Commenting on the downturn in iPhone sell-through, Strategy Analytics executive director Neil Mawston said Apple needs participate in a race to the bottom if it wants to grow shipment volumes moving forward.
"If Apple wants to expand shipment volumes in the future, it will need to launch a new wave of cheaper iPhones and start to push down, not up, the pricing curve," Mawston said.
Neil Mawston doesn't seem to get Apple business. The day Apple joining the race to the bottom is the day we all should start to worry. There are the concessions made by selling older version iPhone, but that has not been prioritised. Selling an older iPhone with cheaper price does not equal to creating brand new phone line (MacPhone? Apple Phone?) just for flooding the lower spectrum of the market.
If the goal was to sell the most widgets Mawston would be correct. But, in business that isn’t the goal. In business the goal is to make the most PROFIT. In this Apple is, by far, #1.
That would make Mawston terribly wrong (I’ll bet if asked Mawston wouldn’t lower the price for his research).
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices. Data from the last 2.5 years is a testament to this. For now, increasing ASP is taking care of growth. But is it sustainable long-term, say 5 years? Another 2 years - probably yes. Beyond that, how would Apple achieve growth?
Mid-range segment (phones between $300 to $600) is actually seeing "growth". In this context, what should Apple do? Ignore it (as many people mention in this forum), because it devalues the brand. Or join it, to take more "profit"? It is NOT as-if there is NO money to be made by selling mid-range phones ($300-$600). Apple already addressed it to a large extent by selling 2+ year old phones (iPhone 6s, SE and even 6 in many markets) in the last quarter. But that strategy does not seem to have resulted in significant growth, with overall unit sales being "flat" compared to previous year. So Apple needs to carefully evaluate options to fuel further growth for future. The decisions to be taken by Apple are NOT as easy as people make it out to be in this thread. I have no doubt that Apple has the right leadership team to take right decisions in this challenging environment.
You see flat sales. I see people holding on to their iPhones longer, but staying within the Apple ecosystem, and still many others moving to the iPhone, ultimately growing the user base. I also see a whole lot of people very excited about the iPhone X, and that looks to drive sales.
Would that other manufacturers have such a strategy. You, like so many that comment here, are just aching for that race to the bottom, which seems to be the modus for many manufacturers to increase market share, and that always starts with cutting the average selling price back.
Did you happen to notice that Apple Services keeps growing? Would you think that there is a correlation? How about those wearable sales?
As Horace Dediu at asymco.com states, the average user spends $.50 per day on Apple products or services; something like $650 million revenue a day on average.
When you say "still many others moving to the iPhone, ultimately growing the user base", do you mean that "Premium segment with >$600 has further potential for growth" in future? I.e. are there MANY smartphone users (to the tune of tens of million) who are currently spending >$600 on competing OEM phones and they are more likely move into Apple's ecosystem, fueling the future user-base growth? It is an important question to be answered. Apple is already holding about >80% share of the "premium segment" which is stagnant. There is very little, if any, scope for adding users in this segment.
If Apple does NOT grow user base, the effect of people holding on to their phones longer would be that iPhone sales would start going down compared to the same quarter year ago. And it has started happening already, with a very minor reduction in sales for the holiday quarter. While 1 million is a very small reduction in sales, it could become a "trend" for the coming quarters if Apple does not change strategy for future. There is only so much scope for increasing ASP of iPhones. Apple's user base "growth" cannot come from selling "Premium" phones (with >$600 pricetag) alone because that segment is stagnant. It can only happen through selling "mid-range" phones with pricetag between $300 - $600.
Your interpretation of "race to the bottom" is different from my interpretation of "race to the bottom". If there is NO profit to be made by selling $300-$600 phones, I would agree that it is a "race to the bottom" move. But that is NOT the case. There are profits to be made even in the mid-range segment. And this is a growing segment. As I mentioned earlier, the decisions to be taken by Apple are NOT as easy as you & others make it out to be.
Race to the bottom applies to the overall market. If Apple drops its prices, so do all of the other Android OS device makers, and it just adds to market saturation. If anything, the smartphone market is maturing, so one would expect that users would keep their existing phones longer, and that is in fact the case. In Apple's specific case, there are plenty of used and refurbished iPhones on the market to satisfy entry for some into the iPhone ecosystem. In fact, Apple was targeting India, as you are likely aware, for refurbished models of iPhones, and that has now turned into a nascent local and regional assembly/manufacturing effort for the SE and possibly the 6s, that would seem to provide some of what you are asking for. Apple doubled its revenue last year, probably from a low base, but doesn't that qualify as a strategy to sell more iPhones?
> Beyond that, how would Apple achieve growth?
While true, you are again missing the point. Apple is a *COMPANY*, which is about generating profits, not about their change in rate of generating profits. They currently make the most profit ($20 billion in the last quarter) of any company in the world. Any year they do not actually lose money, they are successful. This "growth" you speak of is a personal choice, fraught with risks. "Growth" has killed many companies. Apple could just go on eeking out a meager existence at $200 billion in sales per year with their small following of 1.3 billion users and just enjoy their boutique business. The only people focused on this question would be stock investors wondering if Apple stock will quadruple in the next 4 years, or if they just have to settle for dividends. At which point, Apple could simply take the company private, if such complaints started to cause bad PR for them.
I can just see 5 years from now: "All people on Earth have an iPhone, Apple has no room for growth, must start selling cereal."
Commenting on the downturn in iPhone sell-through, Strategy Analytics executive director Neil Mawston said Apple needs participate in a race to the bottom if it wants to grow shipment volumes moving forward.
"If Apple wants to expand shipment volumes in the future, it will need to launch a new wave of cheaper iPhones and start to push down, not up, the pricing curve," Mawston said.
Neil Mawston doesn't seem to get Apple business. The day Apple joining the race to the bottom is the day we all should start to worry. There are the concessions made by selling older version iPhone, but that has not been prioritised. Selling an older iPhone with cheaper price does not equal to creating brand new phone line (MacPhone? Apple Phone?) just for flooding the lower spectrum of the market.
If the goal was to sell the most widgets Mawston would be correct. But, in business that isn’t the goal. In business the goal is to make the most PROFIT. In this Apple is, by far, #1.
That would make Mawston terribly wrong (I’ll bet if asked Mawston wouldn’t lower the price for his research).
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices. Data from the last 2.5 years is a testament to this. For now, increasing ASP is taking care of growth. But is it sustainable long-term, say 5 years? Another 2 years - probably yes. Beyond that, how would Apple achieve growth?
Mid-range segment (phones between $300 to $600) is actually seeing "growth". In this context, what should Apple do? Ignore it (as many people mention in this forum), because it devalues the brand. Or join it, to take more "profit"? It is NOT as-if there is NO money to be made by selling mid-range phones ($300-$600). Apple already addressed it to a large extent by selling 2+ year old phones (iPhone 6s, SE and even 6 in many markets) in the last quarter. But that strategy does not seem to have resulted in significant growth, with overall unit sales being "flat" compared to previous year. So Apple needs to carefully evaluate options to fuel further growth for future. The decisions to be taken by Apple are NOT as easy as people make it out to be in this thread. I have no doubt that Apple has the right leadership team to take right decisions in this challenging environment.
You see flat sales. I see people holding on to their iPhones longer, but staying within the Apple ecosystem, and still many others moving to the iPhone, ultimately growing the user base. I also see a whole lot of people very excited about the iPhone X, and that looks to drive sales.
Would that other manufacturers have such a strategy. You, like so many that comment here, are just aching for that race to the bottom, which seems to be the modus for many manufacturers to increase market share, and that always starts with cutting the average selling price back.
Did you happen to notice that Apple Services keeps growing? Would you think that there is a correlation? How about those wearable sales?
As Horace Dediu at asymco.com states, the average user spends $.50 per day on Apple products or services; something like $650 million revenue a day on average.
When you say "still many others moving to the iPhone, ultimately growing the user base", do you mean that "Premium segment with >$600 has further potential for growth" in future? I.e. are there MANY smartphone users (to the tune of tens of million) who are currently spending >$600 on competing OEM phones and they are more likely move into Apple's ecosystem, fueling the future user-base growth? It is an important question to be answered. Apple is already holding about >80% share of the "premium segment" which is stagnant. There is very little, if any, scope for adding users in this segment.
If Apple does NOT grow user base, the effect of people holding on to their phones longer would be that iPhone sales would start going down compared to the same quarter year ago. And it has started happening already, with a very minor reduction in sales for the holiday quarter. While 1 million is a very small reduction in sales, it could become a "trend" for the coming quarters if Apple does not change strategy for future. There is only so much scope for increasing ASP of iPhones. Apple's user base "growth" cannot come from selling "Premium" phones (with >$600 pricetag) alone because that segment is stagnant. It can only happen through selling "mid-range" phones with pricetag between $300 - $600.
Your interpretation of "race to the bottom" is different from my interpretation of "race to the bottom". If there is NO profit to be made by selling $300-$600 phones, I would agree that it is a "race to the bottom" move. But that is NOT the case. There are profits to be made even in the mid-range segment. And this is a growing segment. As I mentioned earlier, the decisions to be taken by Apple are NOT as easy as you & others make it out to be.
Race to the bottom applies to the overall market. If Apple drops its prices, so do all of the other Android OS device makers, and it just adds to market saturation. If anything, the smartphone market is maturing, so one would expect that users would keep their existing phones longer, and that is in fact the case. In Apple's specific case, there are plenty of used and refurbished iPhones on the market to satisfy entry for some into the iPhone ecosystem. In fact, Apple was targeting India, as you are likely aware, for refurbished models of iPhones, and that has now turned into a nascent local and regional assembly/manufacturing effort for the SE and possibly the 6s, that would seem to provide some of what you are asking for. Apple doubled its revenue last year, probably from a low base, but doesn't that qualify as a strategy to sell more iPhones?
I am from India, so I am more than aware of Apple's strategy to sell refurbished phones and why it was rejected by Indian government. Also the plan for local manufacturing of 6s as well. Agreed, it does qualify as a strategy for selling more iPhones. Apple deciding to sell 6s into its third year all over the world & even 6 in many markets is also an important strategy towards this. It does show that Apple's management is pro-active about it.
