I run a repair shop. We've repaired over 3,000 Apple devices for customers. We are always chatting with our customers, so we get a ton of feedback from them about what they're doing with their phones.<p>We hear a few things consistently:<p>1) Providers have switched from "free upgrades every 2 years" to a plan cost and a monthly phone cost, so people now <i>really know</i> how much their phone costs--and many would rather save the $30 a month than upgrade their phone. This started with T-Mobile a few years ago and now is how most phone plans work. This is having a <i>huge</i> impact on people's desire to buy new phones.<p>2) iPhone 5/5C/5S users have no desire to upgrade to a larger phone. The SE is going to solve some of this, but it'll more likely be a scenario of "I dropped my 5S in the toilet and it's completely dead, so I'll upgrade to a SE instead of dealing with the hassle of finding a legit used 5S." I don't expect to see a huge push toward the SE from current iPhone 5 users.<p>3) Repairs are so cheap, so easy and so effective. It's $79 for us to fix an iPhone 5/5C/5S screen right now, and we can fix it in less than 30 minutes typically. No reason to upgrade when your old one works just fine and you can get it fixed cheaply.<p>Interestingly, the SE screen is 1:1 compatible with the 5S screen, so the SE is coming out of the gate being cheap and easy to repair as well. I'm typically recommending the SE if people really want a new phone.<p>We also ask customers about 3D Touch (the new feature on the 6S/6S+) and if they're using it if they have a 6S. 99% of people have no idea what it is or how to use it. They bought a 6S/6S+ because it was pink. Yep, most of the 6S phones we see are rose gold, and that seems to be the #1 factor driving sales of that line. If they don't care about the pink and ask me what phone I recommend, I recommend buying a refurbished 6 over any of the 6S line. (We don't sell phones, so I have no horse in that race at all.)
It probably doesn't help that the subsidy model has completely changed. But personally, I think iPhone performance has hit a point where one doesn't really feel the need to upgrade right away. I was so ready to upgrade when the contract on my 4 expired. It was really a pain to use after a couple of years. But my 5S has now lasted me two and a half years and other than wishing I had more storage capacity, there's really nothing compelling in the new models for me to want to upgrade. The build quality and battery are so good that I don't feel like it's even getting worn out. The better cameras would be nice, but otherwise? I just can't justify the cost, much as I'd like to, so long as my 5S keeps performing.<p>I do think Apple needs to focus their money and efforts on improving their services and software integration. There's a lot to like in Apple services, but there's a lot of rough edges and weird gaps, and too often I feel like apps get written and then abandoned. If you bundle an app, it should have a dedicated team that keeps making it better, faster, easier to use all the time.<p>I also feel like Apple has a real chance to make a mark on the home automation market if they chose to do so. The best stuff out there is still pretty bad, and pretty much all of it spies on you. Based on how they've been adding context-aware features to iPhone in a very privacy-conscious way, Apple is the one company I would still trust to actually try to do home automation in a way that respects my privacy. And they have the money to invest in making it happen. But while I'm sure their hardware would be well-made, can they raise their software polish to the same level?
Incredible that this is the first time in 13 years that Apple hasn't posted quarterly growth. I'm sure there will be lots of "Apple has lost its ability to innovate" articles based on this, but growing for the last ~52 straight quarters is insane.<p>And I don't think one quarter without growth is enough evidence to conclude "Apple may be reaching the saturation point among potential customers in some countries" or "other smartphone makers using Google’s Android operating system continue to challenge the company with powerful, lower-price devices."
