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May 03, 2017

Comments

SuperCycle

On the other news Apple Q1 2017 was excellent even that it was one week shorter than last years quarter. (Under 1% minus in sales corrected would be the same compared to the last year). It was excellent even that it suffered from strong dollar. Apple managed again raise the ASP of the iPhone and Mac. Something that NOBODY else has managed to do. iPad was again squeezed between larger iPhone and MBP. iPad is still the market leader with 81% marketshare (tablets over 300$). Excellent results and services are doing fantastically AppStore being twice as bis as Google Play store. Also Apple Watch is going strong with headphones. AAPL is all time high.

Apple is redying for the Super Cycle. This year India is the next China for Apple while Chinese market grows nicely.

SuperCycle

"They are more rich than god."

How true that is. "God" is always running out of money and asking you to lent him more.

E.Casais

@SuperCycle

"iPad was again squeezed between larger iPhone and MBP."

This is a very limited view of the situation assuming that only Apple products impact each other, ignoring the overall market context.

Phablets have been existing longer than large-display iPhones, many manufacturers have been competing with Apple in the segment of ultralight notebooks, and they introduced new form factors (hybrids like the Surface series) before Apple came up with equivalent offerings. The impact of those products has been felt for quite some time.

The whole tablet market has therefore been in intrinsic decline for years -- and the iPad is simply going down with it.

SuperCycle

"The whole tablet market has therefore been in intrinsic decline for years -- and the iPad is simply going down with it."

Actually use of iPads is up yoy because they have longer work life than expected. Larger iPhones do eat iPads share. Now when the big companies like IBM (400000 workers) and Volkswagen (625000 workers) are seeing the light the future is very bright for the Apple. Apple is gaining monumentally in the enteprise sector.

Olivier Barthelemy

@supercycle: are you sure the quarter was a week shorter ? I know Q4 was a week longer (and that more than explains all of their feeble growth then), but Q1 is normal-sized, thus no excuse ?

Olivier Barthelemy

@supercycle re: iPads: Apple has historically been unable to handle the corporate market. y guess is that Google will release ChromeOS tablets, and MS's devices might get legs, and both will put a damper on entreprise iPads. Like they did in .edu

Tomi T Ahonen

Hi Supercycle

Otherwise ok comments but the market share of iPad is nothing like four out of five. You mentioned that this share only applies in premium-price tablets. So in real market share - all tablets - iPad is long past its peak and in perennial decline.

...just keeping the score straight :-)

Tomi Ahonen :-)

Wayne Brady

Balancing things out: Sale THROUGH was slightly up. They lowered their channel inventory. Either way you look at it, sales were essentially flat - which is an improvement from the 3 qtrs of significant yoy unit sales declines last year.

So, it appears the sales decline is over. Q416 there was a slight increase. And, of course, one needs the annual number for iPhone's annual cycle.

Tim Cook said the active install base for iPhone grew "double digits" in the quarter. So, for a quarter with flat sales (or 1% decline if you insist), they still grew their active base of users 10%.

Whether or not the Super Cycle happens as projected - the iPhone business is very strong. ASP's grew as customers opted for the more expensive Plus model in a greater percentage than ever. All the USE metrics are strong and healthy. The revenue per user continues to grow. App store revenue grew. This isn't just money to Apple, but to all the partners who do business on the Apple platform.

Tim Cook also said that Apple continues to gain more switchers than it loses to Android. No one provides the numbers on this, but I believe the "switcher" category is still relatively small. We have comfortably moved into the Mac vs Windows territory where each camp just buys whatever is next from the platform they are already tied too. Only the iPhone has 3 times the marketshare of the traditional Mac of a market FAR larger.

I also wish someone would shed some light on the used market. I'm sure that iPhones live longer lives than even premium Android phones do. But with the "iPhone forever" type leasing programs, I'm expecting growth in the amount of 1yr old used iPhones entering the market.

Wayne Brady

On the iPad share. First, Cook said iPad had 81% of tablets over $200, not $300.

It is reasonable to look at total market and it is reasonable to look at market segments. I'm sure BMW doesn't not concern itself with it's share of total market, rather against it's segment peers of Mercedes, Volvo etc.

Either way - iPad sales have declined for years an we are searching for the bottom. Either way - there is no competitor that is taking those sales away. It simply turned out that the iPad's meteoric rise did not portend what many, including myself, thought.

Olivier Barthelemy

@Wayne Brady: I think the main issue with tablets is that there's no reason to upgrade whatsoever. Whether iPads or Androids, 5yo machines still work fine. My brother-in-law is on a Cyanogenmodded HP Touchpad, and doesn't *want* an upgrade, I've sent out feelers at each bday/xmas. And I'm trying to find a reason to junk my own 2011 Galaxy Note 10.1... it doesnt do h.265 which is starting to hurt, but it does all the rest just fine. I can't even find a reason to cyanogenmod it to 6.0 or 7.0, it's on 4.1.
And those tablets aren't being disused like so many fitness trackers are. They're doing their job, and there's no need for them to do more/upgrade.