My question is - Are those enough? Particularly to fuel "growth" for future? We are seeing revenue/profit growth in the past 2.5 years as well. But that is "primarily" driven by ASP increase. New products/services comes next. If anyone says "Growth be damned, Apple would settle for flat revenues in the coming years", then I would agree that with current strategy they would comfortably achieve it. But would Apple be satisfied with no growth in revenues once it hit a ceiling on ASP increase? Would it not require a new strategy? What would that be?
Commenting on the downturn in iPhone sell-through, Strategy Analytics executive director Neil Mawston said Apple needs participate in a race to the bottom if it wants to grow shipment volumes moving forward.
"If Apple wants to expand shipment volumes in the future, it will need to launch a new wave of cheaper iPhones and start to push down, not up, the pricing curve," Mawston said.
Neil Mawston doesn't seem to get Apple business. The day Apple joining the race to the bottom is the day we all should start to worry. There are the concessions made by selling older version iPhone, but that has not been prioritised. Selling an older iPhone with cheaper price does not equal to creating brand new phone line (MacPhone? Apple Phone?) just for flooding the lower spectrum of the market.
If the goal was to sell the most widgets Mawston would be correct. But, in business that isn’t the goal. In business the goal is to make the most PROFIT. In this Apple is, by far, #1.
That would make Mawston terribly wrong (I’ll bet if asked Mawston wouldn’t lower the price for his research).
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices. Data from the last 2.5 years is a testament to this. For now, increasing ASP is taking care of growth. But is it sustainable long-term, say 5 years? Another 2 years - probably yes. Beyond that, how would Apple achieve growth?
Mid-range segment (phones between $300 to $600) is actually seeing "growth". In this context, what should Apple do? Ignore it (as many people mention in this forum), because it devalues the brand. Or join it, to take more "profit"? It is NOT as-if there is NO money to be made by selling mid-range phones ($300-$600). Apple already addressed it to a large extent by selling 2+ year old phones (iPhone 6s, SE and even 6 in many markets) in the last quarter. But that strategy does not seem to have resulted in significant growth, with overall unit sales being "flat" compared to previous year. So Apple needs to carefully evaluate options to fuel further growth for future. The decisions to be taken by Apple are NOT as easy as people make it out to be in this thread. I have no doubt that Apple has the right leadership team to take right decisions in this challenging environment.
You see flat sales. I see people holding on to their iPhones longer, but staying within the Apple ecosystem, and still many others moving to the iPhone, ultimately growing the user base. I also see a whole lot of people very excited about the iPhone X, and that looks to drive sales.
Would that other manufacturers have such a strategy. You, like so many that comment here, are just aching for that race to the bottom, which seems to be the modus for many manufacturers to increase market share, and that always starts with cutting the average selling price back.
Did you happen to notice that Apple Services keeps growing? Would you think that there is a correlation? How about those wearable sales?
As Horace Dediu at asymco.com states, the average user spends $.50 per day on Apple products or services; something like $650 million revenue a day on average.
When you say "still many others moving to the iPhone, ultimately growing the user base", do you mean that "Premium segment with >$600 has further potential for growth" in future? I.e. are there MANY smartphone users (to the tune of tens of million) who are currently spending >$600 on competing OEM phones and they are more likely move into Apple's ecosystem, fueling the future user-base growth? It is an important question to be answered. Apple is already holding about >80% share of the "premium segment" which is stagnant. There is very little, if any, scope for adding users in this segment.
If Apple does NOT grow user base, the effect of people holding on to their phones longer would be that iPhone sales would start going down compared to the same quarter year ago. And it has started happening already, with a very minor reduction in sales for the holiday quarter. While 1 million is a very small reduction in sales, it could become a "trend" for the coming quarters if Apple does not change strategy for future. There is only so much scope for increasing ASP of iPhones. Apple's user base "growth" cannot come from selling "Premium" phones (with >$600 pricetag) alone because that segment is stagnant. It can only happen through selling "mid-range" phones with pricetag between $300 - $600.
Your interpretation of "race to the bottom" is different from my interpretation of "race to the bottom". If there is NO profit to be made by selling $300-$600 phones, I would agree that it is a "race to the bottom" move. But that is NOT the case. There are profits to be made even in the mid-range segment. And this is a growing segment. As I mentioned earlier, the decisions to be taken by Apple are NOT as easy as you & others make it out to be.
Race to the bottom applies to the overall market. If Apple drops its prices, so do all of the other Android OS device makers, and it just adds to market saturation. If anything, the smartphone market is maturing, so one would expect that users would keep their existing phones longer, and that is in fact the case. In Apple's specific case, there are plenty of used and refurbished iPhones on the market to satisfy entry for some into the iPhone ecosystem. In fact, Apple was targeting India, as you are likely aware, for refurbished models of iPhones, and that has now turned into a nascent local and regional assembly/manufacturing effort for the SE and possibly the 6s, that would seem to provide some of what you are asking for. Apple doubled its revenue last year, probably from a low base, but doesn't that qualify as a strategy to sell more iPhones?
I am from India, so I am more than aware of Apple's strategy to sell refurbished phones and why it was rejected by Indian government. Also the plan for local manufacturing of 6s as well. Agreed, it does qualify as a strategy for selling more iPhones. Apple deciding to sell 6s into its third year all over the world & even 6 in many markets is also an important strategy towards this. It does show that Apple's management is pro-active about it.
My question is - Are those enough? Particularly to fuel "growth" for future? We are seeing revenue/profit growth in the past 2.5 years as well. But that is "primarily" driven by ASP increase. New products/services comes next. If anyone says "Growth be damned, Apple would settle for flat revenues in the coming years", then I would agree that with current strategy they would comfortably achieve it. But would Apple be satisfied with no growth in revenues once it hit a ceiling on ASP increase? Would it not require a new strategy? What would that be?
Once you get to that point in the market, then you need to have new products to replace old, not just an increasing futile marketing attempt to sell more of that product at lower and lower ASP's. Please note that Apple has a solid and growing wearables market already in place. Could that too be a solution? Could new products such as eyewear be on the horizon?
Wow, Apple better start taking the advice of this analyst pretty soon. I don't know how many more quarters of smashing every single financial record Apple can bear. Clearly they have no clue what they're doing, and will need to liquidate themselves soon if they don't follow this incredibly original and lucrative "race to the bottom" advice. I mean, clearly it's working out SO well for all these dirt cheap Android OEMs just swimming in cash and brand equity, so no idea why Apple isn't clamouring to mimic this lucrative route of selling trash for cheap. Remember the iPhone 5C? Oh, those were the glory days.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
This argument is so easily debunked I feel like I’m explaining how ice is a thing.
A. In what way is this challenge “unique?” It is no such thing.
B. The middle class can grow. You may be thinking only of America, where the middle class is being systematically killed off, but the middle class is growing by leaps and bounds in some other countries. You must have missed the part where Cook noted China had double-digit growth, Japan had double-digit growth, indeed the company said all their market segments were up. Apple is now the number one seller of smartphones worldwide by revenue. So your claim that “only so many people can afford an iPhone” is unvarnished malarkey.
C. You have a fair point that if the world economy goes badly south, Apple may hurt more than others, but a recent story elsewhere that rated the refurb iPhone 7 line as “clearly the best phone you can buy for $380” makes me think maybe — just maybe — Apple has already given that scenario some thought. It seems to me to be well-proven that people want as close to the iPhone experience as they can afford to get, and Apple has responded to that by ... offering an array or mid-range models , most of which are older designs, but not old iPhones — from the SE to the 6S to the 7 Plus, they are all brand new (and if you’re willing to go refurb or used, they’re even cheaper).
D. Yes, iPhone sales were essentially flat this year, but you seem to be ignoring the fact that for *every other maker not named Samsung,* sales were way down. IOW, the global smartphone industry just had exactly the sort of major market downturn you’re predicting will hurt Apple the most — and yet the companies who were actually hurt the most by it were — the cheapie/knockoff makers, because they weren’t making any money to start with.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
The premium segment has stagnated in unit sales. You can't counter that as needing to be debunked by saying revenues are up. They are completely different beasts.
We need to pull back from the Christmas quarter and see the bigger picture. How many phones did Apple sell in 2017, 2016, 2015?
We know these numbers. They are facts and the facts tell us that growth for Apple in unit sales has been largely flat for the last few years. It's not a new situation but one that Apple clearly wants to change.
Your affirmation that the middle classes are growing by leaps and bounds doesn't debunk anything either. There is no guarantee that some, many or all of them will spend on premium iPhones. That is to be seen. Those people probably have more non iPhone options open to them as ever before. We also can't claim that iPhone X sales this quarter actually mean anything. Not yet anyway one thing is almost certain. iPhone X shipments will drop off as the year progresses.
You need to answer this question. Why did Apple leave older phones in the product mix when they announced the 8 and X series? What made them take that huge strategic decision? One that left its older - cheaper - phones in the mix to potentially canibalise the more expensive options?
If they were seeing the same middle classes as you growing in leaps and bounds, why take risks?
Now, let's reflect on these latest results and try to imagine them sans the older phones in the mix? How do you think things would have looked?
Revenues would still have been high, I'm sure, but how would unit sales look? And what would the reaction have been?
Your point B is centred on the Christmas quarter. The peak in Apple's year. Things always get worse after that. We might see a new SE but Apple has set out its stall for the long months ahead. You mention growth in China but Apple still has a long way to go there and these latest flat numbers included that double digit growth you referred to anyway.
So, what can be done to increase unit sales? Or is Apple happy to remain flat?
The best option is to try and pick up sales in the shark infested mid tiers and that isn't what many here claim it to be 'a race to the bottom'. More like a race to the middle and Apple is late to that party. Even so, it's worth the effort and they arrived in earnest in the Christmas quarter. That move may have saved the day yesterday.
Your affirmation that any other maker not named Samsung is showing sales well down, isn't correct. Huawei has topped its previous year's sales.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
This argument is so easily debunked I feel like I’m explaining how ice is a thing.
A. In what way is this challenge “unique?” It is no such thing.
B. The middle class can grow. You may be thinking only of America, where the middle class is being systematically killed off, but the middle class is growing by leaps and bounds in some other countries. You must have missed the part where Cook noted China had double-digit growth, Japan had double-digit growth, indeed the company said all their market segments were up. Apple is now the number one seller of smartphones worldwide by revenue. So your claim that “only so many people can afford an iPhone” is unvarnished malarkey.
