Everyone knows it's market share that really matters, just ask the pundits.
No need to ask only the 'pundits'. If you plan on offering services or consumables to your customers, marketshare is a key metric. If your platform depends on active, revenue generating developers, marketshare is also a key factor.
All of Apple's move's over the last few years have included measures to shore up handset sales and increase them. It has been a radical shift but in spite of those measures, sales have remained flat or dipped YoY.
Even the most persistent rumours for 2020 include yet more measures to stimulate handset growth (new SE model released out of the habitual refresh).
At the end of the day we are all 'pundits', just in different capacities. That includes Apple management, shareholders, users, competitors.
When Apple releases software targeting Android users to make switching easier, by definition, they are chasing marketshare.
When Apple opens up its services to Android users it is also chasing marketshare.
Perhaps the question you should ask yourself is howmuch marketshare is necessary to keep the business healthy. But at the end of the day it is still marketshare.
You should also compare Apple's handset business model and compare it to 2015. What has changed and more importantly, why?
There have been massive changes and they didn't come about through experimentation. They came about through necessity.
Nah. Your "but market share!" examples are services. Services which are not tethered to hardware, so there's absolutely no reason not to sell Apple Music on Android. Services is a different business model than hardware. Apple is king of hardware, and is also adding services. And interestingly it became king of hardware while needing developers, yet still didn't foolishly chase market share by making cheapies like your Chinese knockoffs. Just like they didn't make netbooks.
Even during the heyday of peak iPhone, everyone knew and commented upon that the historic, never-before-seen-on-earth success of the iPhone could not last forever. That is normal, expected, and not the sign of desperate flailing you like to pretend it is. Absolutely no one thought it would be otherwise.
Marketshare doesn't 'see' hardware or software. It is simply marketshare. More or less important depending on your business but important nevertheless.
Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it. With such a vast pool of customers, it had no need to widen product spreads, reduce pricing etc (applying your logic from the last few years).
And if the 'success could not last forever', then they would have factored a contraction into their business forecasts anyway. Of course they didn't do that at all. They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'. Pundits, eh?
The success couldn't last forever. No, It never does. But, it didn't have to fall off as much as it did either. Since 2017 Apple has been continuously modifying its handset business strategy and ALL of the changes have been focused on breaking out of over three years of flat sales and preventing more YoY contraction. They upped iPhone pricing (X series - 2017) for revenue (not marketshare) and it didn't turn things around. They persisted with high prices in the following cycle (2018) and it backfired in a massive way (front page, high trade-in discounts appeared virtually immediately, plus direct discounts in China). All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band. The following cycle (2019), brought more massive changes. Much better hardware and most importantly - price reductions on its projected top sellers and notably a price drop on the XR.
It is slow to manoeuvre because of its annual refresh cycle and even that is rumoured to change next year in an attempt to make its handset business more agile and competitive.
Its competitors are firmly camped in the ultra premium band and growing sales. That pie is only so big and, as this article suggests, Apple is taking less share of the available profits. Those same competitors are now also pumping their flagship technologies down into the lower bands too. As a result we are now seeing rumours of Apple possibly entering the middle ground with exactly the same thinking.
It wants marketshare. It needs marketshare, and with 80% of the handset market to go for, it should definitely try to grab some more.
"Absolutely no one thought it would be otherwise"
Really?
You have persistently taken issue with what I have suggested Apple do over the last few years and the reasons why.
Just about everything I have suggested has been implemented by Apple.
Everyone knows it's market share that really matters, just ask the pundits.
No need to ask only the 'pundits'. If you plan on offering services or consumables to your customers, marketshare is a key metric. If your platform depends on active, revenue generating developers, marketshare is also a key factor.
All of Apple's move's over the last few years have included measures to shore up handset sales and increase them. It has been a radical shift but in spite of those measures, sales have remained flat or dipped YoY.
Even the most persistent rumours for 2020 include yet more measures to stimulate handset growth (new SE model released out of the habitual refresh).
At the end of the day we are all 'pundits', just in different capacities. That includes Apple management, shareholders, users, competitors.
When Apple releases software targeting Android users to make switching easier, by definition, they are chasing marketshare.
When Apple opens up its services to Android users it is also chasing marketshare.
Perhaps the question you should ask yourself is howmuch marketshare is necessary to keep the business healthy. But at the end of the day it is still marketshare.
You should also compare Apple's handset business model and compare it to 2015. What has changed and more importantly, why?
There have been massive changes and they didn't come about through experimentation. They came about through necessity.
Nah. Your "but market share!" examples are services. Services which are not tethered to hardware, so there's absolutely no reason not to sell Apple Music on Android. Services is a different business model than hardware. Apple is king of hardware, and is also adding services. And interestingly it became king of hardware while needing developers, yet still didn't foolishly chase market share by making cheapies like your Chinese knockoffs. Just like they didn't make netbooks.
Even during the heyday of peak iPhone, everyone knew and commented upon that the historic, never-before-seen-on-earth success of the iPhone could not last forever. That is normal, expected, and not the sign of desperate flailing you like to pretend it is. Absolutely no one thought it would be otherwise.
Marketshare doesn't 'see' hardware or software. It is simply marketshare. More or less important depending on your business but important nevertheless.
Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it. With such a vast pool of customers, it had no need to widen product spreads, reduce pricing etc (applying your logic from the last few years).
And if the 'success could not last forever', then they would have factored a contraction into their business forecasts anyway. Of course they didn't do that at all. They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'. Pundits, eh?
The success couldn't last forever. No, It never does. But, it didn't have to fall off as much as it did either. Since 2017 Apple has been continuously modifying its handset business strategy and ALL of the changes have been focused on breaking out of over three years of flat sales and preventing more YoY contraction. They upped iPhone pricing (X series - 2017) for revenue (not marketshare) and it didn't turn things around. They persisted with high prices in the following cycle (2018) and it backfired in a massive way (front page, high trade-in discounts appeared virtually immediately, plus direct discounts in China). All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band. The following cycle (2019), brought more massive changes. Much better hardware and most importantly - price reductions on its projected top sellers and notably a price drop on the XR.
It is slow to manoeuvre because of its annual refresh cycle and even that is rumoured to change next year in an attempt to make its handset business more agile and competitive.
Its competitors are firmly camped in the ultra premium band and growing sales. That pie is only so big and, as this article suggests, Apple is taking less share of the available profits. Those same competitors are now also pumping their flagship technologies down into the lower bands too. As a result we are now seeing rumours of Apple possibly entering the middle ground with exactly the same thinking.
It wants marketshare. It needs marketshare, and with 80% of the handset market to go for, it should definitely try to grab some more.
"Absolutely no one thought it would be otherwise"
Really?
You have persistently taken issue with what I have suggested Apple do over the last few years and the reasons why.
Just about everything I have suggested has been implemented by Apple.
Every once in a while, I go back and review the Rules of the Troll thread, just to keep my compass aligned... (Some responses never age. Remember, this is seven years old.)
Ha! Hadn't read that. Funny stuff. A shame its writer went off the deep edge with his own constant nonsense and got himself banned.
Yeah, it never made sense to me how much their posts changed leading up to them being banned. It was almost like a completely different person in the end...
Everyone knows it's market share that really matters, just ask the pundits.
No need to ask only the 'pundits'. If you plan on offering services or consumables to your customers, marketshare is a key metric. If your platform depends on active, revenue generating developers, marketshare is also a key factor.
All of Apple's move's over the last few years have included measures to shore up handset sales and increase them. It has been a radical shift but in spite of those measures, sales have remained flat or dipped YoY.
Even the most persistent rumours for 2020 include yet more measures to stimulate handset growth (new SE model released out of the habitual refresh).
At the end of the day we are all 'pundits', just in different capacities. That includes Apple management, shareholders, users, competitors.
When Apple releases software targeting Android users to make switching easier, by definition, they are chasing marketshare.
When Apple opens up its services to Android users it is also chasing marketshare.
Perhaps the question you should ask yourself is howmuch marketshare is necessary to keep the business healthy. But at the end of the day it is still marketshare.
You should also compare Apple's handset business model and compare it to 2015. What has changed and more importantly, why?
There have been massive changes and they didn't come about through experimentation. They came about through necessity.
Nah. Your "but market share!" examples are services. Services which are not tethered to hardware, so there's absolutely no reason not to sell Apple Music on Android. Services is a different business model than hardware. Apple is king of hardware, and is also adding services. And interestingly it became king of hardware while needing developers, yet still didn't foolishly chase market share by making cheapies like your Chinese knockoffs. Just like they didn't make netbooks.
Even during the heyday of peak iPhone, everyone knew and commented upon that the historic, never-before-seen-on-earth success of the iPhone could not last forever. That is normal, expected, and not the sign of desperate flailing you like to pretend it is. Absolutely no one thought it would be otherwise.
Marketshare doesn't 'see' hardware or software. It is simply marketshare. More or less important depending on your business but important nevertheless.
Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it. With such a vast pool of customers, it had no need to widen product spreads, reduce pricing etc (applying your logic from the last few years).
And if the 'success could not last forever', then they would have factored a contraction into their business forecasts anyway. Of course they didn't do that at all. They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'. Pundits, eh?
The success couldn't last forever. No, It never does. But, it didn't have to fall off as much as it did either. Since 2017 Apple has been continuously modifying its handset business strategy and ALL of the changes have been focused on breaking out of over three years of flat sales and preventing more YoY contraction. They upped iPhone pricing (X series - 2017) for revenue (not marketshare) and it didn't turn things around. They persisted with high prices in the following cycle (2018) and it backfired in a massive way (front page, high trade-in discounts appeared virtually immediately, plus direct discounts in China). All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band. The following cycle (2019), brought more massive changes. Much better hardware and most importantly - price reductions on its projected top sellers and notably a price drop on the XR.
It is slow to manoeuvre because of its annual refresh cycle and even that is rumoured to change next year in an attempt to make its handset business more agile and competitive.
Its competitors are firmly camped in the ultra premium band and growing sales. That pie is only so big and, as this article suggests, Apple is taking less share of the available profits. Those same competitors are now also pumping their flagship technologies down into the lower bands too. As a result we are now seeing rumours of Apple possibly entering the middle ground with exactly the same thinking.
It wants marketshare. It needs marketshare, and with 80% of the handset market to go for, it should definitely try to grab some more.
"Absolutely no one thought it would be otherwise"
Really?
You have persistently taken issue with what I have suggested Apple do over the last few years and the reasons why.
Just about everything I have suggested has been implemented by Apple.
You clearly thought it would be otherwise.
Geeze, get real.
1) Yes, it absolutely matters whether we're talking hardware or services. There is not a compelling reason for Apple not to market a service like music or TV across platforms for added market share. The cost of the service is basically fixed and each added customer increases margin. Inversely, there is not a compelling reason for Apple to sell its tablet at cost/minimal-profit for added market share, because with every single sale margin takes a hit. One incurs loss of margin, the other increases margin. That's the difference. It has nothing to do with market share as thing of value all by itself. It isn't. Context matters. And in Apple terms, margin is usually that context that matters most, and that's why they focus on ASP and margins rather than worshipping at the Church of Market Share as you people go on about. (See "netbooks, lack of" -ed.)
2) No, no reasonable person thought there was going to be unlimited iPhone growth, and that was talked about frequently over the years. No reasonable person believes in perpetual motion machines, either. My taking issue with the dim things you often say, in no way infers I believe infinite iPhone growth is a thing. You're free to review my post history and quote me if you believe I have ever, ever advocated believe in or expectation of infinite growth. You'll be wasting your time tho, so you won't.
3) Your crappy knockoff brands participating in the knockoff-premium band may incur growth, but that's because they're starting at the bottom of the pyramid, not the top of it where Apple is at the real premium band. This shouldn't need explaining.
I love how you believe Apple has implemented everything you have suggested. Absurd, of course, but you keep doing you!
Everyone knows it's market share that really matters, just ask the pundits.
No need to ask only the 'pundits'. If you plan on offering services or consumables to your customers, marketshare is a key metric. If your platform depends on active, revenue generating developers, marketshare is also a key factor.
All of Apple's move's over the last few years have included measures to shore up handset sales and increase them. It has been a radical shift but in spite of those measures, sales have remained flat or dipped YoY.
Even the most persistent rumours for 2020 include yet more measures to stimulate handset growth (new SE model released out of the habitual refresh).
At the end of the day we are all 'pundits', just in different capacities. That includes Apple management, shareholders, users, competitors.
When Apple releases software targeting Android users to make switching easier, by definition, they are chasing marketshare.
When Apple opens up its services to Android users it is also chasing marketshare.
Perhaps the question you should ask yourself is howmuch marketshare is necessary to keep the business healthy. But at the end of the day it is still marketshare.
You should also compare Apple's handset business model and compare it to 2015. What has changed and more importantly, why?
There have been massive changes and they didn't come about through experimentation. They came about through necessity.
Nah. Your "but market share!" examples are services. Services which are not tethered to hardware, so there's absolutely no reason not to sell Apple Music on Android. Services is a different business model than hardware. Apple is king of hardware, and is also adding services. And interestingly it became king of hardware while needing developers, yet still didn't foolishly chase market share by making cheapies like your Chinese knockoffs. Just like they didn't make netbooks.
Even during the heyday of peak iPhone, everyone knew and commented upon that the historic, never-before-seen-on-earth success of the iPhone could not last forever. That is normal, expected, and not the sign of desperate flailing you like to pretend it is. Absolutely no one thought it would be otherwise.
Marketshare doesn't 'see' hardware or software. It is simply marketshare. More or less important depending on your business but important nevertheless.
Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it. With such a vast pool of customers, it had no need to widen product spreads, reduce pricing etc (applying your logic from the last few years).
And if the 'success could not last forever', then they would have factored a contraction into their business forecasts anyway. Of course they didn't do that at all. They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'. Pundits, eh?
The success couldn't last forever. No, It never does. But, it didn't have to fall off as much as it did either. Since 2017 Apple has been continuously modifying its handset business strategy and ALL of the changes have been focused on breaking out of over three years of flat sales and preventing more YoY contraction. They upped iPhone pricing (X series - 2017) for revenue (not marketshare) and it didn't turn things around. They persisted with high prices in the following cycle (2018) and it backfired in a massive way (front page, high trade-in discounts appeared virtually immediately, plus direct discounts in China). All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band. The following cycle (2019), brought more massive changes. Much better hardware and most importantly - price reductions on its projected top sellers and notably a price drop on the XR.
It is slow to manoeuvre because of its annual refresh cycle and even that is rumoured to change next year in an attempt to make its handset business more agile and competitive.
Its competitors are firmly camped in the ultra premium band and growing sales. That pie is only so big and, as this article suggests, Apple is taking less share of the available profits. Those same competitors are now also pumping their flagship technologies down into the lower bands too. As a result we are now seeing rumours of Apple possibly entering the middle ground with exactly the same thinking.
It wants marketshare. It needs marketshare, and with 80% of the handset market to go for, it should definitely try to grab some more.
"Absolutely no one thought it would be otherwise"
Really?
You have persistently taken issue with what I have suggested Apple do over the last few years and the reasons why.
Just about everything I have suggested has been implemented by Apple.
You clearly thought it would be otherwise.
”Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it.”
What does that even mean? I’m guessing not much because installed base is far more important than market share to a company like Apple. It represents a vast and growing pool of loyal customers. That you don’t get that says a lot.
”They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'.”
Apple got hit with a “black swan” event (Trump’s China Tariff War). Not a miscalculation when it couldn’t have been foreseen. And that was compounded by the huge number of free battery replacements that was also unforeseeable and that cut into upgrades while keeping a lot of its customers happy.
More importantly, your pronouncements of doom for Apple are way premature. All signs point to the present quarter being their best ever.
Apple’s revenue and earnings can’t be looked at over a single year and make any sense. There are plenty of peaks and valleys over the years, but the overall direction is clearly and obviously continued growth.
”All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band.”
And you know this how? The real numbers aren’t available, not even for Apple. The market is the final arbiter, and not you, and we won’t know the full extent of the market’s decision for quite some time. More likely, you’ve simply pulled this out of your butt.
Every once in a while, I go back and review the Rules of the Troll thread, just to keep my compass aligned... (Some responses never age. Remember, this is seven years old.)
Ha! Hadn't read that. Funny stuff. A shame its writer went off the deep edge with his own constant nonsense and got himself banned.
Every once in a while, I go back and review the Rules of the Troll thread, just to keep my compass aligned... (Some responses never age. Remember, this is seven years old.)
Ha! Hadn't read that. Funny stuff. A shame its writer went off the deep edge with his own constant nonsense and got himself banned.
I miss Tallest Skil! And Sog35...
Whatever happened to them?
They were both banned. Sog35 for hundreds of "Sack Tim Cook now" posts whenever Apple share price went down. Tallest skil for his political posts.
Everyone knows it's market share that really matters, just ask the pundits.
No need to ask only the 'pundits'. If you plan on offering services or consumables to your customers, marketshare is a key metric. If your platform depends on active, revenue generating developers, marketshare is also a key factor.
All of Apple's move's over the last few years have included measures to shore up handset sales and increase them. It has been a radical shift but in spite of those measures, sales have remained flat or dipped YoY.
Even the most persistent rumours for 2020 include yet more measures to stimulate handset growth (new SE model released out of the habitual refresh).
At the end of the day we are all 'pundits', just in different capacities. That includes Apple management, shareholders, users, competitors.
When Apple releases software targeting Android users to make switching easier, by definition, they are chasing marketshare.
When Apple opens up its services to Android users it is also chasing marketshare.
Perhaps the question you should ask yourself is howmuch marketshare is necessary to keep the business healthy. But at the end of the day it is still marketshare.
You should also compare Apple's handset business model and compare it to 2015. What has changed and more importantly, why?
There have been massive changes and they didn't come about through experimentation. They came about through necessity.
Nah. Your "but market share!" examples are services. Services which are not tethered to hardware, so there's absolutely no reason not to sell Apple Music on Android. Services is a different business model than hardware. Apple is king of hardware, and is also adding services. And interestingly it became king of hardware while needing developers, yet still didn't foolishly chase market share by making cheapies like your Chinese knockoffs. Just like they didn't make netbooks.
Even during the heyday of peak iPhone, everyone knew and commented upon that the historic, never-before-seen-on-earth success of the iPhone could not last forever. That is normal, expected, and not the sign of desperate flailing you like to pretend it is. Absolutely no one thought it would be otherwise.
Marketshare doesn't 'see' hardware or software. It is simply marketshare. More or less important depending on your business but important nevertheless.
Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it. With such a vast pool of customers, it had no need to widen product spreads, reduce pricing etc (applying your logic from the last few years).
And if the 'success could not last forever', then they would have factored a contraction into their business forecasts anyway. Of course they didn't do that at all. They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'. Pundits, eh?
The success couldn't last forever. No, It never does. But, it didn't have to fall off as much as it did either. Since 2017 Apple has been continuously modifying its handset business strategy and ALL of the changes have been focused on breaking out of over three years of flat sales and preventing more YoY contraction. They upped iPhone pricing (X series - 2017) for revenue (not marketshare) and it didn't turn things around. They persisted with high prices in the following cycle (2018) and it backfired in a massive way (front page, high trade-in discounts appeared virtually immediately, plus direct discounts in China). All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band. The following cycle (2019), brought more massive changes. Much better hardware and most importantly - price reductions on its projected top sellers and notably a price drop on the XR.
It is slow to manoeuvre because of its annual refresh cycle and even that is rumoured to change next year in an attempt to make its handset business more agile and competitive.
Its competitors are firmly camped in the ultra premium band and growing sales. That pie is only so big and, as this article suggests, Apple is taking less share of the available profits. Those same competitors are now also pumping their flagship technologies down into the lower bands too. As a result we are now seeing rumours of Apple possibly entering the middle ground with exactly the same thinking.
It wants marketshare. It needs marketshare, and with 80% of the handset market to go for, it should definitely try to grab some more.
"Absolutely no one thought it would be otherwise"
Really?
You have persistently taken issue with what I have suggested Apple do over the last few years and the reasons why.
Just about everything I have suggested has been implemented by Apple.
You clearly thought it would be otherwise.
Geeze, get real.
1) Yes, it absolutely matters whether we're talking hardware or services. There is not a compelling reason for Apple not to market a service like music or TV across platforms for added market share. The cost of the service is basically fixed and each added customer increases margin. Inversely, there is not a compelling reason for Apple to sell its tablet at cost/minimal-profit for added market share, because with every single sale margin takes a hit. One incurs loss of margin, the other increases margin. That's the difference. It has nothing to do with market share as thing of value all by itself. It isn't. Context matters. And in Apple terms, margin is usually that context that matters most, and that's why they focus on ASP and margins rather than worshipping at the Church of Market Share as you people go on about. (See "netbooks, lack of" -ed.)
2) No, no reasonable person thought there was going to be unlimited iPhone growth, and that was talked about frequently over the years. No reasonable person believes in perpetual motion machines, either. My taking issue with the dim things you often say, in no way infers I believe infinite iPhone growth is a thing. You're free to review my post history and quote me if you believe I have ever, ever advocated believe in or expectation of infinite growth. You'll be wasting your time tho, so you won't.
3) Your crappy knockoff brands participating in the knockoff-premium band may incur growth, but that's because they're starting at the bottom of the pyramid, not the top of it where Apple is at the real premium band. This shouldn't need explaining.
I love how you believe Apple has implemented everything you have suggested. Absurd, of course, but you keep doing you!
I got real years ago. That should be clear at this point.
You claim there is no real reason NOT to market Apple services across platforms. Perhaps you need reminding that right up to the announcement of Apple's TV service, nobody had any idea if it would be limited to Apple's platform or not. The thinking of some was that it was all going to form part of the so-called eco-system or lock-in as others call it.
In my eyes it made sense to widen the reach of Apple's TV services but that is just my opinion and while some shared it, others didn't, as they had their own reasons.
Implying it was a given is incorrect. It wasn't - right up to the official announcement. Nobody knew what its reach would be and nobody knew the pricing.
The cost of each service is not 'basically fixed'. There are delivery considerations (bandwidth, infrastructure, energy consumption etc) plus advertising, service and support and licencing. All subject to change for varying reasons.
Then there is the cost of content production for TV that can vary widely. As new countries come on board, so does the need of native content, plus in some key markets, dubbing.
Things are more complicated than saying 'each new customer increases margin', although, undoubtedly, that is the plan long term. Right now, and under the current (zero/low cost) roll out, Apple is probably losing money on TV services.
Some Apple users have smugly sat around and claimed there is no money to be had in catering to Android users as they have little disposable income and don't spend it on Apps and Services. That was never ever true but we regularly get articles about how the App store brings in most of the revenues of that particular pie. Android users spend billions too and Apple, quite rightly, wants in on some of that. Again, the source of this article suggests Apple is losing percentage points on handset derived profits. Well, those lost profits are going elsewhere and it isn't RIM. Yes, I know these figures fluctuate and Apple will increase its percentage due to seasonal factors but the last few years of data on its handset business are there and unquestionable. Apple's massive changes in strategy are also there and are attempts to turn things around. All in response to competiton.