That's a concern for phones. Phones do benefit from a stronger fashion/social effect, but OEMs are struggling to maintain the pace of innovation required to justify 2- even 3- yearly upgrades. TouchID through the screen will be nice, but not enough to upgrade from a phone with broadly similar performance, picture, battery, screen... Samsung and Apple are playing the looks card, that's all that's left, and not worth much to many.

Wayne Brady

Lots of people agree with you @Olivier with regard to the longevity of the tablets vs smart phones.

Still, it really is a brand new category that has not fallen into a recognizable pattern. Could be that millions of early adopters bought into the hype of tablets but failed to find much value. Some posit that.

Of course, USAGE metrics of iPad's continue to increase and the customer satisfaction levels remain very high so it's not LIKELY that iPads are not being appreciated by those who bought them.

Anecdotally - I absolutely love my iPad, and am on my 4th (I believe). My college aged kids and my wife do not use their iPads (or Kindle Fire tablets) all that much. No doubt in my mind that large screen phones have impacted the tablet market.

In business...I continue to see the adoption of iPads. 5 years ago I frequently faced the "we want an app and it needs to run on iPads and Androids". Even a few "do you support Windows Mobile/Blackberry". Now it's all iPad.

Huber

@Olivier/Wayne: Completely Most people I know use their tablets for a long time (like me, still typing this on my 2014 Sony Z2 tablet). Others skipped using tablets as a whole, though.

So I'd also assume that the shrinking tablet market is caused by a mixture of long upgrade cycles and tablets being a niche.

Regarding business, in my experience the hype of 2010/2011 is over - you see some iPads here and there (but almost no Android tablets), but there is not much talk about it and no bigger IT projects. Of course it can be different in other companies, but I see mostly small notebooks instead nowadays (not that I like those personally either).

Per "wertigon" Ekström

Ah yes, here we are again. :)

My linear toy model based on earlier performance predicted 51.7M, with a 14.9% quarterly market share and 14.4% moving average share.

I get 50.76M. The rest will have to wait a while, but in units I was 2% off. Interesting.

Apple profits are in no immediate danger, but they have started the slow decline glide. I predict the iPhone has a good 15 years left of this long glide unless Apple makes a really stupid mistake. At that point, their unit shares will look something like 30M-40M average sales each quarter (peaking at 55 and low peak 20).

And yes, it is the return of the see-saw pattern. So Tomi, looks like they are still sticking to their "One phone a year" strategy...

Tester

@PWE:

"I predict the iPhone has a good 15 years left"

... provided that there isn't another disruption coming. The developments in computing have been so fast that I wouldn't take long term viability of any product category for granted - even smartphones.

Per "wertigon" Ekström

@Tester:

A new disruption, right now, would be Apples worst nightmare (unless, of course, Apple creates it). I think the company will be late to such a disruption, but they could have an IE moment (remember Microsoft going all "Nah internet isn't important" and then Netscape eating their lunch, only for MS to do a 180 and dominate the browser field?) - if they push the exact right buttons at the exact correct moment.

With 600M-700M iPhone users, that is a huuuuuge customer base to kick-start any other business...

Wayne Brady

I thought it interesting to hear Cook label it a "pause". This October will tell the tale. All regions are growing except China and especially Hong Kong. The question is...have the Chinese fallen out of love with the iPhone, or were the status conscious among them not willing to buy the same looking iPhone for three years in a row?

Meanwhile, there is that pesky install base that is telling a different tale from the "iPhone in decline" narrative. Double digit growth in install base in a quarter where some 15M fewer iPhones were sold than 2 years ago. Those 2yr old owners were supposed to be the main source of sales (and probably were). So how could Apple sell 15M fewer this quarter and still grow the install base by at least 10%?

How bad is Apple's premium strategy? Instead of lowering prices and battling for market share, they are mining their customer base (which is continuing to grow). They have 165M monthly/yearly subscriptions. Their services business is larger than anyone but Samsung's smartphone business. Likewise, their accessories business (Watch, AirPods, Beats headphones) would be a fortune 100 company.

Still fun to watch this drama unfold.

Tester

@Wayne Brady:

" So how could Apple sell 15M fewer this quarter and still grow the install base by at least 10%?"

I think you will find similar numbers on Android as well. It's simply what has been predicted for quite some time: The replacement cycle extends - and even 4 year old phones are still usable so they can be sold to price conscious customers.

Wayne Brady

@Tester - so then, would you say you support Cook's concept of an "iPhone pause"? Meaning that the lower sales aren't the result of defection of users from the platform, but users who are GOING to still buy their iPhone, but are simply waiting.