C. You have a fair point that if the world economy goes badly south, Apple may hurt more than others, but a recent story elsewhere that rated the refurb iPhone 7 line as “clearly the best phone you can buy for $380” makes me think maybe — just maybe — Apple has already given that scenario some thought. It seems to me to be well-proven that people want as close to the iPhone experience as they can afford to get, and Apple has responded to that by ... offering an array or mid-range models , most of which are older designs, but not old iPhones — from the SE to the 6S to the 7 Plus, they are all brand new (and if you’re willing to go refurb or used, they’re even cheaper).
D. Yes, iPhone sales were essentially flat this year, but you seem to be ignoring the fact that for *every other maker not named Samsung,* sales were way down. IOW, the global smartphone industry just had exactly the sort of major market downturn you’re predicting will hurt Apple the most — and yet the companies who were actually hurt the most by it were — the cheapie/knockoff makers, because they weren’t making any money to start with.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
Your affirmation that any other maker not named Samsung is showing sales well down, isn't correct. Huawei has topped its previous year's sales.
Did they innovate their way to a new fast food branded model?
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
This argument is so easily debunked I feel like I’m explaining how ice is a thing.
A. In what way is this challenge “unique?” It is no such thing.
B. The middle class can grow. You may be thinking only of America, where the middle class is being systematically killed off, but the middle class is growing by leaps and bounds in some other countries. You must have missed the part where Cook noted China had double-digit growth, Japan had double-digit growth, indeed the company said all their market segments were up. Apple is now the number one seller of smartphones worldwide by revenue. So your claim that “only so many people can afford an iPhone” is unvarnished malarkey.
C. You have a fair point that if the world economy goes badly south, Apple may hurt more than others, but a recent story elsewhere that rated the refurb iPhone 7 line as “clearly the best phone you can buy for $380” makes me think maybe — just maybe — Apple has already given that scenario some thought. It seems to me to be well-proven that people want as close to the iPhone experience as they can afford to get, and Apple has responded to that by ... offering an array or mid-range models , most of which are older designs, but not old iPhones — from the SE to the 6S to the 7 Plus, they are all brand new (and if you’re willing to go refurb or used, they’re even cheaper).
D. Yes, iPhone sales were essentially flat this year, but you seem to be ignoring the fact that for *every other maker not named Samsung,* sales were way down. IOW, the global smartphone industry just had exactly the sort of major market downturn you’re predicting will hurt Apple the most — and yet the companies who were actually hurt the most by it were — the cheapie/knockoff makers, because they weren’t making any money to start with.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
The premium segment has stagnated in unit sales. You can't counter that as needing to be debunked by saying revenues are up. They are completely different beasts.
We need to pull back from the Christmas quarter and see the bigger picture. How many phones did Apple sell in 2017, 2016, 2015?
We know these numbers. They are facts and the facts tell us that growth for Apple in unit sales has been largely flat for the last few years. It's not a new situation but one that Apple clearly wants to change.
Your affirmation that the middle classes are growing by leaps and bounds doesn't debunk anything either. There is no guarantee that some, many or all of them will spend on premium iPhones. That is to be seen. Those people probably have more non iPhone options open to them as ever before. We also can't claim that iPhone X sales this quarter actually mean anything. Not yet anyway one thing is almost certain. iPhone X shipments will drop off as the year progresses.
You need to answer this question. Why did Apple leave older phones in the product mix when they announced the 8 and X series? What made them take that huge strategic decision? One that left its older - cheaper - phones in the mix to potentially canibalise the more expensive options?
If they were seeing the same middle classes as you growing in leaps and bounds, why take risks?
Now, let's reflect on these latest results and try to imagine them sans the older phones in the mix? How do you think things would have looked?
Revenues would still have been high, I'm sure, but how would unit sales look? And what would the reaction have been?
Your point B is centred on the Christmas quarter. The peak in Apple's year. Things always get worse after that. We might see a new SE but Apple has set out its stall for the long months ahead. You mention growth in China but Apple still has a long way to go there and these latest flat numbers included that double digit growth you referred to anyway.
So, what can be done to increase unit sales? Or is Apple happy to remain flat?
The best option is to try and pick up sales in the shark infested mid tiers and that isn't what many here claim it to be 'a race to the bottom'. More like a race to the middle and Apple is late to that party. Even so, it's worth the effort and they arrived in earnest in the Christmas quarter. That move may have saved the day yesterday.
Your affirmation that any other maker not named Samsung is showing sales well down, isn't correct. Huawei has topped its previous year's sales.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
This argument is so easily debunked I feel like I’m explaining how ice is a thing.
A. In what way is this challenge “unique?” It is no such thing.
B. The middle class can grow. You may be thinking only of America, where the middle class is being systematically killed off, but the middle class is growing by leaps and bounds in some other countries. You must have missed the part where Cook noted China had double-digit growth, Japan had double-digit growth, indeed the company said all their market segments were up. Apple is now the number one seller of smartphones worldwide by revenue. So your claim that “only so many people can afford an iPhone” is unvarnished malarkey.
C. You have a fair point that if the world economy goes badly south, Apple may hurt more than others, but a recent story elsewhere that rated the refurb iPhone 7 line as “clearly the best phone you can buy for $380” makes me think maybe — just maybe — Apple has already given that scenario some thought. It seems to me to be well-proven that people want as close to the iPhone experience as they can afford to get, and Apple has responded to that by ... offering an array or mid-range models , most of which are older designs, but not old iPhones — from the SE to the 6S to the 7 Plus, they are all brand new (and if you’re willing to go refurb or used, they’re even cheaper).
D. Yes, iPhone sales were essentially flat this year, but you seem to be ignoring the fact that for *every other maker not named Samsung,* sales were way down. IOW, the global smartphone industry just had exactly the sort of major market downturn you’re predicting will hurt Apple the most — and yet the companies who were actually hurt the most by it were — the cheapie/knockoff makers, because they weren’t making any money to start with.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
The premium segment has stagnated in unit sales. You can't counter that as needing to be debunked by saying revenues are up. They are completely different beasts.
We need to pull back from the Christmas quarter and see the bigger picture. How many phones did Apple sell in 2017, 2016, 2015?
We know these numbers. They are facts and the facts tell us that growth for Apple in unit sales has been largely flat for the last few years. It's not a new situation but one that Apple clearly wants to change.
Your affirmation that the middle classes are growing by leaps and bounds doesn't debunk anything either. There is no guarantee that some, many or all of them will spend on premium iPhones. That is to be seen. Those people probably have more non iPhone options open to them as ever before. We also can't claim that iPhone X sales this quarter actually mean anything. Not yet anyway one thing is almost certain. iPhone X shipments will drop off as the year progresses.
You need to answer this question. Why did Apple leave older phones in the product mix when they announced the 8 and X series? What made them take that huge strategic decision? One that left its older - cheaper - phones in the mix to potentially canibalise the more expensive options?
If they were seeing the same middle classes as you growing in leaps and bounds, why take risks?
Now, let's reflect on these latest results and try to imagine them sans the older phones in the mix? How do you think things would have looked?
Revenues would still have been high, I'm sure, but how would unit sales look? And what would the reaction have been?
Your point B is centred on the Christmas quarter. The peak in Apple's year. Things always get worse after that. We might see a new SE but Apple has set out its stall for the long months ahead. You mention growth in China but Apple still has a long way to go there and these latest flat numbers included that double digit growth you referred to anyway.
So, what can be done to increase unit sales? Or is Apple happy to remain flat?
The best option is to try and pick up sales in the shark infested mid tiers and that isn't what many here claim it to be 'a race to the bottom'. More like a race to the middle and Apple is late to that party. Even so, it's worth the effort and they arrived in earnest in the Christmas quarter. That move may have saved the day yesterday.
Your affirmation that any other maker not named Samsung is showing sales well down, isn't correct. Huawei has topped its previous year's sales.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
This argument is so easily debunked I feel like I’m explaining how ice is a thing.
A. In what way is this challenge “unique?” It is no such thing.
B. The middle class can grow. You may be thinking only of America, where the middle class is being systematically killed off, but the middle class is growing by leaps and bounds in some other countries. You must have missed the part where Cook noted China had double-digit growth, Japan had double-digit growth, indeed the company said all their market segments were up. Apple is now the number one seller of smartphones worldwide by revenue. So your claim that “only so many people can afford an iPhone” is unvarnished malarkey.
C. You have a fair point that if the world economy goes badly south, Apple may hurt more than others, but a recent story elsewhere that rated the refurb iPhone 7 line as “clearly the best phone you can buy for $380” makes me think maybe — just maybe — Apple has already given that scenario some thought. It seems to me to be well-proven that people want as close to the iPhone experience as they can afford to get, and Apple has responded to that by ... offering an array or mid-range models , most of which are older designs, but not old iPhones — from the SE to the 6S to the 7 Plus, they are all brand new (and if you’re willing to go refurb or used, they’re even cheaper).
D. Yes, iPhone sales were essentially flat this year, but you seem to be ignoring the fact that for *every other maker not named Samsung,* sales were way down. IOW, the global smartphone industry just had exactly the sort of major market downturn you’re predicting will hurt Apple the most — and yet the companies who were actually hurt the most by it were — the cheapie/knockoff makers, because they weren’t making any money to start with.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
The premium segment has stagnated in unit sales. You can't counter that as needing to be debunked by saying revenues are up. They are completely different beasts.
We need to pull back from the Christmas quarter and see the bigger picture. How many phones did Apple sell in 2017, 2016, 2015?
We know these numbers. They are facts and the facts tell us that growth for Apple in unit sales has been largely flat for the last few years. It's not a new situation but one that Apple clearly wants to change.
Your affirmation that the middle classes are growing by leaps and bounds doesn't debunk anything either. There is no guarantee that some, many or all of them will spend on premium iPhones. That is to be seen. Those people probably have more non iPhone options open to them as ever before. We also can't claim that iPhone X sales this quarter actually mean anything. Not yet anyway one thing is almost certain. iPhone X shipments will drop off as the year progresses.
