Bart Y

If this survey is limited to the US market it might carry some (but ultimately little) weight. 

It is claimed that Apple here (in Spain) recorded a 41% YoY drop for Q1 unit sales. That probably has a lot to do with pricing and marketing can only do so much. 

Hmm, I’m still looking for Spain’s direct numbers but do have some for European smartphone market for Q1 2023 from Canalys.

https://www.canalys.com/newsroom/europe-smartphone-market-q1-2023

Quoting the relevant parts:
“Western Europe's smartphone market faced a continued slump in Q1 2023, dropping 13% to 23.7 million units of shipments, as challenging economic conditions drove lower consumer demand and extended purchasing cycles.”

“Samsung claimed the top spot in Q1 2023 with a 35% market share, despite a fall of 16% year-on-year. Samsung’s top-performing models were the newly launched S23 Ultra, S23 and A14 models, along with last year’s A53 and A33…. According to Canalys estimates, in Q1 2023, Samsung’s ASP rose by 11%, resulting in a 6% decline in the total value of devices shipped. Samsung has invested heavily in brand and product advertising, as well as in MDFs and co-marketing initiatives with operators and retail chains to strengthen its presence.”

”These investments are also targeted at challenging Apple, which grew its market share to 33%. Apple’s shipments this quarter grew by 1% compared to Q1 2022, driven by the sale of iPhone 14 Pro and Pro Max devices. According to Canalys Consumer Insights research, Apple remains the most resilient vendor in Western Europe, supported by the most loyal user base in the region combined with high popularity among switchers.” 

johnbear said:

normang said:

PDRPRTS said:

normang said:

And in other news,

A cart vendor rolls into a Mall, sets up shop, never consulted the management of the mall, has no contract.

After he is removed from the mall, goes down the road to another mall. does the same thing and gets kicked out.  

Unfortunately in the real counterpart of this analogy, the cart vendor is not allowed to set up shop anywhere else. Many do not wish to be in the App Store Mall, as many cant compensate the high sellers fee (which is totally lawful), but they cant go outside and sell either. That is the reason why this whole ordeal is even an issue - even if it is legal now, sideloading is actively deactivated at each system update - one can now legally circumvent this thanks to the jailbreaking court-ruling, but it is not easy for all, and it can be a hassle. At the very least it is difficult to sustain commercially.

Remember that in many legislations and countries your analogy is real and a cart vendor cannot set up an honest shop for survival anywhere simply because malls, or other government-favoured shops do not want competition (or need cheap labour/slaves). This is all fine until it is us needing to survive and make commerce, and as the world economy is going, i wouldnt think it is just something happening in an other continent.

This legal battle may be the grounds for how we and our children will be living in as short as a decade, as this will update Anti-Trust laws to global digital times. Capitalism becomes totalitarianism when monopolies go unchecked, so Anti-Trust laws are conisdered pillars of Democracy. Epic is acting so aggressively that they almost seem to want to wreck this all up in an otherwise valid case - but they are closer to 99% of humans than any monopoly will ever be.

The cart vendor has a choice, if he wants to be in the mall, he has to pay the fee that the mall requires to be there to use "their" space.   Your trying to create fairness where there is none, you can compete or you cannot.. If you decide to setup a cart in a saturated market, you had better be able to market and show that you have a far superior product, or your going to fail..    

Epic has no valid case..  They are trying to upend the app store, and in the process even if somehow they succeeded, its unlikely that things would really improve for anyone else..   It would merely show that if you legally force your will on someone its no different than totalitarianism I assume you decry.. 

imagine if visa and MasterCard charges merchants a 30% fee per transaction. Apple made over 50 billion in revenue from the AppStore last year. Unless they employ 100 mil people or something like that to work for the store and its platform, it’s ridiculous to say they need to charge those high fees to maintain it.
maybe Epic’s approach is not the best one but it seems that they are at the end of their rope after trying to work this out with Apple the nice way. Too many developers are angered and most likely this will hurt Apple too in the end

You seem to think, as many do, that all those revenues somehow are done for free.  They all have real costs and expenses.

Read the 10Q quarterly reports.  Apple in Q3 2020 made 13.16B in Service revenues.  But it cost them 4.3B to make those revenues, about 32.7% goes to expenses, and we are not even considering SGA and R&D expenses.  Apple also has to create, sell and support the hardware all these Apps run on. (Plus new iOS versions that support 90% of all current active iPhones and iPads).  For that, they had product sales revenue of 46.5B with 32.7B in Expenses, about 70% goes to expenses.  Add expenses together and divide by total sales and you get the gross margin of 38%, a fairly consistent point for Apple.  So charging 30% for App transactions (in the first year, remember, then it drops to 15% in successive years), is LESS than their overall gross margin and actually pulls it down.

