solely attributed to a lack of innovation on Apple's part, when it seems far more intuitive to think it is, as much as anything, down to the fact that the smartphone market has matured, and most people with a phone have transitioned from an older style phone to a smartphone.

On the investment side, it is all about how much of the company each individual stock gets you. Apple's stock is a great investment if Apple keeps making about the same profits it is making now. But justifying a 600 billion market cap is very hard and Apple needs huge profits to stay at this price level. Or they need to show significant growth. Other tech hardware companies have ALL eventually succumbed to commodification of their hardware or disruption from other technologies. Apple won't be immune to the challenges that companies like IBM faced in the past. Nobody really knows where market saturation is for smartphones. Personally I don't think we are there yet. But you would be hard pressed to find many folks with a "middle class" income who do not have a smartphone. But that isn't the saturation point for me because you can find folks with hand down phones that are quite old. Saturation will be the point where middle class and up folks are buying new phones.

As for "real" phone or not, yes it is all just terminology. I assume Apple has about three years planned out at any time. There are forks though in that plan if certain technologies don't progress to the point where 200 million of the part can be made in one year. I think it is assume that Apple has off ramps and fall back positions as they get closer to finalizing the next product. It is just conjecture but if they don't do a serious case redesign I'm going to guess that their next case redesign is dependent on some piece of tech that isn't going to be ready for September 2016. If that is the case, then I think Apple has to compete on price this Fall. Folks need visual clues that the phone is new and better. You can say that they shouldn't, but that would just be ignoring reality. Until the phone looks different, it is just going to be the "same". See how the SE is responded to? It is described as "basically an iPhone 5s" when of course it is not. Just like a 2013 iMac is not the same as a 2016 iMac.
[doublepost=1461601408][/doublepost]

Not familiar with PED, and like I said, I'm sure you can find things like names and release dates that didn't precisely line up with his predictions. But as for an upcoming iPhone, he tends to paint a decent picture of what we can expect by this point every year. The links are all there.

If we're debating his shipment forcasts, I'm sure that's a lot murkier. but I would say that the assertion that this upgrade cycle might do weaker numbers at very least matches my own gut reaction to whether there's anything that would remotely compel me to upgrade my 2 year old phone 6.

Unless you have stock riding on it, I'm not sure why people worry much either way. I'm more interested in the whispered plans for 2017.

The A10 processor, the improved battery life, the extra RAM, and the improved camera should be very compelling to go from a 6 to a 7. Why would you not upgrade what is probably one of your top five most used possessions at that point? I just don't get it. Like the Boar's Head Ham commercials say, "Compromise elsewhere." Note, I can see skipping a cycle. But skipping two cycles and stretching for a third year just doesn't make sense.

 

[_mdavenport]

Doomed doomed doomed etc. etc. etc.

 

[Soi Dog]

My take is that it is iOS that is the problem now.
Smartphones have matured as desktops, most of us don't need to upgrade as often as before.
I can't see much improvement between my iPad2 and my Air1 in usability, I wanted to buy the Pro, but that only because of the pen. What makes it pro if you don't buy the pen, well nothing.
What Apple have to do now is to come with a pro version of IOS, open up for external media sources and give us a finder. Maybe lock this features for Pro iPads and a new iPhone if they want it to sell and have people to upgrade. Otherwise I can't see any reason for upgrades. The 6 did it because of form factor, Not processing power, which is way enough already for most applications.

 

[bruinsrme]

Decline? Well has anyone tried to located an SE 64g?
well if there isn't demand I would think I should be able to walk into any Apple Store, target, att store or where ever and pick one up.
No, Apple 2-3 weeks, att spotty at best and online orders are 5-6 weeks out.
Best Buy none.
So if there is a decline the only ones that seem to be creating a decline in shipments is Apple.

 

[stevemiller]

On the investment side, it is all about how much of the company each individual stock gets you. Apple's stock is a great investment if Apple keeps making about the same profits it is making now. But justifying a 600 billion market cap is very hard and Apple needs huge profits to stay at this price level. Or they need to show significant growth. Other tech hardware companies have ALL eventually succumbed to commodification of their hardware or disruption from other technologies. Apple won't be immune to the challenges that companies like IBM faced in the past. Nobody really knows where market saturation is for smartphones. Personally I don't think we are there yet. But you would be hard pressed to find many folks with a "middle class" income who do not have a smartphone. But that isn't the saturation point for me because you can find folks with hand down phones that are quite old. Saturation will be the point where middle class and up folks are buying new phones.

