Apple Profit and Revenue Slide as It Copes with Slumping iPhone Sales
wsj.com
wsj.com
Iterating over iDevices and essentially making them thinner and thinner or mini versions of them (i.e. the watch) doesn't really speak of "innovation" to me.
Apple's real prowess has been in economies of scale, industrial engineering, and supply chain management. This is how they extract more profit from their devices.
However, that profit is now largely based on the same principles of why high-fashion brands can charge $500 for a pair of jeans or shoes. It's also a bit perilous in the sense that once demand falls for "the brand" then a lot of margin just vanishes off the books.
Could customers just be upset with the supply chain issues too? Apple hypes devices. People order. Then the orders take months to fulfill. Customers get tired of waiting and cancel orders?
Example. I ordered at launch. My order failed to complete. I get an e-mail the next day saying that my iphone was held for me, please finish checking out. Estimated delivery October 1 - 15. It is now the 26th and tracking shows it will arrive on Oct 31. A whole month late. Meanwhile I have a nice case here that arrived 1 day over my iPhone order...
My iPhone 4 had four years of updates provided instantly and at no cost. In comparison to competitors I'd argue strongly that Apple has historically had better support for old models than most.
However. I owned my 4 for a pretty long time, because it did everything I needed (until the home button died). I expect my 6s will last a long time too - probably again limited by a hardware fault. Much like PCs, the improvements get smaller and so the impetus to upgrade regularly drops.
Wake me up with some news.
That means something.
In 2001, Apple had revenues of $5.3 billion and a net loss of $25 million.
2014, revenues of $182.8 billion with $39.5 billion in profit.
2015, revenues of $233.7 billion with $53.4 billion in profit.
2016, revenues of $215.6 billion with $45.7 billion in profit.
Apple's 2016 revenues shrunk in comparison to a peak year but it's still their 2nd best showing ever.
Something is very odd with their China business.
2015-2016 has been really tough on most of Apple's smartphone competitors, it's been a moving window and it affected some sooner than Apple, but most of the incumbents have suffered.
Xiaomi's revenue was down 38% over the summer.
Samsung is doing better compared to 2015 which was a down year, but who knows what's going to happen after the Note 7 fiasco.
Lenovo was down 19% in the first half of 2016.
Huawei, Oppo and Vivo have done well in terms of capturing market share, but their earnings have been extremely dismal in comparison to Apple's, each of their smartphone revenues is closer to Apple's profit than its revenue numbers.
Is the goal of growth to make money or to own marketshare?
That's been one of the long running questions but if you look at who is in the top 5 smartphone companies over the last 5-7 years, Apple and Samsung are pretty much the only two that have stuck around, so long-term seeking of marketshare in the absence of profits hasn't seemed to pay off all that well.
I define Apple's market more broadly as internet connected devices, which is much larger and poised to grow much faster than smartphones alone. That Apple's revenue is declining given this broad definition of their market is an even worse sign.