Apple doesn't want flat sales and is not happy with flat sales. At this point, anyone trying to claim the situation is somehow normal, expected and foreseeable (pundits, eh?) is simply not paying attention to what is happening and what has happened.
We spent years talking about a supercycle. A supercycle that hasn't, openly at least, increased handset sales. A supercycle that was suggested and based on reasonable logic. You know, all the stereotypes, eco-system, lock-in, brand loyalty, better product, it just works etc.
I've gone on record numerous times as suggesting 'what if the supercycle actually happened but no one saw it?'.
Apple definitely knows but no one has really dug into Cook to find an answer. Apple knows, right down to the individual, who upgraded and who didn't. It's in the Apple IDs.
There are basically three possibilities.
It didn't happen It happened but no one saw it It happened but over such a long period that its impact was diluted.
None of those are what I would call desirable scenarios.
What is clear is that iPhone has suffered as a product over the last few years - in every way.
You are wrong to throw iPad into an iPhone discussion but the iPad is already (and has been for some time) a very affordable product and one that hasn't seen such intense competition. Even so, it had it very own 'crisis' in the eyes of some. The presence of an expensive pro model doesn't change anything. Nor does the presence of an ultra expensive iPhone.
This is about iPhone, not iPad. It is not casual that iPhone has been the backbone of Apple's success and even to this day remains the key driver. While that remains true, iPhone will be one of the pillars of Apple.
It is not about if I can quote you on saying Apple would need 'infinite' growth. You are throwing 'infinite' in here to then say 'hey, I never said that'. Of course I never even mentioned infinite growth in the first place.
No, the point is that you claimed none of what has happened would actually happen.
Not that that in itself really has any bearing on anything. Being 'right' or 'wrong' when you are giving a simple opinion or speculating doesn't mean that much.
What is more relevant is how people counter opinions or speculation with 'absolutes', as if they could possibly 'know' in the first place. And how, in the process, they throw in insults (veiled or otherwise). You have done both.
My responses in this thread are based on a mix of fact, opinion and speculation. The numbers are there. The official comments are there. The massive changes in Apple's handset strategy are there.
Everyone knows it's market share that really matters, just ask the pundits.
No need to ask only the 'pundits'. If you plan on offering services or consumables to your customers, marketshare is a key metric. If your platform depends on active, revenue generating developers, marketshare is also a key factor.
All of Apple's move's over the last few years have included measures to shore up handset sales and increase them. It has been a radical shift but in spite of those measures, sales have remained flat or dipped YoY.
Even the most persistent rumours for 2020 include yet more measures to stimulate handset growth (new SE model released out of the habitual refresh).
At the end of the day we are all 'pundits', just in different capacities. That includes Apple management, shareholders, users, competitors.
When Apple releases software targeting Android users to make switching easier, by definition, they are chasing marketshare.
When Apple opens up its services to Android users it is also chasing marketshare.
Perhaps the question you should ask yourself is howmuch marketshare is necessary to keep the business healthy. But at the end of the day it is still marketshare.
You should also compare Apple's handset business model and compare it to 2015. What has changed and more importantly, why?
There have been massive changes and they didn't come about through experimentation. They came about through necessity.
Nah. Your "but market share!" examples are services. Services which are not tethered to hardware, so there's absolutely no reason not to sell Apple Music on Android. Services is a different business model than hardware. Apple is king of hardware, and is also adding services. And interestingly it became king of hardware while needing developers, yet still didn't foolishly chase market share by making cheapies like your Chinese knockoffs. Just like they didn't make netbooks.
Even during the heyday of peak iPhone, everyone knew and commented upon that the historic, never-before-seen-on-earth success of the iPhone could not last forever. That is normal, expected, and not the sign of desperate flailing you like to pretend it is. Absolutely no one thought it would be otherwise.
Marketshare doesn't 'see' hardware or software. It is simply marketshare. More or less important depending on your business but important nevertheless.
Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it. With such a vast pool of customers, it had no need to widen product spreads, reduce pricing etc (applying your logic from the last few years).
And if the 'success could not last forever', then they would have factored a contraction into their business forecasts anyway. Of course they didn't do that at all. They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'. Pundits, eh?
The success couldn't last forever. No, It never does. But, it didn't have to fall off as much as it did either. Since 2017 Apple has been continuously modifying its handset business strategy and ALL of the changes have been focused on breaking out of over three years of flat sales and preventing more YoY contraction. They upped iPhone pricing (X series - 2017) for revenue (not marketshare) and it didn't turn things around. They persisted with high prices in the following cycle (2018) and it backfired in a massive way (front page, high trade-in discounts appeared virtually immediately, plus direct discounts in China). All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band. The following cycle (2019), brought more massive changes. Much better hardware and most importantly - price reductions on its projected top sellers and notably a price drop on the XR.
It is slow to manoeuvre because of its annual refresh cycle and even that is rumoured to change next year in an attempt to make its handset business more agile and competitive.
Its competitors are firmly camped in the ultra premium band and growing sales. That pie is only so big and, as this article suggests, Apple is taking less share of the available profits. Those same competitors are now also pumping their flagship technologies down into the lower bands too. As a result we are now seeing rumours of Apple possibly entering the middle ground with exactly the same thinking.
It wants marketshare. It needs marketshare, and with 80% of the handset market to go for, it should definitely try to grab some more.
"Absolutely no one thought it would be otherwise"
Really?
You have persistently taken issue with what I have suggested Apple do over the last few years and the reasons why.
Just about everything I have suggested has been implemented by Apple.
You clearly thought it would be otherwise.
Geeze, get real.
1) Yes, it absolutely matters whether we're talking hardware or services. There is not a compelling reason for Apple not to market a service like music or TV across platforms for added market share. The cost of the service is basically fixed and each added customer increases margin. Inversely, there is not a compelling reason for Apple to sell its tablet at cost/minimal-profit for added market share, because with every single sale margin takes a hit. One incurs loss of margin, the other increases margin. That's the difference. It has nothing to do with market share as thing of value all by itself. It isn't. Context matters. And in Apple terms, margin is usually that context that matters most, and that's why they focus on ASP and margins rather than worshipping at the Church of Market Share as you people go on about. (See "netbooks, lack of" -ed.)
2) No, no reasonable person thought there was going to be unlimited iPhone growth, and that was talked about frequently over the years. No reasonable person believes in perpetual motion machines, either. My taking issue with the dim things you often say, in no way infers I believe infinite iPhone growth is a thing. You're free to review my post history and quote me if you believe I have ever, ever advocated believe in or expectation of infinite growth. You'll be wasting your time tho, so you won't.
3) Your crappy knockoff brands participating in the knockoff-premium band may incur growth, but that's because they're starting at the bottom of the pyramid, not the top of it where Apple is at the real premium band. This shouldn't need explaining.
I love how you believe Apple has implemented everything you have suggested. Absurd, of course, but you keep doing you!
I got real years ago. That should be clear at this point.
You claim there is no real reason NOT to market Apple services across platforms. Perhaps you need reminding that right up to the announcement of Apple's TV service, nobody had any idea if it would be limited to Apple's platform or not. The thinking of some was that it was all going to form part of the so-called eco-system or lock-in as others call it.
In my eyes it made sense to widen the reach of Apple's TV services but that is just my opinion and while some shared it, others didn't, as they had their own reasons.
Implying it was a given is incorrect. It wasn't - right up to the official announcement. Nobody knew what its reach would be and nobody knew the pricing.
The cost of each service is not 'basically fixed'. There are delivery considerations (bandwidth, infrastructure, energy consumption etc) plus advertising, service and support and licencing. All subject to change for varying reasons.
Then there is the cost of content production for TV that can vary widely. As new countries come on board, so does the need of native content, plus in some key markets, dubbing.
Things are more complicated than saying 'each new customer increases margin', although, undoubtedly, that is the plan long term. Right now, and under the current (zero/low cost) roll out, Apple is probably losing money on TV services.
Some Apple users have smugly sat around and claimed there is no money to be had in catering to Android users as they have little disposable income and don't spend it on Apps and Services. That was never ever true but we regularly get articles about how the App store brings in most of the revenues of that particular pie. Android users spend billions too and Apple, quite rightly, wants in on some of that. Again, the source of this article suggests Apple is losing percentage points on handset derived profits. Well, those lost profits are going elsewhere and it isn't RIM. Yes, I know these figures fluctuate and Apple will increase its percentage due to seasonal factors but the last few years of data on its handset business are there and unquestionable. Apple's massive changes in strategy are also there and are attempts to turn things around. All in response to competiton.
Apple doesn't want flat sales and is not happy with flat sales. At this point, anyone trying to claim the situation is somehow normal, expected and foreseeable (pundits, eh?) is simply not paying attention to what is happening and what has happened.
We spent years talking about a supercycle. A supercycle that hasn't, openly at least, increased handset sales. A supercycle that was suggested and based on reasonable logic. You know, all the stereotypes, eco-system, lock-in, brand loyalty, better product, it just works etc.
I've gone on record numerous times as suggesting 'what if the supercycle actually happened but no one saw it?'.
Apple definitely knows but no one has really dug into Cook to find an answer. Apple knows, right down to the individual, who upgraded and who didn't. It's in the Apple IDs.
There are basically three possibilities.
It didn't happen It happened but no one saw it It happened but over such a long period that its impact was diluted.
None of those are what I would call desirable scenarios.
What is clear is that iPhone has suffered as a product over the last few years - in every way.
You are wrong to throw iPad into an iPhone discussion but the iPad is already (and has been for some time) a very affordable product and one that hasn't seen such intense competition. Even so, it had it very own 'crisis' in the eyes of some. The presence of an expensive pro model doesn't change anything. Nor does the presence of an ultra expensive iPhone.
This is about iPhone, not iPad. It is not casual that iPhone has been the backbone of Apple's success and even to this day remains the key driver. While that remains true, iPhone will be one of the pillars of Apple.
It is not about if I can quote you on saying Apple would need 'infinite' growth. You are throwing 'infinite' in here to then say 'hey, I never said that'. Of course I never even mentioned infinite growth in the first place.
No, the point is that you claimed none of what has happened would actually happen.
Not that that in itself really has any bearing on anything. Being 'right' or 'wrong' when you are giving a simple opinion or speculating doesn't mean that much.
What is more relevant is how people counter opinions or speculation with 'absolutes', as if they could possibly 'know' in the first place. And how, in the process, they throw in insults (veiled or otherwise). You have done both.
My responses in this thread are based on a mix of fact, opinion and speculation. The numbers are there. The official comments are there. The massive changes in Apple's handset strategy are there.
Apple's iPhone segment, today, is at eight times the profitability of Huawei, even including Huawei's greater unit sales, and Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year.
Meanwhile, the best that Huawei can expect, is consolidation of the Android device industry in China leaving Apple, Samsung, and Huawei, in decreasing order, splitting the profits. I recall your comment on Xiaomi, when they stated their goal would be to maintain a profitability of 5% in smartphone sales, that "I could do something with that!". Well, it's barely registering any profit share at all, yet still sells large numbers of smartphones, but the effect on the Android device market is to keep margins extremely low for all of, and only, Android device builders, including Huawei.
Maybe your concern trolling of Apple's iPhone business, which you engage in whenever possible based almost entirely on its unit sales, would be better redirected to why Huawei hasn't yet exceeded Samsung in unit sales, and likely won't ever.
Everyone knows it's market share that really matters, just ask the pundits.
No need to ask only the 'pundits'. If you plan on offering services or consumables to your customers, marketshare is a key metric. If your platform depends on active, revenue generating developers, marketshare is also a key factor.
All of Apple's move's over the last few years have included measures to shore up handset sales and increase them. It has been a radical shift but in spite of those measures, sales have remained flat or dipped YoY.
Even the most persistent rumours for 2020 include yet more measures to stimulate handset growth (new SE model released out of the habitual refresh).
At the end of the day we are all 'pundits', just in different capacities. That includes Apple management, shareholders, users, competitors.
When Apple releases software targeting Android users to make switching easier, by definition, they are chasing marketshare.
When Apple opens up its services to Android users it is also chasing marketshare.
Perhaps the question you should ask yourself is howmuch marketshare is necessary to keep the business healthy. But at the end of the day it is still marketshare.
You should also compare Apple's handset business model and compare it to 2015. What has changed and more importantly, why?
There have been massive changes and they didn't come about through experimentation. They came about through necessity.
Nah. Your "but market share!" examples are services. Services which are not tethered to hardware, so there's absolutely no reason not to sell Apple Music on Android. Services is a different business model than hardware. Apple is king of hardware, and is also adding services. And interestingly it became king of hardware while needing developers, yet still didn't foolishly chase market share by making cheapies like your Chinese knockoffs. Just like they didn't make netbooks.
Even during the heyday of peak iPhone, everyone knew and commented upon that the historic, never-before-seen-on-earth success of the iPhone could not last forever. That is normal, expected, and not the sign of desperate flailing you like to pretend it is. Absolutely no one thought it would be otherwise.
Marketshare doesn't 'see' hardware or software. It is simply marketshare. More or less important depending on your business but important nevertheless.
Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it. With such a vast pool of customers, it had no need to widen product spreads, reduce pricing etc (applying your logic from the last few years).
And if the 'success could not last forever', then they would have factored a contraction into their business forecasts anyway. Of course they didn't do that at all. They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'. Pundits, eh?
The success couldn't last forever. No, It never does. But, it didn't have to fall off as much as it did either. Since 2017 Apple has been continuously modifying its handset business strategy and ALL of the changes have been focused on breaking out of over three years of flat sales and preventing more YoY contraction. They upped iPhone pricing (X series - 2017) for revenue (not marketshare) and it didn't turn things around. They persisted with high prices in the following cycle (2018) and it backfired in a massive way (front page, high trade-in discounts appeared virtually immediately, plus direct discounts in China). All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band. The following cycle (2019), brought more massive changes. Much better hardware and most importantly - price reductions on its projected top sellers and notably a price drop on the XR.
It is slow to manoeuvre because of its annual refresh cycle and even that is rumoured to change next year in an attempt to make its handset business more agile and competitive.
Its competitors are firmly camped in the ultra premium band and growing sales. That pie is only so big and, as this article suggests, Apple is taking less share of the available profits. Those same competitors are now also pumping their flagship technologies down into the lower bands too. As a result we are now seeing rumours of Apple possibly entering the middle ground with exactly the same thinking.
It wants marketshare. It needs marketshare, and with 80% of the handset market to go for, it should definitely try to grab some more.
"Absolutely no one thought it would be otherwise"
Really?
You have persistently taken issue with what I have suggested Apple do over the last few years and the reasons why.
Just about everything I have suggested has been implemented by Apple.
You clearly thought it would be otherwise.
Geeze, get real.
1) Yes, it absolutely matters whether we're talking hardware or services. There is not a compelling reason for Apple not to market a service like music or TV across platforms for added market share. The cost of the service is basically fixed and each added customer increases margin. Inversely, there is not a compelling reason for Apple to sell its tablet at cost/minimal-profit for added market share, because with every single sale margin takes a hit. One incurs loss of margin, the other increases margin. That's the difference. It has nothing to do with market share as thing of value all by itself. It isn't. Context matters. And in Apple terms, margin is usually that context that matters most, and that's why they focus on ASP and margins rather than worshipping at the Church of Market Share as you people go on about. (See "netbooks, lack of" -ed.)
2) No, no reasonable person thought there was going to be unlimited iPhone growth, and that was talked about frequently over the years. No reasonable person believes in perpetual motion machines, either. My taking issue with the dim things you often say, in no way infers I believe infinite iPhone growth is a thing. You're free to review my post history and quote me if you believe I have ever, ever advocated believe in or expectation of infinite growth. You'll be wasting your time tho, so you won't.
3) Your crappy knockoff brands participating in the knockoff-premium band may incur growth, but that's because they're starting at the bottom of the pyramid, not the top of it where Apple is at the real premium band. This shouldn't need explaining.
I love how you believe Apple has implemented everything you have suggested. Absurd, of course, but you keep doing you!
I got real years ago. That should be clear at this point.
You claim there is no real reason NOT to market Apple services across platforms. Perhaps you need reminding that right up to the announcement of Apple's TV service, nobody had any idea if it would be limited to Apple's platform or not. The thinking of some was that it was all going to form part of the so-called eco-system or lock-in as others call it.
In my eyes it made sense to widen the reach of Apple's TV services but that is just my opinion and while some shared it, others didn't, as they had their own reasons.
Implying it was a given is incorrect. It wasn't - right up to the official announcement. Nobody knew what its reach would be and nobody knew the pricing.
The cost of each service is not 'basically fixed'. There are delivery considerations (bandwidth, infrastructure, energy consumption etc) plus advertising, service and support and licencing. All subject to change for varying reasons.
Then there is the cost of content production for TV that can vary widely. As new countries come on board, so does the need of native content, plus in some key markets, dubbing.
Things are more complicated than saying 'each new customer increases margin', although, undoubtedly, that is the plan long term. Right now, and under the current (zero/low cost) roll out, Apple is probably losing money on TV services.
Some Apple users have smugly sat around and claimed there is no money to be had in catering to Android users as they have little disposable income and don't spend it on Apps and Services. That was never ever true but we regularly get articles about how the App store brings in most of the revenues of that particular pie. Android users spend billions too and Apple, quite rightly, wants in on some of that. Again, the source of this article suggests Apple is losing percentage points on handset derived profits. Well, those lost profits are going elsewhere and it isn't RIM. Yes, I know these figures fluctuate and Apple will increase its percentage due to seasonal factors but the last few years of data on its handset business are there and unquestionable. Apple's massive changes in strategy are also there and are attempts to turn things around. All in response to competiton.
Apple doesn't want flat sales and is not happy with flat sales. At this point, anyone trying to claim the situation is somehow normal, expected and foreseeable (pundits, eh?) is simply not paying attention to what is happening and what has happened.
We spent years talking about a supercycle. A supercycle that hasn't, openly at least, increased handset sales. A supercycle that was suggested and based on reasonable logic. You know, all the stereotypes, eco-system, lock-in, brand loyalty, better product, it just works etc.
I've gone on record numerous times as suggesting 'what if the supercycle actually happened but no one saw it?'.
Apple definitely knows but no one has really dug into Cook to find an answer. Apple knows, right down to the individual, who upgraded and who didn't. It's in the Apple IDs.
There are basically three possibilities.
It didn't happen It happened but no one saw it It happened but over such a long period that its impact was diluted.
None of those are what I would call desirable scenarios.
What is clear is that iPhone has suffered as a product over the last few years - in every way.
You are wrong to throw iPad into an iPhone discussion but the iPad is already (and has been for some time) a very affordable product and one that hasn't seen such intense competition. Even so, it had it very own 'crisis' in the eyes of some. The presence of an expensive pro model doesn't change anything. Nor does the presence of an ultra expensive iPhone.
This is about iPhone, not iPad. It is not casual that iPhone has been the backbone of Apple's success and even to this day remains the key driver. While that remains true, iPhone will be one of the pillars of Apple.
It is not about if I can quote you on saying Apple would need 'infinite' growth. You are throwing 'infinite' in here to then say 'hey, I never said that'. Of course I never even mentioned infinite growth in the first place.
No, the point is that you claimed none of what has happened would actually happen.
Not that that in itself really has any bearing on anything. Being 'right' or 'wrong' when you are giving a simple opinion or speculating doesn't mean that much.
What is more relevant is how people counter opinions or speculation with 'absolutes', as if they could possibly 'know' in the first place. And how, in the process, they throw in insults (veiled or otherwise). You have done both.
My responses in this thread are based on a mix of fact, opinion and speculation. The numbers are there. The official comments are there. The massive changes in Apple's handset strategy are there.
Apple's iPhone segment, today, is at eight times the profitability of Huawei, even including Huawei's greater unit sales, and Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year.
Meanwhile, the best that Huawei can expect, is consolidation of the Android device industry in China leaving Apple, Samsung, and Huawei, in decreasing order, splitting the profits. I recall your comment on Xiaomi, when they stated their goal would be to maintain a profitability of 5% in smartphone sales, that "I could do something with that!". Well, it's barely registering any profit share at all, yet still sells large numbers of smartphones, but the effect on the Android device market is to keep margins extremely low for all of, and only, Android device builders, including Huawei.
Maybe your concern trolling of Apple's iPhone business, which you engage in whenever possible based almost entirely on its unit sales, would be better redirected to why Huawei hasn't yet exceeded Samsung in unit sales, and likely won't ever.
If you bring Huawei into things it is to focus on part of the competition. Likewise Xiaomi.
Yes, Chinese brands are part of the reason Apple has stalled on handset sales. Do you disagree?
Their profitability is irrelevant from an Apple perspective. When you are profitable to the tune of billions, though, it is enough. And the proof is in the pudding: the product. Apple has been playing catch-up.
Apple has reacted (is still reacting) to reality.
Look at all the changes in its handset strategy from 2017. Apple made those changes for clear reasons.
Try to imagine the situation today if those changes hadn't been made. Shudder the thought.
"... Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year."
This is incorrect. Money can't keep a user base at specific levels. As I said before, unless someone fleshes out that billion users, the number is pretty much worthless. I'm definitely in there although my iOS devices do nothing for Apple and aren't being updated. Is it not reasonable to expect that every long term Apple user is in a similar situation. Or worse, and I give myself as an example again. My more current mobile hardware is not from Apple. That revenue went elsewhere.
If Xiaomi registers large sales but little profitability, it means those sales didn't go to a competitor, ultimately affecting the competitor's revenues and profitability. That's competition and why users don't care about the profitability of the manufacturer. They care about the product. For the record Xiaomi recently overtook Huawei in Spanish handset sales although Huawei Spain revenues are up, the company has its largest non Chinese flagship store in Madrid with another flagship store to open in Barcelona next year.
There are also rumours of Huawei seeking to open a huge manufacturing base within the EU.
Trump has really shot himself in the foot over Huawei. They are also seeking to increase manufacturing in South Korea and have signed multi billion dollar deals with Japanese companies. Meanwhile, U.S companies can only read the news and weep.
Today, with Trump bans and tantrums at 100%, Huawei said that handset sales could hit 230 million for 2019. That's a massive increase over 2018. And without a global launch for the Mate 30 Pro. One of the very best phones of 2019.
There you have yet another example of protectionism.
All while Apple takes in collateral damage for political shenanigans.
Everyone knows it's market share that really matters, just ask the pundits.
No need to ask only the 'pundits'. If you plan on offering services or consumables to your customers, marketshare is a key metric. If your platform depends on active, revenue generating developers, marketshare is also a key factor.
All of Apple's move's over the last few years have included measures to shore up handset sales and increase them. It has been a radical shift but in spite of those measures, sales have remained flat or dipped YoY.
Even the most persistent rumours for 2020 include yet more measures to stimulate handset growth (new SE model released out of the habitual refresh).