The expectation was $2.00 EPS, Apple reported $1.90. AAPL is down in after-hours trading right now, at 95.91 from 104.35 at market close (as of 5:20 PM).<p>This is a significant earnings report as it's the first to break 13 years of continuous growth. Revenue was down 13%.<p>• Q2 EPS: $1.90, down 22% YoY, versus expectations of $1.99<p>• Q2 revenue: $50.6 billion, down 13% YoY, versus expectations of $52 billion<p>• Gross margin: 39.4% versus 40.8% last year and expectations of 39.47%<p>• iPhone unit sales: 51.2 million, down 17% YoY, versus expectations of 50.7 million<p>• iPhone ASP: $644.25, down 2% YoY, versus $651 expected<p>• iPad unit sales: 10.2 million, down 19% YoY, versus expectations of 9.4 million<p>• Mac unit sales: 4.03 million, down 11% YoY, versus expectations of 4.6 million<p>• Q3 revenue guidance: $41 billion and $43 billion, versus expectations of $47.35 billion
Well, they had a good run. I wonder what's next.<p>I don't think anyone was surprised though, around 2014 we saw the writing on the wall. I mean take the Nexus 5, I have plenty of friends who have one and it's basically like they bought a microwave. It just works, it's fine, and they're expressing 0, and I really mean 0 interest in upgrading their microwave. They'll keep it for as long as the battery lasts and they don't break it. And that's really a last-generation phenomenon, before two years ago I was looking forward to new mobile tech. Now the changes aren't meaningful anymore.<p>And now people are openly expressing it, too. Like the CEO of sony, who spoke about the end of innovation in smartphones a few months ago. I mean take my dad, he just bought an LG G3 for $8 a month on a 2 year contract. Now this phone is 2 years old, not top of the line... but it's $8 a month and it comes with a nice screen that's almost double the PPI of the latest iphone, 3gb of ram, a nice snapdragon 801 chip, 3000 mAh battery, it just works fine and it's just really cheap. In two years, the latest G5 will be $200 too, and you'll buy G3 like phones for $100. What can we innovate in smartphones that's worth $700 to most people? That used to buy you a magical device that could do things nothing else could, in your pocket just a few years ago.<p>Anyway, I wonder what's next for Apple. There's no rumours of anything happening except its car. Wearables will expand. But they're all late or super late to market in these product categories. That's not a bad thing, they'll obviously make money, but it's not comparable to creating a real smartphone industry.
In this thread: lots of people making unfounded assumuptions and drawing dumb conclusions when anyone who has been paying attention knew this was coming as <i>Apple even said so last quarter</i>.<p>The last year quarter was buoyed by previous quarter supply constraints causing a lot more sales in many categories and products.<p>It's not that this quarter was bad (it was fine) it's that last years quarter was SO GOOD and last quarter had no major supply constraints that we see this.<p>Basically - Apple has got so good at the supply chain it's hurting their numbers for quarters with no new releases.<p>But sure, start speculating about [insert your favorite phone] and writing screeds about phone subsidies/performance/innovation/whatever. It won't be right... but you'll feel better I guess.
50.6b net income on 39.4% gross margins. A bit early to be writing Apple's obituary or anything even close. Retail is suffering nationwide and I suspect Apple is caught up in this decline.
The era where cell phone companies offered phone subsidies as trade for a customer's long term commitment has ended. The impact this is having and will continue to have on smartphone sales is profound. It is much more likely that customers will upgrade their devices less frequently. We are already beginning to see the impact in Apple and Samsung earnings.
>Its newest smartphone, the four-inch iPhone SE, went on sale in late March, too late to affect the most recent quarterly results, but analysts hope to get more insight into how it is selling.<p>Went to the Apple Store in my large metro and they were out of almost every model. The associate searched other stores and there wasn't much within 1500 miles. Anecdotal, but it looks like the demand is outpacing the supply of the iPhone SE. It'll be interesting to see the sales numbers.
For me, the main reason to upgrade phones is to get a better camera, so I can take better pictures of my kids. Other than that, most of the features are "nice to have". Don't get me wrong, I like Touch ID, I like the big screen of the plus (but not the size and slipperiness of the phone), but nothing has been a compelling upgrade, other than camera improvements.<p>In many ways, this is a credit to Apple doing a great job. On the other hand, the real challenge with driving iOS upgrades is software. There's no killer app that requires the latest hardware, unless you care about games and maybe a few drawing apps on the iPad.
So anyone thinking planned obsolesce might move itself up the Apple priority list? Their per quarter revenue is still massive, but Wall Street always expects more. At its current rate of stock buy back, Apple could buy back all of its stocks and go private in a few years. They could rid themselves of market fluctuations in regard to stock and pump out products while continuing making the ridiculous amounts or revenue and overcome the need to take shortcuts for the sake of Wall Streets obsession with non-stop growth.
> The Company also announced that its Board of Directors has authorized an increase of $50 billion to the Company’s program to return capital to shareholders. Under the expanded program, Apple plans to spend a cumulative total of $250 billion of cash by the end of March 2018.<p>My god, that $50 billion expansion is 7% of the company at the current market cap.