As for "real" phone or not, yes it is all just terminology. I assume Apple has about three years planned out at any time. There are forks though in that plan if certain technologies don't progress to the point where 200 million of the part can be made in one year. I think it is assume that Apple has off ramps and fall back positions as they get closer to finalizing the next product. It is just conjecture but if they don't do a serious case redesign I'm going to guess that their next case redesign is dependent on some piece of tech that isn't going to be ready for September 2016. If that is the case, then I think Apple has to compete on price this Fall. Folks need visual clues that the phone is new and better. You can say that they shouldn't, but that would just be ignoring reality. Until the phone looks different, it is just going to be the "same". See how the SE is responded to? It is described as "basically an iPhone 5s" when of course it is not. Just like a 2013 iMac is not the same as a 2016 iMac.
[doublepost=1461601408][/doublepost]

The A10 processor, the improved battery life, the extra RAM, and the improved camera should be very compelling to go from a 6 to a 7. Why would you not upgrade what is probably one of your top five most used possessions at that point? I just don't get it. Like the Boar's Head Ham commercials say, "Compromise elsewhere." Note, I can see skipping a cycle. But skipping two cycles and stretching for a third year just doesn't make sense.

I can figure out what's worth upgrading when without your expert and condescending advice, anonymous random person on the Internet

If something is working fine and meeting my needs I'm not going to force myself to upgrade just because "newer". Upgrading for new stuff you don't need to me is wasteful and "doesn't make sense"

And if I was going to upgrade this fall I might take a long look at the competition to make sure I was getting the best value.

 

[garylapointe]

I know it always comes back to growth for investors, but it does seem a bit bonkers sometimes when its a situation like Apple's where it would be impossible to sustain the sort of growth they have seen indefinitely.

And once everyone who's likely to get one, new growth isn't an option any more, it's keeping them upgrading.

I don't know what percentage replace every one, two, three or four years but it seems like the next step would be to get them to update more often. Start releasing iPhones on an 18 month cycle and get those two and four year people updating more often (have more time for development and retool less often). Maybe release the flagship phone yearly to keep those yearly upgraders and announcements going...

Gary

 

[kdarling]

He has a better track record than others based on what evidence?

Others have already posted articles about Kuo (e.g. this one) that purport to list his predictions, with most astonishingly correct. And right or wrong, a lot of people here tend to remember his hardware predictions as being so.

Now, sir, what YOU have not done, is present ANY evidence to the contrary. So, while you might be correct that he's actually a PR fantasy or a result of bad mass memory, you have shown nothing to back up such conjectures.

If you do come up with a valid list that shows he's mostly wrong, I'm sure everyone would be interested.

(Related - there was a list compiled by a business magazine a year or two ago of which Apple analysts most often got sales and stock predictions correct. I'll try to find it. I remember Horace Dediu being near the bottom, for example, and he's quoted way too often.)

 

[I7guy]

I can figure out what's worth upgrading when without your expert and condescending advice, anonymous random person on the Internet

If something is working fine and meeting my needs I'm not going to force myself to upgrade just because "newer". Upgrading for new stuff you don't need to me is wasteful and "doesn't make sense"

And if I was going to upgrade this fall I might take a long look at the competition to make sure I was getting the best value.

Value is individual, that my family, friends and extended family have for the majority iPhones, means there is a big value for me in continuing to use iPhones. I don't buy items based on the proverbial definition of "value", I buy what works for me best.

 

[johngordon]

It may be crazy, and it certainly is more risky, but the smaller company with $2bn annual profit is the better investment. Just remember, Apple was once that company and those who heavily invested in them have a ton of money now. Sure, investing in a stable company making $20bn annual is great if you want a few bucks off dividends each quarter, but you're not going to make serious money off it. And these are things Apple's BoD are going to be paying close attention to.

Sure - I guess the question becomes this:

At what point (if any) does a company rake in so much in profit that the quarterly dividends paid out by a company seeing a slow down in growth are greater than the potential return from a company making a fraction of the profits, despite showing year on year growth?

 

[TallManNY]

I can figure out what's worth upgrading when without your expert and condescending advice, anonymous random person on the Internet

If something is working fine and meeting my needs I'm not going to force myself to upgrade just because "newer". Upgrading for new stuff you don't need to me is wasteful and "doesn't make sense"

And if I was going to upgrade this fall I might take a long look at the competition to make sure I was getting the best value.

Sorry if it seemed condescending. (And I guess it was a bit; so fair to call me out on it.)

Hey, the 6 is a great phone. And your call if keeping extra cash in your pocket or perhaps spending it on something else is more worthwhile. I was more saying that even if the 6 works fine, just a spec upgrade from the 6 to what will be available on the 7 is going to be a very nice thing. But heck, I've been using my 2011 iMac every day for five years now. Maybe I should take my own advice and let a few more dollars out of the bank account. I'm more suggesting that we all enjoy the best of the tech that we can, especially on the stuff that we use dozens of times per day. And yet I can't get myself to pull the trigger on $2.5k iMac upgrade. So I guess I'm not following my own advice.

Oh and definitely consider the competition. The latest flagship Androids seem very nice.

 

[American Hero]

I held an S7 Edge in a phone store a couple of weeks ago because I was curious. It just... didn't feel quality. It might have been the fact that it was a display model, but it was a working device. It just didn't feel good in the hand.

it takes a few days to go get used to, but after that, it feels terrific in the hand.