iPhone 39.3 M units in Q3... sorry I missed this news a week ago

Oops, I missed this somehow while was travelling.

 

So Apple gave its Q3 results (talking calendar quarter of course so its July-September numbers) and this includes the first few days of sales of the new iPhone 6 models. How was it? 39.3 million units. Thats up 12% from Q2 and up 16% from the same period one year ago. That is not good enough, as the market is growing far faster, so iPhone market share is again down (year-on-year). Because of the iPhone launch pattern of one launch date per year, the quarterly sales move up and down a lot, so the Apple view should always be considered with the annual view. But yes, market share now in Q3 is about 12.4% which is down from 13.3% a year ago same period. Apple's iPhone market share year-on-year has now fallen 8 consecutive quarters, down from the peak market share of 23.9% in Q1 of 2012 to essentially half of that, 12.4% today.

For the full year iPhone is heading to approx 14% market share (down from 15.5% in 2013 and 19.5% in 2012). Yes, its the most profitable handset manufacturer by a huge margin, good for Apple investors but as the iOS once represented essentially a quarter of the global smartphone market, how long will programmers care about an OS that is headed to single digit market share by end of the decade (same level as where the Macintosh PC has traditionally been, and incidentially also the same level where the iPhone is when measured as market share of the total handset market, not just smartphones. Yes, nice growth but not as fast as the industry. Market share keeps falling. When will it stabilizea d to what level. I expect around 9% in a couple of years. The large screen phablets will not restore iPhone to growth, they may stall the decline for a quarter or two. Then it again continues. But for Apple to achieve a stabilization of its market share erosion year-on-year, would require roughly 64 million iPhone sales for the Christmas Quarter now. Even that would only give a market share annually of about 14.5%. And it would require a herculean jump from the 51 million iPhones sold last year in the Christmas quarter. I think more reasonable is something nearer 58 to 59 million.

Ok, iPhone sales up with the launch of the new models, as usual. The sales boost not enough to reverse the continuing slide in market share. The company is doing fine, but iPhone is headed to ever more obviously a niche luxury product for the rich.

Comments

[KPOM]

Nothing Is ever good enough for Tomi. Sure, Apple only managed to beat the Street by 1 million units and with only 9 days of iPhone 6 sales. They'd be much better off adopting Samsung's strategy of selling anything and everything in search of market share.

[KPOM]

Pun fully intended, but YoY is an Apple's to oranges comparison, and unfavorable to Apple, believe it or not. In 2013, iPhone launched in China the same day it did in the US. In 2014, it launched a month later. That's potentially 2 million sales pushed back to the next quarter. Plus, unlike last year, everyone knew that Apple would be releasing bigger phones, and so it's quite reasonable to assume that August sales were comparatively worse in 2014 than 2013. And Apple increased the ASP because the 6 Plus starts at $950 unsubsidized.

[Winter]

@KPOM
"... iPhone launched in China the same day it did in the US. In 2014, it launched a month later."

The point is that if you have to resort to this kind of statistical massaging, you know you are on the defense.

The phone and tablet market will end up running Android (over 90% market share), just like Tomi (and many others) predicted years ago. And with it, humanity will end up computing on Android.

But we know, if you cannot win, you change the definition of "winning" until you do "win". We know the beat, Apple rakes in most of the dough, Android only has losses etc..

That reminds me of Gutenberg, who went bankrupt with his printing press while I imagine copyists were making record profits. We know how that panned out.

[Winter]

@AndThisWillBeToo
"Tomi rooted for Tizen becoming as big as Android, give or take few percent. iOS to single digits he did predict."

And how is that relevant for his prediction about Apple?

As usual, every excuse is a good excuse to divert from the real question.

[AndThisWillBeToo]

@Tomi
IT seems you made it Talouselämä headlines again:
http://summa.talentum.fi/article/te/uutiset/102969

[Winter]

@AndThisWillBeToo
"My comment was about Android. Tomi did NOT predict that the phone and tablet market will end up running Android (over 90% market share) years ago. Did not. Period."

