Apple posts first negative year since 2008, 2016 looks grim

[rbk123]

argue all you want, Steve Jobs would never approve this Apple Watch.

I love whenever speculation is stated as fact. Priceless.

 

[JimKiler]

argue all you want, Steve Jobs would never approve this Apple Watch.

He also would not have approved the first iPhone...oh wait.

I'd agree that it's saturated... certainly while China's economy is in the doldrums, anyway. Apple's main consolations are that this is an "S" year (it wasn't going to repeat the sales jump it got with the iPhone 6) and that most active iPhone owners still haven't upgraded to a 6 or 6s. The big litmus test will be when the iPhone 7 drops. If sales aren't significantly better for Apple and the market at large, we'll know there's not much more room.

I saw that too, so apparently owners are not true apple owner unless they upgrade every year to a new iPhone?

 

[Artdeco]

I love whenever speculation is stated as fact. Priceless.

Let's see...

Lisa
iMac USB Mouse
iPod Hi-Fi
Apple TV (first gen)
iPod Shuffle button free (3rd gen)
Final Cut Pro X
Ping
Power Mac G4
iPod Photo

If he was alive, none of those products would have seen the light of day, oh wait...

 

[Commodus]

I saw that too, so apparently owners are not true apple owner unless they upgrade every year to a new iPhone?

Nope -- it just means that Apple hasn't hit the ceiling for upgrade sales. There are clearly many people who hold on to phones for over two years (or who bought a budget model and just aren't in a rush to upgrade).

 

[JimKiler]

Nope -- it just means that Apple hasn't hit the ceiling for upgrade sales. There are clearly many people who hold on to phones for over two years (or who bought a budget model and just aren't in a rush to upgrade).

Yes but the way company's talk it is almost expected that everyone should upgrade every year. Granted that stat Cook gave did not breakout 5s from older phones but still unless your phone is slow or does not work does not mean we need to upgrade so companies like apple can make billions more.

 

[openwheel]

I love whenever speculation is stated as fact. Priceless.

If you want to take my words as the Gospel truth. Go right ahead. :thumbsup:

 

[openwheel]

So much fail in this thread...

I agree with you on that one.

 

[theeedude]

I do think the company needs to find something truly groundbreaking (if it can), but at the same time, remember that Apple's modus operandi is to come into markets where there are seemingly strong entrants and knock them off their perches.

When the iPod came out, Creative and Rio were already big names in MP3 players; when the iPhone arrived, RIM (BlackBerry) and Nokia dominated the smartphone space; Windows tablet PCs had been out for several years before the iPad showed up. The key wasn't that Apple got in early, but that it 'cracked' interface and design issues that had been preventing a market from growing.

I'm not wholly convinced that Apple has done that in smartwatches, although it's widely seen as the sales leader in that category. There's plenty of room for innovation in cars and VR, though. Electric cars, autonomous technology and in-cabin infotainment systems are still pretty rough around the edges. What if someone can fundamentally improve on those and take them into the mainstream? And given that VR right now is limited to Cardboard, Gear VR and a couple of more advanced headsets that haven't shipped (Oculus Rift and Vive), I wouldn't call that market sewn up.

The problem for Apple is the challenges in VR and self driving cars are about solving fundamental computing problems, not refining existing concepts with some chamfered edges, aluminium build, and a fruit logo. Also, there already is an Apple of cars, which is Tesla.

 

[rbk123]

If you want to take my words as the Gospel truth. Go right ahead. :thumbsup:

Did my words give you the impression I was taking yours as Gospel truth?

 

[Achtung!]

With the San Bernardino scandal and Carl Icahn's massive sell-off of Apple shares, it looks like Apple is in for a tough 2016.

Shares have tumbled about 26% compared to Q1 2015. And with slow growth in iPhone sales, I don't see shares recovering to their record highs any time soon.

http://fortune.com/2016/02/22/who-dumped-apple-13f/

 

[nerp]

Shares may be falling but let's be realistic. They are still printing money. 99 percent of companies in this space would dream for their balance sheet. Apple has the highest profit margin per device and they are selling them like crazy. Shareholder disappointment and market speculation operates in a separate universe.

 

[Commodus]

With the San Bernardino scandal and Carl Icahn's massive sell-off of Apple shares, it looks like Apple is in for a tough 2016.

