Cook talks slumping iPhone sales in interview, to reportedly hold 'all-hands' meeting with...

Posted:
in General Discussion edited January 3
After issuing an earnings forecast correction on Wednesday, Apple CEO Tim Cook sat down to discuss the anticipated revenue dip and a range of related topics including rising diplomatic tensions between the U.S. and China.

Tim Cook
Apple CEO Tim Cook


The 13-minute interview with CNBC runs the gamut -- Cook discusses everything from iPhone subsidies to Apple's trade-in program -- but it manages to put the surprise forecast cut into perspective.

On Wednesday, Cook released a note informing investors that revenue for the first quarter of 2019 will be billions of dollars shy of an original estimate from November. Quarterly results won't be released until Jan. 29, but Apple's revised guidance shows some major issues lay ahead for iPhone.

In the interview, Cook reiterated what he said to investors and put the blame for weak iPhone performance squarely on China. Apple's top brass noted a slowdown in the important Chinese economy heading into the second half of 2018, a situation worsened by recent trade disputes with the U.S.

"It's clear the economy began to slow there in the second half. And what I believe to be the case is that trade tensions between the us and China put additional pressure on their economy," Cook said.

Additionally, Cook also put some of the blame for weak quarterly results on supply constraints impacting an impressively diverse lineup of products launched over the past few months. "We had some supply constrains during the quarter. We had an unprecedented number of new products during the quarter. New watches, new iPad Pros. Most of these were constrained during the quarter," he said during the interview.

On a positive note, Apple services and wearables categories reached new highs during the holiday quarter. Services, which has been Apple's fastest-growing category over the past year, performed especially well over the past three months.

"This is incredibly exciting for us because so many things hit records in there," Cook said. "The App Store did, Apple Music hit a new record, Apple Pay hit a new record, our search ad product from the App Store hit a new record, iCloud hit a new record."



Moving on from the question of iPhone, Cook addressed growing uncertainty surrounding China, particularly his own safety during travel.

Recently, a Huawei executive Meng Wanzhou was taken into custody in Canada at the request of the U.S., leading many to wonder if China would target U.S. execs in retaliation. Cook, however, doesn't seem to share this fear.

"I was just there in October. I'm going back later this quarter. And so it's not something I'm even thinking about is the truth," he said.

The mounting pressure has Apple on the defensive, and the company is apparently trying to mitigate fears both externally and with employees. According to a report from Bloomberg, Cook will be addressing these concerns internally as part of a town hall meeting on Thursday.
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Comments

  • Reply 1 of 48
    coolfactorcoolfactor Posts: 1,368member
    Hey Tim, I would've bought a Mac mini if it wasn't ONE THOUSAND DOLLARS (in Canada)!
    mike54propodapple4lizifetailstoodecoderringkitatitcolinng
  • Reply 2 of 48
    From 2011 through 2017, many so-called analysts who didn't understand Apple, said that Apple stopped innovating, and the other players in the market caught up. They said Apple could not innovate without Steve Jobs. 

    It turns out that you can innovate without Steve Jobs (look at WayTools, Telsa, and other companies). You just really have to want it. Referring to what Steve said, R&D isn't about writing a cheque. You have to think on behalf of your customers' best interests, all-round, including fairness and providing value. 

    When the original iPhone dropped in price the year after it was released, Apple issued a $100 refund for every single early buyer. Apple took a small hit on the bottom line to be loyal to their customers. And that's why the Apple brand name was so strong in 2012. 

    2018 rolls around and finally the so-called analysts are right. Apple now increments but charges category-defining prices. iPad Pro 12.9" (512GB LTE) went from CA$1606 (2017) to over CA$1900 (2018). The damn pencil went up by 50%!!! Same goes for iPhone, Mac mini, MacBook Air - just about everything Apple makes. 

    If it was $1000 or more, it went up by $200-$300. Overnight. If it was under $1000, it went up to nearly $1000. Base model Mac mini went from $499 to $799. And all they did was put back the quad core that the 2012 model had that they took out in 2014. And the audacity to shout on stage at the keynote, "more cores is faster." No shit? 

    Is it a mystery that people aren't buying? 

    Steve used to say that Apple's customers were smart. If you want to lead, you got to make things for the leaders. i.e. artists, musicians, directors, and other professionals who do amazing things with their systems and push the boundaries. 

    But instead Apple is fooling itself thinking it can chase easy money. They send demo units to "influencers" i.e. people with YouTube channels. They hope that Apple customers are truly sheeple who just buy what "influencers" show off. 