I looked at "iPhone in Memoriam: A History from its Peak Moment of Success. But who copied whom?" from April 09, 2010

http://communities-dominate.blogs.com/brands/2010/04/iphone-in-memoriam-a-history-from-its-peak-moment-who-copied-whom.html

Tomi had three contenders to win: Android, Nokia, Samsung. Nokia committed suicide, which could in no way be predicted then. Samsung won initially, but using Android io Bada. Android won, period.

[Winter]

@AndThisWillBeToo
Indeed, my quote "The phone and tablet market will end up running Android (over 90% market share)" cannot be found in Tomi's writing. So I must be more careful with my statements, as they will be taken literally.

So, what did Tomi predict in 2010?

iPhone peak market share and a battle between three Linux phone OS' for supremacy (actually, two phone makers, Nokia and Samsung, and one OS, Android).

Android ultimately won, probably helped by the fact that Samsung chose to win by adopting Samsung and Nokia chose to commit suicide by hiring Elop.

And I extrapolated "wining" to "over 90% market share" as the computing industry is a winner-takes-all market.

Still, Apple iPhone has seen its peak in marketshare some time ago.

[AndThisWillBeToo]

@Winter
"Still, Apple iPhone has seen its peak in marketshare some time ago."

That I agreed with from the start. Sorry I had to pick for that 90% thing.

[My name is KHAN]

@Winter, @AndThisWillBeToo

While Tomi were an excellent analyst/forecaster and he's experience is very valuable to all of us (the reason we're here). He was from the 'old' (nokia) regime that show that having an independent OS (not sharing with other manufacture) make company stronger.

He, along many other journalist & analyst can't really understand the fully Google/Android power, and fall into trap that believe Android growth trajectory will be broken by something. American Journalist mostly believe Apple, WP, and even Amazon can kill Google/Android, while Tomi believe in Bada, Symbian, Meego, Tizen.

I agree with Tomi and Winter point of view that regarding Symbian/Meego. It could have been big, but we can't blame that Tomi didn't foresee the failure of Symbian/Meego since it was a suicide.

But regarding Tizen and BB, I think Tomi really lost it.
First about BB, in the past, Tomi still think BB can survive. Only until recently Tomi think BB could only survive as niece market.
Regarding Tizen. Tomi, along with other journalist were thinking that Tizen (or WP/Amazon for american journalist) could beat Google.

Even Tomi think that Apple could maintain the market at around 8%. Which I think it's too high. I think Apple will be lucky to have around 4% in 2020.

IMHO, perhaps the reason many miss-predict Google because the pro-Apple, pro-Microsoft were spinning too much negative news & words about Google, and Google doesn't brag their achievement like Apple did.

[RottenApple]

Regarding Tizen, we'll never know what would have happened, had Samsung taken Tizen seriously - which was Tomi's key assumption.

His forecasts were made assuming that Samsung would make a concerted effort to push their own OS into the market. Well, they didn't and all forecasts depending on such an assumption were invalid as a result.

In that regard it's quite similar to Nokia/Symbian: If you are unable to foresee a company's motivations, it's not possible to make a good forecast about its business.

[Winter]

@KHAN
"American Journalist mostly believe Apple, WP, and even Amazon can kill Google/Android, while Tomi believe in Bada, Symbian, Meego, Tizen."

I agree with you here. There are so many hardware manufacturers in the world, that it is practically impossible for one manufacturer to obtain a monopoly. So, if any one HW manufacturer succeeds in getting a leg up in the market with its own OS and software, the others will team up behind its most credible competitor that is manufacturer agnostic.

So, indeed, neither Tize/Maego nor Bada could win because they would give Nokia or Samsung too much market power. Android was the only credible alternative as Google does not produce phones and Android is OSS. WP could have been that alternative, had it been better and had not Microsoft shown such predatory behavior in the PC business.