You need to answer this question. Why did Apple leave older phones in the product mix when they announced the 8 and X series? What made them take that huge strategic decision? One that left its older - cheaper - phones in the mix to potentially canibalise the more expensive options?
If they were seeing the same middle classes as you growing in leaps and bounds, why take risks?
Now, let's reflect on these latest results and try to imagine them sans the older phones in the mix? How do you think things would have looked?
Revenues would still have been high, I'm sure, but how would unit sales look? And what would the reaction have been?
Your point B is centred on the Christmas quarter. The peak in Apple's year. Things always get worse after that. We might see a new SE but Apple has set out its stall for the long months ahead. You mention growth in China but Apple still has a long way to go there and these latest flat numbers included that double digit growth you referred to anyway.
So, what can be done to increase unit sales? Or is Apple happy to remain flat?
The best option is to try and pick up sales in the shark infested mid tiers and that isn't what many here claim it to be 'a race to the bottom'. More like a race to the middle and Apple is late to that party. Even so, it's worth the effort and they arrived in earnest in the Christmas quarter. That move may have saved the day yesterday.
Your affirmation that any other maker not named Samsung is showing sales well down, isn't correct. Huawei has topped its previous year's sales.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
This argument is so easily debunked I feel like I’m explaining how ice is a thing.
A. In what way is this challenge “unique?” It is no such thing.
B. The middle class can grow. You may be thinking only of America, where the middle class is being systematically killed off, but the middle class is growing by leaps and bounds in some other countries. You must have missed the part where Cook noted China had double-digit growth, Japan had double-digit growth, indeed the company said all their market segments were up. Apple is now the number one seller of smartphones worldwide by revenue. So your claim that “only so many people can afford an iPhone” is unvarnished malarkey.
C. You have a fair point that if the world economy goes badly south, Apple may hurt more than others, but a recent story elsewhere that rated the refurb iPhone 7 line as “clearly the best phone you can buy for $380” makes me think maybe — just maybe — Apple has already given that scenario some thought. It seems to me to be well-proven that people want as close to the iPhone experience as they can afford to get, and Apple has responded to that by ... offering an array or mid-range models , most of which are older designs, but not old iPhones — from the SE to the 6S to the 7 Plus, they are all brand new (and if you’re willing to go refurb or used, they’re even cheaper).
D. Yes, iPhone sales were essentially flat this year, but you seem to be ignoring the fact that for *every other maker not named Samsung,* sales were way down. IOW, the global smartphone industry just had exactly the sort of major market downturn you’re predicting will hurt Apple the most — and yet the companies who were actually hurt the most by it were — the cheapie/knockoff makers, because they weren’t making any money to start with.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
The premium segment has stagnated in unit sales. You can't counter that as needing to be debunked by saying revenues are up. They are completely different beasts.
We need to pull back from the Christmas quarter and see the bigger picture. How many phones did Apple sell in 2017, 2016, 2015?
We know these numbers. They are facts and the facts tell us that growth for Apple in unit sales has been largely flat for the last few years. It's not a new situation but one that Apple clearly wants to change.
Your affirmation that the middle classes are growing by leaps and bounds doesn't debunk anything either. There is no guarantee that some, many or all of them will spend on premium iPhones. That is to be seen. Those people probably have more non iPhone options open to them as ever before. We also can't claim that iPhone X sales this quarter actually mean anything. Not yet anyway one thing is almost certain. iPhone X shipments will drop off as the year progresses.
You need to answer this question. Why did Apple leave older phones in the product mix when they announced the 8 and X series? What made them take that huge strategic decision? One that left its older - cheaper - phones in the mix to potentially canibalise the more expensive options?
If they were seeing the same middle classes as you growing in leaps and bounds, why take risks?
Now, let's reflect on these latest results and try to imagine them sans the older phones in the mix? How do you think things would have looked?
Revenues would still have been high, I'm sure, but how would unit sales look? And what would the reaction have been?
Your point B is centred on the Christmas quarter. The peak in Apple's year. Things always get worse after that. We might see a new SE but Apple has set out its stall for the long months ahead. You mention growth in China but Apple still has a long way to go there and these latest flat numbers included that double digit growth you referred to anyway.
So, what can be done to increase unit sales? Or is Apple happy to remain flat?
The best option is to try and pick up sales in the shark infested mid tiers and that isn't what many here claim it to be 'a race to the bottom'. More like a race to the middle and Apple is late to that party. Even so, it's worth the effort and they arrived in earnest in the Christmas quarter. That move may have saved the day yesterday.
Your affirmation that any other maker not named Samsung is showing sales well down, isn't correct. Huawei has topped its previous year's sales.
"That's particularly noteworthy because Apple's iPhone 8, 8 Plus and X models pushed the company's ASP within five bucks of $800 while selling against Samsung handsets offered at an ASP of less than $250.'
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
This argument is so easily debunked I feel like I’m explaining how ice is a thing.
A. In what way is this challenge “unique?” It is no such thing.
B. The middle class can grow. You may be thinking only of America, where the middle class is being systematically killed off, but the middle class is growing by leaps and bounds in some other countries. You must have missed the part where Cook noted China had double-digit growth, Japan had double-digit growth, indeed the company said all their market segments were up. Apple is now the number one seller of smartphones worldwide by revenue. So your claim that “only so many people can afford an iPhone” is unvarnished malarkey.
C. You have a fair point that if the world economy goes badly south, Apple may hurt more than others, but a recent story elsewhere that rated the refurb iPhone 7 line as “clearly the best phone you can buy for $380” makes me think maybe — just maybe — Apple has already given that scenario some thought. It seems to me to be well-proven that people want as close to the iPhone experience as they can afford to get, and Apple has responded to that by ... offering an array or mid-range models , most of which are older designs, but not old iPhones — from the SE to the 6S to the 7 Plus, they are all brand new (and if you’re willing to go refurb or used, they’re even cheaper).
D. Yes, iPhone sales were essentially flat this year, but you seem to be ignoring the fact that for *every other maker not named Samsung,* sales were way down. IOW, the global smartphone industry just had exactly the sort of major market downturn you’re predicting will hurt Apple the most — and yet the companies who were actually hurt the most by it were — the cheapie/knockoff makers, because they weren’t making any money to start with.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
The premium segment has stagnated in unit sales. You can't counter that as needing to be debunked by saying revenues are up. They are completely different beasts.
We need to pull back from the Christmas quarter and see the bigger picture. How many phones did Apple sell in 2017, 2016, 2015?
We know these numbers. They are facts and the facts tell us that growth for Apple in unit sales has been largely flat for the last few years. It's not a new situation but one that Apple clearly wants to change.
Your affirmation that the middle classes are growing by leaps and bounds doesn't debunk anything either. There is no guarantee that some, many or all of them will spend on premium iPhones. That is to be seen. Those people probably have more non iPhone options open to them as ever before. We also can't claim that iPhone X sales this quarter actually mean anything. Not yet anyway one thing is almost certain. iPhone X shipments will drop off as the year progresses.
You need to answer this question. Why did Apple leave older phones in the product mix when they announced the 8 and X series? What made them take that huge strategic decision? One that left its older - cheaper - phones in the mix to potentially canibalise the more expensive options?
If they were seeing the same middle classes as you growing in leaps and bounds, why take risks?
Now, let's reflect on these latest results and try to imagine them sans the older phones in the mix? How do you think things would have looked?
Revenues would still have been high, I'm sure, but how would unit sales look? And what would the reaction have been?
Your point B is centred on the Christmas quarter. The peak in Apple's year. Things always get worse after that. We might see a new SE but Apple has set out its stall for the long months ahead. You mention growth in China but Apple still has a long way to go there and these latest flat numbers included that double digit growth you referred to anyway.
So, what can be done to increase unit sales? Or is Apple happy to remain flat?
The best option is to try and pick up sales in the shark infested mid tiers and that isn't what many here claim it to be 'a race to the bottom'. More like a race to the middle and Apple is late to that party. Even so, it's worth the effort and they arrived in earnest in the Christmas quarter. That move may have saved the day yesterday.
Your affirmation that any other maker not named Samsung is showing sales well down, isn't correct. Huawei has topped its previous year's sales.
I can see that Samsung has followed your advice to the letter.
LOL. You cannot be serious!
Just for the heck of it:
"Apple's total sales of iPhones in the quarter reached 77.3 million, nearly 4 percent higher than Samsung's despite the introduction of a trio of the most expensive tier of new flagship iPhones ever."
I hope you were paying attention as you know anything he writes is deliberately skewed to show Apple in the best possible light while dissing competitors.
So, take a look at that snippet and tell me what's not being said.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
This argument is so easily debunked I feel like I’m explaining how ice is a thing.
A. In what way is this challenge “unique?” It is no such thing.
B. The middle class can grow. You may be thinking only of America, where the middle class is being systematically killed off, but the middle class is growing by leaps and bounds in some other countries. You must have missed the part where Cook noted China had double-digit growth, Japan had double-digit growth, indeed the company said all their market segments were up. Apple is now the number one seller of smartphones worldwide by revenue. So your claim that “only so many people can afford an iPhone” is unvarnished malarkey.
C. You have a fair point that if the world economy goes badly south, Apple may hurt more than others, but a recent story elsewhere that rated the refurb iPhone 7 line as “clearly the best phone you can buy for $380” makes me think maybe — just maybe — Apple has already given that scenario some thought. It seems to me to be well-proven that people want as close to the iPhone experience as they can afford to get, and Apple has responded to that by ... offering an array or mid-range models , most of which are older designs, but not old iPhones — from the SE to the 6S to the 7 Plus, they are all brand new (and if you’re willing to go refurb or used, they’re even cheaper).
D. Yes, iPhone sales were essentially flat this year, but you seem to be ignoring the fact that for *every other maker not named Samsung,* sales were way down. IOW, the global smartphone industry just had exactly the sort of major market downturn you’re predicting will hurt Apple the most — and yet the companies who were actually hurt the most by it were — the cheapie/knockoff makers, because they weren’t making any money to start with.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
The premium segment has stagnated in unit sales. You can't counter that as needing to be debunked by saying revenues are up. They are completely different beasts.