There are roughly 2.2 million apps in the Apple App Store.  Let’s say 75% of them update at least once a year.  Assign 3 people to review each update taking 2 hours each to review and 1 hr each to document. That’s 6 hours of work for each app update, assuming all goes fine.  That’s 1.65 Million updates x 6 hrs.  Figure you pay $25/hr (flat pay, no benefits).  That’s ~$250M or $0.25 Billion in app update reviews alone.  Then there’s the thousands if not 100’s of thousands of new apps that are submitted annually which likely take much more time to review, test, dialog with, iterate with developer, till acceptable.  

Services is not a simple enterprise, at least not for a company as big as Apple.

red oak said:

There is almost zero evidence any of these foldable phones (including the ones from Samsung) sell in any measurable volume

Anyone who thinks Apple is now “ too far behind” is someone you need to avoid on all things Apple 🍎 

Roughly, the “measurable” Foldables volume is about 7-9M units total market in 2021, with Samsung maybe 85% of that total.  So about 6M-7.65M for Samsung.  Given we know Flip 3 sells 70% to Fold 3 30%, extrapolates to 4.2M-5.3M Flip models and 1.8M-2.3M Fold models over the Samsung sales season.  If my post above about reliability and customer service  issues reported by Samsung users in their own community discussion boards is true, there’s problems still which eventually will catch up with Samsung.

Anyway, 6-9M is a terribly low number of market units to commit R&D, parts sourcing (especially fragile, low reliability and availability Samsung units), and production for Apple IF it’s to meet Apple’s standards for reliability, longevity, quality, and functionality.  Better to wait till Apple and suppliers perfect this further and even then whether it still makes any sense financially or reputation wise.  

An article about supposedly “bad” Apple cables, as in overpriced, not defective.  AI gives a number of alternatives, then provides links to Best Buy to purchase them.  Shall we presume AI gets a commission on any purchases?  Does that mean this is more of a revenue generating article which may influence the content?  

JP234 said:

There should be, somewhere out there, a market analysis to determine the point of diminishing returns comparing markup/volume ratios.

IMO, there already has been plenty of market analysis by Apple and others to determine “diminishing returns” and what the market will pay, willingly pay, and “take my money!” pay for a product or service.  

Some people have a problem with what THEY would pay, partly because of limited vision (pun intended) of the possibilities and because THEY believe the price MUST be lower to garner volume.  They want “minimized risk” so that if the price is low enough, they won’t feel they’ve lost much if it turns out less than amazing.  That’s a “you” problem.  

Others know they can and will pay because they see the value and possibilities of said technology.   They wish to try it for themselves, get the experience, and expand their ideas of what is possible.  And they are willing, most all times capable, and able to afford the technology or experience.  Of course, when you have sufficient discretionary income or assets, much more of the world’s options become available and doable.

Apple introduced the Mac at elevated prices to the cookie cutter PC industry.  It’s survived and in some respects flourished.  Apple introduced the costly iPod yet overtook the entire mobile MP3 player market for 10 years.  

Apple introduced the $500 iPhone, roundly criticized for cost and design, and it now has dominated the upper end smartphone market since 2015’s iPhone 6 and 6S.  

In 2017, Apple introduced the first $1000 iPhone X, breaching a price threshold some thought impossible for a mobile smartphone.  Everyone decried its price - everyone who felt they couldn’t or wouldn’t afford it.  It was a you/them problem.  Yet somehow, in some manner and ways, hundreds of millions of people worldwide, that year and since, believe these products worthy enough to pay these prices, all at once or over time.  Apple’s superior resale or trade-in value (even to competitors) many times makes this easier too.  

Rinse and repeat for the Apple Watch, Apple Watch Bands, Apple AirPods and AirPods Pro (remember how people said THOSE looked goofy, no one would want to be seen wearing them, where’s my beloved headphone Jack and tangled wire cheap or expensive earbuds and headphones!!), iMac, Mac Studio, Mac Pro, iPad Air, iPad Pro, heck even iPhone SE and base iPad?  

There’s always someone complaining about Apple’s prices, claiming Apple should price lower so THEY can afford it or they can get almost the same for a lot cheaper and in the same breath claim that Apple would benefit from selling more volume at cheaper prices.  And it’s always been so.  Yet Apple has backed their “prices” or rather customer value with high technology, superior and widely copied design, generally superior support, highly refined USER EXPERIENCE at all levels, from marketing, packaging, buying experience, user experience, after sales OS support, resale value, and integrated ecosystem management.  For all of this, Apple asks a premium cost, and in exchange, generally delivers a premium value which apparently, over 1.4 billions active users and over 2 billion active device install base attests to.  Apparently Apple is doing something right.  

