You missed the point. It's not doom and gloom for Apple. They have what 200 billion in cash. So they can weather this storm for a while. But going back to what we originally posted about was about Apple dying or going out of business. You just alluded to that as a deflection because you were wrong about sales and market share.
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iPhone Drops to 15% Market Share as Smartphone Market Goes Flat
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But they are competing. John wants an iPhone but in no way can afford one so buys what he can afford.
If Apple is not competing directly it is because they have consciously decided to abandon / neglect this bucket. Beccause they have deliberately decided to "not compete" doesn't mean it doesn't count.
Or should we only measure the markets Apple specifically competes in?
That depends on their objective. I think they're clear about not trying to compete in markets there's nothing to be gained. The Apple TV for example is not trying to compete. Making a profit is a requirement to make the Apple TV at all, ofcourse, but that's about all they're doing.
In the global market they're losing market share. I agree with that. That market share reduces profit I also understand. That the market share loss is due to pricing is dependent on the reasons for that.
If the loss of market share is due to a lower price of the direct competition; like the higher end Samsung (and other brands I as an example have considered like some sony's and HTC's) then it may be true Apple has a problem.
If the loss of market share is because phone sales in the higher end are down entirely, and the lower end sales are actually improving (because of the emerge of third world countries). Then Apple has no problem at all and should stay with its pricing. It would hurt them if they'd lower pricing in that case, and I don't even think the sales would go up substantially.
I think the latter is true.
The discussion is also problematic and difficult because the actual reasons for customer decisions are not agreed upon.
I think people buy Apple because of less quantifiable reasons than storage, or megapixels, but more for "what are the best photo's made with" and "do I have to delete stuff if I buy this". Now if I'm technically better versed for example (I am in comparison to average) I'd be interested in things like technical details, but those tend to be different than the marketing equivalents of those details. I look at photo sensor size, not megapixels. I look at screen technology (IPS or TN) and benchmarks (battery duration) not battery size.
So yeah, I'm maybe in the wrong discussion. That doesn't even mean I'm right, btw.
@jamezr: Market share is directly linked to profits: Agreed. Pricing is directly linked to marketshare: disagreed. Profits are directly linked to pricing: agreed. I'm not sure about our discussion and what you meant I the last post.
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Not saying that's what is happening here, but yes you can.
If competitor X sells more and you sell the same amount as you were selling , you've lost marketshare....
You cán lose market share without losing sales. But only if the market grows.
They did sell less in this case. Sales are linked to profits. Why I think that's not a problem I've explained a few posts up, I'd love to discuss that.
Thats not true at all. Please understand that market share is literally just that. Exactly as it sounds. It's what percentage of the users are using your device/product.
this has no direct link to sales numbers going up or down.
Examples (using made up figures) to show how Market share can go down, while sales increase (similar to what happened in the smart phone industry in the last decade)
Year 1: Company A sells 10m phones, Company B sells 10m phones. Market share is 50%/50%.
Year 2: Company A Sells 15m Phones, Company B sells 20m phones. Market Share is now 42% / 58%
Both companies increased volume of sales. But one company saw decline in market share. This indicates that the market itself is growing.
Further: Market Share also has no direct link to profits. Market share is only about volume and numbers of units. This is completely irrelevant to profit and profit margins, as those are based on individual unit pricing.
More Examples continuing from above:
Company A sells their phones at $650 / device. Costs are $150. They earned $500 profit off Each device.
Year 1 profit would be 5,000
year 2 profit would be 7,500
Company B sells their phones at $650 / device. Costs are $300. They earned $350 profit off each device
Year 1 profit would be 3,000
Year 2 Profit would be 7,000
At the end of the day, Marketshare in a vacuum of data is a completely meaningless number that can only be used for bragging rights. It is important to understand why it is used, but it is being generally overused today just as a statistic in a pissing match.
At the end of the day, why we use market share as a statistic is to help us figure out unit sales, since most of the tech companies don't accurately release that data. But thats really all it can be used for. Unit sales numbers and popularity contests. There is no direct link from MarketShare to profit. and it entirely possible to lose marketshare while increasing sales and profits.
However, in 1st Q 2016 case for apple, Apple did in fact announce a decline of about 10 million units sold.
I disagree even your own examples of market share are tied to sales....Sales go up....market share rises as well. You can't have one without the other.
I'm not sure what you're saying. Maybe you're trying to say something, But not using the right terminology?
you can gain / lose marketshare even if you have less sales if the whole market is shrinking as well.
An example of this:
Year 1: Company A sells 10 Million, Company Be Sells 10 Million: 50%/50%
Year 2: Company A Sells 9 Millions, Company B sells 5 Million: 64%/36%
Market share increased YoY, despite a decline in sales, and the overall market selling less.
This is an example of whats currently going on in the PC industry.
Apple has grown to 13% Market Share in the PC Industry, But has not increased sales by any reasonable amount (Last quarter saw less sales)
The whole industry sold less. Apple increased market share, because one or more of the other players had a decrease of sales larger than Apple saw.
the only tie that Market Share has to sales, is in volume. Not dollar amounts, and not profits.