I'm not surprised. I think Apple underestimated the demand for the iphone SE 64 GB. Its been out of stock in most stores since it was released. Apple's shareholders should be asking why can't anyone buy it in a store? Also many people don't want wait two weeks to receive their phone when they buy it online.
The key numbers from the Press Release:
The Company posted quarterly revenue of $50.6 billion and
quarterly net income of $10.5 billion, or $1.90 per diluted
share. These results compare to revenue of $58 billion and
net income of $13.6 billion, or $2.33 per diluted share, in
the year-ago quarter. Gross margin was 39.4 percent compared
to 40.8 percent in the year-ago quarter. International sales
accounted for 67 percent of the quarter’s revenue.<p>So not really a surprise from what they announced at previous quarter.
I love my iPhone 6+ but while overall the ecosystem is getting better, the device is more laggy and glitchy than previous models.<p>Apple Pay always gets triggered by accident when I try to unlock using the fingerprint, and once in a while random apps seem to heat up the phone and drain the battery before I realize what is going on.<p>I think small things like the minor points of perceived quality that I'm describing can have a big impact on sales. When a phone costs $800 people expect a very solid experience with no glitches.
Sales faltering...just wait until the margins dip. Hardware margins the size Apple has enjoyed are incredibly rare and never have lasted with any company, period. Their hardware margins are on par, or even above many software vendors, which is just unsustainable. It's a great product, but the upgrade cycle is lengthening, and margins are going to fall. Same happened to the PC, same started to happen with the tablet, and the same will happen to the phone market.
Are we past peak-smartphone or is this just noise from model release schedules?<p>It took PCs 20+ years to get good enough, smartphones managed the same in much less than 10 it seems.
Sweet, time to buy more. I was holding off since it was obvious that prices over 100$/share without any new products to excite the imagination of traders with no technology background wasn't going to last forever. It' always interesting to me how wall street lacks any depth in their analysis. Direct sales and revenues are basically the only metrics they look at. Which is fine for a small company but when you are looking at a 700B company, spending 8B a year in R&D being that shortsighted is almost funny.
For any exponential function comes time when its growth cannot be sustained. Smartphones are boring and mature, we haven't had killer app in ages - welcome to the PC market of 2007.
Well besides the obvious about the decline in phone sales I think the primary reasons is Apple's steadfast refusal to get in lower margin markets. Sorry, but a four hundred dollar phone is still not cheap enough especially when you consider the monthly usage fees following the purchase.<p>Then we see tablets and all Apple has done is release newer models with higher price points and worse more expensive add ons.<p>Finally, their cheapest desktop is eleven hundred and cheapest laptop is nine hundred for a low powered system, the first realistic laptops start at thirteen hundred. No I don't really count the Mac Mini because it never seems to register on people's radar and by the time you add on the monitor and such its up close to eight and nine hundred.<p>I won't even touch that Watch, its price or the silliness of that is the price of just the bands.<p>Apple's failure is that it won't go low. They don't have to go rock bottom but they damn well need to push "LE" models or the like. Redo the first Air with a few minor upgrades as the Air LE, 299... get an iMac out for the public nearer seven hundred. Get the rest of the iMac line back into realistic pricing especially for SSD upgrades. Please update the Mac Pro, really how long are they going to ignore it?<p>tl;dr Apple simply priced them out of too many markets, either out of ignorance or arrogance.
I just upgraded from being a long time iPhone user to a nexus6p and an delighted. Most of the UI makes more sense to me. The camera is amazing and the integration with Google apps as first class apps is a positive. Being able to voice command the device without a power cord plugged in is an added benefit. I can't imagine going back to iPhones.
My wife has an iPhone 4. She's not a technical person; she just wants a phone and some apps. She has no interest in upgrading.<p>Moreover, her iPhone 4 was the first smartphone in our family. Since she got her phone (and stuck with it), I've gone through at least four or five phones -- always because they broke, not because I was interested in upgrading.<p>So I'm guessing that while there are lots of Apple gotta-have-the-latest people out there, most people just want a phone that works. And if Apple's hardware and software quality are good (or even half-good), then people will just keep using their old phones.<p>Which means that Apple will continue to sell phones, but the number of people who will buy or upgrade each year will shrink, at least to some degree.<p>It should also be noted that Apple is still very profitable! It's just <i>less</i> profitable than it was last year.
