Supply Chain Indicators Point to Poor February for Apple

[UnfetteredMind]

I don't think people are crying for a game-changing product.

I think people miss Steve Jobs. Period.

This may be hinted at in one response that they always looked forward to Steve's presentations. He wasn't always introducing great, new break-through products, but the presentation itself was generally very good regardless. I don't think Cook, Schiller and others have Steve's "magic" in the presentation department, but that doesn't mean that they aren't producing great products at the same or even better rate. Did Jobs' presentations sell products or perhaps something else? I would argue more the latter. The faithful may have hung on all of Steve's words, but I don't believe the general population did.

Perhaps unfortunate, Forestal seemed to be one who could give a pretty decent rendition of Steve's presentations.

 

[mabhatter]

That's what happens when you put all your eggs in one basket.

But they're still SOLID GOLD eggs....

I agree Apple hasn't LAUNCHED any new product all quarter. That's OK for me, my wallet needs to rest anyway. But without the sudden mad dash to the Apple Store for new swag, I'm sure their numbers are down.

That said, Apple will end up with a 30% profit cut... That's gotta hurt!!! Till you realize that's $8-9 BILLION instead of $13 B like in previous quarters. That's a slightly smaller "vastly, staggeringly, enormous pile of profit" that's bigger than entire COUNTRIES.

Think of all the money they will save on fewer ummpa lumpas with bad backs from hauling all that swag!

 

[gnasher729]

Well it does when those sales come at the expense of iPhone sales. The bottom line is there are a lot more people now choosing Samsung phones rather than the iPhone and that is trouble for Apple. The iPhone isn't necessarily the "it" phone it was 2 years ago.

Actually, iPhone sales and iPhone market share in the phone market have been growing continuously all the time. What confuses people is the move from cheap feature phones to cheap smart phones, which means currently Apple's share of the artificial smart phone market is shrinking. There is still a huge majority that spends $100 on a phone and not $500. The difference is that these people nowadays fall in the "smart phone" category, where two years ago they didn't.

 

[NoNothing]

Exactly the same as Apple does.

Exactly? Not even close. Apple has huge direct to end user sales and also reports channel inventory.

 

[DaffyDuck]

I think Android as an OS is something that hardware has had to grow into. The hardware is finally at a point where it can comfortably power all of the power hungry features like widgets, live wallpapers, etc. smoothly and with good battery life. Meanwhile the app ecosystem is approaching that of iTunes. Even the games I play the most are on Google Play now. Apple has decided not to cater to those, like me, that would like a truly larger screen. Ironically, it is my iPad that has made my iPhone screen feel too small.

but on the flip side (playing devils advocate)

Apple only sells 1 "premium" current model. There's no choice, no options. if you can't afford their premium product, you cant afford their product. there is no choice in the matter. you get the exact hardware, software and platform they give you in one device.
They might not get the volume, so they're reliant on margins and brand loyalty.

what happens when thats not enough? The point that I think samsung has made, is that people are different. We're all "unique and beautiful snowflakes". a 4" phone for you, might not nice for your mom. So your mom MUST sacrifice what she wants just to use an Apple, while paying a premium price for a device she doesn't necessarily enjoy using.

Samsung is taking the shotgun approach. Sure their margins diminish on the lower end, volume sales side, with some possible weaker performances. But hey, those who want to only spend $150 and buy a low end phone for the 2 phone calls a day they make can, while senior executive who needs a pocket computer can spend the $650 and have top of the line 10" phone.

While the average buyer looks at the iphone and says "is this what i want?" and if they hesitate for any minute because it possibly doesn't fit them qutie enough, Samsung has enough options so that if one samsung device doesn't fit them, There WILL be another one that does. Apple doesn't give that option. if the iphone doesn't fit what they want... take it or leave it


This doesn't even include what are self perceived "qualitative" issues you threw at samsung with 'cheap" and 'crappy', many of which are biased and unsubstantiated.

I'm not saying that Apple's products aren't damn well made and of good quality, but they really have NOT lately done anything to say they are significantly better built than anyone else. chocie of "metal v plastic" doesn't mean one is better quality than the other, and believing this alone is pretty... ignorant.

 

[Speedy2]

not. apple success is measured by its PROFIT, not stock price. PROFIT is the air companies breathe.

Their profits are hardly growing anymore. Did you look at the most recent earings report and the current outlook? Apparently not close enough.

Incorrect. apple sales are true sales, as in, to paying consumers.