Cook also touted the "switcher rate" again this quarter. He never provides the numbers, but I do find it interesting that Google has never disputed it. Nor have any of the analyst houses. According to Cook the iPhone is still gaining more users from Android than losing users to Android.

Something to watch for the next quarter with the full qtr sales of the Samsung Galaxy S8. Will Cook still mention switchers...or just ignore that notion until it reappears in another quarter. And when we get those S8 sales numbers, I want to see them compared to the S4, not the S7. Is Samsung king of a declining Android premium segment....or will Samsung have revived the premium segment back to growth.

They certainly seem to have relegated the Google Pixel to "old news". And I haven't seen LG, HTC or Sony making any headway against Samsung in the premium segment.

Wayne Brady

What are the stories worth watching. Samsung #1, Apple #2, Chinese filling out the rest is kind of baked in and years long with no change in site.

1. Will there be further consolidation among the Chinese - that is how I see Apple being moved from 2 to 3.
2. Will one of the Chinese brands break away and become the Samsung/Apple of China?
3. Will one of the Chinese brands become a true global competitor?
4. Will Google become a significant hardware player in their own right or will Samsung force them to divest hardware AGAIN (Samsung made Google sell Motorola).
5. How long will HTC and Sony continue with their Android smartphone charities
6. Will Nokia be successful at all -- and if so, how long before whatever is great about them is copied by the competition.
7. Will Apple see significant improvement in India, or is it just a pipe dream that they can repeat their Chinese success in India
8. Will Apple itself start selling it's used phones in markets like India
9. Will the S8 revive the Android premium phone market or will the mid-range, good enough continue to take those sales.
10. Can anyone BUT Samsung make a good business out of selling premium Android phones?
11. Will Apple attack the mid-range with a iPhone Plus SE model? Or rather, WHEN will Apple...
12. Is this the year Msft officially cancels their phone program?
13. Will people buy Blackberry branded phones made by the Chinese in any greater numbers than they bought from the Canadians?

Piot

@PWE

"And yes, it is the return of the see-saw pattern. So Tomi, looks like they are still sticking to their "One phone a year" strategy..."

And NO, the see-saw pattern has been running like clockwork for nearly 6 years now. It never left!
So NO, their 'One phone a year' strategy stopped in 2013.

Close but no cigar.

PS. Predicting the next 15 years for any tech company is a fools errand.

Keep on with the good work.

Tester

@Wayne Brady:

"so then, would you say you support Cook's concept of an "iPhone pause"? Meaning that the lower sales aren't the result of defection of users from the platform, but users who are GOING to still buy their iPhone, but are simply waiting."

I think by now most people have made up their mind which platform to use. So logically those who use an iPhone but feel the new model is too expensive for justifying an upgrade will try to keep their existing device as long as possible.

I do see some danger, though, that long term some of these users may defect if Apple does not adjust their prices and the second hand market cannot serve them anymore.

The biggest risk in this business is entirely elsewhere, though: Apple's entire business model can basically be summed up as "Buy our device, make all future business with us". Say what you want but many people consider this anti-competetive so it's only a matter of time if some countries enact laws to stop it. What then? What if some country forces Apple to open up to third-party app stores, for example? Will they quit that market or risk losing control over the software that gets onto the phones?

Wayne Brady

Seeing as Apple has more partners than anybody, it's hard to make the case that they are anti-competitive. With a 15% marketshare, it's hard to make the case they are a monopoly.

Android already exists for those who think Apple's way of doing business is unacceptable. But there are costs associated with Android's open philosophy (which is more philosophy than reality).

For those who value security, simplicity, and access to operating system upgrades....Apple is the better choice.

But these are old debates and the market has already answered them.

ch

The fact that they have so many partners with which they have a contract in fact indicates their anti-competitive behavior.


Apple is also not good for those that really value security as you can lock down Android much better. IOS is better than average Android but doesn't come near the the best secured Andriods

paul

Apple is going down and down!
The fact that Apple is sitting on a enormous pile of cash actually is a big disadvantage for them because it will make Apple lazy and obese and loose the strong will to innovate. It will be so easy from now for Apple to buy and innovation than to innovate themselves. This will play against them on a long term because if one does not innovante by themself it will loose that muscle.

Gul Dukat

Apple only sell good looking.
Good looking = premium... apple say
No good looking = no premium

Apple dead sure, iPhone design not changing 9 year.
Reason no iPhone 8, but 7s this year cause by samsung
Samsung S8/S8+ too pretty, if iphone 8 (10th birthday) sell, it will fail, and shame
Apple know they lost, Apple wait iPhone 8 next year.
Apple era gone already, apple is dead zombie.

Apple no prety now, no secure most now. Apple is just faksion.

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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