Further, you can have increasing market share, but losses / decrease in profits if the cost to price ratio changes, but still continue to sell units.
you can disagree all you want, but this isn't a matter of opinion. this is one of those rare cases, where this is math based facts that can be objectively measured and calculated though.
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Investors care about companies' whose stock prices follow an upward sawtooth graph. Analysts play their part in manipulating expectations to make that happen. Investors buy up on the dip, sell off on the tip.
Except Apple is using more money than before (r&d for Apple watch, car, TV, pencil, etc), combine that with selling same or less than before, that means less profits.
That's all fine and dandy, I was just pointing out the logical flaw in what that user stated.
The latest data from research firm IDC reveals that Apple's smartphone market share dropped to 15.3 percent in the March quarter as the worldwide smartphone market fell nearly flat during the first three months of 2016.
Apple yesterday reported iPhone sales of 51.2 million during the three-month period ending March 26, compared to 61.2 million units and 18.3 percent market share in the year-ago quarter. Meanwhile, overall smartphone shipments totaled 334.9 million during the quarter, a year-over-year increase of only 500,000 units.Samsung continued to lead the market with 81.9 million smartphones shipped for 24.5 percent market share, down only slightly from 24.6 percent in the year-ago quarter. Huawei, OPPO, and Vivo rounded off the top five smartphone makers in the quarter as Chinese vendors continue to churn the top of the charts.
Huawei, which manufactures Google's popular Android-based Nexus 6P smartphone, shipped 27.5 million handsets during the quarter for 8.2 percent market share as it attempts to compete with Apple and Samsung in the U.S. market and other regions beyond China. Its market share was 5.2 percent one year ago.
OPPO and Vivo, meanwhile, pushed out Lenovo and Xiaomi respectively for the fourth and fifth spots on the top smartphone vendors list.
Article Link: iPhone Drops to 15% Market Share as Smartphone Market Goes Flat
I'm not surprised with iOS 8 full of problems. Windows 95 and windows 98 was more stable and reliable than iOS 8. It seem every new version of iOS has some bug to Apple comes up with some fix.
Apple really needs to make OS X run on iPad or iPhone or come out with better iOS.
Cook really needs to wake up.
It's not numbers that have driven Apple to the most valuable company on earth, but rather the meticulously crafted ecosystem and user experience as well as commanding where the market is heading.
Under Jobs, Apple was willing to adapt the newest tech that would actually make a significantly better user experience even at cost of price (and hence volume and/or profit margin). Think when they adapted SSD in MBA, Retina display in iphone... etc. They all very expensive components back then (remember the $999 optional 64GB SSD?), but the difference it made on user experience was clear and could be felt right away. Eventually, other companies had to follow suit because Apple was able to provide an unparallel product that consumer really wanted.
And Apple's value rose to stratosphere because it had that unique market driving power.
Now their product often lags behind competitor offering and no longer possesses that driving power it once had.
It's not numbers that have driven Apple to the most valuable company on earth, but rather the meticulously crafted ecosystem and user experience as well as commanding where the market is heading.
Under Jobs, Apple was willing to adapt the newest tech that would actually make a significantly better user experience even at cost of price (and hence volume and/or profit margin). Think when they adapted SSD in MBA, Retina display in iphone... etc. They all very expensive components back then (remember the $999 optional 64GB SSD?), but the difference it made on user experience was clear and could be felt right away. Eventually, other companies had to follow suit because Apple was able to provide an unparallel product that consumer really wanted.
And Apple's value rose to stratosphere because it had that unique market driving power.
Now their product often lags behind competitor offering and no longer possesses that driving power it once had.
It's a good thing Jobs died when he did. I don't think even he could have lived up to his legacy.
Maybe not however you kind of get the feeling that the iPhone / iPad was just a stepping stone to something bigger. Looks like that died with him.
It's good for Tim. All TC has to do is stop innovating. Milk SJ's legacy to make worse products with higher profit margins. Pray we fondly remember the SJ era to buy them.
Exactly....as the subsides have gone away the ASP Average Selling Price of the iPhone has gone down.
As the ASP goes down so will the high profit margins Apple has enjoyed as well. If the iPhone SE sells it will bring the ASP down even more cutting into the profit margins
The ASP will go down next quarter when the iPhone SE sales are reflected.
http://www.zdnet.com/article/heres-how-apples-13-year-growth-streak-came-to-an-end/
Don't forget the recent rise of installment plan options here in the states. That pretty much takes the place of subsidies.
I actually disagree. If Jobs is still around, we probably wouldn't see the 16GB base model on a 4k-capable phone joke. Jobs has always been known for his attention to details and not just pleasing the guys on Wall st. I don't think a lousy UX is something Jobs would have taken as a compromise.
Apple was never a company that copy fads or give people option and was always a company that do things my way. Where other companies into fads like making bigger phones, curved phones or Samsung round phone so on. Apple phone very much static and has not change much over the years.
Apple like to always think it better and smarter than the people who by their products. And saying no you don't need this but this.
Like laptops with little ports thinking future a feather lightweight thin computer is more important than ports or basic performance. And basic stuff like 3D maps, google earth, HD clips on youtube will cause computer to overheat and get very slow is not good. People that don't like Apple way just go to different company.
We'll see if it helps. I think all the carriers are starting to offering something like iPhone forever like VZW does.