At the end of the day we are all 'pundits', just in different capacities. That includes Apple management, shareholders, users, competitors.
When Apple releases software targeting Android users to make switching easier, by definition, they are chasing marketshare.
When Apple opens up its services to Android users it is also chasing marketshare.
Perhaps the question you should ask yourself is howmuch marketshare is necessary to keep the business healthy. But at the end of the day it is still marketshare.
You should also compare Apple's handset business model and compare it to 2015. What has changed and more importantly, why?
There have been massive changes and they didn't come about through experimentation. They came about through necessity.
Nah. Your "but market share!" examples are services. Services which are not tethered to hardware, so there's absolutely no reason not to sell Apple Music on Android. Services is a different business model than hardware. Apple is king of hardware, and is also adding services. And interestingly it became king of hardware while needing developers, yet still didn't foolishly chase market share by making cheapies like your Chinese knockoffs. Just like they didn't make netbooks.
Even during the heyday of peak iPhone, everyone knew and commented upon that the historic, never-before-seen-on-earth success of the iPhone could not last forever. That is normal, expected, and not the sign of desperate flailing you like to pretend it is. Absolutely no one thought it would be otherwise.
Marketshare doesn't 'see' hardware or software. It is simply marketshare. More or less important depending on your business but important nevertheless.
Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it. With such a vast pool of customers, it had no need to widen product spreads, reduce pricing etc (applying your logic from the last few years).
And if the 'success could not last forever', then they would have factored a contraction into their business forecasts anyway. Of course they didn't do that at all. They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'. Pundits, eh?
The success couldn't last forever. No, It never does. But, it didn't have to fall off as much as it did either. Since 2017 Apple has been continuously modifying its handset business strategy and ALL of the changes have been focused on breaking out of over three years of flat sales and preventing more YoY contraction. They upped iPhone pricing (X series - 2017) for revenue (not marketshare) and it didn't turn things around. They persisted with high prices in the following cycle (2018) and it backfired in a massive way (front page, high trade-in discounts appeared virtually immediately, plus direct discounts in China). All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band. The following cycle (2019), brought more massive changes. Much better hardware and most importantly - price reductions on its projected top sellers and notably a price drop on the XR.
It is slow to manoeuvre because of its annual refresh cycle and even that is rumoured to change next year in an attempt to make its handset business more agile and competitive.
Its competitors are firmly camped in the ultra premium band and growing sales. That pie is only so big and, as this article suggests, Apple is taking less share of the available profits. Those same competitors are now also pumping their flagship technologies down into the lower bands too. As a result we are now seeing rumours of Apple possibly entering the middle ground with exactly the same thinking.
It wants marketshare. It needs marketshare, and with 80% of the handset market to go for, it should definitely try to grab some more.
"Absolutely no one thought it would be otherwise"
Really?
You have persistently taken issue with what I have suggested Apple do over the last few years and the reasons why.
Just about everything I have suggested has been implemented by Apple.
You clearly thought it would be otherwise.
Geeze, get real.
1) Yes, it absolutely matters whether we're talking hardware or services. There is not a compelling reason for Apple not to market a service like music or TV across platforms for added market share. The cost of the service is basically fixed and each added customer increases margin. Inversely, there is not a compelling reason for Apple to sell its tablet at cost/minimal-profit for added market share, because with every single sale margin takes a hit. One incurs loss of margin, the other increases margin. That's the difference. It has nothing to do with market share as thing of value all by itself. It isn't. Context matters. And in Apple terms, margin is usually that context that matters most, and that's why they focus on ASP and margins rather than worshipping at the Church of Market Share as you people go on about. (See "netbooks, lack of" -ed.)
2) No, no reasonable person thought there was going to be unlimited iPhone growth, and that was talked about frequently over the years. No reasonable person believes in perpetual motion machines, either. My taking issue with the dim things you often say, in no way infers I believe infinite iPhone growth is a thing. You're free to review my post history and quote me if you believe I have ever, ever advocated believe in or expectation of infinite growth. You'll be wasting your time tho, so you won't.
3) Your crappy knockoff brands participating in the knockoff-premium band may incur growth, but that's because they're starting at the bottom of the pyramid, not the top of it where Apple is at the real premium band. This shouldn't need explaining.
I love how you believe Apple has implemented everything you have suggested. Absurd, of course, but you keep doing you!
I got real years ago. That should be clear at this point.
You claim there is no real reason NOT to market Apple services across platforms. Perhaps you need reminding that right up to the announcement of Apple's TV service, nobody had any idea if it would be limited to Apple's platform or not. The thinking of some was that it was all going to form part of the so-called eco-system or lock-in as others call it.
In my eyes it made sense to widen the reach of Apple's TV services but that is just my opinion and while some shared it, others didn't, as they had their own reasons.
Implying it was a given is incorrect. It wasn't - right up to the official announcement. Nobody knew what its reach would be and nobody knew the pricing.
The cost of each service is not 'basically fixed'. There are delivery considerations (bandwidth, infrastructure, energy consumption etc) plus advertising, service and support and licencing. All subject to change for varying reasons.
Then there is the cost of content production for TV that can vary widely. As new countries come on board, so does the need of native content, plus in some key markets, dubbing.
Things are more complicated than saying 'each new customer increases margin', although, undoubtedly, that is the plan long term. Right now, and under the current (zero/low cost) roll out, Apple is probably losing money on TV services.
Some Apple users have smugly sat around and claimed there is no money to be had in catering to Android users as they have little disposable income and don't spend it on Apps and Services. That was never ever true but we regularly get articles about how the App store brings in most of the revenues of that particular pie. Android users spend billions too and Apple, quite rightly, wants in on some of that. Again, the source of this article suggests Apple is losing percentage points on handset derived profits. Well, those lost profits are going elsewhere and it isn't RIM. Yes, I know these figures fluctuate and Apple will increase its percentage due to seasonal factors but the last few years of data on its handset business are there and unquestionable. Apple's massive changes in strategy are also there and are attempts to turn things around. All in response to competiton.
Apple doesn't want flat sales and is not happy with flat sales. At this point, anyone trying to claim the situation is somehow normal, expected and foreseeable (pundits, eh?) is simply not paying attention to what is happening and what has happened.
We spent years talking about a supercycle. A supercycle that hasn't, openly at least, increased handset sales. A supercycle that was suggested and based on reasonable logic. You know, all the stereotypes, eco-system, lock-in, brand loyalty, better product, it just works etc.
I've gone on record numerous times as suggesting 'what if the supercycle actually happened but no one saw it?'.
Apple definitely knows but no one has really dug into Cook to find an answer. Apple knows, right down to the individual, who upgraded and who didn't. It's in the Apple IDs.
There are basically three possibilities.
It didn't happen It happened but no one saw it It happened but over such a long period that its impact was diluted.
None of those are what I would call desirable scenarios.
What is clear is that iPhone has suffered as a product over the last few years - in every way.
You are wrong to throw iPad into an iPhone discussion but the iPad is already (and has been for some time) a very affordable product and one that hasn't seen such intense competition. Even so, it had it very own 'crisis' in the eyes of some. The presence of an expensive pro model doesn't change anything. Nor does the presence of an ultra expensive iPhone.
This is about iPhone, not iPad. It is not casual that iPhone has been the backbone of Apple's success and even to this day remains the key driver. While that remains true, iPhone will be one of the pillars of Apple.
It is not about if I can quote you on saying Apple would need 'infinite' growth. You are throwing 'infinite' in here to then say 'hey, I never said that'. Of course I never even mentioned infinite growth in the first place.
No, the point is that you claimed none of what has happened would actually happen.
Not that that in itself really has any bearing on anything. Being 'right' or 'wrong' when you are giving a simple opinion or speculating doesn't mean that much.
What is more relevant is how people counter opinions or speculation with 'absolutes', as if they could possibly 'know' in the first place. And how, in the process, they throw in insults (veiled or otherwise). You have done both.
My responses in this thread are based on a mix of fact, opinion and speculation. The numbers are there. The official comments are there. The massive changes in Apple's handset strategy are there.
Apple's iPhone segment, today, is at eight times the profitability of Huawei, even including Huawei's greater unit sales, and Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year.
Meanwhile, the best that Huawei can expect, is consolidation of the Android device industry in China leaving Apple, Samsung, and Huawei, in decreasing order, splitting the profits. I recall your comment on Xiaomi, when they stated their goal would be to maintain a profitability of 5% in smartphone sales, that "I could do something with that!". Well, it's barely registering any profit share at all, yet still sells large numbers of smartphones, but the effect on the Android device market is to keep margins extremely low for all of, and only, Android device builders, including Huawei.
Maybe your concern trolling of Apple's iPhone business, which you engage in whenever possible based almost entirely on its unit sales, would be better redirected to why Huawei hasn't yet exceeded Samsung in unit sales, and likely won't ever.
If you bring Huawei into things it is to focus on part of the competition. Likewise Xiaomi.
Yes, Chinese brands are part of the reason Apple has stalled on handset sales. Do you disagree?
Their profitability is irrelevant from an Apple perspective. When you are profitable to the tune of billions, though, it is enough. And the proof is in the pudding: the product. Apple has been playing catch-up.
Apple has reacted (is still reacting) to reality.
Look at all the changes in its handset strategy from 2017. Apple made those changes for clear reasons.
Try to imagine the situation today if those changes hadn't been made. Shudder the thought.
"... Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year."
This is incorrect. Money can't keep a user base at specific levels. As I said before, unless someone fleshes out that billion users, the number is pretty much worthless. I'm definitely in there although my iOS devices do nothing for Apple and aren't being updated. Is it not reasonable to expect that every long term Apple user is in a similar situation. Or worse, and I give myself as an example again. My more current mobile hardware is not from Apple. That revenue went elsewhere.
If Xiaomi registers large sales but little profitability, it means those sales didn't go to a competitor, ultimately affecting the competitor's revenues and profitability. That's competition and why users don't care about the profitability of the manufacturer. They care about the product. For the record Xiaomi recently overtook Huawei in Spanish handset sales although Huawei Spain revenues are up, the company has its largest non Chinese flagship store in Madrid with another flagship store to open in Barcelona next year.
There are also rumours of Huawei seeking to open a huge manufacturing base within the EU.
Trump has really shot himself in the foot over Huawei. They are also seeking to increase manufacturing in South Korea and have signed multi billion dollar deals with Japanese companies. Meanwhile, U.S companies can only read the news and weep.
Today, with Trump bans and tantrums at 100%, Huawei said that handset sales could hit 230 million for 2018. That's a massive increase over 2017. And without a global launch for the Mate 30 Pro. One of the very best phones of 2019.
There you have yet another example of protectionism.
All while Apple takes in collateral damage for political shenanigans.
Yeah, so about that 230 million units sold.Apple is making eight times more profit from selling 200 million units.
That is, in the corporate world, the bottom line, driven by ASP and Margins on hardware and supported by the wide Apple ecosystem of hardware and software that users love.
Everyone knows it's market share that really matters, just ask the pundits.
No need to ask only the 'pundits'. If you plan on offering services or consumables to your customers, marketshare is a key metric. If your platform depends on active, revenue generating developers, marketshare is also a key factor.
All of Apple's move's over the last few years have included measures to shore up handset sales and increase them. It has been a radical shift but in spite of those measures, sales have remained flat or dipped YoY.
Even the most persistent rumours for 2020 include yet more measures to stimulate handset growth (new SE model released out of the habitual refresh).
At the end of the day we are all 'pundits', just in different capacities. That includes Apple management, shareholders, users, competitors.
When Apple releases software targeting Android users to make switching easier, by definition, they are chasing marketshare.
When Apple opens up its services to Android users it is also chasing marketshare.
Perhaps the question you should ask yourself is howmuch marketshare is necessary to keep the business healthy. But at the end of the day it is still marketshare.
You should also compare Apple's handset business model and compare it to 2015. What has changed and more importantly, why?
There have been massive changes and they didn't come about through experimentation. They came about through necessity.
Nah. Your "but market share!" examples are services. Services which are not tethered to hardware, so there's absolutely no reason not to sell Apple Music on Android. Services is a different business model than hardware. Apple is king of hardware, and is also adding services. And interestingly it became king of hardware while needing developers, yet still didn't foolishly chase market share by making cheapies like your Chinese knockoffs. Just like they didn't make netbooks.
Even during the heyday of peak iPhone, everyone knew and commented upon that the historic, never-before-seen-on-earth success of the iPhone could not last forever. That is normal, expected, and not the sign of desperate flailing you like to pretend it is. Absolutely no one thought it would be otherwise.
Marketshare doesn't 'see' hardware or software. It is simply marketshare. More or less important depending on your business but important nevertheless.
Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it. With such a vast pool of customers, it had no need to widen product spreads, reduce pricing etc (applying your logic from the last few years).
And if the 'success could not last forever', then they would have factored a contraction into their business forecasts anyway. Of course they didn't do that at all. They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'. Pundits, eh?
The success couldn't last forever. No, It never does. But, it didn't have to fall off as much as it did either. Since 2017 Apple has been continuously modifying its handset business strategy and ALL of the changes have been focused on breaking out of over three years of flat sales and preventing more YoY contraction. They upped iPhone pricing (X series - 2017) for revenue (not marketshare) and it didn't turn things around. They persisted with high prices in the following cycle (2018) and it backfired in a massive way (front page, high trade-in discounts appeared virtually immediately, plus direct discounts in China). All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band. The following cycle (2019), brought more massive changes. Much better hardware and most importantly - price reductions on its projected top sellers and notably a price drop on the XR.
It is slow to manoeuvre because of its annual refresh cycle and even that is rumoured to change next year in an attempt to make its handset business more agile and competitive.
Its competitors are firmly camped in the ultra premium band and growing sales. That pie is only so big and, as this article suggests, Apple is taking less share of the available profits. Those same competitors are now also pumping their flagship technologies down into the lower bands too. As a result we are now seeing rumours of Apple possibly entering the middle ground with exactly the same thinking.
It wants marketshare. It needs marketshare, and with 80% of the handset market to go for, it should definitely try to grab some more.
"Absolutely no one thought it would be otherwise"
Really?
You have persistently taken issue with what I have suggested Apple do over the last few years and the reasons why.
Just about everything I have suggested has been implemented by Apple.
You clearly thought it would be otherwise.
Geeze, get real.
1) Yes, it absolutely matters whether we're talking hardware or services. There is not a compelling reason for Apple not to market a service like music or TV across platforms for added market share. The cost of the service is basically fixed and each added customer increases margin. Inversely, there is not a compelling reason for Apple to sell its tablet at cost/minimal-profit for added market share, because with every single sale margin takes a hit. One incurs loss of margin, the other increases margin. That's the difference. It has nothing to do with market share as thing of value all by itself. It isn't. Context matters. And in Apple terms, margin is usually that context that matters most, and that's why they focus on ASP and margins rather than worshipping at the Church of Market Share as you people go on about. (See "netbooks, lack of" -ed.)
2) No, no reasonable person thought there was going to be unlimited iPhone growth, and that was talked about frequently over the years. No reasonable person believes in perpetual motion machines, either. My taking issue with the dim things you often say, in no way infers I believe infinite iPhone growth is a thing. You're free to review my post history and quote me if you believe I have ever, ever advocated believe in or expectation of infinite growth. You'll be wasting your time tho, so you won't.
3) Your crappy knockoff brands participating in the knockoff-premium band may incur growth, but that's because they're starting at the bottom of the pyramid, not the top of it where Apple is at the real premium band. This shouldn't need explaining.
I love how you believe Apple has implemented everything you have suggested. Absurd, of course, but you keep doing you!
I got real years ago. That should be clear at this point.
You claim there is no real reason NOT to market Apple services across platforms. Perhaps you need reminding that right up to the announcement of Apple's TV service, nobody had any idea if it would be limited to Apple's platform or not. The thinking of some was that it was all going to form part of the so-called eco-system or lock-in as others call it.
In my eyes it made sense to widen the reach of Apple's TV services but that is just my opinion and while some shared it, others didn't, as they had their own reasons.
Implying it was a given is incorrect. It wasn't - right up to the official announcement. Nobody knew what its reach would be and nobody knew the pricing.
The cost of each service is not 'basically fixed'. There are delivery considerations (bandwidth, infrastructure, energy consumption etc) plus advertising, service and support and licencing. All subject to change for varying reasons.
Then there is the cost of content production for TV that can vary widely. As new countries come on board, so does the need of native content, plus in some key markets, dubbing.
Things are more complicated than saying 'each new customer increases margin', although, undoubtedly, that is the plan long term. Right now, and under the current (zero/low cost) roll out, Apple is probably losing money on TV services.
Some Apple users have smugly sat around and claimed there is no money to be had in catering to Android users as they have little disposable income and don't spend it on Apps and Services. That was never ever true but we regularly get articles about how the App store brings in most of the revenues of that particular pie. Android users spend billions too and Apple, quite rightly, wants in on some of that. Again, the source of this article suggests Apple is losing percentage points on handset derived profits. Well, those lost profits are going elsewhere and it isn't RIM. Yes, I know these figures fluctuate and Apple will increase its percentage due to seasonal factors but the last few years of data on its handset business are there and unquestionable. Apple's massive changes in strategy are also there and are attempts to turn things around. All in response to competiton.
Apple doesn't want flat sales and is not happy with flat sales. At this point, anyone trying to claim the situation is somehow normal, expected and foreseeable (pundits, eh?) is simply not paying attention to what is happening and what has happened.
We spent years talking about a supercycle. A supercycle that hasn't, openly at least, increased handset sales. A supercycle that was suggested and based on reasonable logic. You know, all the stereotypes, eco-system, lock-in, brand loyalty, better product, it just works etc.
I've gone on record numerous times as suggesting 'what if the supercycle actually happened but no one saw it?'.
Apple definitely knows but no one has really dug into Cook to find an answer. Apple knows, right down to the individual, who upgraded and who didn't. It's in the Apple IDs.
There are basically three possibilities.
It didn't happen It happened but no one saw it It happened but over such a long period that its impact was diluted.
None of those are what I would call desirable scenarios.
What is clear is that iPhone has suffered as a product over the last few years - in every way.
You are wrong to throw iPad into an iPhone discussion but the iPad is already (and has been for some time) a very affordable product and one that hasn't seen such intense competition. Even so, it had it very own 'crisis' in the eyes of some. The presence of an expensive pro model doesn't change anything. Nor does the presence of an ultra expensive iPhone.
This is about iPhone, not iPad. It is not casual that iPhone has been the backbone of Apple's success and even to this day remains the key driver. While that remains true, iPhone will be one of the pillars of Apple.
It is not about if I can quote you on saying Apple would need 'infinite' growth. You are throwing 'infinite' in here to then say 'hey, I never said that'. Of course I never even mentioned infinite growth in the first place.
No, the point is that you claimed none of what has happened would actually happen.
Not that that in itself really has any bearing on anything. Being 'right' or 'wrong' when you are giving a simple opinion or speculating doesn't mean that much.
What is more relevant is how people counter opinions or speculation with 'absolutes', as if they could possibly 'know' in the first place. And how, in the process, they throw in insults (veiled or otherwise). You have done both.
My responses in this thread are based on a mix of fact, opinion and speculation. The numbers are there. The official comments are there. The massive changes in Apple's handset strategy are there.
Apple's iPhone segment, today, is at eight times the profitability of Huawei, even including Huawei's greater unit sales, and Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year.
Meanwhile, the best that Huawei can expect, is consolidation of the Android device industry in China leaving Apple, Samsung, and Huawei, in decreasing order, splitting the profits. I recall your comment on Xiaomi, when they stated their goal would be to maintain a profitability of 5% in smartphone sales, that "I could do something with that!". Well, it's barely registering any profit share at all, yet still sells large numbers of smartphones, but the effect on the Android device market is to keep margins extremely low for all of, and only, Android device builders, including Huawei.
Maybe your concern trolling of Apple's iPhone business, which you engage in whenever possible based almost entirely on its unit sales, would be better redirected to why Huawei hasn't yet exceeded Samsung in unit sales, and likely won't ever.
If you bring Huawei into things it is to focus on part of the competition. Likewise Xiaomi.
Yes, Chinese brands are part of the reason Apple has stalled on handset sales. Do you disagree?
Their profitability is irrelevant from an Apple perspective. When you are profitable to the tune of billions, though, it is enough. And the proof is in the pudding: the product. Apple has been playing catch-up.
Apple has reacted (is still reacting) to reality.
Look at all the changes in its handset strategy from 2017. Apple made those changes for clear reasons.
Try to imagine the situation today if those changes hadn't been made. Shudder the thought.
"... Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year."
This is incorrect. Money can't keep a user base at specific levels. As I said before, unless someone fleshes out that billion users, the number is pretty much worthless. I'm definitely in there although my iOS devices do nothing for Apple and aren't being updated. Is it not reasonable to expect that every long term Apple user is in a similar situation. Or worse, and I give myself as an example again. My more current mobile hardware is not from Apple. That revenue went elsewhere.
If Xiaomi registers large sales but little profitability, it means those sales didn't go to a competitor, ultimately affecting the competitor's revenues and profitability. That's competition and why users don't care about the profitability of the manufacturer. They care about the product. For the record Xiaomi recently overtook Huawei in Spanish handset sales although Huawei Spain revenues are up, the company has its largest non Chinese flagship store in Madrid with another flagship store to open in Barcelona next year.
There are also rumours of Huawei seeking to open a huge manufacturing base within the EU.
Trump has really shot himself in the foot over Huawei. They are also seeking to increase manufacturing in South Korea and have signed multi billion dollar deals with Japanese companies. Meanwhile, U.S companies can only read the news and weep.
Today, with Trump bans and tantrums at 100%, Huawei said that handset sales could hit 230 million for 2018. That's a massive increase over 2017. And without a global launch for the Mate 30 Pro. One of the very best phones of 2019.
There you have yet another example of protectionism.
All while Apple takes in collateral damage for political shenanigans.
Yeah, so about that 230 million units sold.Apple is making eight times more profit from selling 200 million units.
That is, in the corporate world, the bottom line, driven by ASP and Margins on hardware and supported by the wide Apple ecosystem of hardware and software that users love.
As I said, profitability (in the sense of who is more profitable) is irrevelant.
Just ask Apple, which has been changing its handset movements for three years now looking for a way to increase demand.
Why wouldn't I like the link?
Trump has lost the respect of his peers. The day he took office there were some very negative comments caught from EU officials.
Huawei is perhaps a focus point to much about which the U.S has earned its negative reputation from abroad but many nations have taken note and are already reacting.
The only thing he has done long term damage to is the U.S itself.
Far from protecting U.S influence and technological advancement, he has dramatically accelerated the advancement of other companies and countries. Billions lost in revenues. Billions that will go to Chinese and other non-U.S interests. Billions that will be invested in competing R&D.
