Foxconn's Profits Slide 31% as iPhone Sales Continue to Drop

[ginkobiloba]

So they'll sell it as the music lover's iPhone: stereo speakers, 'digital quality' Lightning earphones / wireless earphones and the new Music app.

Bluetooth earpods are very much the opposite of the music lover's wishes. If there is one category they will NOT be able to sell the iPhone 7 to , it's precisely the music lover. They all have invested in expensive quality headphones and they all now need to carry at all times a dangling fragile adapter.

Also, there is no such thing as a "digital quality" earphones. Our ears are analog and all digital information has to be converted into analog before reaching the earphones.

 

[rdlink]

A company that large doesn't see profits slide that much just from iPhone sales.

Remember, FoxConn makes electronics for EVERYONE. Samsung, Dell, Microsoft, Google, Amazon, HP, HTC, and more. They make everything.

Stop it. Your post doesn't fit in with the "Apple is doomed" crowd's narrative. Everyone knows that Foxconn just materialized out of thin air when Steve Jobs held up the first iPhone on stage.

Time will tell if the sales figures for the last two quarters are a speed bump or a trend. But it's a little early to write the obituary for a company that still sells ~$40 billion worth of products in a "bad" quarter, routinely brings home 35-40% margins, has massive brand recognition and respect, and has ~$250 billion in the bank.

Ask the average person what an iPhone is and they'll be able to tell you. Ask the average person what a Galaxy is and they'll look at you with a blank stare.

 

[smacrumon]

4" iPhone 6/6s is missing from the line up. That's why sales are falling and failing.

Wrong price too. Apple is pricing iPhone out of existence. It might work temporarily for shareholders, but it's clearly not working for customers.

 

[ArtOfWarfare]

Foxconn is Dooooooooommmed!

---

The girl in the far right looks like iPhone Girl from 2008!

Nice to see her again after eight years.

Uh... no, they look nothing like each other. They're both Asian women under 30 years old. They're wearing similar uniforms. That's about where the similarities end.

 

[9081094]

The phone hasn't even been announced yet lmao you do realizes not every single feature leaks right?

The camera, the speed, new software that's only iPhone 7 compatible, different home button, better reception because of the antenna bands, maybe some type of water proofing...

I don't know why everyone just to such drastic conclusions about a phone that hasn't released...

No Amoled, big bezels, same design. Of course there will be a better camera, of course it will be faster... But it's all soooooo 2014 compared to for example Galaxy S7 edge and Note 7.

 

[Waxhead138]

After reading all the rumors about the new iPhone I really don't even know how thy are going to advertise it.

No headphone jack is a huge no go for many people I have talked to, myself included.

And the rumors also point to most other things staying virtually the same.
The 6S is already blazing fast so a faster processor is unlikely to convince anyone to go out and upgrade their phone either.

wht is their strategy for the new phone? Only people with yearly free upgrade plans and expiring contracts?

What am I missing?

I think they've known for sometime that the major redesign would take one more year...aka the 10th anniversary model. Assuming we see something awe inspiring next year....I think they knew that foregoing offering anything would be worse than offering a mild upgrade. They picked the lesser of two evils.

That said they better wow people next year. A year from now is when we have a true forecast of Apples future I think. By future...obviously they aren't going to disappear. That's just ludicrous. But whether people just simply lose interest for a very long time is the real question.
[doublepost=1471008137][/doublepost]

I wonder if the slump isn't just about a "lack of innovation" but maybe more, or at least partly, due to market saturation. So many people have iPhone's now and other smartphones that eventually sales would slow down at some point.

This whole "doom and gloom" sentiment seems silly to me at this point. The companies are still making money hand over fist here and they're not even close to going under or anything like that.

I agree with you about the slump. All big business, and it's ridiculous in almost every case, somehow expect unending growth annually. I've always found that expectation mind boggling.

 

[yaxomoxay]

No worries, production improvements on the way...

 

[Savor]

First off, the smartphone industry is saturated as is. Anyone who ever wanted an iPhone already owns one or multiple ones. Then sold them off. The luster of owning an iPhone died out years ago. People are hanging onto their phones longer because the specs and each mobile platform is mature enough to use longer than say five years ago.