We need to pull back from the Christmas quarter and see the bigger picture. How many phones did Apple sell in 2017, 2016, 2015?
We know these numbers. They are facts and the facts tell us that growth for Apple in unit sales has been largely flat for the last few years. It's not a new situation but one that Apple clearly wants to change.
Your affirmation that the middle classes are growing by leaps and bounds doesn't debunk anything either. There is no guarantee that some, many or all of them will spend on premium iPhones. That is to be seen. Those people probably have more non iPhone options open to them as ever before. We also can't claim that iPhone X sales this quarter actually mean anything. Not yet anyway one thing is almost certain. iPhone X shipments will drop off as the year progresses.
You need to answer this question. Why did Apple leave older phones in the product mix when they announced the 8 and X series? What made them take that huge strategic decision? One that left its older - cheaper - phones in the mix to potentially canibalise the more expensive options?
If they were seeing the same middle classes as you growing in leaps and bounds, why take risks?
Now, let's reflect on these latest results and try to imagine them sans the older phones in the mix? How do you think things would have looked?
Revenues would still have been high, I'm sure, but how would unit sales look? And what would the reaction have been?
Your point B is centred on the Christmas quarter. The peak in Apple's year. Things always get worse after that. We might see a new SE but Apple has set out its stall for the long months ahead. You mention growth in China but Apple still has a long way to go there and these latest flat numbers included that double digit growth you referred to anyway.
So, what can be done to increase unit sales? Or is Apple happy to remain flat?
The best option is to try and pick up sales in the shark infested mid tiers and that isn't what many here claim it to be 'a race to the bottom'. More like a race to the middle and Apple is late to that party. Even so, it's worth the effort and they arrived in earnest in the Christmas quarter. That move may have saved the day yesterday.
Your affirmation that any other maker not named Samsung is showing sales well down, isn't correct. Huawei has topped its previous year's sales.
I can see that Samsung has followed your advice to the letter.
LOL. You cannot be serious!
Just for the heck of it:
"Apple's total sales of iPhones in the quarter reached 77.3 million, nearly 4 percent higher than Samsung's despite the introduction of a trio of the most expensive tier of new flagship iPhones ever."
I hope you were paying attention as you know anything he writes is deliberately skewed to show Apple in the best possible light while dissing competitors.
So, take a look at that snippet and tell me what's not being said.
Did you forget to mention that Samsung had 1/3 of Apple's ASP; it's hard to miss that in the story.
Commenting on the downturn in iPhone sell-through, Strategy Analytics executive director Neil Mawston said Apple needs participate in a race to the bottom if it wants to grow shipment volumes moving forward.
"If Apple wants to expand shipment volumes in the future, it will need to launch a new wave of cheaper iPhones and start to push down, not up, the pricing curve," Mawston said.
Neil Mawston doesn't seem to get Apple business. The day Apple joining the race to the bottom is the day we all should start to worry. There are the concessions made by selling older version iPhone, but that has not been prioritised. Selling an older iPhone with cheaper price does not equal to creating brand new phone line (MacPhone? Apple Phone?) just for flooding the lower spectrum of the market.
If the goal was to sell the most widgets Mawston would be correct. But, in business that isn’t the goal. In business the goal is to make the most PROFIT. In this Apple is, by far, #1.
That would make Mawston terribly wrong (I’ll bet if asked Mawston wouldn’t lower the price for his research).
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices. Data from the last 2.5 years is a testament to this. For now, increasing ASP is taking care of growth. But is it sustainable long-term, say 5 years? Another 2 years - probably yes. Beyond that, how would Apple achieve growth?
Mid-range segment (phones between $300 to $600) is actually seeing "growth". In this context, what should Apple do? Ignore it (as many people mention in this forum), because it devalues the brand. Or join it, to take more "profit"? It is NOT as-if there is NO money to be made by selling mid-range phones ($300-$600). Apple already addressed it to a large extent by selling 2+ year old phones (iPhone 6s, SE and even 6 in many markets) in the last quarter. But that strategy does not seem to have resulted in significant growth, with overall unit sales being "flat" compared to previous year. So Apple needs to carefully evaluate options to fuel further growth for future. The decisions to be taken by Apple are NOT as easy as people make it out to be in this thread. I have no doubt that Apple has the right leadership team to take right decisions in this challenging environment.
You see flat sales. I see people holding on to their iPhones longer, but staying within the Apple ecosystem, and still many others moving to the iPhone, ultimately growing the user base. I also see a whole lot of people very excited about the iPhone X, and that looks to drive sales.
Would that other manufacturers have such a strategy. You, like so many that comment here, are just aching for that race to the bottom, which seems to be the modus for many manufacturers to increase market share, and that always starts with cutting the average selling price back.
Did you happen to notice that Apple Services keeps growing? Would you think that there is a correlation? How about those wearable sales?
As Horace Dediu at asymco.com states, the average user spends $.50 per day on Apple products or services; something like $650 million revenue a day on average.
When you say "still many others moving to the iPhone, ultimately growing the user base", do you mean that "Premium segment with >$600 has further potential for growth" in future? I.e. are there MANY smartphone users (to the tune of tens of million) who are currently spending >$600 on competing OEM phones and they are more likely move into Apple's ecosystem, fueling the future user-base growth? It is an important question to be answered. Apple is already holding about >80% share of the "premium segment" which is stagnant. There is very little, if any, scope for adding users in this segment.
If Apple does NOT grow user base, the effect of people holding on to their phones longer would be that iPhone sales would start going down compared to the same quarter year ago. And it has started happening already, with a very minor reduction in sales for the holiday quarter. While 1 million is a very small reduction in sales, it could become a "trend" for the coming quarters if Apple does not change strategy for future. There is only so much scope for increasing ASP of iPhones. Apple's user base "growth" cannot come from selling "Premium" phones (with >$600 pricetag) alone because that segment is stagnant. It can only happen through selling "mid-range" phones with pricetag between $300 - $600.
Your interpretation of "race to the bottom" is different from my interpretation of "race to the bottom". If there is NO profit to be made by selling $300-$600 phones, I would agree that it is a "race to the bottom" move. But that is NOT the case. There are profits to be made even in the mid-range segment. And this is a growing segment. As I mentioned earlier, the decisions to be taken by Apple are NOT as easy as you & others make it out to be.
1. Growth of the iPhone will come in India and China Where Apple leads the premium segment.
2. If the low end was the way to go then Google would have stuck with their cheaper Nexus line and not come out with their Pixel line.
Be more specific by low end. I think they could sell an 4.7 inch A9 in multi-color polycarbonate aimed at kids for $ 400. Maybe they could even produce it in India along side the SE.
3. DED may be slipping. He failed too mention how much a failure Pixel2 must be. If it was a success Alphabet would not be able to hide it in the quarterly reports.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
This argument is so easily debunked I feel like I’m explaining how ice is a thing.
A. In what way is this challenge “unique?” It is no such thing.
B. The middle class can grow. You may be thinking only of America, where the middle class is being systematically killed off, but the middle class is growing by leaps and bounds in some other countries. You must have missed the part where Cook noted China had double-digit growth, Japan had double-digit growth, indeed the company said all their market segments were up. Apple is now the number one seller of smartphones worldwide by revenue. So your claim that “only so many people can afford an iPhone” is unvarnished malarkey.
C. You have a fair point that if the world economy goes badly south, Apple may hurt more than others, but a recent story elsewhere that rated the refurb iPhone 7 line as “clearly the best phone you can buy for $380” makes me think maybe — just maybe — Apple has already given that scenario some thought. It seems to me to be well-proven that people want as close to the iPhone experience as they can afford to get, and Apple has responded to that by ... offering an array or mid-range models , most of which are older designs, but not old iPhones — from the SE to the 6S to the 7 Plus, they are all brand new (and if you’re willing to go refurb or used, they’re even cheaper).
D. Yes, iPhone sales were essentially flat this year, but you seem to be ignoring the fact that for *every other maker not named Samsung,* sales were way down. IOW, the global smartphone industry just had exactly the sort of major market downturn you’re predicting will hurt Apple the most — and yet the companies who were actually hurt the most by it were — the cheapie/knockoff makers, because they weren’t making any money to start with.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
The premium segment has stagnated in unit sales. You can't counter that as needing to be debunked by saying revenues are up. They are completely different beasts.
We need to pull back from the Christmas quarter and see the bigger picture. How many phones did Apple sell in 2017, 2016, 2015?
We know these numbers. They are facts and the facts tell us that growth for Apple in unit sales has been largely flat for the last few years. It's not a new situation but one that Apple clearly wants to change.
Your affirmation that the middle classes are growing by leaps and bounds doesn't debunk anything either. There is no guarantee that some, many or all of them will spend on premium iPhones. That is to be seen. Those people probably have more non iPhone options open to them as ever before. We also can't claim that iPhone X sales this quarter actually mean anything. Not yet anyway one thing is almost certain. iPhone X shipments will drop off as the year progresses.
You need to answer this question. Why did Apple leave older phones in the product mix when they announced the 8 and X series? What made them take that huge strategic decision? One that left its older - cheaper - phones in the mix to potentially canibalise the more expensive options?
If they were seeing the same middle classes as you growing in leaps and bounds, why take risks?
Now, let's reflect on these latest results and try to imagine them sans the older phones in the mix? How do you think things would have looked?
Revenues would still have been high, I'm sure, but how would unit sales look? And what would the reaction have been?
Your point B is centred on the Christmas quarter. The peak in Apple's year. Things always get worse after that. We might see a new SE but Apple has set out its stall for the long months ahead. You mention growth in China but Apple still has a long way to go there and these latest flat numbers included that double digit growth you referred to anyway.
So, what can be done to increase unit sales? Or is Apple happy to remain flat?
The best option is to try and pick up sales in the shark infested mid tiers and that isn't what many here claim it to be 'a race to the bottom'. More like a race to the middle and Apple is late to that party. Even so, it's worth the effort and they arrived in earnest in the Christmas quarter. That move may have saved the day yesterday.
Your affirmation that any other maker not named Samsung is showing sales well down, isn't correct. Huawei has topped its previous year's sales.
I can see that Samsung has followed your advice to the letter.
LOL. You cannot be serious!