You are already seeing the fallout and the year hasn't even ended. Huawei has consistently produced some of the best handsets out there. This year alone it has pumped out massive new technologies. And in a tit for tat move, China has ordered a rip and replace order that will have an impact on U.S communications interests over the coming years.
The next part involves Huawei Mobile Services. The genie is out of that bottle thanks to Trump and it's not going back even if Google gets a licence.
The situation is mindboggingly absurd but there you have it. Huawei is becoming even more vertically integrated thanks to Trump.
Every new teardown sees HiSilicon pop up again and again.
Without the entity list, it is very likely Huawei would have overtaken Samsung this year.
Yes, there has been a big impact on Huawei but I'll leave it to you to figure out who is going to hurt more.
Everyone knows it's market share that really matters, just ask the pundits.
No need to ask only the 'pundits'. If you plan on offering services or consumables to your customers, marketshare is a key metric. If your platform depends on active, revenue generating developers, marketshare is also a key factor.
All of Apple's move's over the last few years have included measures to shore up handset sales and increase them. It has been a radical shift but in spite of those measures, sales have remained flat or dipped YoY.
Even the most persistent rumours for 2020 include yet more measures to stimulate handset growth (new SE model released out of the habitual refresh).
At the end of the day we are all 'pundits', just in different capacities. That includes Apple management, shareholders, users, competitors.
When Apple releases software targeting Android users to make switching easier, by definition, they are chasing marketshare.
When Apple opens up its services to Android users it is also chasing marketshare.
Perhaps the question you should ask yourself is howmuch marketshare is necessary to keep the business healthy. But at the end of the day it is still marketshare.
You should also compare Apple's handset business model and compare it to 2015. What has changed and more importantly, why?
There have been massive changes and they didn't come about through experimentation. They came about through necessity.
Nah. Your "but market share!" examples are services. Services which are not tethered to hardware, so there's absolutely no reason not to sell Apple Music on Android. Services is a different business model than hardware. Apple is king of hardware, and is also adding services. And interestingly it became king of hardware while needing developers, yet still didn't foolishly chase market share by making cheapies like your Chinese knockoffs. Just like they didn't make netbooks.
Even during the heyday of peak iPhone, everyone knew and commented upon that the historic, never-before-seen-on-earth success of the iPhone could not last forever. That is normal, expected, and not the sign of desperate flailing you like to pretend it is. Absolutely no one thought it would be otherwise.
Marketshare doesn't 'see' hardware or software. It is simply marketshare. More or less important depending on your business but important nevertheless.
Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it. With such a vast pool of customers, it had no need to widen product spreads, reduce pricing etc (applying your logic from the last few years).
And if the 'success could not last forever', then they would have factored a contraction into their business forecasts anyway. Of course they didn't do that at all. They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'. Pundits, eh?
The success couldn't last forever. No, It never does. But, it didn't have to fall off as much as it did either. Since 2017 Apple has been continuously modifying its handset business strategy and ALL of the changes have been focused on breaking out of over three years of flat sales and preventing more YoY contraction. They upped iPhone pricing (X series - 2017) for revenue (not marketshare) and it didn't turn things around. They persisted with high prices in the following cycle (2018) and it backfired in a massive way (front page, high trade-in discounts appeared virtually immediately, plus direct discounts in China). All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band. The following cycle (2019), brought more massive changes. Much better hardware and most importantly - price reductions on its projected top sellers and notably a price drop on the XR.
It is slow to manoeuvre because of its annual refresh cycle and even that is rumoured to change next year in an attempt to make its handset business more agile and competitive.
Its competitors are firmly camped in the ultra premium band and growing sales. That pie is only so big and, as this article suggests, Apple is taking less share of the available profits. Those same competitors are now also pumping their flagship technologies down into the lower bands too. As a result we are now seeing rumours of Apple possibly entering the middle ground with exactly the same thinking.
It wants marketshare. It needs marketshare, and with 80% of the handset market to go for, it should definitely try to grab some more.
"Absolutely no one thought it would be otherwise"
Really?
You have persistently taken issue with what I have suggested Apple do over the last few years and the reasons why.
Just about everything I have suggested has been implemented by Apple.
You clearly thought it would be otherwise.
Geeze, get real.
1) Yes, it absolutely matters whether we're talking hardware or services. There is not a compelling reason for Apple not to market a service like music or TV across platforms for added market share. The cost of the service is basically fixed and each added customer increases margin. Inversely, there is not a compelling reason for Apple to sell its tablet at cost/minimal-profit for added market share, because with every single sale margin takes a hit. One incurs loss of margin, the other increases margin. That's the difference. It has nothing to do with market share as thing of value all by itself. It isn't. Context matters. And in Apple terms, margin is usually that context that matters most, and that's why they focus on ASP and margins rather than worshipping at the Church of Market Share as you people go on about. (See "netbooks, lack of" -ed.)
2) No, no reasonable person thought there was going to be unlimited iPhone growth, and that was talked about frequently over the years. No reasonable person believes in perpetual motion machines, either. My taking issue with the dim things you often say, in no way infers I believe infinite iPhone growth is a thing. You're free to review my post history and quote me if you believe I have ever, ever advocated believe in or expectation of infinite growth. You'll be wasting your time tho, so you won't.
3) Your crappy knockoff brands participating in the knockoff-premium band may incur growth, but that's because they're starting at the bottom of the pyramid, not the top of it where Apple is at the real premium band. This shouldn't need explaining.
I love how you believe Apple has implemented everything you have suggested. Absurd, of course, but you keep doing you!
I got real years ago. That should be clear at this point.
You claim there is no real reason NOT to market Apple services across platforms. Perhaps you need reminding that right up to the announcement of Apple's TV service, nobody had any idea if it would be limited to Apple's platform or not. The thinking of some was that it was all going to form part of the so-called eco-system or lock-in as others call it.
In my eyes it made sense to widen the reach of Apple's TV services but that is just my opinion and while some shared it, others didn't, as they had their own reasons.
Implying it was a given is incorrect. It wasn't - right up to the official announcement. Nobody knew what its reach would be and nobody knew the pricing.
The cost of each service is not 'basically fixed'. There are delivery considerations (bandwidth, infrastructure, energy consumption etc) plus advertising, service and support and licencing. All subject to change for varying reasons.
Then there is the cost of content production for TV that can vary widely. As new countries come on board, so does the need of native content, plus in some key markets, dubbing.
Things are more complicated than saying 'each new customer increases margin', although, undoubtedly, that is the plan long term. Right now, and under the current (zero/low cost) roll out, Apple is probably losing money on TV services.
Some Apple users have smugly sat around and claimed there is no money to be had in catering to Android users as they have little disposable income and don't spend it on Apps and Services. That was never ever true but we regularly get articles about how the App store brings in most of the revenues of that particular pie. Android users spend billions too and Apple, quite rightly, wants in on some of that. Again, the source of this article suggests Apple is losing percentage points on handset derived profits. Well, those lost profits are going elsewhere and it isn't RIM. Yes, I know these figures fluctuate and Apple will increase its percentage due to seasonal factors but the last few years of data on its handset business are there and unquestionable. Apple's massive changes in strategy are also there and are attempts to turn things around. All in response to competiton.
Apple doesn't want flat sales and is not happy with flat sales. At this point, anyone trying to claim the situation is somehow normal, expected and foreseeable (pundits, eh?) is simply not paying attention to what is happening and what has happened.
We spent years talking about a supercycle. A supercycle that hasn't, openly at least, increased handset sales. A supercycle that was suggested and based on reasonable logic. You know, all the stereotypes, eco-system, lock-in, brand loyalty, better product, it just works etc.
I've gone on record numerous times as suggesting 'what if the supercycle actually happened but no one saw it?'.
Apple definitely knows but no one has really dug into Cook to find an answer. Apple knows, right down to the individual, who upgraded and who didn't. It's in the Apple IDs.
There are basically three possibilities.
It didn't happen It happened but no one saw it It happened but over such a long period that its impact was diluted.
None of those are what I would call desirable scenarios.
What is clear is that iPhone has suffered as a product over the last few years - in every way.
You are wrong to throw iPad into an iPhone discussion but the iPad is already (and has been for some time) a very affordable product and one that hasn't seen such intense competition. Even so, it had it very own 'crisis' in the eyes of some. The presence of an expensive pro model doesn't change anything. Nor does the presence of an ultra expensive iPhone.
This is about iPhone, not iPad. It is not casual that iPhone has been the backbone of Apple's success and even to this day remains the key driver. While that remains true, iPhone will be one of the pillars of Apple.
It is not about if I can quote you on saying Apple would need 'infinite' growth. You are throwing 'infinite' in here to then say 'hey, I never said that'. Of course I never even mentioned infinite growth in the first place.
No, the point is that you claimed none of what has happened would actually happen.
Not that that in itself really has any bearing on anything. Being 'right' or 'wrong' when you are giving a simple opinion or speculating doesn't mean that much.
What is more relevant is how people counter opinions or speculation with 'absolutes', as if they could possibly 'know' in the first place. And how, in the process, they throw in insults (veiled or otherwise). You have done both.
My responses in this thread are based on a mix of fact, opinion and speculation. The numbers are there. The official comments are there. The massive changes in Apple's handset strategy are there.
Apple's iPhone segment, today, is at eight times the profitability of Huawei, even including Huawei's greater unit sales, and Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year.
Meanwhile, the best that Huawei can expect, is consolidation of the Android device industry in China leaving Apple, Samsung, and Huawei, in decreasing order, splitting the profits. I recall your comment on Xiaomi, when they stated their goal would be to maintain a profitability of 5% in smartphone sales, that "I could do something with that!". Well, it's barely registering any profit share at all, yet still sells large numbers of smartphones, but the effect on the Android device market is to keep margins extremely low for all of, and only, Android device builders, including Huawei.
Maybe your concern trolling of Apple's iPhone business, which you engage in whenever possible based almost entirely on its unit sales, would be better redirected to why Huawei hasn't yet exceeded Samsung in unit sales, and likely won't ever.
If you bring Huawei into things it is to focus on part of the competition. Likewise Xiaomi.
Yes, Chinese brands are part of the reason Apple has stalled on handset sales. Do you disagree?
Their profitability is irrelevant from an Apple perspective. When you are profitable to the tune of billions, though, it is enough. And the proof is in the pudding: the product. Apple has been playing catch-up.
Apple has reacted (is still reacting) to reality.
Look at all the changes in its handset strategy from 2017. Apple made those changes for clear reasons.
Try to imagine the situation today if those changes hadn't been made. Shudder the thought.
"... Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year."
This is incorrect. Money can't keep a user base at specific levels. As I said before, unless someone fleshes out that billion users, the number is pretty much worthless. I'm definitely in there although my iOS devices do nothing for Apple and aren't being updated. Is it not reasonable to expect that every long term Apple user is in a similar situation. Or worse, and I give myself as an example again. My more current mobile hardware is not from Apple. That revenue went elsewhere.
If Xiaomi registers large sales but little profitability, it means those sales didn't go to a competitor, ultimately affecting the competitor's revenues and profitability. That's competition and why users don't care about the profitability of the manufacturer. They care about the product. For the record Xiaomi recently overtook Huawei in Spanish handset sales although Huawei Spain revenues are up, the company has its largest non Chinese flagship store in Madrid with another flagship store to open in Barcelona next year.
There are also rumours of Huawei seeking to open a huge manufacturing base within the EU.
Trump has really shot himself in the foot over Huawei. They are also seeking to increase manufacturing in South Korea and have signed multi billion dollar deals with Japanese companies. Meanwhile, U.S companies can only read the news and weep.
Today, with Trump bans and tantrums at 100%, Huawei said that handset sales could hit 230 million for 2018. That's a massive increase over 2017. And without a global launch for the Mate 30 Pro. One of the very best phones of 2019.
There you have yet another example of protectionism.
All while Apple takes in collateral damage for political shenanigans.
Yeah, so about that 230 million units sold.Apple is making eight times more profit from selling 200 million units.
That is, in the corporate world, the bottom line, driven by ASP and Margins on hardware and supported by the wide Apple ecosystem of hardware and software that users love.
As I said, profitability (in the sense of who is more profitable) is irrevelant.
Just ask Apple, which has been changing its handset movements for three years now looking for a way to increase demand.
Why wouldn't I like the link?
Trump has lost the respect of his peers. The day he took office there were some very negative comments caught from EU officials.
Huawei is perhaps a focus point to much about which the U.S has earned its negative reputation from abroad but many nations have taken note and are already reacting.
The only thing he has done long term damage to is the U.S itself.
Far from protecting U.S influence and technological advancement, he has dramatically accelerated the advancement of other companies and countries. Billions lost in revenues. Billions that will go to Chinese and other non-U.S interests. Billions that will be invested in competing R&D.
You are already seeing the fallout and the year hasn't even ended. Huawei has consistently produced some of the best handsets out there. This year alone it has pumped out massive new technologies. And in a tit for tat move, China has ordered a rip and replace order that will have an impact on U.S communications interests over the coming years.
The next part involves Huawei Mobile Services. The genie is out of that bottle thanks to Trump and it's not going back even if Google gets a licence.
The situation is mindboggingly absurd but there you have it. Huawei is becoming even more vertically integrated thanks to Trump.
Every new teardown sees HiSilicon pop up again and again.
Without the entity list, it is very likely Huawei would have overtaken Samsung this year.
Yes, there has been a big impact on Huawei but I'll leave it to you to figure out who is going to hurt more.
The Chinese have indeed copied freely and used their government funding to warp the playing field in their favor. But there are at least a couple of things you fail to take into your calculations concerning what you see as Apple’s impending doom.
1. Autocracy and originality are anathema to one another. Advantage Apple both short and long run.
2. These so-called competitors that you contend (with no proof) have “waded into Apple's ultra premium band“ are making some unknown number of high-end and presumably high quality smartphones, but that is almost certainly some small percentage of their production. Apple ONLY makes high quality products, and has in place a high quality production capacity all other computer manufacturers can only dream of.
3. Apple’s enormous cash flow gives them all the cash they need to continue improving and growing on all fronts simultaneously. Cash-starved operations can’t match that. Of course, government support helps make up for that, but also means those companies taking those handouts are dependent on them. That comes back in myriad ways to hurt them, a perfect example being lack of privacy protection.
4. Contrary to your assertion that smartphones are disconnected from other products like iPads, Apple has demonstrably shown that an ecosystem of products cross-feeds advantages. Thus, Apple Watches and AirPods help sell iPhones, and vice versa.
Bottom line: You’ve made the classic error of underestimating Apple. And you’re far from alone.
Everyone knows it's market share that really matters, just ask the pundits.
No need to ask only the 'pundits'. If you plan on offering services or consumables to your customers, marketshare is a key metric. If your platform depends on active, revenue generating developers, marketshare is also a key factor.
All of Apple's move's over the last few years have included measures to shore up handset sales and increase them. It has been a radical shift but in spite of those measures, sales have remained flat or dipped YoY.
Even the most persistent rumours for 2020 include yet more measures to stimulate handset growth (new SE model released out of the habitual refresh).
At the end of the day we are all 'pundits', just in different capacities. That includes Apple management, shareholders, users, competitors.
When Apple releases software targeting Android users to make switching easier, by definition, they are chasing marketshare.
When Apple opens up its services to Android users it is also chasing marketshare.
Perhaps the question you should ask yourself is howmuch marketshare is necessary to keep the business healthy. But at the end of the day it is still marketshare.
You should also compare Apple's handset business model and compare it to 2015. What has changed and more importantly, why?
There have been massive changes and they didn't come about through experimentation. They came about through necessity.
Nah. Your "but market share!" examples are services. Services which are not tethered to hardware, so there's absolutely no reason not to sell Apple Music on Android. Services is a different business model than hardware. Apple is king of hardware, and is also adding services. And interestingly it became king of hardware while needing developers, yet still didn't foolishly chase market share by making cheapies like your Chinese knockoffs. Just like they didn't make netbooks.
Even during the heyday of peak iPhone, everyone knew and commented upon that the historic, never-before-seen-on-earth success of the iPhone could not last forever. That is normal, expected, and not the sign of desperate flailing you like to pretend it is. Absolutely no one thought it would be otherwise.
Marketshare doesn't 'see' hardware or software. It is simply marketshare. More or less important depending on your business but important nevertheless.
Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it. With such a vast pool of customers, it had no need to widen product spreads, reduce pricing etc (applying your logic from the last few years).
And if the 'success could not last forever', then they would have factored a contraction into their business forecasts anyway. Of course they didn't do that at all. They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'. Pundits, eh?
The success couldn't last forever. No, It never does. But, it didn't have to fall off as much as it did either. Since 2017 Apple has been continuously modifying its handset business strategy and ALL of the changes have been focused on breaking out of over three years of flat sales and preventing more YoY contraction. They upped iPhone pricing (X series - 2017) for revenue (not marketshare) and it didn't turn things around. They persisted with high prices in the following cycle (2018) and it backfired in a massive way (front page, high trade-in discounts appeared virtually immediately, plus direct discounts in China). All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band. The following cycle (2019), brought more massive changes. Much better hardware and most importantly - price reductions on its projected top sellers and notably a price drop on the XR.
It is slow to manoeuvre because of its annual refresh cycle and even that is rumoured to change next year in an attempt to make its handset business more agile and competitive.
Its competitors are firmly camped in the ultra premium band and growing sales. That pie is only so big and, as this article suggests, Apple is taking less share of the available profits. Those same competitors are now also pumping their flagship technologies down into the lower bands too. As a result we are now seeing rumours of Apple possibly entering the middle ground with exactly the same thinking.
It wants marketshare. It needs marketshare, and with 80% of the handset market to go for, it should definitely try to grab some more.
"Absolutely no one thought it would be otherwise"
Really?
You have persistently taken issue with what I have suggested Apple do over the last few years and the reasons why.
Just about everything I have suggested has been implemented by Apple.
You clearly thought it would be otherwise.
Geeze, get real.
1) Yes, it absolutely matters whether we're talking hardware or services. There is not a compelling reason for Apple not to market a service like music or TV across platforms for added market share. The cost of the service is basically fixed and each added customer increases margin. Inversely, there is not a compelling reason for Apple to sell its tablet at cost/minimal-profit for added market share, because with every single sale margin takes a hit. One incurs loss of margin, the other increases margin. That's the difference. It has nothing to do with market share as thing of value all by itself. It isn't. Context matters. And in Apple terms, margin is usually that context that matters most, and that's why they focus on ASP and margins rather than worshipping at the Church of Market Share as you people go on about. (See "netbooks, lack of" -ed.)
2) No, no reasonable person thought there was going to be unlimited iPhone growth, and that was talked about frequently over the years. No reasonable person believes in perpetual motion machines, either. My taking issue with the dim things you often say, in no way infers I believe infinite iPhone growth is a thing. You're free to review my post history and quote me if you believe I have ever, ever advocated believe in or expectation of infinite growth. You'll be wasting your time tho, so you won't.
3) Your crappy knockoff brands participating in the knockoff-premium band may incur growth, but that's because they're starting at the bottom of the pyramid, not the top of it where Apple is at the real premium band. This shouldn't need explaining.
I love how you believe Apple has implemented everything you have suggested. Absurd, of course, but you keep doing you!
I got real years ago. That should be clear at this point.
You claim there is no real reason NOT to market Apple services across platforms. Perhaps you need reminding that right up to the announcement of Apple's TV service, nobody had any idea if it would be limited to Apple's platform or not. The thinking of some was that it was all going to form part of the so-called eco-system or lock-in as others call it.
In my eyes it made sense to widen the reach of Apple's TV services but that is just my opinion and while some shared it, others didn't, as they had their own reasons.
Implying it was a given is incorrect. It wasn't - right up to the official announcement. Nobody knew what its reach would be and nobody knew the pricing.
The cost of each service is not 'basically fixed'. There are delivery considerations (bandwidth, infrastructure, energy consumption etc) plus advertising, service and support and licencing. All subject to change for varying reasons.
Then there is the cost of content production for TV that can vary widely. As new countries come on board, so does the need of native content, plus in some key markets, dubbing.
Things are more complicated than saying 'each new customer increases margin', although, undoubtedly, that is the plan long term. Right now, and under the current (zero/low cost) roll out, Apple is probably losing money on TV services.
Some Apple users have smugly sat around and claimed there is no money to be had in catering to Android users as they have little disposable income and don't spend it on Apps and Services. That was never ever true but we regularly get articles about how the App store brings in most of the revenues of that particular pie. Android users spend billions too and Apple, quite rightly, wants in on some of that. Again, the source of this article suggests Apple is losing percentage points on handset derived profits. Well, those lost profits are going elsewhere and it isn't RIM. Yes, I know these figures fluctuate and Apple will increase its percentage due to seasonal factors but the last few years of data on its handset business are there and unquestionable. Apple's massive changes in strategy are also there and are attempts to turn things around. All in response to competiton.
Apple doesn't want flat sales and is not happy with flat sales. At this point, anyone trying to claim the situation is somehow normal, expected and foreseeable (pundits, eh?) is simply not paying attention to what is happening and what has happened.
We spent years talking about a supercycle. A supercycle that hasn't, openly at least, increased handset sales. A supercycle that was suggested and based on reasonable logic. You know, all the stereotypes, eco-system, lock-in, brand loyalty, better product, it just works etc.
I've gone on record numerous times as suggesting 'what if the supercycle actually happened but no one saw it?'.
Apple definitely knows but no one has really dug into Cook to find an answer. Apple knows, right down to the individual, who upgraded and who didn't. It's in the Apple IDs.
There are basically three possibilities.
It didn't happen It happened but no one saw it It happened but over such a long period that its impact was diluted.
None of those are what I would call desirable scenarios.
What is clear is that iPhone has suffered as a product over the last few years - in every way.
You are wrong to throw iPad into an iPhone discussion but the iPad is already (and has been for some time) a very affordable product and one that hasn't seen such intense competition. Even so, it had it very own 'crisis' in the eyes of some. The presence of an expensive pro model doesn't change anything. Nor does the presence of an ultra expensive iPhone.
This is about iPhone, not iPad. It is not casual that iPhone has been the backbone of Apple's success and even to this day remains the key driver. While that remains true, iPhone will be one of the pillars of Apple.
It is not about if I can quote you on saying Apple would need 'infinite' growth. You are throwing 'infinite' in here to then say 'hey, I never said that'. Of course I never even mentioned infinite growth in the first place.
No, the point is that you claimed none of what has happened would actually happen.
Not that that in itself really has any bearing on anything. Being 'right' or 'wrong' when you are giving a simple opinion or speculating doesn't mean that much.
What is more relevant is how people counter opinions or speculation with 'absolutes', as if they could possibly 'know' in the first place. And how, in the process, they throw in insults (veiled or otherwise). You have done both.
My responses in this thread are based on a mix of fact, opinion and speculation. The numbers are there. The official comments are there. The massive changes in Apple's handset strategy are there.
Apple's iPhone segment, today, is at eight times the profitability of Huawei, even including Huawei's greater unit sales, and Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year.