Contrast this to competitors like Android makers, especially Samsung, Chinese makers, etc. who have diminishing and shrinking high end premium sales even as they try like crazy to penetrate that level and and sell “upper end” models like Foldables, Ultras, etc.  They sell some, make some bucks, but ALWAYS, ALWAYS, their revenues and profits severely lag behind Apple’s, both individually and collectively.  Why?  Because they dilute their brands with mid level and inexpensive (read cheap) products, undermine and undercut ANY pricing power they have by starting to discount even their flagship models within 2 months of introduction, sometimes earlier because of flagging sales, and all those bundles, BOGOs, promotional discounts eat directly into margins, revenues, and profits.  If they built their premium products to a price point with a reasonably healthy margin, why do they undermine themselves?  Because the dirty little secret is Apple’s competitors’ buying demographic is just not able or interested in spending more outside of first adopters.  “Wait for the sale”, “I’ll switch to a different maker”, and “oh, it’s no better than what I have” dominates their thinking and mantras.  And in tougher macroeconomic times like the last 3 years, buyers pulled back and it’s reflected in the overall smartphone and electronics marketplace shrinkage that’s hit Samsung and all of Apple’s competitors hard.  Apple, by contrast, has fallen much less than everyone else, and in a few cases and quarters, has done better, sometimes far better YOY and compared to their competitors.

And so we have the Vision Pro and an extraordinary price ask, presumably set to preserve Apple’s 35-40% hardware gross margin, in this case likely 27-32% gross margin on a first generation product like this.  That will make it exclusive, definitely lower volume, and very high powered and loaded with a cutting edge amount of well integrated technology, to be highly desired by some.  Some, not all.  Even maybe a select few (hundred thousand).  I’m sure Apple gauged the interest, ran the numbers, and decided a new technology, concept, and execution done in an (ultra) premium manner, with premium solutions and support, needed to have an (ultra) premium price.  Decide for yourself if Apple will be right over the short and long run.

But IMO, I wouldn’t be betting against Apple.  People have been telling Apple for a long, long, long time about how Apple “should” be running their business, how Apple is pricing themselves  out of sales, and how Apple could do things better if they just listened to all of the criticisms and business model conventions.  And those people will continue to be wrong, continue to scratch their heads, and wonder how could a company doing so many things wrong be making annually almost $400 billion revenue, sell 225+ million iPhones, capture 50-60% of ALL smartphone revenues, 85% of all smartphone profits (without any Foldable models), have $100B in free cash flow, and again, have a $3 TRILLION market cap?

if Apple is so “wrong”, I don’t want to be the complainer’s “right”.

FYQ1 2023 was not “slow”, it was on target to do well, but the China lockdown supply disruption brought iPhone sales revenues down -8% and gross revenue down -5% YOY from record highs in Q1 2022.  That decline  has followed Apple’s quarters throughout the year, yet Apple has been chipping away at it.  So much so that by end of Q3, the YTD decline is only iPhones -4% and gross revenue only -3% in one of the most turbulent and inflationary macroeconomic environments any company has faced.

if Apple has a solid Q4 with the iPhone 15 introduction, FY2023 revenues has the potential to be only down -1.5-2% to even flat which would be quite an accomplishment IMO.

if Q1 shows a strong demand plus favorable mix towards the iPhone 15 Pro and Pro Max models, that would show Apple’s user upgrade demographics remain strong and resilient, plus Apple keeps attracting Android switchers and new users worldwide.  The revenue recovery will take time but I think Apple is poised to have at least their 2nd most productive and profitable Q1 on record if not set a new All time revenue record beyond previous $123.95.

9secondkox2 said:

Be interesting to see how they work together. Still not sold on Vision Pro as anything but niche.

Question is, would you count all or part of  an iPhone 15 Ultra Spatial as AVP revenue or not?

if Apple manages to sell 600K AVP units in first year at an ASP of $3800 (w/accessory power, lenses, and straps), that a starting run of $2.3B, AVP App Store revenue is unknown for some time.  If Apple can increase sales by 1M each year then we get:
2024 600K X $3800 = $2.3B
2025 1.6M X $3800 = $6.1B
2026 2.6M X $3800 = $9.9B
2027 3.6M X $3800 = $13.7B
2028 4.7M X $3800 = $17.5B

This does not include effects if Apple comes out with a cheaper yet still very capable version.  $17+B market revenues in 5 years is a pretty good feat, still maybe niche but growing and adding to overall revenues.  And we are not
counting contributions from Spatial Cameras, AVP App Store, content subscriptions like Sports, instruction, education, etc.