They count sales into the channel like everyone else. Do you ever read the earnings calls? They always report the number of devices in the channel, and since they are officially sold to the carriers and retailers, they HAVE TO be accounted as such.
Your confusion probably stems from the fact that after new iPhones or iPads are launched, they are usually on tight supply and channel inventory is close to zero, which means every item sold is actually in the hands of the customers. When they can produce enough, channel inventory fills up, and retailers like Amazon, BestBuy have the stuff in stock.

You might remember this story:
http://www.tech-thoughts.net/2012/07/apple-q3-results-what-analysts-missed.html

I quote Tim Cook, as he explains why Q3 iPhone sales were lower than expected:
"As a reminder, in the previous quarter in our fiscal Q2, we launched the iPhone 4S in China in January. We added China Telecom as a second carrier in March. And as we proceeded across the quarter, we increased the channel inventory to accommodate the sales and to reach our target inventory of four to six weeks. The remainder of the sequential revenue decline is mainly attributable to normal seasonality after the very successful iPhone 4S launch. We did not see an obvious impact in Q3 that we would associate with the economy in mainland China."

 

[NoNothing]

And ad revenue growth is increasing (with the economy) while iPhone and iPad sales growth is decreasing.

CPC for Google ad revenue is dropping and their revenue growth is slowing much more than Apple's sales growth. For example:

iPhone saw over 30% daily increase YoY of unit sales on iPhone last quarter.
iPad saw over 60% daily increase YoY of unit sales on iPad last quarter.

 

[charlitos]

Foxxcon has hundreds of thousand of workers

So Foxconn hires 5000 people to reduce/improve their workforce while their largest customer Apple stalls demand for their services?

 

[alexgowers]

Bull,

Apple stock may go up and down and it'll have no relation to business. Stock is exactly that the stock investors put in a company. It suits them to have stock fluctuate as much as possible to create profit, it in now way reflects apples profitability or relavence.

Predicting sales based on resellers is pointless as apple sells he vast majority direct online or through their stores. I would never buy through any reseller.

Apple has done plenty of products the issue is mostly economic slow down in America etc. but apple is opening new markets with china so expect more profit for sure in these. By inference you can assume less products sold in more markets could mean bumper profits.

We all know America is now a poor country in many areas so its becoming less relavent to reference it as a predictor of world wide demand

 

[Oletros]

So Foxconn hires 5000 people to reduce/improve their workforce while their largest customer Apple stalls demand for their services?

I'm not the one claiming that demand is reducing, I''m saying that recruiting R&D people has nothing to do with greater demand short term like the ****ing Appleinsider article implies.

And yes, stall demand and recruiting for reducing workforce automating production are not mutually exclusive things.

 

[Speedy2]

Now for something completely different...

Apple got a lot of critique for the Maps application. Including from myself.

Turns out that all the things that I complained about have been fixed. Huge areas in the UK with awful satellite images seem to have been all fixed. Large parts of South Germany that were equally awful are now just fine.

Not really.
Street maps and POIs are still awful in Germany, with the very same errors as on day 1. Also there's still no public transport routing. Nothing in this department has been fixed.
I don't care much for satellite images, do you?

 

[Oletros]

Predicting sales based in resellers is pointless as apple sells he vast majority direct online r through their stores. I would never buy through any reseller.

Perhaps it is true for computers and iPads, but I don't think that the majority of iPhones are sold directly by them

 

[Michael Scrip]

Well it does when those sales come at the expense of iPhone sales. The bottom line is there are a lot more people now choosing Samsung phones rather than the iPhone and that is trouble for Apple. The iPhone isn't necessarily the "it" phone it was 2 years ago.

Sure... Apple is #2 in sales volume behind Samsung.

But 47 million iPhones in 3 months averaging $600 a piece isn't something that can be ignored.

That's 500,000 iPhones... every day.

It appears that it's Apple vs Samsung now. But the truth is... both companies will be around for a long time.

Every Samsung sale could take away from an iPhone sale. However... Samsung makes phones that sell for $100 or $200 while Apple's cheapest model starts at $450

Price pays into this too. Apple only offers mid to high-end phones.

It's not exactly a level playing field, is it?

So I have an issue with your blanket statement "The bottom line is there are a lot more people now choosing Samsung phones rather than the iPhone and that is trouble for Apple.

We don't know if more people would continue to choose Samsung phones if Apple had models across more price points.