Meanwhile, the best that Huawei can expect, is consolidation of the Android device industry in China leaving Apple, Samsung, and Huawei, in decreasing order, splitting the profits. I recall your comment on Xiaomi, when they stated their goal would be to maintain a profitability of 5% in smartphone sales, that "I could do something with that!". Well, it's barely registering any profit share at all, yet still sells large numbers of smartphones, but the effect on the Android device market is to keep margins extremely low for all of, and only, Android device builders, including Huawei.
Maybe your concern trolling of Apple's iPhone business, which you engage in whenever possible based almost entirely on its unit sales, would be better redirected to why Huawei hasn't yet exceeded Samsung in unit sales, and likely won't ever.
If you bring Huawei into things it is to focus on part of the competition. Likewise Xiaomi.
Yes, Chinese brands are part of the reason Apple has stalled on handset sales. Do you disagree?
Their profitability is irrelevant from an Apple perspective. When you are profitable to the tune of billions, though, it is enough. And the proof is in the pudding: the product. Apple has been playing catch-up.
Apple has reacted (is still reacting) to reality.
Look at all the changes in its handset strategy from 2017. Apple made those changes for clear reasons.
Try to imagine the situation today if those changes hadn't been made. Shudder the thought.
"... Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year."
This is incorrect. Money can't keep a user base at specific levels. As I said before, unless someone fleshes out that billion users, the number is pretty much worthless. I'm definitely in there although my iOS devices do nothing for Apple and aren't being updated. Is it not reasonable to expect that every long term Apple user is in a similar situation. Or worse, and I give myself as an example again. My more current mobile hardware is not from Apple. That revenue went elsewhere.
If Xiaomi registers large sales but little profitability, it means those sales didn't go to a competitor, ultimately affecting the competitor's revenues and profitability. That's competition and why users don't care about the profitability of the manufacturer. They care about the product. For the record Xiaomi recently overtook Huawei in Spanish handset sales although Huawei Spain revenues are up, the company has its largest non Chinese flagship store in Madrid with another flagship store to open in Barcelona next year.
There are also rumours of Huawei seeking to open a huge manufacturing base within the EU.
Trump has really shot himself in the foot over Huawei. They are also seeking to increase manufacturing in South Korea and have signed multi billion dollar deals with Japanese companies. Meanwhile, U.S companies can only read the news and weep.
Today, with Trump bans and tantrums at 100%, Huawei said that handset sales could hit 230 million for 2018. That's a massive increase over 2017. And without a global launch for the Mate 30 Pro. One of the very best phones of 2019.
There you have yet another example of protectionism.
All while Apple takes in collateral damage for political shenanigans.
Yeah, so about that 230 million units sold.Apple is making eight times more profit from selling 200 million units.
That is, in the corporate world, the bottom line, driven by ASP and Margins on hardware and supported by the wide Apple ecosystem of hardware and software that users love.
As I said, profitability (in the sense of who is more profitable) is irrevelant.
Just ask Apple, which has been changing its handset movements for three years now looking for a way to increase demand.
Why wouldn't I like the link?
Trump has lost the respect of his peers. The day he took office there were some very negative comments caught from EU officials.
Huawei is perhaps a focus point to much about which the U.S has earned its negative reputation from abroad but many nations have taken note and are already reacting.
The only thing he has done long term damage to is the U.S itself.
Far from protecting U.S influence and technological advancement, he has dramatically accelerated the advancement of other companies and countries. Billions lost in revenues. Billions that will go to Chinese and other non-U.S interests. Billions that will be invested in competing R&D.
You are already seeing the fallout and the year hasn't even ended. Huawei has consistently produced some of the best handsets out there. This year alone it has pumped out massive new technologies. And in a tit for tat move, China has ordered a rip and replace order that will have an impact on U.S communications interests over the coming years.
The next part involves Huawei Mobile Services. The genie is out of that bottle thanks to Trump and it's not going back even if Google gets a licence.
The situation is mindboggingly absurd but there you have it. Huawei is becoming even more vertically integrated thanks to Trump.
Every new teardown sees HiSilicon pop up again and again.
Without the entity list, it is very likely Huawei would have overtaken Samsung this year.
Yes, there has been a big impact on Huawei but I'll leave it to you to figure out who is going to hurt more.
The Chinese have indeed copied freely and used their government funding to warp the playing field in their favor. But there are at least a couple of things you fail to take into your calculations concerning what you see as Apple’s impending doom.
1. Autocracy and originality are anathema to one another. Advantage Apple both short and long run.
2. These so-called competitors that you contend (with no proof) have “waded into Apple's ultra premium band“ are making some unknown number of high-end and presumably high quality smartphones, but that is almost certainly some small percentage of their production. Apple ONLY makes high quality products, and has in place a high quality production capacity all other computer manufacturers can only dream of.
3. Apple’s enormous cash flow gives them all the cash they need to continue improving and growing on all fronts simultaneously. Cash-starved operations can’t match that. Of course, government support helps make up for that, but also means those companies taking those handouts are dependent on them. That comes back in myriad ways to hurt them, a perfect example being lack of privacy protection.
4. Contrary to your assertion that smartphones are disconnected from other products like iPads, Apple has demonstrably shown that an ecosystem of products cross-feeds advantages. Thus, Apple Watches and AirPods help sell iPhones, and vice versa.
Bottom line: You’ve made the classic error of underestimating Apple. And you’re far from alone.
Apple is far from impending doom.
I am speaking about the handset business and that business alone.
That is the business that put Apple where it is today. That was (is) the leg that supports the weight of the company.
While it has grown new legs and they are strengthening, the iPhone business remains the biggest revenue driver.
Any stalling in that business draws attention - the entire article is based on the suspected profits Apple is taking from the industry. Less than before.
I have given plenty of examples in other threads of competitors moving into Apple's ultra premium bands. What proof are you looking for? Do you think the drop off in China has left millions of Chinese ultra premium buyers holding back on purchases?
ALL of Huawei's flagship lines over the last three years have broken records for the company. Each successive generation has outsold the previous one.
You need to take a look at the quality of competing phones. You are very wrong in implying that somehow only Apple has the quality others can only dream of. The same applies to much of the key technologies in them.
If the ecosystem helps sell more iPhones, why have iPhone sales been flat for years?
I do not underestimate Apple. Far from it. In fact the more they implement these changes in business strategy, the more I agree with them. They are things I've said they should do for years.
And seeing as this article is based on data from Counterpoint, here is another drawing on Counterpoint, for next year:
Everyone knows it's market share that really matters, just ask the pundits.
No need to ask only the 'pundits'. If you plan on offering services or consumables to your customers, marketshare is a key metric. If your platform depends on active, revenue generating developers, marketshare is also a key factor.
All of Apple's move's over the last few years have included measures to shore up handset sales and increase them. It has been a radical shift but in spite of those measures, sales have remained flat or dipped YoY.
Even the most persistent rumours for 2020 include yet more measures to stimulate handset growth (new SE model released out of the habitual refresh).
At the end of the day we are all 'pundits', just in different capacities. That includes Apple management, shareholders, users, competitors.
When Apple releases software targeting Android users to make switching easier, by definition, they are chasing marketshare.
When Apple opens up its services to Android users it is also chasing marketshare.
Perhaps the question you should ask yourself is howmuch marketshare is necessary to keep the business healthy. But at the end of the day it is still marketshare.
You should also compare Apple's handset business model and compare it to 2015. What has changed and more importantly, why?
There have been massive changes and they didn't come about through experimentation. They came about through necessity.
Nah. Your "but market share!" examples are services. Services which are not tethered to hardware, so there's absolutely no reason not to sell Apple Music on Android. Services is a different business model than hardware. Apple is king of hardware, and is also adding services. And interestingly it became king of hardware while needing developers, yet still didn't foolishly chase market share by making cheapies like your Chinese knockoffs. Just like they didn't make netbooks.
Even during the heyday of peak iPhone, everyone knew and commented upon that the historic, never-before-seen-on-earth success of the iPhone could not last forever. That is normal, expected, and not the sign of desperate flailing you like to pretend it is. Absolutely no one thought it would be otherwise.
Marketshare doesn't 'see' hardware or software. It is simply marketshare. More or less important depending on your business but important nevertheless.
Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it. With such a vast pool of customers, it had no need to widen product spreads, reduce pricing etc (applying your logic from the last few years).
And if the 'success could not last forever', then they would have factored a contraction into their business forecasts anyway. Of course they didn't do that at all. They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'. Pundits, eh?
The success couldn't last forever. No, It never does. But, it didn't have to fall off as much as it did either. Since 2017 Apple has been continuously modifying its handset business strategy and ALL of the changes have been focused on breaking out of over three years of flat sales and preventing more YoY contraction. They upped iPhone pricing (X series - 2017) for revenue (not marketshare) and it didn't turn things around. They persisted with high prices in the following cycle (2018) and it backfired in a massive way (front page, high trade-in discounts appeared virtually immediately, plus direct discounts in China). All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band. The following cycle (2019), brought more massive changes. Much better hardware and most importantly - price reductions on its projected top sellers and notably a price drop on the XR.
It is slow to manoeuvre because of its annual refresh cycle and even that is rumoured to change next year in an attempt to make its handset business more agile and competitive.
Its competitors are firmly camped in the ultra premium band and growing sales. That pie is only so big and, as this article suggests, Apple is taking less share of the available profits. Those same competitors are now also pumping their flagship technologies down into the lower bands too. As a result we are now seeing rumours of Apple possibly entering the middle ground with exactly the same thinking.
It wants marketshare. It needs marketshare, and with 80% of the handset market to go for, it should definitely try to grab some more.
"Absolutely no one thought it would be otherwise"
Really?
You have persistently taken issue with what I have suggested Apple do over the last few years and the reasons why.
Just about everything I have suggested has been implemented by Apple.
You clearly thought it would be otherwise.
Geeze, get real.
1) Yes, it absolutely matters whether we're talking hardware or services. There is not a compelling reason for Apple not to market a service like music or TV across platforms for added market share. The cost of the service is basically fixed and each added customer increases margin. Inversely, there is not a compelling reason for Apple to sell its tablet at cost/minimal-profit for added market share, because with every single sale margin takes a hit. One incurs loss of margin, the other increases margin. That's the difference. It has nothing to do with market share as thing of value all by itself. It isn't. Context matters. And in Apple terms, margin is usually that context that matters most, and that's why they focus on ASP and margins rather than worshipping at the Church of Market Share as you people go on about. (See "netbooks, lack of" -ed.)
2) No, no reasonable person thought there was going to be unlimited iPhone growth, and that was talked about frequently over the years. No reasonable person believes in perpetual motion machines, either. My taking issue with the dim things you often say, in no way infers I believe infinite iPhone growth is a thing. You're free to review my post history and quote me if you believe I have ever, ever advocated believe in or expectation of infinite growth. You'll be wasting your time tho, so you won't.
3) Your crappy knockoff brands participating in the knockoff-premium band may incur growth, but that's because they're starting at the bottom of the pyramid, not the top of it where Apple is at the real premium band. This shouldn't need explaining.
I love how you believe Apple has implemented everything you have suggested. Absurd, of course, but you keep doing you!
I got real years ago. That should be clear at this point.
You claim there is no real reason NOT to market Apple services across platforms. Perhaps you need reminding that right up to the announcement of Apple's TV service, nobody had any idea if it would be limited to Apple's platform or not. The thinking of some was that it was all going to form part of the so-called eco-system or lock-in as others call it.
In my eyes it made sense to widen the reach of Apple's TV services but that is just my opinion and while some shared it, others didn't, as they had their own reasons.
Implying it was a given is incorrect. It wasn't - right up to the official announcement. Nobody knew what its reach would be and nobody knew the pricing.
The cost of each service is not 'basically fixed'. There are delivery considerations (bandwidth, infrastructure, energy consumption etc) plus advertising, service and support and licencing. All subject to change for varying reasons.
Then there is the cost of content production for TV that can vary widely. As new countries come on board, so does the need of native content, plus in some key markets, dubbing.
Things are more complicated than saying 'each new customer increases margin', although, undoubtedly, that is the plan long term. Right now, and under the current (zero/low cost) roll out, Apple is probably losing money on TV services.
Some Apple users have smugly sat around and claimed there is no money to be had in catering to Android users as they have little disposable income and don't spend it on Apps and Services. That was never ever true but we regularly get articles about how the App store brings in most of the revenues of that particular pie. Android users spend billions too and Apple, quite rightly, wants in on some of that. Again, the source of this article suggests Apple is losing percentage points on handset derived profits. Well, those lost profits are going elsewhere and it isn't RIM. Yes, I know these figures fluctuate and Apple will increase its percentage due to seasonal factors but the last few years of data on its handset business are there and unquestionable. Apple's massive changes in strategy are also there and are attempts to turn things around. All in response to competiton.
Apple doesn't want flat sales and is not happy with flat sales. At this point, anyone trying to claim the situation is somehow normal, expected and foreseeable (pundits, eh?) is simply not paying attention to what is happening and what has happened.
We spent years talking about a supercycle. A supercycle that hasn't, openly at least, increased handset sales. A supercycle that was suggested and based on reasonable logic. You know, all the stereotypes, eco-system, lock-in, brand loyalty, better product, it just works etc.
I've gone on record numerous times as suggesting 'what if the supercycle actually happened but no one saw it?'.
Apple definitely knows but no one has really dug into Cook to find an answer. Apple knows, right down to the individual, who upgraded and who didn't. It's in the Apple IDs.
There are basically three possibilities.
It didn't happen It happened but no one saw it It happened but over such a long period that its impact was diluted.
None of those are what I would call desirable scenarios.
What is clear is that iPhone has suffered as a product over the last few years - in every way.
You are wrong to throw iPad into an iPhone discussion but the iPad is already (and has been for some time) a very affordable product and one that hasn't seen such intense competition. Even so, it had it very own 'crisis' in the eyes of some. The presence of an expensive pro model doesn't change anything. Nor does the presence of an ultra expensive iPhone.
This is about iPhone, not iPad. It is not casual that iPhone has been the backbone of Apple's success and even to this day remains the key driver. While that remains true, iPhone will be one of the pillars of Apple.
It is not about if I can quote you on saying Apple would need 'infinite' growth. You are throwing 'infinite' in here to then say 'hey, I never said that'. Of course I never even mentioned infinite growth in the first place.
No, the point is that you claimed none of what has happened would actually happen.
Not that that in itself really has any bearing on anything. Being 'right' or 'wrong' when you are giving a simple opinion or speculating doesn't mean that much.
What is more relevant is how people counter opinions or speculation with 'absolutes', as if they could possibly 'know' in the first place. And how, in the process, they throw in insults (veiled or otherwise). You have done both.
My responses in this thread are based on a mix of fact, opinion and speculation. The numbers are there. The official comments are there. The massive changes in Apple's handset strategy are there.
Apple's iPhone segment, today, is at eight times the profitability of Huawei, even including Huawei's greater unit sales, and Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year.
Meanwhile, the best that Huawei can expect, is consolidation of the Android device industry in China leaving Apple, Samsung, and Huawei, in decreasing order, splitting the profits. I recall your comment on Xiaomi, when they stated their goal would be to maintain a profitability of 5% in smartphone sales, that "I could do something with that!". Well, it's barely registering any profit share at all, yet still sells large numbers of smartphones, but the effect on the Android device market is to keep margins extremely low for all of, and only, Android device builders, including Huawei.
Maybe your concern trolling of Apple's iPhone business, which you engage in whenever possible based almost entirely on its unit sales, would be better redirected to why Huawei hasn't yet exceeded Samsung in unit sales, and likely won't ever.
If you bring Huawei into things it is to focus on part of the competition. Likewise Xiaomi.
Yes, Chinese brands are part of the reason Apple has stalled on handset sales. Do you disagree?
Their profitability is irrelevant from an Apple perspective. When you are profitable to the tune of billions, though, it is enough. And the proof is in the pudding: the product. Apple has been playing catch-up.
Apple has reacted (is still reacting) to reality.
Look at all the changes in its handset strategy from 2017. Apple made those changes for clear reasons.
Try to imagine the situation today if those changes hadn't been made. Shudder the thought.
"... Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year."
This is incorrect. Money can't keep a user base at specific levels. As I said before, unless someone fleshes out that billion users, the number is pretty much worthless. I'm definitely in there although my iOS devices do nothing for Apple and aren't being updated. Is it not reasonable to expect that every long term Apple user is in a similar situation. Or worse, and I give myself as an example again. My more current mobile hardware is not from Apple. That revenue went elsewhere.
If Xiaomi registers large sales but little profitability, it means those sales didn't go to a competitor, ultimately affecting the competitor's revenues and profitability. That's competition and why users don't care about the profitability of the manufacturer. They care about the product. For the record Xiaomi recently overtook Huawei in Spanish handset sales although Huawei Spain revenues are up, the company has its largest non Chinese flagship store in Madrid with another flagship store to open in Barcelona next year.
There are also rumours of Huawei seeking to open a huge manufacturing base within the EU.
Trump has really shot himself in the foot over Huawei. They are also seeking to increase manufacturing in South Korea and have signed multi billion dollar deals with Japanese companies. Meanwhile, U.S companies can only read the news and weep.
Today, with Trump bans and tantrums at 100%, Huawei said that handset sales could hit 230 million for 2018. That's a massive increase over 2017. And without a global launch for the Mate 30 Pro. One of the very best phones of 2019.
There you have yet another example of protectionism.
All while Apple takes in collateral damage for political shenanigans.
Yeah, so about that 230 million units sold.Apple is making eight times more profit from selling 200 million units.
That is, in the corporate world, the bottom line, driven by ASP and Margins on hardware and supported by the wide Apple ecosystem of hardware and software that users love.
As I said, profitability (in the sense of who is more profitable) is irrevelant.
Just ask Apple, which has been changing its handset movements for three years now looking for a way to increase demand.
Why wouldn't I like the link?
Trump has lost the respect of his peers. The day he took office there were some very negative comments caught from EU officials.
Huawei is perhaps a focus point to much about which the U.S has earned its negative reputation from abroad but many nations have taken note and are already reacting.
The only thing he has done long term damage to is the U.S itself.
Far from protecting U.S influence and technological advancement, he has dramatically accelerated the advancement of other companies and countries. Billions lost in revenues. Billions that will go to Chinese and other non-U.S interests. Billions that will be invested in competing R&D.
You are already seeing the fallout and the year hasn't even ended. Huawei has consistently produced some of the best handsets out there. This year alone it has pumped out massive new technologies. And in a tit for tat move, China has ordered a rip and replace order that will have an impact on U.S communications interests over the coming years.
The next part involves Huawei Mobile Services. The genie is out of that bottle thanks to Trump and it's not going back even if Google gets a licence.
The situation is mindboggingly absurd but there you have it. Huawei is becoming even more vertically integrated thanks to Trump.
Every new teardown sees HiSilicon pop up again and again.
Without the entity list, it is very likely Huawei would have overtaken Samsung this year.
Yes, there has been a big impact on Huawei but I'll leave it to you to figure out who is going to hurt more.
The Chinese have indeed copied freely and used their government funding to warp the playing field in their favor. But there are at least a couple of things you fail to take into your calculations concerning what you see as Apple’s impending doom.
1. Autocracy and originality are anathema to one another. Advantage Apple both short and long run.
2. These so-called competitors that you contend (with no proof) have “waded into Apple's ultra premium band“ are making some unknown number of high-end and presumably high quality smartphones, but that is almost certainly some small percentage of their production. Apple ONLY makes high quality products, and has in place a high quality production capacity all other computer manufacturers can only dream of.
3. Apple’s enormous cash flow gives them all the cash they need to continue improving and growing on all fronts simultaneously. Cash-starved operations can’t match that. Of course, government support helps make up for that, but also means those companies taking those handouts are dependent on them. That comes back in myriad ways to hurt them, a perfect example being lack of privacy protection.
4. Contrary to your assertion that smartphones are disconnected from other products like iPads, Apple has demonstrably shown that an ecosystem of products cross-feeds advantages. Thus, Apple Watches and AirPods help sell iPhones, and vice versa.
Bottom line: You’ve made the classic error of underestimating Apple. And you’re far from alone.
Apple is far from impending doom.
I am speaking about the handset business and that business alone.
That is the business that put Apple where it is today. That was (is) the leg that supports the weight of the company.
While it has grown new legs and they are strengthening, the iPhone business remains the biggest revenue driver.
Any stalling in that business draws attention - the entire article is based on the suspected profits Apple is taking from the industry. Less than before.
I have given plenty of examples in other threads of competitors moving into Apple's ultra premium bands. What proof are you looking for? Do you think the drop off in China has left millions of Chinese ultra premium buyers holding back on purchases?
ALL of Huawei's flagship lines over the last three years have broken records for the company. Each successive generation has outsold the previous one.
You need to take a look at the quality of competing phones. You are very wrong in implying that somehow only Apple has the quality others can only dream of. The same applies to much of the key technologies in them.
If the ecosystem helps sell more iPhones, why have iPhone sales been flat for years?
I do not underestimate Apple. Far from it. In fact the more they implement these changes in business strategy, the more I agree with them. They are things I've said they should do for years.
And seeing as this article is based on data from Counterpoint, here is another drawing on Counterpoint, for next year:
It really comes down to the fact that iPhones are being kept for much longer periods of ownership, hence why sales are flat, yet at the same time, the iPhone user base is growing. Right now, that replacement cycle is a little over 4 years average. If you take 900 million iPhone users and divide by 4 years, you get a replacement cycle of 225 million units per year, which might very well be accurate for Apple's fiscal year 2021 sales which begins next fall. Hence why I have been using 180 million to 220 million as typical for future iPhone replacement cycles.
At some point in time, Android OS device users will also be holding onto their devices longer; and some say that the overall Android OS device market is as well flat today. If that is the case, then how exactly is Huawei going to grow, other than taking away Samsung's, Oppo's, or Xiaomi's unit share? So far though, I'm not seeing any data in other than for a shot period of time in China that Huawei is an alternative to the iPhone.
Mostly though, I find it odd that you don't acknowledge that Huawei is now the one facing headwinds. It might be the only option for Huawei to begin dumping devices on the market at even lower margins to maintain unit share while attempting to find an alternative to Google Services. Either way, Huawei may as well be facing flat sales.
Everyone knows it's market share that really matters, just ask the pundits.
No need to ask only the 'pundits'. If you plan on offering services or consumables to your customers, marketshare is a key metric. If your platform depends on active, revenue generating developers, marketshare is also a key factor.
All of Apple's move's over the last few years have included measures to shore up handset sales and increase them. It has been a radical shift but in spite of those measures, sales have remained flat or dipped YoY.
Even the most persistent rumours for 2020 include yet more measures to stimulate handset growth (new SE model released out of the habitual refresh).
At the end of the day we are all 'pundits', just in different capacities. That includes Apple management, shareholders, users, competitors.
When Apple releases software targeting Android users to make switching easier, by definition, they are chasing marketshare.