Apple is not doomed, but I think they've taken their eyes off the ball a bit. Watch and iPad Pro are me-too products, and the switch to flat interfaces cost them a lot of differentiation IMHO. They've cheapened their brand and they don't seem to know what market they should really disrupt.
I've said this before but I think it's because my socks are most definitely still on my feet, and have been for the last several years. Apple used to come up with new, distinctive, products that had me gasping for air and figuratively knocking my socks off. Not anymore. I don't want to say it's because of the loss of Jobs but it sure seems that way. I really like Tim but he seems like a production guy instead of a product guy.<p>Come on Apple, where are the revolutionary products of yesteryear? 3D displays? AR/VR technology? Home automation? iPod headphones? Voice recognition (ala Alexa)? I used to look to Apple for a glimpse of the future; not anymore. :(
The concerning part of this is how little Apple did to get ahead of the market saturation problem before it started impacting sales. They had plenty of warning. Analysts have been predicting this for years. They waited way too long to release iPhones with larger displays. Then it takes more than a year to update the 4" model and when they do it gets released with a nearly identical enclosure to a 3 year old phone. Current rumors suggest the iPhone 7 may share a very similar design to the iPhone 6/S which is just baffling to me if true. When market saturation is a problem it seems like the absolute worst thing you could do is keep recycling 2-3 year old designs.
Cut prices on their ageing cash cow, or start flogging that faltering horse?<p>Smart money's on the latter. Kinda painful to re-watch the Apple II moment while android ambles off into the sunset with all the users....
I'm curious what other people think about the ecosystem as a catalyst, in particular Apple Pay. It seems to be that squeezing between iPhone owners and everyday purchases would be very lucrative.
This is a small anecdote, but: I'm happy with my current iPhone and the current models aren't additionally compelling enough to me to upgrade.<p>I have an iPhone 5S and don't want a larger one. When the iPhone SE came out, I was excited until I found out it didn't have force touch, which was the main interesting feature to me about the new lineup. Other than Apple Pay it seems I have very little reason to upgrade until this one dies or breaks. I don't see being satisfied with their product as a black mark against them.
I only see it as a matter of time before brands like Xiaomi make cheaper and better products for sale beyond their current dominance in 'developing countries'. We need to catch up.
I have been a happy Android user for years but was planning on switching to an iPhone next time for compatibility with my iPads.<p>I changed my mind because of the Google Fi service. I can get a compatible phone for $200, and I project my monthly service plan would be less than half than my Verizon plan, given my usage patterns. I do worry that Google might drop the Fi service, or change the features/cost in the future though.
Apple's probably just biding its time with the iPhone while it works to soup-up the Apple Watch - add cellular, more power, more battery, smaller package.<p>I reckon the iPhone (and maybe iPad) will transition into just a dumb accessory screens.<p>My thinking is that this follows the trend: Desktop (power on your desk) -> Laptop (power in your bag) -> Smartphone (power in your pocket) -> Watch? (power on your person)
It is probably end of the era moment, like the end of PC back in 2005. Personal Computer is nothing special and even status/luxury brands does not make real difference. PC is mere cheap commodity.<p>Now there is moment when smartphone is just a phone. Apple or any other brand - does not make real difference.<p>Some, say, MicroMax or Huawey Android stuff is about $150, and it gives you everything, except 3D.<p>It is just a phone.
The 6S and 6S plus didn't offer a ton of new features really besides being faster. The 3D-touch screen is nice for quick shortcuts but not a killer feature.<p>Basically, the only reason why I would personally want to upgrade is for the bigger screen on the plus model and the battery life that comes with it.
I'm not surprised at all. I don't get why people are. Anyone who wants one, pretty much has one at this point. Those who have them within the past few years are most likely happy with them. The bubble won't exactly burst but it will decrease.
>Apple said it would raise its quarterly dividend 10 percent to 57 cents a share and increase the amount of stock it buys back to $175 <i>billion.</i><p>Surely that's the NYT's typo and they mean million with an M, right?<p>EDIT: Not a typo, see mbrubeck's reply below.
Apple is doing just fine. But there's been no Next Big Thing since Jobs. Apple's watch is a dud. Nest's products don't work well. It's like Sony after Akio Moreta died; the company plugs on, but the light has gone out.