    Apple is failing because it is pandering to fools, hoping that "a fool and their money soon part." They forgot their customers are artists, creatives, directors, engineers, authors, teachers, scientists. 

    We can easily see Intel is polishing a turd when they are at 14nm+++ (i.e. didn't do 10, 10+, and certainly didn't do 7). Nobody is going to buy their crap. Everyone is pissed off at Intel, to the point they are booting up their own silicon teams. 

    Perhaps the only area that Apple is leading in right now - is the A-series silicon. They used to lead in development tools too, like Swift. But hey, they pissed off the people who made Swift so they went elsewhere. 
    ElCapitanuktechieMisterKitmike54propodkiehtanapple4lizifetailstooshark5150decoderring
  • Reply 3 of 48
    I think there are multiple problems.

    The eye watering price of MacBooks and iPhones is putting off a lot of previously loyal fans. I often hear that friends plan on getting a new Mac then change their mind when they work out the actual cost of getting a machine with the RAM and storage they need. The inability to upgrade after purchase makes it a difficult buying decision for many. I appreciate why this is, but it’s a challenge for potential purchasers. 

    Secondly the technology is so good that there’s little reason to upgrade an older device. My 5 year old MacBook Pro is easily fast enough for my needs and the new ones offer no great benefit for me that could justify the high cost. 

    A lot of enthusiasts and keen Apple users bought an iPhone X last year but given the high cost see little reason to upgrade to an iPhone XS which looks identical and feels the same in use. I love my iPhone XS but cannot recommend anyone upgrade from an iPhone X as it doesn’t offer any obvious benefit. Most users would be unable to tell the difference without running benchmarks. That’s not to say it isn’t enormously faster and have many other technological improvements - it’s that most users won’t notice. Without some significant new features it’s difficult to see where Apple (and other manufacturers) can go with smart phones - were approaching the limit of what consumers need in terms of hardware. 

    Meanwhile the wider market of people who thought $1000 was too much for a phone last year still feel that way now. 

    Exchange rates and challenging market conditions obviously play a big part too. The high dollar against the pound means Apple prices really are extremely high in the UK and it’s making Apple products far less affordable. 
    edited January 3 propodkiehtananantksundaramfirelocktedz98kitatit
  • Reply 4 of 48
    Hey Tim, I would've bought a Mac mini if it wasn't ONE THOUSAND DOLLARS (in Canada)!
    I would even pay the higher price if it was easily upgradeable.
    uktechieMisterKitmike54decoderringtedz98colinng
  • Reply 5 of 48
    There is also another issue that nobody really wants to talk about in fear of not being PC, but nobody but a small section of the potential customer base want to listen to a potty mouth SJW CEO going on about how their customers should live their lives and what values they should hold. 

    If Timmy wants to be an activist - fine - keep it at the local level where it might be relevant, but the moment he steps outside the US, his message is either irrelevant because many countries gained the rights he keeps fighting for even decades ago, or it flies right in the face or their religion, culture and belief systems.  Incidentally these geographies falls under Apple's definition of emerging markets. So it is not only price and currency issues that discourage customers in these markets. 
    tbornotmike54anantksundaramCmirda
  • Reply 6 of 48
    jdwjdw Posts: 676member
    Tim Cook, the proper Elizabethan English is not "Thy shalt not buy..." but rather "Thou shalt not buy..."  :-)

  • Reply 7 of 48
    tbornottbornot Posts: 105member
    Another big change was the way iPhones are purchased, from the monthly payment to your cell provider to a one time up-front.  People don’t mind $15 a month, but a thousand at once means running up the credit card at 25%.  Perhaps an acceptance corporation to deal with long term loans like the old GMAC used to do with GM cars?
  • Reply 8 of 48
    bitmodbitmod Posts: 222member
    Hubris. 
    And history repeats itself... 

    Show me 1 decision by Apple in the last year that was beneficial to the customer more-so than Apple? You can't. 
    This company has become more about the shareholders and influence than it has about innovation, industrial design, and the customer experience. 

    Completely ignoring their customers needs and instead telling their customers what they want. 
    You know, all the "Pro" users out there screaming for secretly throttled phones and bent iPads for obscene money. 