When Apple opens up its services to Android users it is also chasing marketshare.
Perhaps the question you should ask yourself is howmuch marketshare is necessary to keep the business healthy. But at the end of the day it is still marketshare.
You should also compare Apple's handset business model and compare it to 2015. What has changed and more importantly, why?
There have been massive changes and they didn't come about through experimentation. They came about through necessity.
Nah. Your "but market share!" examples are services. Services which are not tethered to hardware, so there's absolutely no reason not to sell Apple Music on Android. Services is a different business model than hardware. Apple is king of hardware, and is also adding services. And interestingly it became king of hardware while needing developers, yet still didn't foolishly chase market share by making cheapies like your Chinese knockoffs. Just like they didn't make netbooks.
Even during the heyday of peak iPhone, everyone knew and commented upon that the historic, never-before-seen-on-earth success of the iPhone could not last forever. That is normal, expected, and not the sign of desperate flailing you like to pretend it is. Absolutely no one thought it would be otherwise.
Marketshare doesn't 'see' hardware or software. It is simply marketshare. More or less important depending on your business but important nevertheless.
Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it. With such a vast pool of customers, it had no need to widen product spreads, reduce pricing etc (applying your logic from the last few years).
And if the 'success could not last forever', then they would have factored a contraction into their business forecasts anyway. Of course they didn't do that at all. They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'. Pundits, eh?
The success couldn't last forever. No, It never does. But, it didn't have to fall off as much as it did either. Since 2017 Apple has been continuously modifying its handset business strategy and ALL of the changes have been focused on breaking out of over three years of flat sales and preventing more YoY contraction. They upped iPhone pricing (X series - 2017) for revenue (not marketshare) and it didn't turn things around. They persisted with high prices in the following cycle (2018) and it backfired in a massive way (front page, high trade-in discounts appeared virtually immediately, plus direct discounts in China). All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band. The following cycle (2019), brought more massive changes. Much better hardware and most importantly - price reductions on its projected top sellers and notably a price drop on the XR.
It is slow to manoeuvre because of its annual refresh cycle and even that is rumoured to change next year in an attempt to make its handset business more agile and competitive.
Its competitors are firmly camped in the ultra premium band and growing sales. That pie is only so big and, as this article suggests, Apple is taking less share of the available profits. Those same competitors are now also pumping their flagship technologies down into the lower bands too. As a result we are now seeing rumours of Apple possibly entering the middle ground with exactly the same thinking.
It wants marketshare. It needs marketshare, and with 80% of the handset market to go for, it should definitely try to grab some more.
"Absolutely no one thought it would be otherwise"
Really?
You have persistently taken issue with what I have suggested Apple do over the last few years and the reasons why.
Just about everything I have suggested has been implemented by Apple.
You clearly thought it would be otherwise.
Geeze, get real.
1) Yes, it absolutely matters whether we're talking hardware or services. There is not a compelling reason for Apple not to market a service like music or TV across platforms for added market share. The cost of the service is basically fixed and each added customer increases margin. Inversely, there is not a compelling reason for Apple to sell its tablet at cost/minimal-profit for added market share, because with every single sale margin takes a hit. One incurs loss of margin, the other increases margin. That's the difference. It has nothing to do with market share as thing of value all by itself. It isn't. Context matters. And in Apple terms, margin is usually that context that matters most, and that's why they focus on ASP and margins rather than worshipping at the Church of Market Share as you people go on about. (See "netbooks, lack of" -ed.)
2) No, no reasonable person thought there was going to be unlimited iPhone growth, and that was talked about frequently over the years. No reasonable person believes in perpetual motion machines, either. My taking issue with the dim things you often say, in no way infers I believe infinite iPhone growth is a thing. You're free to review my post history and quote me if you believe I have ever, ever advocated believe in or expectation of infinite growth. You'll be wasting your time tho, so you won't.
3) Your crappy knockoff brands participating in the knockoff-premium band may incur growth, but that's because they're starting at the bottom of the pyramid, not the top of it where Apple is at the real premium band. This shouldn't need explaining.
I love how you believe Apple has implemented everything you have suggested. Absurd, of course, but you keep doing you!
I got real years ago. That should be clear at this point.
You claim there is no real reason NOT to market Apple services across platforms. Perhaps you need reminding that right up to the announcement of Apple's TV service, nobody had any idea if it would be limited to Apple's platform or not. The thinking of some was that it was all going to form part of the so-called eco-system or lock-in as others call it.
In my eyes it made sense to widen the reach of Apple's TV services but that is just my opinion and while some shared it, others didn't, as they had their own reasons.
Implying it was a given is incorrect. It wasn't - right up to the official announcement. Nobody knew what its reach would be and nobody knew the pricing.
The cost of each service is not 'basically fixed'. There are delivery considerations (bandwidth, infrastructure, energy consumption etc) plus advertising, service and support and licencing. All subject to change for varying reasons.
Then there is the cost of content production for TV that can vary widely. As new countries come on board, so does the need of native content, plus in some key markets, dubbing.
Things are more complicated than saying 'each new customer increases margin', although, undoubtedly, that is the plan long term. Right now, and under the current (zero/low cost) roll out, Apple is probably losing money on TV services.
Some Apple users have smugly sat around and claimed there is no money to be had in catering to Android users as they have little disposable income and don't spend it on Apps and Services. That was never ever true but we regularly get articles about how the App store brings in most of the revenues of that particular pie. Android users spend billions too and Apple, quite rightly, wants in on some of that. Again, the source of this article suggests Apple is losing percentage points on handset derived profits. Well, those lost profits are going elsewhere and it isn't RIM. Yes, I know these figures fluctuate and Apple will increase its percentage due to seasonal factors but the last few years of data on its handset business are there and unquestionable. Apple's massive changes in strategy are also there and are attempts to turn things around. All in response to competiton.
Apple doesn't want flat sales and is not happy with flat sales. At this point, anyone trying to claim the situation is somehow normal, expected and foreseeable (pundits, eh?) is simply not paying attention to what is happening and what has happened.
We spent years talking about a supercycle. A supercycle that hasn't, openly at least, increased handset sales. A supercycle that was suggested and based on reasonable logic. You know, all the stereotypes, eco-system, lock-in, brand loyalty, better product, it just works etc.
I've gone on record numerous times as suggesting 'what if the supercycle actually happened but no one saw it?'.
Apple definitely knows but no one has really dug into Cook to find an answer. Apple knows, right down to the individual, who upgraded and who didn't. It's in the Apple IDs.
There are basically three possibilities.
It didn't happen It happened but no one saw it It happened but over such a long period that its impact was diluted.
None of those are what I would call desirable scenarios.
What is clear is that iPhone has suffered as a product over the last few years - in every way.
You are wrong to throw iPad into an iPhone discussion but the iPad is already (and has been for some time) a very affordable product and one that hasn't seen such intense competition. Even so, it had it very own 'crisis' in the eyes of some. The presence of an expensive pro model doesn't change anything. Nor does the presence of an ultra expensive iPhone.
This is about iPhone, not iPad. It is not casual that iPhone has been the backbone of Apple's success and even to this day remains the key driver. While that remains true, iPhone will be one of the pillars of Apple.
It is not about if I can quote you on saying Apple would need 'infinite' growth. You are throwing 'infinite' in here to then say 'hey, I never said that'. Of course I never even mentioned infinite growth in the first place.
No, the point is that you claimed none of what has happened would actually happen.
Not that that in itself really has any bearing on anything. Being 'right' or 'wrong' when you are giving a simple opinion or speculating doesn't mean that much.
What is more relevant is how people counter opinions or speculation with 'absolutes', as if they could possibly 'know' in the first place. And how, in the process, they throw in insults (veiled or otherwise). You have done both.
My responses in this thread are based on a mix of fact, opinion and speculation. The numbers are there. The official comments are there. The massive changes in Apple's handset strategy are there.
Apple's iPhone segment, today, is at eight times the profitability of Huawei, even including Huawei's greater unit sales, and Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year.
Meanwhile, the best that Huawei can expect, is consolidation of the Android device industry in China leaving Apple, Samsung, and Huawei, in decreasing order, splitting the profits. I recall your comment on Xiaomi, when they stated their goal would be to maintain a profitability of 5% in smartphone sales, that "I could do something with that!". Well, it's barely registering any profit share at all, yet still sells large numbers of smartphones, but the effect on the Android device market is to keep margins extremely low for all of, and only, Android device builders, including Huawei.
Maybe your concern trolling of Apple's iPhone business, which you engage in whenever possible based almost entirely on its unit sales, would be better redirected to why Huawei hasn't yet exceeded Samsung in unit sales, and likely won't ever.
If you bring Huawei into things it is to focus on part of the competition. Likewise Xiaomi.
Yes, Chinese brands are part of the reason Apple has stalled on handset sales. Do you disagree?
Their profitability is irrelevant from an Apple perspective. When you are profitable to the tune of billions, though, it is enough. And the proof is in the pudding: the product. Apple has been playing catch-up.
Apple has reacted (is still reacting) to reality.
Look at all the changes in its handset strategy from 2017. Apple made those changes for clear reasons.
Try to imagine the situation today if those changes hadn't been made. Shudder the thought.
"... Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year."
This is incorrect. Money can't keep a user base at specific levels. As I said before, unless someone fleshes out that billion users, the number is pretty much worthless. I'm definitely in there although my iOS devices do nothing for Apple and aren't being updated. Is it not reasonable to expect that every long term Apple user is in a similar situation. Or worse, and I give myself as an example again. My more current mobile hardware is not from Apple. That revenue went elsewhere.
If Xiaomi registers large sales but little profitability, it means those sales didn't go to a competitor, ultimately affecting the competitor's revenues and profitability. That's competition and why users don't care about the profitability of the manufacturer. They care about the product. For the record Xiaomi recently overtook Huawei in Spanish handset sales although Huawei Spain revenues are up, the company has its largest non Chinese flagship store in Madrid with another flagship store to open in Barcelona next year.
There are also rumours of Huawei seeking to open a huge manufacturing base within the EU.
Trump has really shot himself in the foot over Huawei. They are also seeking to increase manufacturing in South Korea and have signed multi billion dollar deals with Japanese companies. Meanwhile, U.S companies can only read the news and weep.
Today, with Trump bans and tantrums at 100%, Huawei said that handset sales could hit 230 million for 2018. That's a massive increase over 2017. And without a global launch for the Mate 30 Pro. One of the very best phones of 2019.
There you have yet another example of protectionism.
All while Apple takes in collateral damage for political shenanigans.
Yeah, so about that 230 million units sold.Apple is making eight times more profit from selling 200 million units.
That is, in the corporate world, the bottom line, driven by ASP and Margins on hardware and supported by the wide Apple ecosystem of hardware and software that users love.
As I said, profitability (in the sense of who is more profitable) is irrevelant.
Just ask Apple, which has been changing its handset movements for three years now looking for a way to increase demand.
Why wouldn't I like the link?
Trump has lost the respect of his peers. The day he took office there were some very negative comments caught from EU officials.
Huawei is perhaps a focus point to much about which the U.S has earned its negative reputation from abroad but many nations have taken note and are already reacting.
The only thing he has done long term damage to is the U.S itself.
Far from protecting U.S influence and technological advancement, he has dramatically accelerated the advancement of other companies and countries. Billions lost in revenues. Billions that will go to Chinese and other non-U.S interests. Billions that will be invested in competing R&D.
You are already seeing the fallout and the year hasn't even ended. Huawei has consistently produced some of the best handsets out there. This year alone it has pumped out massive new technologies. And in a tit for tat move, China has ordered a rip and replace order that will have an impact on U.S communications interests over the coming years.
The next part involves Huawei Mobile Services. The genie is out of that bottle thanks to Trump and it's not going back even if Google gets a licence.
The situation is mindboggingly absurd but there you have it. Huawei is becoming even more vertically integrated thanks to Trump.
Every new teardown sees HiSilicon pop up again and again.
Without the entity list, it is very likely Huawei would have overtaken Samsung this year.
Yes, there has been a big impact on Huawei but I'll leave it to you to figure out who is going to hurt more.
The Chinese have indeed copied freely and used their government funding to warp the playing field in their favor. But there are at least a couple of things you fail to take into your calculations concerning what you see as Apple’s impending doom.
1. Autocracy and originality are anathema to one another. Advantage Apple both short and long run.
2. These so-called competitors that you contend (with no proof) have “waded into Apple's ultra premium band“ are making some unknown number of high-end and presumably high quality smartphones, but that is almost certainly some small percentage of their production. Apple ONLY makes high quality products, and has in place a high quality production capacity all other computer manufacturers can only dream of.
3. Apple’s enormous cash flow gives them all the cash they need to continue improving and growing on all fronts simultaneously. Cash-starved operations can’t match that. Of course, government support helps make up for that, but also means those companies taking those handouts are dependent on them. That comes back in myriad ways to hurt them, a perfect example being lack of privacy protection.
4. Contrary to your assertion that smartphones are disconnected from other products like iPads, Apple has demonstrably shown that an ecosystem of products cross-feeds advantages. Thus, Apple Watches and AirPods help sell iPhones, and vice versa.
Bottom line: You’ve made the classic error of underestimating Apple. And you’re far from alone.
Apple is far from impending doom.
I am speaking about the handset business and that business alone.
That is the business that put Apple where it is today. That was (is) the leg that supports the weight of the company.
While it has grown new legs and they are strengthening, the iPhone business remains the biggest revenue driver.
Any stalling in that business draws attention - the entire article is based on the suspected profits Apple is taking from the industry. Less than before.
I have given plenty of examples in other threads of competitors moving into Apple's ultra premium bands. What proof are you looking for? Do you think the drop off in China has left millions of Chinese ultra premium buyers holding back on purchases?
ALL of Huawei's flagship lines over the last three years have broken records for the company. Each successive generation has outsold the previous one.
You need to take a look at the quality of competing phones. You are very wrong in implying that somehow only Apple has the quality others can only dream of. The same applies to much of the key technologies in them.
If the ecosystem helps sell more iPhones, why have iPhone sales been flat for years?
I do not underestimate Apple. Far from it. In fact the more they implement these changes in business strategy, the more I agree with them. They are things I've said they should do for years.
Your links are worthless. The first one is a statement by Huawei, and should be taken with a huge grain of salt. The second one is just as suspicious. These can at best be considered crude guesses.
Beyond that, the last hard number we got (from Apple) was about 217 M iPhones sold. Huawei is bragging (assuming they’re telling the truth) about selling 7 M over 2 months. Of course, nothing is said about their high quality production capacity, but even assuming the best or 3.5 M/month, that’s only about 42 M/year. And frankly, I’d be surprised if they can handle half that, or a tenth of Apple’s production capacity.
“If the ecosystem helps sell more iPhones, why have iPhone sales been flat for years?“
Why have Android sales been flat for years? Huawei may be growing, but it’s just another Android, so it’s not taking market share from Apple but from other Android manufacturers.
But again, you miss the point. Market share is far less important than installed base. It’s not incidental that Apple’s installed base is still growing, and now tops 900 M.
Statista’s Android numbers (highly suspect and almost certainly weighted in favor of Android) show 2.7 B installed base in 2017. With the flat smartphone market, I doubt it’s any higher today.
IOW, Apple has a far larger fraction of the installed base than it does a fraction of market share. Which makes perfect sense. Even older iPhones are extremely well built and treasured.
Everyone knows it's market share that really matters, just ask the pundits.
No need to ask only the 'pundits'. If you plan on offering services or consumables to your customers, marketshare is a key metric. If your platform depends on active, revenue generating developers, marketshare is also a key factor.
All of Apple's move's over the last few years have included measures to shore up handset sales and increase them. It has been a radical shift but in spite of those measures, sales have remained flat or dipped YoY.
Even the most persistent rumours for 2020 include yet more measures to stimulate handset growth (new SE model released out of the habitual refresh).
At the end of the day we are all 'pundits', just in different capacities. That includes Apple management, shareholders, users, competitors.
When Apple releases software targeting Android users to make switching easier, by definition, they are chasing marketshare.
When Apple opens up its services to Android users it is also chasing marketshare.
Perhaps the question you should ask yourself is howmuch marketshare is necessary to keep the business healthy. But at the end of the day it is still marketshare.
You should also compare Apple's handset business model and compare it to 2015. What has changed and more importantly, why?
There have been massive changes and they didn't come about through experimentation. They came about through necessity.
Nah. Your "but market share!" examples are services. Services which are not tethered to hardware, so there's absolutely no reason not to sell Apple Music on Android. Services is a different business model than hardware. Apple is king of hardware, and is also adding services. And interestingly it became king of hardware while needing developers, yet still didn't foolishly chase market share by making cheapies like your Chinese knockoffs. Just like they didn't make netbooks.
Even during the heyday of peak iPhone, everyone knew and commented upon that the historic, never-before-seen-on-earth success of the iPhone could not last forever. That is normal, expected, and not the sign of desperate flailing you like to pretend it is. Absolutely no one thought it would be otherwise.
Marketshare doesn't 'see' hardware or software. It is simply marketshare. More or less important depending on your business but important nevertheless.
Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it. With such a vast pool of customers, it had no need to widen product spreads, reduce pricing etc (applying your logic from the last few years).
And if the 'success could not last forever', then they would have factored a contraction into their business forecasts anyway. Of course they didn't do that at all. They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'. Pundits, eh?
The success couldn't last forever. No, It never does. But, it didn't have to fall off as much as it did either. Since 2017 Apple has been continuously modifying its handset business strategy and ALL of the changes have been focused on breaking out of over three years of flat sales and preventing more YoY contraction. They upped iPhone pricing (X series - 2017) for revenue (not marketshare) and it didn't turn things around. They persisted with high prices in the following cycle (2018) and it backfired in a massive way (front page, high trade-in discounts appeared virtually immediately, plus direct discounts in China). All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band. The following cycle (2019), brought more massive changes. Much better hardware and most importantly - price reductions on its projected top sellers and notably a price drop on the XR.
It is slow to manoeuvre because of its annual refresh cycle and even that is rumoured to change next year in an attempt to make its handset business more agile and competitive.
Its competitors are firmly camped in the ultra premium band and growing sales. That pie is only so big and, as this article suggests, Apple is taking less share of the available profits. Those same competitors are now also pumping their flagship technologies down into the lower bands too. As a result we are now seeing rumours of Apple possibly entering the middle ground with exactly the same thinking.
It wants marketshare. It needs marketshare, and with 80% of the handset market to go for, it should definitely try to grab some more.
"Absolutely no one thought it would be otherwise"
Really?
You have persistently taken issue with what I have suggested Apple do over the last few years and the reasons why.
Just about everything I have suggested has been implemented by Apple.
You clearly thought it would be otherwise.
Geeze, get real.
1) Yes, it absolutely matters whether we're talking hardware or services. There is not a compelling reason for Apple not to market a service like music or TV across platforms for added market share. The cost of the service is basically fixed and each added customer increases margin. Inversely, there is not a compelling reason for Apple to sell its tablet at cost/minimal-profit for added market share, because with every single sale margin takes a hit. One incurs loss of margin, the other increases margin. That's the difference. It has nothing to do with market share as thing of value all by itself. It isn't. Context matters. And in Apple terms, margin is usually that context that matters most, and that's why they focus on ASP and margins rather than worshipping at the Church of Market Share as you people go on about. (See "netbooks, lack of" -ed.)
2) No, no reasonable person thought there was going to be unlimited iPhone growth, and that was talked about frequently over the years. No reasonable person believes in perpetual motion machines, either. My taking issue with the dim things you often say, in no way infers I believe infinite iPhone growth is a thing. You're free to review my post history and quote me if you believe I have ever, ever advocated believe in or expectation of infinite growth. You'll be wasting your time tho, so you won't.
3) Your crappy knockoff brands participating in the knockoff-premium band may incur growth, but that's because they're starting at the bottom of the pyramid, not the top of it where Apple is at the real premium band. This shouldn't need explaining.
I love how you believe Apple has implemented everything you have suggested. Absurd, of course, but you keep doing you!
I got real years ago. That should be clear at this point.
You claim there is no real reason NOT to market Apple services across platforms. Perhaps you need reminding that right up to the announcement of Apple's TV service, nobody had any idea if it would be limited to Apple's platform or not. The thinking of some was that it was all going to form part of the so-called eco-system or lock-in as others call it.
In my eyes it made sense to widen the reach of Apple's TV services but that is just my opinion and while some shared it, others didn't, as they had their own reasons.
Implying it was a given is incorrect. It wasn't - right up to the official announcement. Nobody knew what its reach would be and nobody knew the pricing.
The cost of each service is not 'basically fixed'. There are delivery considerations (bandwidth, infrastructure, energy consumption etc) plus advertising, service and support and licencing. All subject to change for varying reasons.
Then there is the cost of content production for TV that can vary widely. As new countries come on board, so does the need of native content, plus in some key markets, dubbing.
Things are more complicated than saying 'each new customer increases margin', although, undoubtedly, that is the plan long term. Right now, and under the current (zero/low cost) roll out, Apple is probably losing money on TV services.
Some Apple users have smugly sat around and claimed there is no money to be had in catering to Android users as they have little disposable income and don't spend it on Apps and Services. That was never ever true but we regularly get articles about how the App store brings in most of the revenues of that particular pie. Android users spend billions too and Apple, quite rightly, wants in on some of that. Again, the source of this article suggests Apple is losing percentage points on handset derived profits. Well, those lost profits are going elsewhere and it isn't RIM. Yes, I know these figures fluctuate and Apple will increase its percentage due to seasonal factors but the last few years of data on its handset business are there and unquestionable. Apple's massive changes in strategy are also there and are attempts to turn things around. All in response to competiton.
Apple doesn't want flat sales and is not happy with flat sales. At this point, anyone trying to claim the situation is somehow normal, expected and foreseeable (pundits, eh?) is simply not paying attention to what is happening and what has happened.
We spent years talking about a supercycle. A supercycle that hasn't, openly at least, increased handset sales. A supercycle that was suggested and based on reasonable logic. You know, all the stereotypes, eco-system, lock-in, brand loyalty, better product, it just works etc.
I've gone on record numerous times as suggesting 'what if the supercycle actually happened but no one saw it?'.
Apple definitely knows but no one has really dug into Cook to find an answer. Apple knows, right down to the individual, who upgraded and who didn't. It's in the Apple IDs.
There are basically three possibilities.
It didn't happen It happened but no one saw it It happened but over such a long period that its impact was diluted.
None of those are what I would call desirable scenarios.
What is clear is that iPhone has suffered as a product over the last few years - in every way.
You are wrong to throw iPad into an iPhone discussion but the iPad is already (and has been for some time) a very affordable product and one that hasn't seen such intense competition. Even so, it had it very own 'crisis' in the eyes of some. The presence of an expensive pro model doesn't change anything. Nor does the presence of an ultra expensive iPhone.
This is about iPhone, not iPad. It is not casual that iPhone has been the backbone of Apple's success and even to this day remains the key driver. While that remains true, iPhone will be one of the pillars of Apple.
