JamesBB

"Frankly, if I were to shut off my Web and shut off the TV and just look at how many customers are coming into our stores … and looking at sales trends, I wouldn’t know there were any economic issues at all in China,” (Tim Cook during earnings call)

Apple just started selling phones in China, so it would indeed be incredibly unlikely if growth was over already after the first two years... Don't think we have seen that kind of growth curve before.

Explode -> then whimp...??!! ...Really?

The segment of middle class consumers are growing steadily and opening their purses for western icons like Apple. According to a McKinsey study the middle class is growing from 50 mio in 2010 ago to 500 mio over the next five years. Just try and relate to that....! That is like adding the entire size of EU to the global population of potential consumers...

Then someone will say; "...well just look at China's stock market! The economy is falling apart!"

The domestic Chinese stock market has been (and still is) overvalued since opening up to the public (think IPO'ing an entire country...). At the same time, a significant part of the old chinese economy is still old age heavy industry and they are taking a beating... the Chinese consumer on the other hand is doing very well. Chinese retail sales was up 11.2% YoY in Dec.

In China, "face" is everything! You get a lot of face by having the latest iPhone model or watch... emphasis "latest". I think we will see some of the fastest upgrade cycles in Asia. Simply because it matters if you have the latest model. In the western world, we are perhaps more practical and can live with a phone that is 2 or even 3 generations behind... that may also change.

The current Analyst narrative is that upgrade cycles will slow. It may not happen. Upgrade cycles may in fact start to pick up driven by Asia.

Google's core business is advertising... what did they expect?

mjtomlin said:

JamesBB said:

The real story in all this supply chain nonsense is this: The 6s/6sP is selling less relative to 6/6P, and they may have to adjust the production mix, but the combined pair of 6/6P/6s/6sP(+6e?) will almost certainly outperform total sales of the 6/6P/5s/5c portfolio (as Tim Cook said it would...). Just look at the weekly Fiksu stats and that is the exact picture it paints. 2016 will be a stellar year for Apple.

The problem with showing percentages is that the user base continues to grow and the numbers don't tell a sales story, they only give you a look at model mix. Without actual sales figures we cannot judge or say if the new models are selling better or worse. In all likely hood they are in fact selling a lot more 6S models than 6 models during the same time frame.

Let me help you there. This is where Excel comes in handy... you know the accumulated sales (~820 mio by Sep'15), you can now calculate the decommissioning of old phones based on the missing usage numbers and you then have installed user base in absolute numbers (572 mio according to my model). You then apply the percentages back on the user base and voila - you have monthly sales estimates. Takes a bit of modeling and some assumptions around decommissioning, but indeed doable.

It has proven incredibly accurate in past quarters. 

sog35 said:

The Apple CEO does none of this. Instead of showing vision and a future of growth he simply emphasizes quarterly units sold and 'building the best product'. When he should really be emphasizing LONG-TERM goals of building a INSTALL BASE and growing SERVICES.

http://appleinsider.com/articles/15/11/18/goldman-sachs-sees-apples-transition-into-services-company-driving-stock-to-163
Interestingly Goldman Sachs said that they saw Apple transitioning into a services company with more steady income as a result of subscription based hard/software and gave Apple a huge buy endorsement on that background.

More interestingly, GS made that bullish pitch on Nov 18th, when the stock was still trading at 114... and it ran up to 120, before all the supply chain nonsense came out...

Question: Do you think GS were long or short the stock Dec 1st?

I read somewhere that GS makes a profit on +98% of all their trades, so you go figure... ;-)

wizard69 said:

...As for "peak iPhone" well that is bound to happen sometime. Every product ever conceived by man eventually finds market equilibrium. I serious doubt though that this will happen in 2016.

I guess you are referring to peak-cars, peak-toys or peak-fridges... Demand for consumables is not finite like natural resources... consumable demand is replacing itself every year!

Phones, tablets, watches (or gadgets in whatever form factor) are consumables. You can argue whether phones are discretionary anymore (I certainly don't consider my phone discretionary). They are continuously replaced in fairly steady cycles although they may evolve and change form factor.

Markets will grow VERY fast as long as you have relatively unexplored markets (which we still do - think Africa, India, Asia etc).

When markets mature, then you enter replacement cycles where growth starts to taper off. Growth in this phase can still be high (think car industry during the past decades), but then it's usually driven by improvements in technology, in the use of products or demographics (like the growth of the Chinese middle class).

And we haven't even touched on market share... with just ~15%, guess Apple still has plenty of room to grow on that account. For every new Android feature phone, there is a potential iPhone customer with a steady 94% replacement loyalty.

What "peak" are we referring to here?