I think that Apple would be wise to invest a few billion in solving the fundamental problem of batter life. That is the key missing ingredient for everything else we want in the future for mobile tech.
I hope the lack of growth in hardware sales makes the company improve their services and lower their hardware prices instead of trying to increase hardware replacement rates via shorter life cycles.
The most innovative thing Apple can do now to reverse the course of things is to decrease their outrageously high prices (especially in Europe) and phase out these ridiculous 16GB models.
So, does this mean we shall start seeing "the iPhone is dead" click-bait articles like we see with other similar tech products when their sales slump for various reasons?
I'm glad Apple has some competition with Android. I made the switch to Android after I got multiple "dud" iPhone 6's which stopped working after a few days.
In weird analogies, I think the 5S is the Apple's playstation 2 ( good enough for everything and really really no incentive to upgrade except for the enthusiasts ).
Apple still have $233,000,000,000 in the bank. More than the federal reserve, more than Google, Microsoft, and Facebook combined.<p>They could buy their way out of this I am pretty sure.
Until some months ago, I had a factory unlocked iPhone 5 which I used for 2+ years. I had no reason to switch to a more recent model, other than the (at times) nagging need for the finger-print lock. Then, out of the blue, the battery on my iPhone began to malfunction, in that, it would only let the phone stay on for a couple of minutes unless it was plugged constantly to a power source.<p>I bought an iPhone 6S, space gray, factory unlocked at around $650 (excluding tax). I sent my iPhone 5 back to Apple for a recycle. They gave me $200 in iTunes gift money. So, all in all, I got a new iPhone 6S for $450 (excluding tax).
I wonder if Apple is going to find a new market with the potential for massive growth any time soon. So far smartwatches don't seem to be such a market.
Apple is the Ford of smartphones. As the auto industry currently stands, the top selling model each year doesn't earn more than 1% of the industry's total revenue. The question is whether smartphones will eventually become similarly fragmented, or if the ecosystem network effect will maintain a "winner take most" effect.
Every year I see a similar post over hyped a few months before a new major model is released. Then it won't be long before I see a post stating Apple's sales and stock are at an all time high. I swear this happens every year.
$175 billion in buy backs?! Wow, its expensive propping up the share price to keep Wall Street happy...<p>There is only so much hardware innovation, there are only so many people on the planet with $600 to spend on a mobile phone.<p>Apple should really move whole heartedly into services (as evidenced by revenue up 20%); build a gmail / dropbox competitor - stop thinking of itself as a consumer hardware maker, that era is over.
I don't know. My iPhone 5s recently died. I went to the Apple store. I looked at the new models. I looked at the version they have that looks like the 5s with better mechanics. I paid $269US for a replacement iPhone 5s. I just couldn't figure out a reason to upgrade. I have the same problem with the iPad. I'll probably upgrade at some point, but the battery life isn't better (and in fact I'd have to repurchase all of the extra phone-sleeve type batteries I have to buy due to Apple's inability to comprehend there are customers that care more about convenience than slimness and weight), and of course storage capacity (which hasn't really changed).<p>I can't be that unusual a customer. I think a lot of people are just done upgrading. For a while there in 2009/11/13 (or was it 10/12/14?) every time you upgraded it really did make a difference... a "quantum leap" in technology. Now, I feel like upgrading just changed the style (and unfortunately accessories) of my phone. Rumor is the 7 is going to do away with standard headsets. That would be a deal breaker for me. I am fatigued of not only replacing the phone, but the $300 in accessories it takes to power/add accessories/run the phone every 2 years.<p>This whole subject around quarterly earnings at Apple always makes me think about this larger trend here called peak stuff. Material consumption is falling in Western countries. Steve Howard did that great interview on the subject on NPR: <a href="http://www.npr.org/2016/01/22/464013718/ikea-executive-on-why-the-west-has-hit-peak-stuff" rel="nofollow">http://www.npr.org/2016/01/22/464013718/ikea-executive-on-wh...</a><p>Apple's products were the pinnacle of aspirations besides a car or home in much of the world, and now... well... they're less so. Still popular, still great products, but maybe there is starting to be some fatigue. It's probably good. Anyone who things unlimited growth as a model on a planet with finite resources is still living in the 20th century anyways.<p>Maybe that's contributing.