It is not about if I can quote you on saying Apple would need 'infinite' growth. You are throwing 'infinite' in here to then say 'hey, I never said that'. Of course I never even mentioned infinite growth in the first place.
No, the point is that you claimed none of what has happened would actually happen.
Not that that in itself really has any bearing on anything. Being 'right' or 'wrong' when you are giving a simple opinion or speculating doesn't mean that much.
What is more relevant is how people counter opinions or speculation with 'absolutes', as if they could possibly 'know' in the first place. And how, in the process, they throw in insults (veiled or otherwise). You have done both.
My responses in this thread are based on a mix of fact, opinion and speculation. The numbers are there. The official comments are there. The massive changes in Apple's handset strategy are there.
Apple's iPhone segment, today, is at eight times the profitability of Huawei, even including Huawei's greater unit sales, and Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year.
Meanwhile, the best that Huawei can expect, is consolidation of the Android device industry in China leaving Apple, Samsung, and Huawei, in decreasing order, splitting the profits. I recall your comment on Xiaomi, when they stated their goal would be to maintain a profitability of 5% in smartphone sales, that "I could do something with that!". Well, it's barely registering any profit share at all, yet still sells large numbers of smartphones, but the effect on the Android device market is to keep margins extremely low for all of, and only, Android device builders, including Huawei.
Maybe your concern trolling of Apple's iPhone business, which you engage in whenever possible based almost entirely on its unit sales, would be better redirected to why Huawei hasn't yet exceeded Samsung in unit sales, and likely won't ever.
If you bring Huawei into things it is to focus on part of the competition. Likewise Xiaomi.
Yes, Chinese brands are part of the reason Apple has stalled on handset sales. Do you disagree?
Their profitability is irrelevant from an Apple perspective. When you are profitable to the tune of billions, though, it is enough. And the proof is in the pudding: the product. Apple has been playing catch-up.
Apple has reacted (is still reacting) to reality.
Look at all the changes in its handset strategy from 2017. Apple made those changes for clear reasons.
Try to imagine the situation today if those changes hadn't been made. Shudder the thought.
"... Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year."
This is incorrect. Money can't keep a user base at specific levels. As I said before, unless someone fleshes out that billion users, the number is pretty much worthless. I'm definitely in there although my iOS devices do nothing for Apple and aren't being updated. Is it not reasonable to expect that every long term Apple user is in a similar situation. Or worse, and I give myself as an example again. My more current mobile hardware is not from Apple. That revenue went elsewhere.
If Xiaomi registers large sales but little profitability, it means those sales didn't go to a competitor, ultimately affecting the competitor's revenues and profitability. That's competition and why users don't care about the profitability of the manufacturer. They care about the product. For the record Xiaomi recently overtook Huawei in Spanish handset sales although Huawei Spain revenues are up, the company has its largest non Chinese flagship store in Madrid with another flagship store to open in Barcelona next year.
There are also rumours of Huawei seeking to open a huge manufacturing base within the EU.
Trump has really shot himself in the foot over Huawei. They are also seeking to increase manufacturing in South Korea and have signed multi billion dollar deals with Japanese companies. Meanwhile, U.S companies can only read the news and weep.
Today, with Trump bans and tantrums at 100%, Huawei said that handset sales could hit 230 million for 2018. That's a massive increase over 2017. And without a global launch for the Mate 30 Pro. One of the very best phones of 2019.
There you have yet another example of protectionism.
All while Apple takes in collateral damage for political shenanigans.
Yeah, so about that 230 million units sold.Apple is making eight times more profit from selling 200 million units.
That is, in the corporate world, the bottom line, driven by ASP and Margins on hardware and supported by the wide Apple ecosystem of hardware and software that users love.
As I said, profitability (in the sense of who is more profitable) is irrevelant.
Just ask Apple, which has been changing its handset movements for three years now looking for a way to increase demand.
Why wouldn't I like the link?
Trump has lost the respect of his peers. The day he took office there were some very negative comments caught from EU officials.
Huawei is perhaps a focus point to much about which the U.S has earned its negative reputation from abroad but many nations have taken note and are already reacting.
The only thing he has done long term damage to is the U.S itself.
Far from protecting U.S influence and technological advancement, he has dramatically accelerated the advancement of other companies and countries. Billions lost in revenues. Billions that will go to Chinese and other non-U.S interests. Billions that will be invested in competing R&D.
You are already seeing the fallout and the year hasn't even ended. Huawei has consistently produced some of the best handsets out there. This year alone it has pumped out massive new technologies. And in a tit for tat move, China has ordered a rip and replace order that will have an impact on U.S communications interests over the coming years.
The next part involves Huawei Mobile Services. The genie is out of that bottle thanks to Trump and it's not going back even if Google gets a licence.
The situation is mindboggingly absurd but there you have it. Huawei is becoming even more vertically integrated thanks to Trump.
Every new teardown sees HiSilicon pop up again and again.
Without the entity list, it is very likely Huawei would have overtaken Samsung this year.
Yes, there has been a big impact on Huawei but I'll leave it to you to figure out who is going to hurt more.
The Chinese have indeed copied freely and used their government funding to warp the playing field in their favor. But there are at least a couple of things you fail to take into your calculations concerning what you see as Apple’s impending doom.
1. Autocracy and originality are anathema to one another. Advantage Apple both short and long run.
2. These so-called competitors that you contend (with no proof) have “waded into Apple's ultra premium band“ are making some unknown number of high-end and presumably high quality smartphones, but that is almost certainly some small percentage of their production. Apple ONLY makes high quality products, and has in place a high quality production capacity all other computer manufacturers can only dream of.
3. Apple’s enormous cash flow gives them all the cash they need to continue improving and growing on all fronts simultaneously. Cash-starved operations can’t match that. Of course, government support helps make up for that, but also means those companies taking those handouts are dependent on them. That comes back in myriad ways to hurt them, a perfect example being lack of privacy protection.
4. Contrary to your assertion that smartphones are disconnected from other products like iPads, Apple has demonstrably shown that an ecosystem of products cross-feeds advantages. Thus, Apple Watches and AirPods help sell iPhones, and vice versa.
Bottom line: You’ve made the classic error of underestimating Apple. And you’re far from alone.
Apple is far from impending doom.
I am speaking about the handset business and that business alone.
That is the business that put Apple where it is today. That was (is) the leg that supports the weight of the company.
While it has grown new legs and they are strengthening, the iPhone business remains the biggest revenue driver.
Any stalling in that business draws attention - the entire article is based on the suspected profits Apple is taking from the industry. Less than before.
I have given plenty of examples in other threads of competitors moving into Apple's ultra premium bands. What proof are you looking for? Do you think the drop off in China has left millions of Chinese ultra premium buyers holding back on purchases?
ALL of Huawei's flagship lines over the last three years have broken records for the company. Each successive generation has outsold the previous one.
You need to take a look at the quality of competing phones. You are very wrong in implying that somehow only Apple has the quality others can only dream of. The same applies to much of the key technologies in them.
If the ecosystem helps sell more iPhones, why have iPhone sales been flat for years?
I do not underestimate Apple. Far from it. In fact the more they implement these changes in business strategy, the more I agree with them. They are things I've said they should do for years.
Your links are worthless. The first one is a statement by Huawei, and should be taken with a huge grain of salt. The second one is just as suspicious. These can at best be considered crude guesses.
Beyond that, the last hard number we got (from Apple) was about 217 M iPhones sold. Huawei is bragging (assuming they’re telling the truth) about selling 7 M over 2 months. Of course, nothing is said about their high quality production capacity, but even assuming the best or 3.5 M/month, that’s only about 42 M/year. And frankly, I’d be surprised if they can handle half that, or a tenth of Apple’s production capacity.
“If the ecosystem helps sell more iPhones, why have iPhone sales been flat for years?“
Why have Android sales been flat for years? Huawei may be growing, but it’s just another Android, so it’s not taking market share from Apple but from other Android manufacturers.
But again, you miss the point. Market share is far less important than installed base. It’s not incidental that Apple’s installed base is still growing, and now tops 900 M.
Statista’s Android numbers (highly suspect and almost certainly weighted in favor of Android) show 2.7 B installed base in 2017. With the flat smartphone market, I doubt it’s any higher today.
IOW, Apple has a far larger fraction of the installed base than it does a fraction of market share. Which makes perfect sense. Even older iPhones are extremely well built and treasured.
Are you really trying to claim that official sales numbers provided by the company itself and reported on are 'worthless'?
Where else would you prefer they were sourced from?
The simple fact that you resort to terms like 'worthless' and 'suspicious' make it clear that your mind is already made up. You even extend that notion further by pre-supposing Statista is weighted against Apple.
Android as a platform may be flat - but it's flat at 80%!!! Can you see the difference?
What do you know about Huawei's production capacity? Nothing?
Where do you think all these advanced process node chips are going?
Everyone knows it's market share that really matters, just ask the pundits.
No need to ask only the 'pundits'. If you plan on offering services or consumables to your customers, marketshare is a key metric. If your platform depends on active, revenue generating developers, marketshare is also a key factor.
All of Apple's move's over the last few years have included measures to shore up handset sales and increase them. It has been a radical shift but in spite of those measures, sales have remained flat or dipped YoY.
Even the most persistent rumours for 2020 include yet more measures to stimulate handset growth (new SE model released out of the habitual refresh).
At the end of the day we are all 'pundits', just in different capacities. That includes Apple management, shareholders, users, competitors.
When Apple releases software targeting Android users to make switching easier, by definition, they are chasing marketshare.
When Apple opens up its services to Android users it is also chasing marketshare.
Perhaps the question you should ask yourself is howmuch marketshare is necessary to keep the business healthy. But at the end of the day it is still marketshare.
You should also compare Apple's handset business model and compare it to 2015. What has changed and more importantly, why?
There have been massive changes and they didn't come about through experimentation. They came about through necessity.
Nah. Your "but market share!" examples are services. Services which are not tethered to hardware, so there's absolutely no reason not to sell Apple Music on Android. Services is a different business model than hardware. Apple is king of hardware, and is also adding services. And interestingly it became king of hardware while needing developers, yet still didn't foolishly chase market share by making cheapies like your Chinese knockoffs. Just like they didn't make netbooks.
Even during the heyday of peak iPhone, everyone knew and commented upon that the historic, never-before-seen-on-earth success of the iPhone could not last forever. That is normal, expected, and not the sign of desperate flailing you like to pretend it is. Absolutely no one thought it would be otherwise.
Marketshare doesn't 'see' hardware or software. It is simply marketshare. More or less important depending on your business but important nevertheless.
Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it. With such a vast pool of customers, it had no need to widen product spreads, reduce pricing etc (applying your logic from the last few years).
And if the 'success could not last forever', then they would have factored a contraction into their business forecasts anyway. Of course they didn't do that at all. They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'. Pundits, eh?
The success couldn't last forever. No, It never does. But, it didn't have to fall off as much as it did either. Since 2017 Apple has been continuously modifying its handset business strategy and ALL of the changes have been focused on breaking out of over three years of flat sales and preventing more YoY contraction. They upped iPhone pricing (X series - 2017) for revenue (not marketshare) and it didn't turn things around. They persisted with high prices in the following cycle (2018) and it backfired in a massive way (front page, high trade-in discounts appeared virtually immediately, plus direct discounts in China). All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band. The following cycle (2019), brought more massive changes. Much better hardware and most importantly - price reductions on its projected top sellers and notably a price drop on the XR.
It is slow to manoeuvre because of its annual refresh cycle and even that is rumoured to change next year in an attempt to make its handset business more agile and competitive.
Its competitors are firmly camped in the ultra premium band and growing sales. That pie is only so big and, as this article suggests, Apple is taking less share of the available profits. Those same competitors are now also pumping their flagship technologies down into the lower bands too. As a result we are now seeing rumours of Apple possibly entering the middle ground with exactly the same thinking.
It wants marketshare. It needs marketshare, and with 80% of the handset market to go for, it should definitely try to grab some more.
"Absolutely no one thought it would be otherwise"
Really?
You have persistently taken issue with what I have suggested Apple do over the last few years and the reasons why.
Just about everything I have suggested has been implemented by Apple.
You clearly thought it would be otherwise.
Geeze, get real.
1) Yes, it absolutely matters whether we're talking hardware or services. There is not a compelling reason for Apple not to market a service like music or TV across platforms for added market share. The cost of the service is basically fixed and each added customer increases margin. Inversely, there is not a compelling reason for Apple to sell its tablet at cost/minimal-profit for added market share, because with every single sale margin takes a hit. One incurs loss of margin, the other increases margin. That's the difference. It has nothing to do with market share as thing of value all by itself. It isn't. Context matters. And in Apple terms, margin is usually that context that matters most, and that's why they focus on ASP and margins rather than worshipping at the Church of Market Share as you people go on about. (See "netbooks, lack of" -ed.)
2) No, no reasonable person thought there was going to be unlimited iPhone growth, and that was talked about frequently over the years. No reasonable person believes in perpetual motion machines, either. My taking issue with the dim things you often say, in no way infers I believe infinite iPhone growth is a thing. You're free to review my post history and quote me if you believe I have ever, ever advocated believe in or expectation of infinite growth. You'll be wasting your time tho, so you won't.
3) Your crappy knockoff brands participating in the knockoff-premium band may incur growth, but that's because they're starting at the bottom of the pyramid, not the top of it where Apple is at the real premium band. This shouldn't need explaining.
I love how you believe Apple has implemented everything you have suggested. Absurd, of course, but you keep doing you!
I got real years ago. That should be clear at this point.
You claim there is no real reason NOT to market Apple services across platforms. Perhaps you need reminding that right up to the announcement of Apple's TV service, nobody had any idea if it would be limited to Apple's platform or not. The thinking of some was that it was all going to form part of the so-called eco-system or lock-in as others call it.
In my eyes it made sense to widen the reach of Apple's TV services but that is just my opinion and while some shared it, others didn't, as they had their own reasons.
Implying it was a given is incorrect. It wasn't - right up to the official announcement. Nobody knew what its reach would be and nobody knew the pricing.
The cost of each service is not 'basically fixed'. There are delivery considerations (bandwidth, infrastructure, energy consumption etc) plus advertising, service and support and licencing. All subject to change for varying reasons.
Then there is the cost of content production for TV that can vary widely. As new countries come on board, so does the need of native content, plus in some key markets, dubbing.
Things are more complicated than saying 'each new customer increases margin', although, undoubtedly, that is the plan long term. Right now, and under the current (zero/low cost) roll out, Apple is probably losing money on TV services.
Some Apple users have smugly sat around and claimed there is no money to be had in catering to Android users as they have little disposable income and don't spend it on Apps and Services. That was never ever true but we regularly get articles about how the App store brings in most of the revenues of that particular pie. Android users spend billions too and Apple, quite rightly, wants in on some of that. Again, the source of this article suggests Apple is losing percentage points on handset derived profits. Well, those lost profits are going elsewhere and it isn't RIM. Yes, I know these figures fluctuate and Apple will increase its percentage due to seasonal factors but the last few years of data on its handset business are there and unquestionable. Apple's massive changes in strategy are also there and are attempts to turn things around. All in response to competiton.
Apple doesn't want flat sales and is not happy with flat sales. At this point, anyone trying to claim the situation is somehow normal, expected and foreseeable (pundits, eh?) is simply not paying attention to what is happening and what has happened.
We spent years talking about a supercycle. A supercycle that hasn't, openly at least, increased handset sales. A supercycle that was suggested and based on reasonable logic. You know, all the stereotypes, eco-system, lock-in, brand loyalty, better product, it just works etc.
I've gone on record numerous times as suggesting 'what if the supercycle actually happened but no one saw it?'.
Apple definitely knows but no one has really dug into Cook to find an answer. Apple knows, right down to the individual, who upgraded and who didn't. It's in the Apple IDs.
There are basically three possibilities.
It didn't happen It happened but no one saw it It happened but over such a long period that its impact was diluted.
None of those are what I would call desirable scenarios.
What is clear is that iPhone has suffered as a product over the last few years - in every way.
You are wrong to throw iPad into an iPhone discussion but the iPad is already (and has been for some time) a very affordable product and one that hasn't seen such intense competition. Even so, it had it very own 'crisis' in the eyes of some. The presence of an expensive pro model doesn't change anything. Nor does the presence of an ultra expensive iPhone.
This is about iPhone, not iPad. It is not casual that iPhone has been the backbone of Apple's success and even to this day remains the key driver. While that remains true, iPhone will be one of the pillars of Apple.
It is not about if I can quote you on saying Apple would need 'infinite' growth. You are throwing 'infinite' in here to then say 'hey, I never said that'. Of course I never even mentioned infinite growth in the first place.
No, the point is that you claimed none of what has happened would actually happen.
Not that that in itself really has any bearing on anything. Being 'right' or 'wrong' when you are giving a simple opinion or speculating doesn't mean that much.
What is more relevant is how people counter opinions or speculation with 'absolutes', as if they could possibly 'know' in the first place. And how, in the process, they throw in insults (veiled or otherwise). You have done both.
My responses in this thread are based on a mix of fact, opinion and speculation. The numbers are there. The official comments are there. The massive changes in Apple's handset strategy are there.
Apple's iPhone segment, today, is at eight times the profitability of Huawei, even including Huawei's greater unit sales, and Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year.
Meanwhile, the best that Huawei can expect, is consolidation of the Android device industry in China leaving Apple, Samsung, and Huawei, in decreasing order, splitting the profits. I recall your comment on Xiaomi, when they stated their goal would be to maintain a profitability of 5% in smartphone sales, that "I could do something with that!". Well, it's barely registering any profit share at all, yet still sells large numbers of smartphones, but the effect on the Android device market is to keep margins extremely low for all of, and only, Android device builders, including Huawei.
Maybe your concern trolling of Apple's iPhone business, which you engage in whenever possible based almost entirely on its unit sales, would be better redirected to why Huawei hasn't yet exceeded Samsung in unit sales, and likely won't ever.
If you bring Huawei into things it is to focus on part of the competition. Likewise Xiaomi.
Yes, Chinese brands are part of the reason Apple has stalled on handset sales. Do you disagree?
Their profitability is irrelevant from an Apple perspective. When you are profitable to the tune of billions, though, it is enough. And the proof is in the pudding: the product. Apple has been playing catch-up.
Apple has reacted (is still reacting) to reality.
Look at all the changes in its handset strategy from 2017. Apple made those changes for clear reasons.
Try to imagine the situation today if those changes hadn't been made. Shudder the thought.
"... Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year."
This is incorrect. Money can't keep a user base at specific levels. As I said before, unless someone fleshes out that billion users, the number is pretty much worthless. I'm definitely in there although my iOS devices do nothing for Apple and aren't being updated. Is it not reasonable to expect that every long term Apple user is in a similar situation. Or worse, and I give myself as an example again. My more current mobile hardware is not from Apple. That revenue went elsewhere.
If Xiaomi registers large sales but little profitability, it means those sales didn't go to a competitor, ultimately affecting the competitor's revenues and profitability. That's competition and why users don't care about the profitability of the manufacturer. They care about the product. For the record Xiaomi recently overtook Huawei in Spanish handset sales although Huawei Spain revenues are up, the company has its largest non Chinese flagship store in Madrid with another flagship store to open in Barcelona next year.
There are also rumours of Huawei seeking to open a huge manufacturing base within the EU.
Trump has really shot himself in the foot over Huawei. They are also seeking to increase manufacturing in South Korea and have signed multi billion dollar deals with Japanese companies. Meanwhile, U.S companies can only read the news and weep.
Today, with Trump bans and tantrums at 100%, Huawei said that handset sales could hit 230 million for 2018. That's a massive increase over 2017. And without a global launch for the Mate 30 Pro. One of the very best phones of 2019.
There you have yet another example of protectionism.
All while Apple takes in collateral damage for political shenanigans.
Yeah, so about that 230 million units sold.Apple is making eight times more profit from selling 200 million units.
That is, in the corporate world, the bottom line, driven by ASP and Margins on hardware and supported by the wide Apple ecosystem of hardware and software that users love.
As I said, profitability (in the sense of who is more profitable) is irrevelant.
Just ask Apple, which has been changing its handset movements for three years now looking for a way to increase demand.
Why wouldn't I like the link?
Trump has lost the respect of his peers. The day he took office there were some very negative comments caught from EU officials.
Huawei is perhaps a focus point to much about which the U.S has earned its negative reputation from abroad but many nations have taken note and are already reacting.
The only thing he has done long term damage to is the U.S itself.
Far from protecting U.S influence and technological advancement, he has dramatically accelerated the advancement of other companies and countries. Billions lost in revenues. Billions that will go to Chinese and other non-U.S interests. Billions that will be invested in competing R&D.
You are already seeing the fallout and the year hasn't even ended. Huawei has consistently produced some of the best handsets out there. This year alone it has pumped out massive new technologies. And in a tit for tat move, China has ordered a rip and replace order that will have an impact on U.S communications interests over the coming years.
The next part involves Huawei Mobile Services. The genie is out of that bottle thanks to Trump and it's not going back even if Google gets a licence.
The situation is mindboggingly absurd but there you have it. Huawei is becoming even more vertically integrated thanks to Trump.
Every new teardown sees HiSilicon pop up again and again.
Without the entity list, it is very likely Huawei would have overtaken Samsung this year.
Yes, there has been a big impact on Huawei but I'll leave it to you to figure out who is going to hurt more.
The Chinese have indeed copied freely and used their government funding to warp the playing field in their favor. But there are at least a couple of things you fail to take into your calculations concerning what you see as Apple’s impending doom.
1. Autocracy and originality are anathema to one another. Advantage Apple both short and long run.
2. These so-called competitors that you contend (with no proof) have “waded into Apple's ultra premium band“ are making some unknown number of high-end and presumably high quality smartphones, but that is almost certainly some small percentage of their production. Apple ONLY makes high quality products, and has in place a high quality production capacity all other computer manufacturers can only dream of.
3. Apple’s enormous cash flow gives them all the cash they need to continue improving and growing on all fronts simultaneously. Cash-starved operations can’t match that. Of course, government support helps make up for that, but also means those companies taking those handouts are dependent on them. That comes back in myriad ways to hurt them, a perfect example being lack of privacy protection.
4. Contrary to your assertion that smartphones are disconnected from other products like iPads, Apple has demonstrably shown that an ecosystem of products cross-feeds advantages. Thus, Apple Watches and AirPods help sell iPhones, and vice versa.
Bottom line: You’ve made the classic error of underestimating Apple. And you’re far from alone.
Apple is far from impending doom.
I am speaking about the handset business and that business alone.
That is the business that put Apple where it is today. That was (is) the leg that supports the weight of the company.
While it has grown new legs and they are strengthening, the iPhone business remains the biggest revenue driver.
Any stalling in that business draws attention - the entire article is based on the suspected profits Apple is taking from the industry. Less than before.