Shares have tumbled about 26% compared to Q1 2015. And with slow growth in iPhone sales, I don't see shares recovering to their record highs any time soon.

http://fortune.com/2016/02/22/who-dumped-apple-13f/

I don't think either of those will hurt Apple much. The San Bernardino "scandal" is more about Apple drawing a line in the sand and setting legal boundaries; it's not going to lose sales to anyone but diehard Trump fans who take his uninformed, off-the-cuff remarks as gospel.

As for Icahn... I'm sure Apple liked the cash, but it probably doesn't mind less involvement from him. Icahn is an activist investor who's only interested in short-term gains. He's notorious for pushing for changes that make sense for his bank account, but could be ruinous for the long-term health of a company (just ask Yahoo). The bigger question for 2016 is whether or not the iPhone 5se and 7 will be enough to avoid talk of "peak iPhone."

 

[poofyhairguy]

I don't think either of those will hurt Apple much. The San Bernardino "scandal" is more about Apple drawing a line in the sand and setting legal boundaries; it's not going to lose sales to anyone but diehard Trump fans who take his uninformed, off-the-cuff remarks as gospel.

 

[Commodus]

Pardon for bringing this back up, but it's notable what happened this week: the FBI backed off... probably because it both realized that it might lose, and that opinions were swinging against it (both in the public and through support from companies like Facebook and Google). It was a pretty big gamble on Apple's part, but it apparently paid off -- at least, for now.

It's an odd thing when you hear even diehard Android fans talking about respecting Apple. Not that I expect this to lead to a sales boom, but the notion that iPhone sales will tank over this issue seems to have vanished.

 

[theeedude]

Apple should worry more about S7 Edge than the FBI. It can't keep shoveling outdated sh!t while Samsung is hitting it out of the ballpark on industrial design and components.

 

[Artdeco]

I agree with Apple, and hope all manuf's bump up the security on electronic devices, you know it's just a matter of time until Russia or China demand access, if they haven't already.

 

[Anteaus]

I'm sure AT&T going from a subsidization model to a financing model had a small effect also. Since people are required to pay full price for their phones up front or finance through AT&T Next, Apple won't be able to count on people with less disposable incomes to upgrade as often.

I've said this in other threads, but I think Apple has to move back into less savory fields like the low-end PC market or break into new fields if it wants to prevent contraction and protect its stock value. Every year the mobile device market gets increasingly competitive and Apple will find it difficult to keep charging such high premiums when there are so many viable alternatives.

Apple fans will continue to buy Apple products, but that isn't enough to sustain the position they are in now.

 

[Commodus]

Apple should worry more about S7 Edge than the FBI. It can't keep shoveling outdated sh!t while Samsung is hitting it out of the ballpark on industrial design and components.

I'm sure it's primarily concerned about rivals like the S7, although I don't think it's sweating bullets as much as you might think. Its big advantages are the camera and screen resolution. The Exynos 8890 and Snapdragon 820 aren't really any faster than the A9, and I doubt that Apple is losing sleep over bezel sizes (aka the irrational obsession of tech forums).

The big things the iPhone 7 ideally delivers: an upgrade in display resolution, better low-light camera performance, a significant processor boost and longer battery life. Anything after that is just gravy.

 

[jpiniero]

I've said this in other threads, but I think Apple has to move back into less savory fields like the low-end PC market or break into new fields if it wants to prevent contraction and protect its stock value. Every year the mobile device market gets increasingly competitive and Apple will find it difficult to keep charging such high premiums when there are so many viable alternatives.

This is Apple's Fiscal Q1 (Q4 2015) revenue breakdown:
68% iPhone
9% iPad
9% Mac
8% Services (App Store, etc)
6% Other (Beats)

Any kind of other product just isn't going to make a dent besides iPhone. They really are a one-trick pony.

 

[Mopetar]

This is Apple's Fiscal Q1 (Q4 2015) revenue breakdown:
68% iPhone
9% iPad
9% Mac
8% Services (App Store, etc)
6% Other (Beats)

Any kind of other product just isn't going to make a dent besides iPhone. They really are a one-trick pony.

But it's a pretty good trick to have, though, especially since it's one that they didn't have at all 10 years ago.

The other thing you're missing is that Apple makes so much revenue that their 9% Mac business practically represents a hugely successful company on its own. Assuming that 9% remains relatively fixed across the year, it represents around $22 billion in yearly revenue.