    Hubris. 
    Brought them down before - it's bringing them down again. 
    Can try and deflect with China all you want Tim - but when the stock hits $84 this summer you're gone. 

    mike54muthuk_vanalingamdecoderringuktechiekitatitcolinng
  • Reply 9 of 48
    mwhitemwhite Posts: 171member
    tbornot said:
    Another big change was the way iPhones are purchased, from the monthly payment to your cell provider to a one time up-front.  People don’t mind $15 a month, but a thousand at once means running up the credit card at 25%.  Perhaps an acceptance corporation to deal with long term loans like the old GMAC used to do with GM cars?
    I don't know where you're getting you iPhone from but my ex just purchased a iPhone 8 2 months ago and I am making payments to Verizon like I have always done....
    watto_cobra
  • Reply 10 of 48
    mike54mike54 Posts: 293member
    Hey Tim, I would've bought a Mac mini if it wasn't ONE THOUSAND DOLLARS (in Canada)!
    Tim, look here too, I would of bought a mac mini if it wasn't $2400! (Aus) for 16GB of RAM and 512GB of storage and if it didn't have bad thermal performance and a pathetic GPU.

    tedz98uktechiekitatitcolinng
  • Reply 11 of 48
    fastasleepfastasleep Posts: 2,290member
    tbornot said:
    Another big change was the way iPhones are purchased, from the monthly payment to your cell provider to a one time up-front.  People don’t mind $15 a month, but a thousand at once means running up the credit card at 25%.  Perhaps an acceptance corporation to deal with long term loans like the old GMAC used to do with GM cars?
    With T-Mobile, I paid about a third for my X and the rest I'm paying interest-free over 24 months. ¯\(°_o)/¯ 
    watto_cobra
  • Reply 12 of 48
    fastasleepfastasleep Posts: 2,290member

    ElCapitan said:
    There is also another issue that nobody really wants to talk about in fear of not being PC, but nobody but a small section of the potential customer base want to listen to a potty mouth SJW CEO going on about how their customers should live their lives and what values they should hold. 

    If Timmy wants to be an activist - fine - keep it at the local level where it might be relevant, but the moment he steps outside the US, his message is either irrelevant because many countries gained the rights he keeps fighting for even decades ago, or it flies right in the face or their religion, culture and belief systems.  Incidentally these geographies falls under Apple's definition of emerging markets. So it is not only price and currency issues that discourage customers in these markets. 
    Ah yes, the "potty mouth" CEO standing up for basic human rights once in a while. Just terrible you should have to hear that. /eyeroll
    propodcharlesgreswatto_cobra
  • Reply 13 of 48
    colinng said:
    They send demo units to "influencers" i.e. people with YouTube channels. They hope that Apple customers are truly sheeple who just buy what "influencers" show off. 

    Apple is failing because it is pandering to fools, hoping that "a fool and their money soon part." They forgot their customers are artists, creatives, directors, engineers, authors, teachers, scientists. 

    You mean artists, creatives, directors, engineers, authors, teachers, scientists don't recognize recommendations from some lovely youtube "influencers" like "iJustine" at all?
    edited January 3 uktechiewatto_cobracolinng
  • Reply 14 of 48
    tbornot said:
    Another big change was the way iPhones are purchased, from the monthly payment to your cell provider to a one time up-front.  People don’t mind $15 a month, but a thousand at once means running up the credit card at 25%.  Perhaps an acceptance corporation to deal with long term loans like the old GMAC used to do with GM cars?

    Huh? Most telcos are now offering these phones on installment plans. I’m on the iPhone Upgrade program, and my only upfront cost is tax and activation fee. Also where was anyone ever only paying $15/month for a new iPhone?
  • Reply 15 of 48
    bitmod said:
    Hubris. 
    And history repeats itself... 

    Show me 1 decision by Apple in the last year that was beneficial to the customer more-so than Apple? You can't. 
    This company has become more about the shareholders and influence than it has about innovation, industrial design, and the customer experience. 

    Completely ignoring their customers needs and instead telling their customers what they want. 
    You know, all the "Pro" users out there screaming for secretly throttled phones and bent iPads for obscene money. 

    Hubris. 
    Brought them down before - it's bringing them down again. 
    Can try and deflect with China all you want Tim - but when the stock hits $84 this summer you're gone. 

    I remember 2013 when Samsung was hot with the Galaxy line and their Next Big thing campaign and Apple hadn’t released the iPhone 6 yet. All these Wall Street clowns wanted Tim Cook’s head. Heck some even claimed the board was thinking of replacing him. It was stupid then and I’ll be very surprised if it happens now.
  • Reply 16 of 48
    Apple has always played the game of being pricey, that if you don’t want to pay up, they don’t need you as a customer, etc.

    That works very well in the early stages of a product cycle, when there is lot of scope for differentiation using innovation, lot of scope for new must have features, etc.