Just for the heck of it:
"Apple's total sales of iPhones in the quarter reached 77.3 million, nearly 4 percent higher than Samsung's despite the introduction of a trio of the most expensive tier of new flagship iPhones ever."
I hope you were paying attention as you know anything he writes is deliberately skewed to show Apple in the best possible light while dissing competitors.
So, take a look at that snippet and tell me what's not being said.
Did you forget to mention that Samsung had 1/3 of Apple's ASP; it's hard to miss that in the story.
I have never ever made a big deal out of ASP.
My post was on unit performance, marketshare and everything that comes from that.
I will conclude that you don't know how to answer my question.
Commenting on the downturn in iPhone sell-through, Strategy Analytics executive director Neil Mawston said Apple needs participate in a race to the bottom if it wants to grow shipment volumes moving forward.
"If Apple wants to expand shipment volumes in the future, it will need to launch a new wave of cheaper iPhones and start to push down, not up, the pricing curve," Mawston said.
Neil Mawston doesn't seem to get Apple business. The day Apple joining the race to the bottom is the day we all should start to worry. There are the concessions made by selling older version iPhone, but that has not been prioritised. Selling an older iPhone with cheaper price does not equal to creating brand new phone line (MacPhone? Apple Phone?) just for flooding the lower spectrum of the market.
If the goal was to sell the most widgets Mawston would be correct. But, in business that isn’t the goal. In business the goal is to make the most PROFIT. In this Apple is, by far, #1.
That would make Mawston terribly wrong (I’ll bet if asked Mawston wouldn’t lower the price for his research).
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices. Data from the last 2.5 years is a testament to this. For now, increasing ASP is taking care of growth. But is it sustainable long-term, say 5 years? Another 2 years - probably yes. Beyond that, how would Apple achieve growth?
Mid-range segment (phones between $300 to $600) is actually seeing "growth". In this context, what should Apple do? Ignore it (as many people mention in this forum), because it devalues the brand. Or join it, to take more "profit"? It is NOT as-if there is NO money to be made by selling mid-range phones ($300-$600). Apple already addressed it to a large extent by selling 2+ year old phones (iPhone 6s, SE and even 6 in many markets) in the last quarter. But that strategy does not seem to have resulted in significant growth, with overall unit sales being "flat" compared to previous year. So Apple needs to carefully evaluate options to fuel further growth for future. The decisions to be taken by Apple are NOT as easy as people make it out to be in this thread. I have no doubt that Apple has the right leadership team to take right decisions in this challenging environment.
You see flat sales. I see people holding on to their iPhones longer, but staying within the Apple ecosystem, and still many others moving to the iPhone, ultimately growing the user base. I also see a whole lot of people very excited about the iPhone X, and that looks to drive sales.
Would that other manufacturers have such a strategy. You, like so many that comment here, are just aching for that race to the bottom, which seems to be the modus for many manufacturers to increase market share, and that always starts with cutting the average selling price back.
Did you happen to notice that Apple Services keeps growing? Would you think that there is a correlation? How about those wearable sales?
As Horace Dediu at asymco.com states, the average user spends $.50 per day on Apple products or services; something like $650 million revenue a day on average.
When you say "still many others moving to the iPhone, ultimately growing the user base", do you mean that "Premium segment with >$600 has further potential for growth" in future? I.e. are there MANY smartphone users (to the tune of tens of million) who are currently spending >$600 on competing OEM phones and they are more likely move into Apple's ecosystem, fueling the future user-base growth? It is an important question to be answered. Apple is already holding about >80% share of the "premium segment" which is stagnant. There is very little, if any, scope for adding users in this segment.
If Apple does NOT grow user base, the effect of people holding on to their phones longer would be that iPhone sales would start going down compared to the same quarter year ago. And it has started happening already, with a very minor reduction in sales for the holiday quarter. While 1 million is a very small reduction in sales, it could become a "trend" for the coming quarters if Apple does not change strategy for future. There is only so much scope for increasing ASP of iPhones. Apple's user base "growth" cannot come from selling "Premium" phones (with >$600 pricetag) alone because that segment is stagnant. It can only happen through selling "mid-range" phones with pricetag between $300 - $600.
Your interpretation of "race to the bottom" is different from my interpretation of "race to the bottom". If there is NO profit to be made by selling $300-$600 phones, I would agree that it is a "race to the bottom" move. But that is NOT the case. There are profits to be made even in the mid-range segment. And this is a growing segment. As I mentioned earlier, the decisions to be taken by Apple are NOT as easy as you & others make it out to be.
1. Growth of the iPhone will come in India and China Where Apple leads the premium segment.
2. If the low end was the way to go then Google would have stuck with their cheaper Nexus line and not come out with their Pixel line.
Be more specific by low end. I think they could sell an 4.7 inch A9 in multi-color polycarbonate aimed at kids for $ 400. Maybe they could even produce it in India along side the SE.
3. DED may be slipping. He failed too mention how much a failure Pixel2 must be. If it was a success Alphabet would not be able to hide it in the quarterly reports.
1. That is a prediction for the future and not based on any specific reality, save for ONE quarter (this last reported quarter) which we already know will not be potentially topped until this time next year. We know this from historical sourcing (it is always Apple's strongest quarter) and, in the short term, we have Apple's guidance for this quarter to go on. From one quarter (the last one) to the next, Apple has forecast a contraction. That's the reason we should never take any one quarter out of its yearly perspective.
2. No one is even talking about the low end. It's about the middle ground and it was specifically singled out in the post you were replying to. I can't see how he could be more specific when he even provided price bands and contextualised the point he was making.
Q1 2017 saw contraction (industry wide and according to Counterpoint) in the low end and contraction also in the high end. Now, we are seeing reports of a 9% contraction overall for 2017. That begs the question, where was the growth (if any) in particular sectors? In Q1 2017, there was MASSIVE growth in the mid ground and in September 2017, Apple decided to change tack, leaving some models dangling in or close to that sector. Was it a coincidence?
3. Google Pixel? For handsets, Google isn't a major player so from a general handset perspective there is nothing to comment on. From a premium phone perspective, it is clear that Google has a roadmap and the pieces are being laid out. It's too early to tell how it will play out but we do know that the current Pixels were never expected to ship in huge quantities and therefore, in the context of this thread, are irrelevant.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
This argument is so easily debunked I feel like I’m explaining how ice is a thing.
A. In what way is this challenge “unique?” It is no such thing.
B. The middle class can grow. You may be thinking only of America, where the middle class is being systematically killed off, but the middle class is growing by leaps and bounds in some other countries. You must have missed the part where Cook noted China had double-digit growth, Japan had double-digit growth, indeed the company said all their market segments were up. Apple is now the number one seller of smartphones worldwide by revenue. So your claim that “only so many people can afford an iPhone” is unvarnished malarkey.
C. You have a fair point that if the world economy goes badly south, Apple may hurt more than others, but a recent story elsewhere that rated the refurb iPhone 7 line as “clearly the best phone you can buy for $380” makes me think maybe — just maybe — Apple has already given that scenario some thought. It seems to me to be well-proven that people want as close to the iPhone experience as they can afford to get, and Apple has responded to that by ... offering an array or mid-range models , most of which are older designs, but not old iPhones — from the SE to the 6S to the 7 Plus, they are all brand new (and if you’re willing to go refurb or used, they’re even cheaper).
D. Yes, iPhone sales were essentially flat this year, but you seem to be ignoring the fact that for *every other maker not named Samsung,* sales were way down. IOW, the global smartphone industry just had exactly the sort of major market downturn you’re predicting will hurt Apple the most — and yet the companies who were actually hurt the most by it were — the cheapie/knockoff makers, because they weren’t making any money to start with.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
The premium segment has stagnated in unit sales. You can't counter that as needing to be debunked by saying revenues are up. They are completely different beasts.
We need to pull back from the Christmas quarter and see the bigger picture. How many phones did Apple sell in 2017, 2016, 2015?
We know these numbers. They are facts and the facts tell us that growth for Apple in unit sales has been largely flat for the last few years. It's not a new situation but one that Apple clearly wants to change.
Your affirmation that the middle classes are growing by leaps and bounds doesn't debunk anything either. There is no guarantee that some, many or all of them will spend on premium iPhones. That is to be seen. Those people probably have more non iPhone options open to them as ever before. We also can't claim that iPhone X sales this quarter actually mean anything. Not yet anyway one thing is almost certain. iPhone X shipments will drop off as the year progresses.
You need to answer this question. Why did Apple leave older phones in the product mix when they announced the 8 and X series? What made them take that huge strategic decision? One that left its older - cheaper - phones in the mix to potentially canibalise the more expensive options?
If they were seeing the same middle classes as you growing in leaps and bounds, why take risks?
Now, let's reflect on these latest results and try to imagine them sans the older phones in the mix? How do you think things would have looked?
Revenues would still have been high, I'm sure, but how would unit sales look? And what would the reaction have been?
Your point B is centred on the Christmas quarter. The peak in Apple's year. Things always get worse after that. We might see a new SE but Apple has set out its stall for the long months ahead. You mention growth in China but Apple still has a long way to go there and these latest flat numbers included that double digit growth you referred to anyway.
So, what can be done to increase unit sales? Or is Apple happy to remain flat?
The best option is to try and pick up sales in the shark infested mid tiers and that isn't what many here claim it to be 'a race to the bottom'. More like a race to the middle and Apple is late to that party. Even so, it's worth the effort and they arrived in earnest in the Christmas quarter. That move may have saved the day yesterday.
Your affirmation that any other maker not named Samsung is showing sales well down, isn't correct. Huawei has topped its previous year's sales.
I can see that Samsung has followed your advice to the letter.
LOL. You cannot be serious!
Just for the heck of it:
"Apple's total sales of iPhones in the quarter reached 77.3 million, nearly 4 percent higher than Samsung's despite the introduction of a trio of the most expensive tier of new flagship iPhones ever."
I hope you were paying attention as you know anything he writes is deliberately skewed to show Apple in the best possible light while dissing competitors.
So, take a look at that snippet and tell me what's not being said.
Did you forget to mention that Samsung had 1/3 of Apple's ASP; it's hard to miss that in the story.
I have never ever made a big deal out of ASP.
My post was on unit performance, marketshare and everything that comes from that.