While that's not as impressive as the $100+ billion the iPhone rakes in annually, it's still more money than something like half of the Fortune 500 companies will make in their entirety. The same goes for their tablets and services as well.

They're actually more like a 4.5 trick pony, it's just that one of the tricks is pretty much the best one you can find anywhere, whereas all of the others are just merely really good.

 

[Commodus]

This is Apple's Fiscal Q1 (Q4 2015) revenue breakdown:
68% iPhone
9% iPad
9% Mac
8% Services (App Store, etc)
6% Other (Beats)

Any kind of other product just isn't going to make a dent besides iPhone. They really are a one-trick pony.

Doesn't that make many other companies one-trick ponies, too? Take Samsung Electronics, for example. In its latest earnings, it reveals that 50 percent of its sales are from mobile. And that's not including its semiconductor business, which heavily skews toward mobile. It may have a much wider product range, but smartphones are still its bread and butter. It'd be a fraction of its former self if it had to depend primarily on TVs and laundry machines.

Apple should make sure that it's exploring new fields. However, I don't think it's facing a crisis of overdependence right now. The main issue is making sure that this revenue train keeps going while it looks for the next big thing.

 

[Artdeco]

I find it a little sad that SS finally "got it right" when the era of midrange priced phones being acceptable started. It'll be interesting to see the sales numbers of all phones roll in over the next year.

 

[Phokus]

But it's a pretty good trick to have, though, especially since it's one that they didn't have at all 10 years ago.

The other thing you're missing is that Apple makes so much revenue that their 9% Mac business practically represents a hugely successful company on its own. Assuming that 9% remains relatively fixed across the year, it represents around $22 billion in yearly revenue.

While that's not as impressive as the $100+ billion the iPhone rakes in annually, it's still more money than something like half of the Fortune 500 companies will make in their entirety. The same goes for their tablets and services as well.

They're actually more like a 4.5 trick pony, it's just that one of the tricks is pretty much the best one you can find anywhere, whereas all of the others are just merely really good.

It's better to have a highly diversified business. If you're a stock owner, you're going to sweat a little and pray to god that people keep buying iphones since none of their other businesses generate enough profit on their own. The problem is, eventually, the iphone business will get stale. It's going to be harder and harder to come out with phones that really differentiates itself from prior generations and there will be a temptation to lower prices/come out with phones that really go farther downmarket than they normally want to. From what i've read, even if they come out with a good car, that won't make a dent in their profits as well (again, because the iphone is so big) even if they're successful because the car industry just isn't big enough.

 

[Mopetar]

It's better to have a highly diversified business. If you're a stock owner, you're going to sweat a little and pray to god that people keep buying iphones since none of their other businesses generate enough profit on their own. The problem is, eventually, the iphone business will get stale. It's going to be harder and harder to come out with phones that really differentiates itself from prior generations and there will be a temptation to lower prices/come out with phones that really go farther downmarket than they normally want to. From what i've read, even if they come out with a good car, that won't make a dent in their profits as well (again, because the iphone is so big) even if they're successful because the car industry just isn't big enough.

Apple positions themselves as a luxury brand which makes it more difficult for them to diversify to the extent that a company like Proctor and Gamble that has dozens of products (and occasionally several brands for a particular category) that are designed to be mass market.

There are a few areas they could expand into (home appliances for a smart home) over time, but I don't even think we'll see a car for at least another five years if we ever do at all. I think a more likely area is that they get back into enterprise and start selling servers based on their ARM SoC designs.

There were a few recent stories about Apple talking about the difficulties of building a data center and whether they could trust the components didn't have back doors. I don't know if people are still doing it, but I recall reading about a few people racking Mac minis after Apple killed of their XServe line.

Really, there is anything they could do right now that would stack up next to the iPhone revenue, but if they add another two or three product categories that can each make them an extra ~$20 billion in yearly revenue it's hard to fault them.

The posted ~$53 billion in net income last year. Although a lot of that is overseas, they'd only need about a decade of that to take themselves private at their current share price.

 

[Rakehellion]

I like how some people here think they know what Steve Jobs would approve of more than the people he worked with personally for a decade and a half (or longer). If only I had a dollar for every time I saw "Steve Jobs would never..."

I can't tell if AT breeds arrogance, or if arrogance just flocks to AT