That's why I brought up the fact that only 1/4 of Samsung's smartphone sales were mid to high-end phones... which are in direct competition with Apple's offerings.

The bulk of Samsung's sales are low-end phones... a market that Apple doesn't cater to.

So is Apple really behind?

 

[baryon]

One day you hear "best quarter ever" then the next day you read "worst month ever" then "rising market share" then "decline in market sales". Not sure what it all means, but it sure is contradictory and confusing as hell.

All I can say is that Apple's recent product releases were very nice compared to previous ones. The iPad Mini, the slim iMac, Retina MacBook Pro, iPhone 5, etc… happened almost all in one go. No matter what analysts say, I can't believe that people don't like these products. It doesn't add up, in my opinion.

 

[NoNothing]

And 99% of Apple's revenue is from hardware sales, where are you getting at?

Not unless Apple is pulling in over $1,200 trillion per year. Otherwise, you are a bit off on your 99%.

 

[UnfetteredMind]

I DON'T want anything new. I'm pretty happy with recent products.

I believe the smartphone market has gotten to this point faster than the personal computer market. At what point is the device you currently have "good enough" and you're happy to keep it for a longer period of time? The pace of smartphones has increased so rapidly, I believe we're either there now or approaching it quickly. I still have an iPhone 4 and it more or less does what I need. If new cars start rolling out with Siri and other integrated technologies that require a later smartphone, that could drive me to a new phone.

On the other hand, it seems on the Android side, many times you need to upgrade your phone to get the latest OS. I have to wonder if people will tire of this prior to Google getting a better handle on this and providing more timely updates?

 

[charlitos]

I'm not the one claiming that demand is reducing, I''m saying that recruiting R&D people has nothing to do with greater demand short term like the ****ing Appleinsider article implies.

And yes, stall demand and recruiting for reducing workforce automating production are not mutually exclusive things.

But they are quite unlikely to occur simultaneously wouldnt you agree? I dont think you understand my point. Im not saying that is clear that the new thousands of hires from Foxconn and TSMC (which happened to have Apple as their largest or one of their largest customers) implies that Apple's demand for their services have increased. Im just pointing out that it makes very little sense for these companies to show such healthy signs of growth while their customer Apple seems to be suffering such low demands and reducing productions all across their supply chain according to "analysts".

Here is a statement from Foxconn when the "analysts" started to come up with conclusions about their low recruitment levels in January:

"This was due to an unprecedented rate of return of employees following the Chinese New Year holiday(which lasted a week starting February 10). This was not related to any single customer, and any speculation to the contrary is false and inaccurate".

Im simply dismissing this entire article on Macrumors based on facts extracted from AppleInsider. I dont care about what conclusions AppleInsider came up with, Im just observing the facts and with those facts it isnt that hard to understand when "analysts" talk out of their..

 

[Winnie6052]

Innovation

Look Samsung has been innovating over the past 3 years since the iPad was introduced..putting Apple to shame.....

They copied ( iPhone )and introduced a smartphone
They copied ( ipad )and introduced a tablet....
They copied ( mac air )and introduced a laptop
They copied Passbook app and introduced Wallet

Now they are working on an OS called iCopy based on Android and iOS.

Come on media lets report the facts.

 

[UnfetteredMind]

The Chromebook Pixel. I don't remember any device makers name being associated with that.

Forgot about that one. Everything I see does indeed indicate Google is the manufacturer (vs another vendor).

 

[maxosx]

On the other hand, it seems on the Android side, many times you need to upgrade your phone to get the latest OS. I have to wonder if people will tire of this prior to Google getting a better handle on this and providing more timely updates?

Android is every bit as much of a mainstream smartphone as Apple is from the perspective of your average user.

Unlike years past, the current crop of Androids released over the last year have a very stable fast and fun OS.

The truth is most people don't know what an OS is, nor do they care.

Living a normal life, they do not need the latest version of something they know nothing about. All they care is that their phone works as well as when they bought it. Androids "just work" much like iPhones do.

As an enthusiast I enjoy BOTH iOS and Android. In fact my truth is I am a very long term Apple computer user even before iOS existed. Because of my strong bond with Apple I care. And when I care, I get both frustrated and angry with Apple for resisting current trends that would benefit them.

There's a supremely easy solution to the problem.

If Apple would offer the current size iPhone, along with one more that is larger (much like they do with their laptops) the problem would be solved. Users that want a large efficient screen for their intense smartphone use, would have that choice.