I will conclude that you don't know how to answer my question.
Of course you don't make a big deal out of ASP, you're fine with profitless business models when it suits your marketshare nonsense.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
This argument is so easily debunked I feel like I’m explaining how ice is a thing.
A. In what way is this challenge “unique?” It is no such thing.
B. The middle class can grow. You may be thinking only of America, where the middle class is being systematically killed off, but the middle class is growing by leaps and bounds in some other countries. You must have missed the part where Cook noted China had double-digit growth, Japan had double-digit growth, indeed the company said all their market segments were up. Apple is now the number one seller of smartphones worldwide by revenue. So your claim that “only so many people can afford an iPhone” is unvarnished malarkey.
C. You have a fair point that if the world economy goes badly south, Apple may hurt more than others, but a recent story elsewhere that rated the refurb iPhone 7 line as “clearly the best phone you can buy for $380” makes me think maybe — just maybe — Apple has already given that scenario some thought. It seems to me to be well-proven that people want as close to the iPhone experience as they can afford to get, and Apple has responded to that by ... offering an array or mid-range models , most of which are older designs, but not old iPhones — from the SE to the 6S to the 7 Plus, they are all brand new (and if you’re willing to go refurb or used, they’re even cheaper).
D. Yes, iPhone sales were essentially flat this year, but you seem to be ignoring the fact that for *every other maker not named Samsung,* sales were way down. IOW, the global smartphone industry just had exactly the sort of major market downturn you’re predicting will hurt Apple the most — and yet the companies who were actually hurt the most by it were — the cheapie/knockoff makers, because they weren’t making any money to start with.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
The premium segment has stagnated in unit sales. You can't counter that as needing to be debunked by saying revenues are up. They are completely different beasts.
We need to pull back from the Christmas quarter and see the bigger picture. How many phones did Apple sell in 2017, 2016, 2015?
We know these numbers. They are facts and the facts tell us that growth for Apple in unit sales has been largely flat for the last few years. It's not a new situation but one that Apple clearly wants to change.
Your affirmation that the middle classes are growing by leaps and bounds doesn't debunk anything either. There is no guarantee that some, many or all of them will spend on premium iPhones. That is to be seen. Those people probably have more non iPhone options open to them as ever before. We also can't claim that iPhone X sales this quarter actually mean anything. Not yet anyway one thing is almost certain. iPhone X shipments will drop off as the year progresses.
You need to answer this question. Why did Apple leave older phones in the product mix when they announced the 8 and X series? What made them take that huge strategic decision? One that left its older - cheaper - phones in the mix to potentially canibalise the more expensive options?
If they were seeing the same middle classes as you growing in leaps and bounds, why take risks?
Now, let's reflect on these latest results and try to imagine them sans the older phones in the mix? How do you think things would have looked?
Revenues would still have been high, I'm sure, but how would unit sales look? And what would the reaction have been?
Your point B is centred on the Christmas quarter. The peak in Apple's year. Things always get worse after that. We might see a new SE but Apple has set out its stall for the long months ahead. You mention growth in China but Apple still has a long way to go there and these latest flat numbers included that double digit growth you referred to anyway.
So, what can be done to increase unit sales? Or is Apple happy to remain flat?
The best option is to try and pick up sales in the shark infested mid tiers and that isn't what many here claim it to be 'a race to the bottom'. More like a race to the middle and Apple is late to that party. Even so, it's worth the effort and they arrived in earnest in the Christmas quarter. That move may have saved the day yesterday.
Your affirmation that any other maker not named Samsung is showing sales well down, isn't correct. Huawei has topped its previous year's sales.
I can see that Samsung has followed your advice to the letter.
LOL. You cannot be serious!
Just for the heck of it:
"Apple's total sales of iPhones in the quarter reached 77.3 million, nearly 4 percent higher than Samsung's despite the introduction of a trio of the most expensive tier of new flagship iPhones ever."
I hope you were paying attention as you know anything he writes is deliberately skewed to show Apple in the best possible light while dissing competitors.
So, take a look at that snippet and tell me what's not being said.
Did you forget to mention that Samsung had 1/3 of Apple's ASP; it's hard to miss that in the story.
I have never ever made a big deal out of ASP.
My post was on unit performance, marketshare and everything that comes from that.
I will conclude that you don't know how to answer my question.
Of course you don't make a big deal out of ASP, you're fine with profitless business models when it suits your marketshare nonsense.
Not at all. I have a more balanced opinion.
You still haven't answered my question.
While I await your answer, I will add another. Why did Apple leave its older models in the product mix and not follow its historical behaviour?
I have never ever mentioned a profitless business model. Ever.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
This argument is so easily debunked I feel like I’m explaining how ice is a thing.
A. In what way is this challenge “unique?” It is no such thing.
B. The middle class can grow. You may be thinking only of America, where the middle class is being systematically killed off, but the middle class is growing by leaps and bounds in some other countries. You must have missed the part where Cook noted China had double-digit growth, Japan had double-digit growth, indeed the company said all their market segments were up. Apple is now the number one seller of smartphones worldwide by revenue. So your claim that “only so many people can afford an iPhone” is unvarnished malarkey.
C. You have a fair point that if the world economy goes badly south, Apple may hurt more than others, but a recent story elsewhere that rated the refurb iPhone 7 line as “clearly the best phone you can buy for $380” makes me think maybe — just maybe — Apple has already given that scenario some thought. It seems to me to be well-proven that people want as close to the iPhone experience as they can afford to get, and Apple has responded to that by ... offering an array or mid-range models , most of which are older designs, but not old iPhones — from the SE to the 6S to the 7 Plus, they are all brand new (and if you’re willing to go refurb or used, they’re even cheaper).
D. Yes, iPhone sales were essentially flat this year, but you seem to be ignoring the fact that for *every other maker not named Samsung,* sales were way down. IOW, the global smartphone industry just had exactly the sort of major market downturn you’re predicting will hurt Apple the most — and yet the companies who were actually hurt the most by it were — the cheapie/knockoff makers, because they weren’t making any money to start with.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
Your affirmation that any other maker not named Samsung is showing sales well down, isn't correct. Huawei has topped its previous year's sales.
Did they innovate their way to a new fast food branded model?
Number three might make an appearance next month. We'll have to wait and see.
Why not pick up some KFC to munch on while you brush up on Huawei's innovation?
It is rumoured that Apple licences up to 800 patents from Huawei. You never know, some of this battery innovation might end up in Apple's mobile devices.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
This argument is so easily debunked I feel like I’m explaining how ice is a thing.
A. In what way is this challenge “unique?” It is no such thing.
B. The middle class can grow. You may be thinking only of America, where the middle class is being systematically killed off, but the middle class is growing by leaps and bounds in some other countries. You must have missed the part where Cook noted China had double-digit growth, Japan had double-digit growth, indeed the company said all their market segments were up. Apple is now the number one seller of smartphones worldwide by revenue. So your claim that “only so many people can afford an iPhone” is unvarnished malarkey.
C. You have a fair point that if the world economy goes badly south, Apple may hurt more than others, but a recent story elsewhere that rated the refurb iPhone 7 line as “clearly the best phone you can buy for $380” makes me think maybe — just maybe — Apple has already given that scenario some thought. It seems to me to be well-proven that people want as close to the iPhone experience as they can afford to get, and Apple has responded to that by ... offering an array or mid-range models , most of which are older designs, but not old iPhones — from the SE to the 6S to the 7 Plus, they are all brand new (and if you’re willing to go refurb or used, they’re even cheaper).
D. Yes, iPhone sales were essentially flat this year, but you seem to be ignoring the fact that for *every other maker not named Samsung,* sales were way down. IOW, the global smartphone industry just had exactly the sort of major market downturn you’re predicting will hurt Apple the most — and yet the companies who were actually hurt the most by it were — the cheapie/knockoff makers, because they weren’t making any money to start with.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices.
The premium segment has stagnated in unit sales. You can't counter that as needing to be debunked by saying revenues are up. They are completely different beasts.
We need to pull back from the Christmas quarter and see the bigger picture. How many phones did Apple sell in 2017, 2016, 2015?
We know these numbers. They are facts and the facts tell us that growth for Apple in unit sales has been largely flat for the last few years. It's not a new situation but one that Apple clearly wants to change.
Your affirmation that the middle classes are growing by leaps and bounds doesn't debunk anything either. There is no guarantee that some, many or all of them will spend on premium iPhones. That is to be seen. Those people probably have more non iPhone options open to them as ever before. We also can't claim that iPhone X sales this quarter actually mean anything. Not yet anyway one thing is almost certain. iPhone X shipments will drop off as the year progresses.
You need to answer this question. Why did Apple leave older phones in the product mix when they announced the 8 and X series? What made them take that huge strategic decision? One that left its older - cheaper - phones in the mix to potentially canibalise the more expensive options?
If they were seeing the same middle classes as you growing in leaps and bounds, why take risks?
Now, let's reflect on these latest results and try to imagine them sans the older phones in the mix? How do you think things would have looked?
Revenues would still have been high, I'm sure, but how would unit sales look? And what would the reaction have been?
Your point B is centred on the Christmas quarter. The peak in Apple's year. Things always get worse after that. We might see a new SE but Apple has set out its stall for the long months ahead. You mention growth in China but Apple still has a long way to go there and these latest flat numbers included that double digit growth you referred to anyway.
So, what can be done to increase unit sales? Or is Apple happy to remain flat?
The best option is to try and pick up sales in the shark infested mid tiers and that isn't what many here claim it to be 'a race to the bottom'. More like a race to the middle and Apple is late to that party. Even so, it's worth the effort and they arrived in earnest in the Christmas quarter. That move may have saved the day yesterday.
Your affirmation that any other maker not named Samsung is showing sales well down, isn't correct. Huawei has topped its previous year's sales.
I can see that Samsung has followed your advice to the letter.
LOL. You cannot be serious!
Just for the heck of it:
"Apple's total sales of iPhones in the quarter reached 77.3 million, nearly 4 percent higher than Samsung's despite the introduction of a trio of the most expensive tier of new flagship iPhones ever."
I hope you were paying attention as you know anything he writes is deliberately skewed to show Apple in the best possible light while dissing competitors.