Secondly, flagships generate the most profits. Not midrangers or budget phones. If Apple wants a race to the bottom, they would need to license iOS to other manufacturers the way Microsoft did to Windows and make a lucrative cut from each OEM using iOS. Apple will not sabotage their profits just by slashing prices on their flagships. Apple goes for profits, not volume sales like what Google shoots for with Android to generate more web traffic and sell more ads.

I don't need to keep regurgitating what I already said with Apple and their future. Same ol', same ol'. Nobody stays on top forever. If it is truly that serious, okay. *shrugs* Every company goes through it from IBM to Sony. Apple went through it worse in the mid-90's. Only continents keeping iPhone afloat is North America and Europe. But Asia has 60% of the world population. You don't respect China, India, and Indonesia (#1, #2, #4 in population) enough for iPhone sales to grow considerably, expect consequences.

Apple should license iOS to other OEM's. This can drive hardware prices down for any non-Apple iOS devices. Now if the OEM changes the hardware configuration too much, tough luck on software updates. Real iPhones would then be treat like Google Nexus devices with the fastest updates. Apple can maintain selling their iPhones for higher profits while licensing iOS to other manufacturers would help saturate the Apple mobile platform in poorer but more populated countries .

At some point, all industries get saturated enough. But Apple needs other manufacturers to saturate iOS even more in countries like China, India, and Indonesia where price matters. BTW, if that happens to be iPhone Girl, at least someone has shown her loyalty working to assemble iPhones for us and being paid for very little. That's eight plus years of loyalty working under Foxconn. My loyalty dealing with all-Apple/all the time, burnt out three years ago.

 

[smacrumon]

I wonder if the slump isn't just about a "lack of innovation" but maybe more, or at least partly, due to market saturation. So many people have iPhone's now and other smartphones that eventually sales would slow down at some point.

This whole "doom and gloom" sentiment seems silly to me at this point. The companies are still making money hand over fist here and they're not even close to going under or anything like that.

It's certainly not saturation. Loads of potential customers are ready to move to the iPhone. They just can't enter because the price is too high for the technology they want to buy. Innovation seems to be some kind of sticking point as well. iPhone in some quarters is perceived these days as being less advanced than competitors.

Think back to 2007, iPhone was 5 years ahead of the competition. iPhone was the best, iPhone was fresh, iPhone was sexy. Today, competitors have caught up, Apple has languished and not made the next big thing and instead is playing catch up with competitors.

The company is still making money, BUT, this has similar overtones to the Apple of the 1990's, the OS was languishing behind the competition, and Apple allowed competitors to catch up.

 

[EricTheHalfBee]

Foxconn makes most consumer electronics goods (somewhere around 50% of everything in the world).

So why is it that when Foxconn slips people blame Apple and not the other hundreds of companies they manufacture for?

Oh right, because Apple.

 

[9081094]

The market is saturated. Without significant innovation nobody will upgrade just to have the latest model. I'm happy with my iPhone 6 and won't upgrade till it really makes a difference.

The market isn't saturated yet. But people have a lot to choose from these days. Innovation didn't come from Apple for the last two years. People are holding out for what... the iPhone 8? When sales of the iPhone 6S fell short... a lot of people told they were holding out for the iPhone 7 and reasoned this downfall... What will happen to the iPhone 8 in 2017 when Samsung is showing their foldable Galaxy 8 next april?

Samsung is already building more than half of the iPhone parts. If, BIG IF, iPhone 7 does well, Samsung will do well. To beat Samsung, Huawei, Xiaomi and many others, Apple has to built innovative parts themselves. The parts they're using now are all (except the A10) widely available on the market for everyone. The only difference is that Apple sells them far above cost price and put an on it.

 

[djcerla]

What if they don't include your fancy wireless AirPods and bundle the cheap Lightning headphones that most people are expecting?

That would be a mistake; including the AirPods is a statement: "no more wired headphones; let's start the change now", not including them would just trade one cable for another, and look like an inconvenience ("you can't listen to music when the phone is charging!"). That would be very disappointing.

EDIT: also, the AirPods would be a nice upsell for the iPhone SE.

 

[9081094]

Foxconn makes most consumer electronics goods (somewhere around 50% of everything in the world).

So why is it that when Foxconn slips people blame Apple and not the other hundreds of companies they manufacture for?

Oh right, because Apple.

Because only Apple is capable of making that impact on Foxconn.