I have given plenty of examples in other threads of competitors moving into Apple's ultra premium bands. What proof are you looking for? Do you think the drop off in China has left millions of Chinese ultra premium buyers holding back on purchases?
ALL of Huawei's flagship lines over the last three years have broken records for the company. Each successive generation has outsold the previous one.
You need to take a look at the quality of competing phones. You are very wrong in implying that somehow only Apple has the quality others can only dream of. The same applies to much of the key technologies in them.
If the ecosystem helps sell more iPhones, why have iPhone sales been flat for years?
I do not underestimate Apple. Far from it. In fact the more they implement these changes in business strategy, the more I agree with them. They are things I've said they should do for years.
Your links are worthless. The first one is a statement by Huawei, and should be taken with a huge grain of salt. The second one is just as suspicious. These can at best be considered crude guesses.
Beyond that, the last hard number we got (from Apple) was about 217 M iPhones sold. Huawei is bragging (assuming they’re telling the truth) about selling 7 M over 2 months. Of course, nothing is said about their high quality production capacity, but even assuming the best or 3.5 M/month, that’s only about 42 M/year. And frankly, I’d be surprised if they can handle half that, or a tenth of Apple’s production capacity.
“If the ecosystem helps sell more iPhones, why have iPhone sales been flat for years?“
Why have Android sales been flat for years? Huawei may be growing, but it’s just another Android, so it’s not taking market share from Apple but from other Android manufacturers.
But again, you miss the point. Market share is far less important than installed base. It’s not incidental that Apple’s installed base is still growing, and now tops 900 M.
Statista’s Android numbers (highly suspect and almost certainly weighted in favor of Android) show 2.7 B installed base in 2017. With the flat smartphone market, I doubt it’s any higher today.
IOW, Apple has a far larger fraction of the installed base than it does a fraction of market share. Which makes perfect sense. Even older iPhones are extremely well built and treasured.
Are you really trying to claim that official sales numbers provided by the company itself and reported on are 'worthless'?
Where else would you prefer they were sourced from?
The simple fact that you resort to terms like 'worthless' and 'suspicious' make it clear that your mind is already made up. You even extend that notion further by pre-supposing Statista is weighted against Apple.
Android as a platform may be flat - but it's flat at 80%!!! Can you see the difference?
What do you know about Huawei's production capacity? Nothing?
Where do you think all these advanced process node chips are going?
"Android as a platform may be flat, but it's flat at 80%!"
iPhone as a platform may be flat, but it's flat at 66% of the profit of the entire market!
With that, it's highly unlikely that Huawei isn't getting support and subsidies from the Chinese Government, nor that Huawei is a Private Corporation comparable in any way to a Private Corporation in the West.
Good for HiSilicon to finally exceed Apple wafer consumption on TMSC's latest node but given that Huawei has enterprise, surveillance, and telecom businesses, that's not much of a win.
Android as a platform may be flat - but it's flat at 80%!!! Can you see the difference?
It’s flat at 80% market share. But it’s only got around 70% installed base, and dropping. Now, you can keep ignoring that reality, but that won’t make it go away. Android is hemorrhaging installed base because of all the crappy hardware and software out there. Advantage, Apple.
We’re entering the endgame for smart devices, and Apple has huge advantages built up. That you’re too blind to see those advantages is your problem, not Apple’s.
Every once in a while, I go back and review the Rules of the Troll thread, just to keep my compass aligned... (Some responses never age. Remember, this is seven years old.)
Ha! Hadn't read that. Funny stuff. A shame its writer went off the deep edge with his own constant nonsense and got himself banned.
I miss Tallest Skil! And Sog35...
Whatever happened to them?
They were both banned. Sog35 for hundreds of "Sack Tim Cook now" posts whenever Apple share price went down. Tallest skil for his political posts.
I thought Tallest left because of the bigger iPhones.
Comments
Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it. With such a vast pool of customers, it had no need to widen product spreads, reduce pricing etc (applying your logic from the last few years).
And if the 'success could not last forever', then they would have factored a contraction into their business forecasts anyway. Of course they didn't do that at all. They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'. Pundits, eh?
The success couldn't last forever. No, It never does. But, it didn't have to fall off as much as it did either. Since 2017 Apple has been continuously modifying its handset business strategy and ALL of the changes have been focused on breaking out of over three years of flat sales and preventing more YoY contraction. They upped iPhone pricing (X series - 2017) for revenue (not marketshare) and it didn't turn things around. They persisted with high prices in the following cycle (2018) and it backfired in a massive way (front page, high trade-in discounts appeared virtually immediately, plus direct discounts in China). All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band. The following cycle (2019), brought more massive changes. Much better hardware and most importantly - price reductions on its projected top sellers and notably a price drop on the XR.
It is slow to manoeuvre because of its annual refresh cycle and even that is rumoured to change next year in an attempt to make its handset business more agile and competitive.
Its competitors are firmly camped in the ultra premium band and growing sales. That pie is only so big and, as this article suggests, Apple is taking less share of the available profits. Those same competitors are now also pumping their flagship technologies down into the lower bands too. As a result we are now seeing rumours of Apple possibly entering the middle ground with exactly the same thinking.
It wants marketshare. It needs marketshare, and with 80% of the handset market to go for, it should definitely try to grab some more.
"Absolutely no one thought it would be otherwise"
Really?
You have persistently taken issue with what I have suggested Apple do over the last few years and the reasons why.
Just about everything I have suggested has been implemented by Apple.
You clearly thought otherwise.
Apple has been making frequent references to 'installed base' of late with nothing relevant to make any sense of it. With such a vast pool of customers, it had no need to widen product spreads, reduce pricing etc (applying your logic from the last few years).
And if the 'success could not last forever', then they would have factored a contraction into their business forecasts anyway. Of course they didn't do that at all. They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'. Pundits, eh?
The success couldn't last forever. No, It never does. But, it didn't have to fall off as much as it did either. Since 2017 Apple has been continuously modifying its handset business strategy and ALL of the changes have been focused on breaking out of over three years of flat sales and preventing more YoY contraction. They upped iPhone pricing (X series - 2017) for revenue (not marketshare) and it didn't turn things around. They persisted with high prices in the following cycle (2018) and it backfired in a massive way (front page, high trade-in discounts appeared virtually immediately, plus direct discounts in China). All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band. The following cycle (2019), brought more massive changes. Much better hardware and most importantly - price reductions on its projected top sellers and notably a price drop on the XR.
It is slow to manoeuvre because of its annual refresh cycle and even that is rumoured to change next year in an attempt to make its handset business more agile and competitive.
Its competitors are firmly camped in the ultra premium band and growing sales. That pie is only so big and, as this article suggests, Apple is taking less share of the available profits. Those same competitors are now also pumping their flagship technologies down into the lower bands too. As a result we are now seeing rumours of Apple possibly entering the middle ground with exactly the same thinking.
It wants marketshare. It needs marketshare, and with 80% of the handset market to go for, it should definitely try to grab some more.
"Absolutely no one thought it would be otherwise"
Really?
You have persistently taken issue with what I have suggested Apple do over the last few years and the reasons why.
Just about everything I have suggested has been implemented by Apple.
You clearly thought it would be otherwise.
1) Yes, it absolutely matters whether we're talking hardware or services. There is not a compelling reason for Apple not to market a service like music or TV across platforms for added market share. The cost of the service is basically fixed and each added customer increases margin. Inversely, there is not a compelling reason for Apple to sell its tablet at cost/minimal-profit for added market share, because with every single sale margin takes a hit. One incurs loss of margin, the other increases margin. That's the difference. It has nothing to do with market share as thing of value all by itself. It isn't. Context matters. And in Apple terms, margin is usually that context that matters most, and that's why they focus on ASP and margins rather than worshipping at the Church of Market Share as you people go on about. (See "netbooks, lack of" -ed.)
2) No, no reasonable person thought there was going to be unlimited iPhone growth, and that was talked about frequently over the years. No reasonable person believes in perpetual motion machines, either. My taking issue with the dim things you often say, in no way infers I believe infinite iPhone growth is a thing. You're free to review my post history and quote me if you believe I have ever, ever advocated believe in or expectation of infinite growth. You'll be wasting your time tho, so you won't.
3) Your crappy knockoff brands participating in the knockoff-premium band may incur growth, but that's because they're starting at the bottom of the pyramid, not the top of it where Apple is at the real premium band. This shouldn't need explaining.
I love how you believe Apple has implemented everything you have suggested. Absurd, of course, but you keep doing you!
What does that even mean? I’m guessing not much because installed base is far more important than market share to a company like Apple. It represents a vast and growing pool of loyal customers. That you don’t get that says a lot.
”They actually overstated and ended up issuing a profit warning and admitted 'miscalculating'.”
Apple got hit with a “black swan” event (Trump’s China Tariff War). Not a miscalculation when it couldn’t have been foreseen. And that was compounded by the huge number of free battery replacements that was also unforeseeable and that cut into upgrades while keeping a lot of its customers happy.
More importantly, your pronouncements of doom for Apple are way premature. All signs point to the present quarter being their best ever.
Apple’s revenue and earnings can’t be looked at over a single year and make any sense. There are plenty of peaks and valleys over the years, but the overall direction is clearly and obviously continued growth.
”All the while, the actual product fell way behind competitors in key areas and those competitors waded into Apple's ultra premium band.”
And you know this how? The real numbers aren’t available, not even for Apple. The market is the final arbiter, and not you, and we won’t know the full extent of the market’s decision for quite some time. More likely, you’ve simply pulled this out of your butt.
Along with much of the rest of your post.
Whatever happened to them?
You claim there is no real reason NOT to market Apple services across platforms. Perhaps you need reminding that right up to the announcement of Apple's TV service, nobody had any idea if it would be limited to Apple's platform or not. The thinking of some was that it was all going to form part of the so-called eco-system or lock-in as others call it.
In my eyes it made sense to widen the reach of Apple's TV services but that is just my opinion and while some shared it, others didn't, as they had their own reasons.
Implying it was a given is incorrect. It wasn't - right up to the official announcement. Nobody knew what its reach would be and nobody knew the pricing.
The cost of each service is not 'basically fixed'. There are delivery considerations (bandwidth, infrastructure, energy consumption etc) plus advertising, service and support and licencing. All subject to change for varying reasons.
Then there is the cost of content production for TV that can vary widely. As new countries come on board, so does the need of native content, plus in some key markets, dubbing.
Things are more complicated than saying 'each new customer increases margin', although, undoubtedly, that is the plan long term. Right now, and under the current (zero/low cost) roll out, Apple is probably losing money on TV services.
Some Apple users have smugly sat around and claimed there is no money to be had in catering to Android users as they have little disposable income and don't spend it on Apps and Services. That was never ever true but we regularly get articles about how the App store brings in most of the revenues of that particular pie. Android users spend billions too and Apple, quite rightly, wants in on some of that. Again, the source of this article suggests Apple is losing percentage points on handset derived profits. Well, those lost profits are going elsewhere and it isn't RIM. Yes, I know these figures fluctuate and Apple will increase its percentage due to seasonal factors but the last few years of data on its handset business are there and unquestionable. Apple's massive changes in strategy are also there and are attempts to turn things around. All in response to competiton.
Apple doesn't want flat sales and is not happy with flat sales. At this point, anyone trying to claim the situation is somehow normal, expected and foreseeable (pundits, eh?) is simply not paying attention to what is happening and what has happened.
We spent years talking about a supercycle. A supercycle that hasn't, openly at least, increased handset sales. A supercycle that was suggested and based on reasonable logic. You know, all the stereotypes, eco-system, lock-in, brand loyalty, better product, it just works etc.
I've gone on record numerous times as suggesting 'what if the supercycle actually happened but no one saw it?'.
Apple definitely knows but no one has really dug into Cook to find an answer. Apple knows, right down to the individual, who upgraded and who didn't. It's in the Apple IDs.
There are basically three possibilities.
It didn't happen
It happened but no one saw it
It happened but over such a long period that its impact was diluted.
None of those are what I would call desirable scenarios.
What is clear is that iPhone has suffered as a product over the last few years - in every way.
You are wrong to throw iPad into an iPhone discussion but the iPad is already (and has been for some time) a very affordable product and one that hasn't seen such intense competition. Even so, it had it very own 'crisis' in the eyes of some. The presence of an expensive pro model doesn't change anything. Nor does the presence of an ultra expensive iPhone.
This is about iPhone, not iPad. It is not casual that iPhone has been the backbone of Apple's success and even to this day remains the key driver. While that remains true, iPhone will be one of the pillars of Apple.
It is not about if I can quote you on saying Apple would need 'infinite' growth. You are throwing 'infinite' in here to then say 'hey, I never said that'. Of course I never even mentioned infinite growth in the first place.
No, the point is that you claimed none of what has happened would actually happen.
Not that that in itself really has any bearing on anything. Being 'right' or 'wrong' when you are giving a simple opinion or speculating doesn't mean that much.
What is more relevant is how people counter opinions or speculation with 'absolutes', as if they could possibly 'know' in the first place. And how, in the process, they throw in insults (veiled or otherwise). You have done both.
My responses in this thread are based on a mix of fact, opinion and speculation. The numbers are there. The official comments are there. The massive changes in Apple's handset strategy are there.
Meanwhile, the best that Huawei can expect, is consolidation of the Android device industry in China leaving Apple, Samsung, and Huawei, in decreasing order, splitting the profits. I recall your comment on Xiaomi, when they stated their goal would be to maintain a profitability of 5% in smartphone sales, that "I could do something with that!". Well, it's barely registering any profit share at all, yet still sells large numbers of smartphones, but the effect on the Android device market is to keep margins extremely low for all of, and only, Android device builders, including Huawei.
Maybe your concern trolling of Apple's iPhone business, which you engage in whenever possible based almost entirely on its unit sales, would be better redirected to why Huawei hasn't yet exceeded Samsung in unit sales, and likely won't ever.
Yes, Chinese brands are part of the reason Apple has stalled on handset sales. Do you disagree?
Their profitability is irrelevant from an Apple perspective. When you are profitable to the tune of billions, though, it is enough. And the proof is in the pudding: the product. Apple has been playing catch-up.
Apple has reacted (is still reacting) to reality.
Look at all the changes in its handset strategy from 2017. Apple made those changes for clear reasons.
Try to imagine the situation today if those changes hadn't been made. Shudder the thought.
"... Apple has used those profits to keep it's growing iPhone user base, at between 900 million and a billion users, quite happily buying other Apple devices and services. A virtuous cycle for Apple, even with "flat" iPhone sales between 180 and 220 million units a year."
This is incorrect. Money can't keep a user base at specific levels. As I said before, unless someone fleshes out that billion users, the number is pretty much worthless. I'm definitely in there although my iOS devices do nothing for Apple and aren't being updated. Is it not reasonable to expect that every long term Apple user is in a similar situation. Or worse, and I give myself as an example again. My more current mobile hardware is not from Apple. That revenue went elsewhere.
If Xiaomi registers large sales but little profitability, it means those sales didn't go to a competitor, ultimately affecting the competitor's revenues and profitability. That's competition and why users don't care about the profitability of the manufacturer. They care about the product. For the record Xiaomi recently overtook Huawei in Spanish handset sales although Huawei Spain revenues are up, the company has its largest non Chinese flagship store in Madrid with another flagship store to open in Barcelona next year.
There are also rumours of Huawei seeking to open a huge manufacturing base within the EU.
Trump has really shot himself in the foot over Huawei. They are also seeking to increase manufacturing in South Korea and have signed multi billion dollar deals with Japanese companies. Meanwhile, U.S companies can only read the news and weep.
Today, with Trump bans and tantrums at 100%, Huawei said that handset sales could hit 230 million for 2019. That's a massive increase over 2018. And without a global launch for the Mate 30 Pro. One of the very best phones of 2019.
There you have yet another example of protectionism.
All while Apple takes in collateral damage for political shenanigans.
That is, in the corporate world, the bottom line, driven by ASP and Margins on hardware and supported by the wide Apple ecosystem of hardware and software that users love.
Oh, and here's a link that you won't like;
https://www.washingtonpost.com/business/2019/12/12/chinas-huawei-may-need-two-three-years-recover-us-trade-ban-ceo-says/
Just ask Apple, which has been changing its handset movements for three years now looking for a way to increase demand.
Why wouldn't I like the link?
Trump has lost the respect of his peers. The day he took office there were some very negative comments caught from EU officials.
Huawei is perhaps a focus point to much about which the U.S has earned its negative reputation from abroad but many nations have taken note and are already reacting.
The only thing he has done long term damage to is the U.S itself.
Far from protecting U.S influence and technological advancement, he has dramatically accelerated the advancement of other companies and countries. Billions lost in revenues. Billions that will go to Chinese and other non-U.S interests. Billions that will be invested in competing R&D.
You are already seeing the fallout and the year hasn't even ended. Huawei has consistently produced some of the best handsets out there. This year alone it has pumped out massive new technologies. And in a tit for tat move, China has ordered a rip and replace order that will have an impact on U.S communications interests over the coming years.
The next part involves Huawei Mobile Services. The genie is out of that bottle thanks to Trump and it's not going back even if Google gets a licence.
The situation is mindboggingly absurd but there you have it. Huawei is becoming even more vertically integrated thanks to Trump.
Every new teardown sees HiSilicon pop up again and again.
Without the entity list, it is very likely Huawei would have overtaken Samsung this year.
Yes, there has been a big impact on Huawei but I'll leave it to you to figure out who is going to hurt more.
1. Autocracy and originality are anathema to one another. Advantage Apple both short and long run.
2. These so-called competitors that you contend (with no proof) have “waded into Apple's ultra premium band“ are making some unknown number of high-end and presumably high quality smartphones, but that is almost certainly some small percentage of their production. Apple ONLY makes high quality products, and has in place a high quality production capacity all other computer manufacturers can only dream of.
3. Apple’s enormous cash flow gives them all the cash they need to continue improving and growing on all fronts simultaneously. Cash-starved operations can’t match that. Of course, government support helps make up for that, but also means those companies taking those handouts are dependent on them. That comes back in myriad ways to hurt them, a perfect example being lack of privacy protection.
4. Contrary to your assertion that smartphones are disconnected from other products like iPads, Apple has demonstrably shown that an ecosystem of products cross-feeds advantages. Thus, Apple Watches and AirPods help sell iPhones, and vice versa.
Bottom line: You’ve made the classic error of underestimating Apple. And you’re far from alone.
I am speaking about the handset business and that business alone.
That is the business that put Apple where it is today. That was (is) the leg that supports the weight of the company.
While it has grown new legs and they are strengthening, the iPhone business remains the biggest revenue driver.
Any stalling in that business draws attention - the entire article is based on the suspected profits Apple is taking from the industry. Less than before.
I have given plenty of examples in other threads of competitors moving into Apple's ultra premium bands. What proof are you looking for? Do you think the drop off in China has left millions of Chinese ultra premium buyers holding back on purchases?
ALL of Huawei's flagship lines over the last three years have broken records for the company. Each successive generation has outsold the previous one.
https://www.gsmarena.com/huawei_pushes_over_7_million_mate_30_devices_in_two_months-news-40251.php
https://www.zdnet.com/article/as-smartphone-sales-decline-again-apple-may-have-a-few-lessons-to-learn-from-samsung-and-huawei/
https://www.theburnin.com/market-watch/apple-new-iphone-market-reach-china/
From way back in 2014:
https://www.theregister.co.uk/2014/02/25/mwc2014_huawei_analysis_beating_apple_samsung/
You need to take a look at the quality of competing phones. You are very wrong in implying that somehow only Apple has the quality others can only dream of. The same applies to much of the key technologies in them.
https://www.androidcentral.com/huawei-p30-pro-review-3-months-later
If the ecosystem helps sell more iPhones, why have iPhone sales been flat for years?
I do not underestimate Apple. Far from it. In fact the more they implement these changes in business strategy, the more I agree with them. They are things I've said they should do for years.
And seeing as this article is based on data from Counterpoint, here is another drawing on Counterpoint, for next year:
https://pricebaba.com/blog/huawei-top-5g-smartphone-brand-2020-counterpoint
At some point in time, Android OS device users will also be holding onto their devices longer; and some say that the overall Android OS device market is as well flat today. If that is the case, then how exactly is Huawei going to grow, other than taking away Samsung's, Oppo's, or Xiaomi's unit share? So far though, I'm not seeing any data in other than for a shot period of time in China that Huawei is an alternative to the iPhone.
Mostly though, I find it odd that you don't acknowledge that Huawei is now the one facing headwinds. It might be the only option for Huawei to begin dumping devices on the market at even lower margins to maintain unit share while attempting to find an alternative to Google Services. Either way, Huawei may as well be facing flat sales.
Welcome to the mature smartphone market!
Beyond that, the last hard number we got (from Apple) was about 217 M iPhones sold. Huawei is bragging (assuming they’re telling the truth) about selling 7 M over 2 months. Of course, nothing is said about their high quality production capacity, but even assuming the best or 3.5 M/month, that’s only about 42 M/year. And frankly, I’d be surprised if they can handle half that, or a tenth of Apple’s production capacity.
“If the ecosystem helps sell more iPhones, why have iPhone sales been flat for years?“
Why have Android sales been flat for years? Huawei may be growing, but it’s just another Android, so it’s not taking market share from Apple but from other Android manufacturers.
But again, you miss the point. Market share is far less important than installed base. It’s not incidental that Apple’s installed base is still growing, and now tops 900 M.
https://www.fool.com/investing/2019/11/05/apples-us-iphone-installed-base-growth-is-slowing.aspx
Statista’s Android numbers (highly suspect and almost certainly weighted in favor of Android) show 2.7 B installed base in 2017. With the flat smartphone market, I doubt it’s any higher today.
https://www.statista.com/statistics/385001/smartphone-worldwide-installed-base-operating-systems/
IOW, Apple has a far larger fraction of the installed base than it does a fraction of market share. Which makes perfect sense. Even older iPhones are extremely well built and treasured.
Where else would you prefer they were sourced from?
The simple fact that you resort to terms like 'worthless' and 'suspicious' make it clear that your mind is already made up. You even extend that notion further by pre-supposing Statista is weighted against Apple.
Android as a platform may be flat - but it's flat at 80%!!! Can you see the difference?
What do you know about Huawei's production capacity? Nothing?
Where do you think all these advanced process node chips are going?
https://www.digitimes.com/news/a20191022VL200.html
Let me guess, you are suspicious of that too!
iPhone as a platform may be flat, but it's flat at 66% of the profit of the entire market!
With that, it's highly unlikely that Huawei isn't getting support and subsidies from the Chinese Government, nor that Huawei is a Private Corporation comparable in any way to a Private Corporation in the West.
Good for HiSilicon to finally exceed Apple wafer consumption on TMSC's latest node but given that Huawei has enterprise, surveillance, and telecom businesses, that's not much of a win.
We’re entering the endgame for smart devices, and Apple has huge advantages built up. That you’re too blind to see those advantages is your problem, not Apple’s.