So, take a look at that snippet and tell me what's not being said.
Did you forget to mention that Samsung had 1/3 of Apple's ASP; it's hard to miss that in the story.
I have never ever made a big deal out of ASP.
My post was on unit performance, marketshare and everything that comes from that.
I will conclude that you don't know how to answer my question.
Of course you don't make a big deal out of ASP, you're fine with profitless business models when it suits your marketshare nonsense.
Not at all. I have a more balanced opinion.
You still haven't answered my question.
While I await your answer, I will add another. Why did Apple leave its older models in the product mix and not follow its historical behaviour?
I have never ever mentioned a profitless business model. Ever.
I have consistently stated that Apple required a more expensive premium iPhone, in this case, the iPhone X, in order to allow lower cost entry iPhones and still keep the ASP at around $700, or where is has consistently been when corrected for inflation. That Apple exceeded that by near $100 ASP indicated that it was in fact the iPhone X that drove the higher ASP. The fact that Samsung has such low ASP's even with it's similarly priced premium phones indicates that Samsung has not achieved the same balance of model price tiers.
To reiterate;
It is not difficult to understand, but having a high price for a premium phone allows lower entry price tiers, and at the same time, proper balance of models retains ASP. This is why Apple, over the years, has added even more higher, and lower, price tiers, Merely creating lower price tiers may drive unit sales and marketshare, but ultimately leads to lower ASP and, in the long run, less revenue and profit. I believe that Apple's financials indicate that it has mastered this, and given the future roadmap of iPhones, I would expect yet another super premium iPhone on the horizon, likely with a large OLED screen and supporting the pencil, and similarly, a lower priced SE to follow, maintaining unit sales increases, and increases in the user base, while maintaining revenue and profit expansion.
I would add to that. Customer loyalty to iPhones indicates that 96% will buy another iPhone, even if users will keep their iPhones longer. This is ultimately bad news for Android OS device makers, as they will not be able to penetrate the iPhone ecosystem sufficiently to draw new users into the Android OS platform.
This leaves Android OS device manufacturers competing to maintain marketshare, and unit sales, at whatever the cost, driving down ASP, revenue and profits for all. This is a fact as noted by Apple portion of the overall profits in the smartphone market. It is not a death spiral for Android OS device makers, but technology diffusion leaves very little room for any single device manufacturer to exceed Samsung's revenue and share; Samsung will fight tooth and nail to prevent that.
Comments
Race to the bottom applies to the overall market. If Apple drops its prices, so do all of the other Android OS device makers, and it just adds to market saturation. If anything, the smartphone market is maturing, so one would expect that users would keep their existing phones longer, and that is in fact the case. In Apple's specific case, there are plenty of used and refurbished iPhones on the market to satisfy entry for some into the iPhone ecosystem. In fact, Apple was targeting India, as you are likely aware, for refurbished models of iPhones, and that has now turned into a nascent local and regional assembly/manufacturing effort for the SE and possibly the 6s, that would seem to provide some of what you are asking for. Apple doubled its revenue last year, probably from a low base, but doesn't that qualify as a strategy to sell more iPhones?
I am from India, so I am more than aware of Apple's strategy to sell refurbished phones and why it was rejected by Indian government. Also the plan for local manufacturing of 6s as well. Agreed, it does qualify as a strategy for selling more iPhones. Apple deciding to sell 6s into its third year all over the world & even 6 in many markets is also an important strategy towards this. It does show that Apple's management is pro-active about it.
My question is - Are those enough? Particularly to fuel "growth" for future? We are seeing revenue/profit growth in the past 2.5 years as well. But that is "primarily" driven by ASP increase. New products/services comes next. If anyone says "Growth be damned, Apple would settle for flat revenues in the coming years", then I would agree that with current strategy they would comfortably achieve it. But would Apple be satisfied with no growth in revenues once it hit a ceiling on ASP increase? Would it not require a new strategy? What would that be?
muthuk_vanalingam posted based on facts.
The premium segment has stagnated in unit sales. You can't counter that as needing to be debunked by saying revenues are up. They are completely different beasts.
We need to pull back from the Christmas quarter and see the bigger picture. How many phones did Apple sell in 2017, 2016, 2015?
We know these numbers. They are facts and the facts tell us that growth for Apple in unit sales has been largely flat for the last few years. It's not a new situation but one that Apple clearly wants to change.
Your affirmation that the middle classes are growing by leaps and bounds doesn't debunk anything either. There is no guarantee that some, many or all of them will spend on premium iPhones. That is to be seen. Those people probably have more non iPhone options open to them as ever before. We also can't claim that iPhone X sales this quarter actually mean anything. Not yet anyway one thing is almost certain. iPhone X shipments will drop off as the year progresses.
You need to answer this question. Why did Apple leave older phones in the product mix when they announced the 8 and X series? What made them take that huge strategic decision? One that left its older - cheaper - phones in the mix to potentially canibalise the more expensive options?
If they were seeing the same middle classes as you growing in leaps and bounds, why take risks?
Now, let's reflect on these latest results and try to imagine them sans the older phones in the mix? How do you think things would have looked?
Revenues would still have been high, I'm sure, but how would unit sales look? And what would the reaction have been?
Your point B is centred on the Christmas quarter. The peak in Apple's year. Things always get worse after that. We might see a new SE but Apple has set out its stall for the long months ahead. You mention growth in China but Apple still has a long way to go there and these latest flat numbers included that double digit growth you referred to anyway.
So, what can be done to increase unit sales? Or is Apple happy to remain flat?
The best option is to try and pick up sales in the shark infested mid tiers and that isn't what many here claim it to be 'a race to the bottom'. More like a race to the middle and Apple is late to that party. Even so, it's worth the effort and they arrived in earnest in the Christmas quarter. That move may have saved the day yesterday.
Your affirmation that any other maker not named Samsung is showing sales well down, isn't correct. Huawei has topped its previous year's sales.
muthuk_vanalingam made a very good point IMO.
I can see that Samsung has followed your advice to the letter.
"That's particularly noteworthy because Apple's iPhone 8, 8 Plus and X models pushed the company's ASP within five bucks of $800 while selling against Samsung handsets offered at an ASP of less than $250.'
Just for the heck of it:
"Apple's total sales of iPhones in the quarter reached 77.3 million, nearly 4 percent higher than Samsung's despite the introduction of a trio of the most expensive tier of new flagship iPhones ever."
I hope you were paying attention as you know anything he writes is deliberately skewed to show Apple in the best possible light while dissing competitors.
So, take a look at that snippet and tell me what's not being said.
Where Apple leads the premium segment.
http://iphone.appleinsider.com/articles/18/01/31/apples-iphone-x-takes-top-premium-smartphone-spot--in-india-crushing-oneplus-samsung
2. If the low end was the way to go then Google would have stuck with their cheaper Nexus line and not come out with their Pixel line.
Be more specific by low end. I think they could sell an 4.7 inch A9 in multi-color polycarbonate aimed at kids for $ 400. Maybe they could even produce it in India along side the SE.
3. DED may be slipping. He failed too mention how much a failure Pixel2 must be. If it was a success Alphabet would not be able to hide it in the quarterly reports.
My post was on unit performance, marketshare and everything that comes from that.
I will conclude that you don't know how to answer my question.
2. No one is even talking about the low end. It's about the middle ground and it was specifically singled out in the post you were replying to. I can't see how he could be more specific when he even provided price bands and contextualised the point he was making.
Q1 2017 saw contraction (industry wide and according to Counterpoint) in the low end and contraction also in the high end. Now, we are seeing reports of a 9% contraction overall for 2017. That begs the question, where was the growth (if any) in particular sectors? In Q1 2017, there was MASSIVE growth in the mid ground and in September 2017, Apple decided to change tack, leaving some models dangling in or close to that sector. Was it a coincidence?
3. Google Pixel? For handsets, Google isn't a major player so from a general handset perspective there is nothing to comment on. From a premium phone perspective, it is clear that Google has a roadmap and the pieces are being laid out. It's too early to tell how it will play out but we do know that the current Pixels were never expected to ship in huge quantities and therefore, in the context of this thread, are irrelevant.
You still haven't answered my question.
While I await your answer, I will add another. Why did Apple leave its older models in the product mix and not follow its historical behaviour?
I have never ever mentioned a profitless business model. Ever.
http://www.huawei.com/en/about-huawei/research-development
When you're finished we can get into the mobile specifics.
Maybe starting with batteries as its a subject that's very much in the Apple news these days:
1.
2.
3.
4. http://www.mondaq.com/china/x/561872/Patent/Huawei+Announces+Breakthrough+In+Its+Research+In+GrapheneAssisted+LiIon+Battery+With+Doubled+Lifespan
Number three might make an appearance next month. We'll have to wait and see.
Why not pick up some KFC to munch on while you brush up on Huawei's innovation?
It is rumoured that Apple licences up to 800 patents from Huawei. You never know, some of this battery innovation might end up in Apple's mobile devices.
To reiterate;
It is not difficult to understand, but having a high price for a premium phone allows lower entry price tiers, and at the same time, proper balance of models retains ASP. This is why Apple, over the years, has added even more higher, and lower, price tiers, Merely creating lower price tiers may drive unit sales and marketshare, but ultimately leads to lower ASP and, in the long run, less revenue and profit. I believe that Apple's financials indicate that it has mastered this, and given the future roadmap of iPhones, I would expect yet another super premium iPhone on the horizon, likely with a large OLED screen and supporting the pencil, and similarly, a lower priced SE to follow, maintaining unit sales increases, and increases in the user base, while maintaining revenue and profit expansion.
I would add to that. Customer loyalty to iPhones indicates that 96% will buy another iPhone, even if users will keep their iPhones longer. This is ultimately bad news for Android OS device makers, as they will not be able to penetrate the iPhone ecosystem sufficiently to draw new users into the Android OS platform.
This leaves Android OS device manufacturers competing to maintain marketshare, and unit sales, at whatever the cost, driving down ASP, revenue and profits for all. This is a fact as noted by Apple portion of the overall profits in the smartphone market. It is not a death spiral for Android OS device makers, but technology diffusion leaves very little room for any single device manufacturer to exceed Samsung's revenue and share; Samsung will fight tooth and nail to prevent that.