Soccer Mom's and others who rarely use all the features of a smartphone would be able to continue to enjoy the current size iPhone.

 

[nazaar]

I dunno... Apple sold 47 million iOS phones last quarter... and 22 million iOS tablets last quarter too.

Obviously somebody's happy with iOS...

uhm... I'd venture to say that they're probably more happy with the hardware than iOS. Of course to the regular user it probably doesn't make a difference, but to advance users I think it does.
iOS isn't perfect and could stand for some much needed improvements.

 

[Speedy2]

I keep hearing this, yet the #s say otherwise. The US % Apple is going up, Samsung/Android down.

The world market even says the same..and yet Apple isn't even close to being on the same carriers as Samsung/Android.

You're only half-right. US market share has grown a little, but worldwide market share is flat and even falling in some markets, especially in Europe. At the same time, Android market share is growing everywhere, including the US.

http://www.tech-thoughts.net/2012/12/smartphone-market-share-trends-by-country.html

It's obvious that Apple hit a ceiling. The high end of the market can only get so big.

 

[Michael Scrip]

but on the flip side (playing devils advocate)

Apple only sells 1 "premium" current model. There's no choice, no options. if you can't afford their premium product, you cant afford their product. there is no choice in the matter. you get the exact hardware, software and platform they give you in one device.
They might not get the volume, so they're reliant on margins and brand loyalty.

what happens when thats not enough? The point that I think samsung has made, is that people are different. We're all "unique and beautiful snowflakes". a 4" phone for you, might not nice for your mom. So your mom MUST sacrifice what she wants just to use an Apple, while paying a premium price for a device she doesn't necessarily enjoy using.

Not enough for what?

Isn't it amazing that Apple sells as many iPhones as they do despite having only a few models? That's the big takeaway from this. You'd think Apple would have dismal sales since they only cater to a certain market or demographic. But it's quite the opposite... iPhone sales are at record levels.

From what you're saying... Apple could potentially have more sales if they offered more choice. And I agree.

But Apple is still the #2 manufacturers in sales in an extremely crowded market of a dozen different manufacturers. Not bad.

Samsung is taking the shotgun approach. Sure their margins diminish on the lower end, volume sales side, with some possible weaker performances. But hey, those who want to only spend $150 and buy a low end phone for the 2 phone calls a day they make can, while senior executive who needs a pocket computer can spend the $650 and have top of the line 10" phone.

While the average buyer looks at the iphone and says "is this what i want?" and if they hesitate for any minute because it possibly doesn't fit them qutie enough, Samsung has enough options so that if one samsung device doesn't fit them, There WILL be another one that does. Apple doesn't give that option. if the iphone doesn't fit what they want... take it or leave it

This doesn't even include what are self perceived "qualitative" issues you threw at samsung with 'cheap" and 'crappy', many of which are biased and unsubstantiated.

I'm not saying that Apple's products aren't damn well made and of good quality, but they really have NOT lately done anything to say they are significantly better built than anyone else. chocie of "metal v plastic" doesn't mean one is better quality than the other, and believing this alone is pretty... ignorant.

Yeah... it's difficult to compare Apple and Samsung as they each cater to different markets with their product lines.

Samsung sells phones from $100 to $700... Apple sells phones from $450 to $850

That point alone helps Samsung move more units around the globe. The shotgun approach certainly generates more sales by volume.

A quick look at the average selling price of both companies' smartphones tells the same story:

The ASP for Samsung's smartphones is around $300... the iPhone's ASP is $600

Samsung sells more cheaper phones than Apple sells expensive phones.

Again... different companies... different philosophies... different strategies. Both are valid.

 

[Dmunjal]

Again... different companies... different philosophies... different strategies. Both are valid.

But doesn't it depend on the market? Maybe the high-end market (US subsidized model) is becoming saturated and the next big growth in smartphones is coming from Asia which means non-subsidized lower-cost models.

 

[Michael Scrip]

uhm... I'd venture to say that they're probably more happy with the hardware than iOS. Of course to the regular user it probably doesn't make a difference, but to advance users I think it does.
iOS isn't perfect and could stand for some much needed improvements.

Well... I'd say people are more interested in what you can DO with the phone... in which software plays the biggest part.

Hardware only does so much... it's a screen and some buttons. Any interaction, however, takes place in the OS.

But I agree... I'd like iOS 7 to knock my socks off.