 

[OllyW]

That would be a mistake; including the AirBuds is a statement: "no more wired headphones; let's start the change now", not including them would just look like another inconvenience ("you can't listen to music with a discharged phone!!!"). That would be very disappointing.

I would be happy if your prediction came true (without an associated price hike) but deep down I still think you are going to be disappointed when the announcement is made next month.

 

[Fedelix]

I wonder if the slump isn't just about a "lack of innovation" but maybe more, or at least partly, due to market saturation. So many people have iPhone's now and other smartphones that eventually sales would slow down at some point.

Market Saturation? I don’t think so.

 

[smacrumon]

The market isn't saturated yet. But people have a lot to choose from these days. Innovation didn't come from Apple for the last two years. People are holding out for what... the iPhone 8? When sales of the iPhone 6S fell short... a lot of people told they were holding out for the iPhone 7 and reasoned this downfall... What will happen to the iPhone 8 in 2017 when Samsung is showing their foldable Galaxy 8 next april?

Samsung is already building more than half of the iPhone parts. If, BIG IF, iPhone 7 does well, Samsung will do well. To beat Samsung, Huawei, Xiaomi and many others, Apple has to built innovative parts themselves. The parts they're using now are all (except the A10) widely available on the market for everyone. The only difference is that Apple sells them far above cost price and put an on it.

Wonderful. A frank account of the situation at hand.

 

[thasan]

i dont know about u guys but i absolutely hate the current headphones. They hurt my ear like crazy
i guess that "nice fit in the ear" design will remain the same without any sort rubber bud

 

[9081094]

That would be a mistake; including the AirPods is a statement: "no more wired headphones; let's start the change now", not including them would just look like another inconvenience ("you can't listen to music when the phone is charging!"). That would be very disappointing.

EDIT: also, the AirPods would be a nice upsell for the iPhone SE.

It seems you are more concerned in Apple profits than satisfying customers. Third party companies already make excellent "AirPods" and for certain better then "included" Apple "AirPods".

My advise to Apple: don't include any and drop the price to that of comparable products on the market.

 

[macfacts]

I wonder if the slump isn't just about a "lack of innovation" but maybe more, or at least partly, due to market saturation. So many people have iPhone's now and other smartphones that eventually sales would slow down at some point.

This whole "doom and gloom" sentiment seems silly to me at this point. The companies are still making money hand over fist here and they're not even close to going under or anything like that.

The doom and gloom feeling is what investors feel. It isn't about Apple closing shop. Investors care about how much more Apple sold vs last year/quarter.

Selling the same amount of iphones as before only keeps Apple in business, it doesn't help investors make money.

 

[9081094]

Wonderful. A frank account of the situation at hand.

Thanks man! I can see on your other posts that we are on the same page. I can't agree more with your articles as well!
I could say this is nice! But in reality it's sad that Apple doesn't somehow convince us other ways.

 

[EricTheHalfBee]

Because only Apple is capable of making that impact on Foxconn.

Wrong. iPhone sales were only down 15%. Foxconn was down 31%. Please explain how Apple is responsible.

 

[djcerla]

I would be happy if your prediction came true (without an associated price hike) but deep down I still think you are going to be disappointed when the announcement is made next month.

Assuming there are no major surprises in the iPhone 7, the new headphone tech will be a nice differentiator (no Android phone includes BT headphones in the box); the earbuds may also contain some new party trick that common BT headphones lack (as the aforementioned charging from the phone, heart rate measuring, etc).

The move wouldn't be that expensive as far as margins are concerned, but would have the power to turn the 3.5" jack expected backlash into a pretty much needed selling point, so it would be very very stupid not to choose that parth.

"Statement" vs. "Money Grab": pick one, Apple.

 

[EricTheHalfBee]

The doom and gloom feeling is what investors feel. It needs isn't about Apple closing shop. Investors care about how much more Apple sold vs last year/quarter.

Selling the same amount of iphones as before only keeps Apple in business, it doesn't help investors make money.

It helps long term investors make money. Who gives a damn about short-term investors or day traders looking to flip stocks as fast as possible to line their pockets?

 

[now i see it]

There has never been a business in the history of the world that has been able to consistently maintain the growth rate of a tumor. It's impossible.

 

[9081094]

Wrong. iPhone sales were only down 15%. Foxconn was down 31%. Please explain how Apple is responsible.

It's not only iPhones what Foxconn glues together for Apple. It's iPads, Macs, MacBooks etc. as well.