    However, when the market starts approaching maturity, when older products and competitor products start hitting “good enough” levels, Apple is late to see the writing on the wall. They resort to hubris, and customer unfriendly techniques to increase Average Selling Price, and to increase margins.

    At some point, even the most loyalist fans of Apple start noticing that there is little justification for buying the latest Apple product, paying a ridiculous price, and then having to deal with the compromises Apple forces on you.

    These compromises could be in many ways. A Buggy Bluetooth Audio implementation, combined with removing the Headphone jack and replacing with Lightning. Pathetic battery life. Poor quality cables and rip off replacement cables. Soldered hardware that isn’t user replaceable. All of this is ignored when the going is good - but suddenly all these customer unfriendly ways hit them from all angles, the moment Apple starts skidding.

    And the result is visible for all to see.
    muthuk_vanalingamtailstoocroprdecoderringanantksundaramtedz98uktechiekitatitmicrobecolinng
  • Reply 17 of 48
    John Gruber compared Cook’s letter to Jobs earnings warning in 2002. He thinks Cook’s letter was too long:

    https://daringfireball.net/2019/01/steve_jobs_and_apples_last_previous_earnings_warning
    But man, delivering bad news was one area where Steve Jobs really shined in a way that Tim Cook just can’t. Look at the tight construction of that message from Apple in 2002. First paragraph: put out the numbers. Second paragraph: it’s an industry-wide problem, but Apple has “amazing new products” coming. And then the kicker, the dagger: “As one of the few companies currently making a profit in the PC business…”.

    We’ve got some short term bad news but don’t worry, we have this.” And… out. Short and sweet. Rip off the bad news Band-Aid, express quiet confidence that Apple is in great shape, and that’s it. Message over.

    Even if Jobs were still around I don’t think Apple could get away with a message so short with today’s news. But Cook’s letter was just too long. There was no story to it, no narrative. It should have been something along these lines (paraphrasing for succinctness, obviously — well, maybe not obviously):

    We all know the Chinese market is fucked up — half because China is China and half because of you-know-who’s dumbass trade war. This quarter that fucked-upped-ness hit iPhone harder than we expected. But China is the whole problem — everything else is noise. Customers around the world love the iPhone XS, XS Max, and XR, and iPhones account for 90 percent of the profits in the entire handset industry. We expect that to grow as our competitors struggle to differentiate themselves from each other.

    Boom, drop the mic.
    I think he is right that the letter was too long and was all over the place like let’s just throw things at the wall and see which one sticks. But I think the rest of his post focuses way too much on China, especially China & Trump. Apple didn’t revise down guidance because of Donald Trump. And this so-called trade war was well known/discussed when Apple put out guidance for Q1 on their Q4 earnings call. And when you’re revising revenue guidance down $5B to $7B the market is not really going to care that you’re generating the most profits in a segment with declining growth. But Gruber is right that Jobs was better at delivering bad news. 
  • Reply 18 of 48
    Apple will break up or be broken up by outside buyer. Much as I love Apple, they no longer have the technical advantage and definitely not the services advantage.
  • Reply 19 of 48
    Something else I’m seeing on Twitter is it’s not about price increases because gross margins have stayed the same and a greater percentage of revenues attributable to services might even mean hardware gross margins have declined. OK even if that is true it doesn’t matter to the end consumer when all they see/know is prices have gone up. A couple years ago the best iPhone you could get started at $649. Now it’s $999. And even the second best is $100 more at $749. That’s what the end consumer sees. The end consumer shouldn’t need to care about Aople’s gross margins.
    designr
  • Reply 20 of 48
    Apple is putting out products that aren’t that much better than the rest of the market, and raising their already high prices.  When there are very good phones for less than $700, Apple isn’t going to sell many (compared to cheaper years past models) at $1,100.  Apple wowed the world when the iPad came out at $499. Now the entry to the Pro model is $799.  

    Macs are the same story. Sacrificing upgradability over form factor, prices have increase dramatically with little innovation. Who cares how thin a desktop computer is when you can’t upgrade it. 

    Apple now nickles and dimes you for everything. They can’t afford to put the 3.5mm dongle in with a $1,250 iPhone?  How about the crazy dongle prices when switching to USB C?  Apple doesn’t need to make 1000% margin on those when it means breaking the people who are overspending for their products already. 

    Apple needs to go back to 1998 and review their lineup again. There was a time when Apple Sold one iPhone per year. Now they have a half dozen that don’t appear to be all that different. But keeping each on production costs money.  Narrow the assortment and offer products people want (upgradable!) at fair prices. 
    uktechie
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