[Roy]

Tomi, I find your blog and insights invaluable, but I think your view of iOS is pretty short-sighted. Horace Deidu has an excellent track record, and is forecasting shipments of all iOS devices in 2015 of ~350 million, and TOTAL ACTIVE iOS DEVICES of >800 million. All of which can be targeted in ONE developer build. Every single datapoint indicates that mobile app developers overwhelmingly build for iOS first, and often only. Your retort is, (1) iOS will be swamped (but that's contradicted by the very large absolute number of active iOS devices), and (2) the "app economy" is a mirage anyways, no one is making any money. If that is in fact the case, then that points even more strongly to iOS punching well above its market share weight: (a) they're the only platform paying out any significant $'s at all, and (b) iOS will still be the only handset mfcr making any substantial profit. So, in fact your constant harping of Android moving to 90% market share is a complete canard, a misdirection play, a relatively useless, economically un-actionable factoid.

[RottenApple]

@Leebase:

"Tomi: Apple also can keep reporting growing unit sales and growing revenues, but the iPhone market share has been falling and at some point the relevance of that issue will come home.

No, it won't. Unit sales and revenue keep on growing. As are profits. As do the revenues and profits of those who participate in Apple's ecosystem which STILL eclipse the money to be made on Android. "

Ah, there we have it again: The magical, eternally growing profit making machine.
Too bad, only, that this doesn't exist.

Apple already reached the first peak: market share
Eventually it will reach the second peak: number of sales
And another peak: number of users
And somewhere along the line: peak of profits.

That part is inevitable but all those deadlocked on Apple's current performance seem to ignore it. The all important question is: How will Apple deal with such a situation once it arises.

And the ecosystem's profitability doesn't mean much if you don't do business in the US. In other parts of the world things look A LOT different and Android is significantly more important.

[Tomi T Ahonen]

ok lets stop the sillyness

I have removed many totally absurd comments by AndThisWillToo that claim I never saw Android to become biggest OS until 2013.

I have written a preview of the bloodbath wars at the start of every year the war was ranging. Right after we saw the Nokia collapse, my next bloodbath review is this

http://communities-dominate.blogs.com/brands/2011/03/preview-bloodbath-2-electric-boogaloo-the-smartphone-wars-in-year-2011-will-be-bloodier-still.html

In it I write that Android has won and will get between 35% and 45% market share in 2011. Android ended up with 43%. So please lets stop the bullshit that while yes, I thought Tizen would become the THIRD OS, if the various players did launch on the platform as they promised in 2010 and early 2011, I never said Tizen would exceed Android. And the moment we saw Tizen faltering, I was here telling my readers that was happening.

For AndThisWillBeToo - don't do that. You have been here long enough to know. If you keep posting comments that you KNOW are not true, I will stop you privileges to comment here. Stop that.

Tomi Ahonen :-)

[RottenApple]

@Roy:

Some comments:

"All of which can be targeted in ONE developer build."

The same is true for Android - iOS doesn't have any advantage here.

"Every single datapoint indicates that mobile app developers overwhelmingly build for iOS first, and often only."

Go outside the US and this attitude won't show up nearly as often. The people who tend to ignore the vast rest of mobile users are idiots - mostly located in the USA and being influenced by a constant barrage of Apple propaganda. The problem is just: Outside the US you won't make much of a business this way. There's far more Android users and if you constantly ignore them you'll get dissatisfied customers. I'll leave hobbyists out, of course, because they'll naturally only target their own platform.

"Your retort is, (1) iOS will be swamped (but that's contradicted by the very large absolute number of active iOS devices)"

Again, there's far more active Android devices than Apple devices - and let's not forget one other thing: Those second and third hand devices are mostly owned by people who bought cheap and will act much more cost-aware, so they are not much of an asset to the app economy, just like many older and low end Android devices.

"(a) they're the only platform paying out any significant $'s at all,"

Sorry, wrong conclusion. The number that was mentioned was 'twice as much as Google' and that's still very much region specific.

"and (b) iOS will still be the only handset mfcr making any substantial profit."

... and how often does it need to be repeated that for third parties and consumers Apple's profitability is 100% irrelevant. I as a devloper can't buy anything from that fact. It's also quite idiotic to compare that to an ecosystem that does not depend on ANYONE making profit, it has so many contributors that even if a major player went bankrupt, it'd still live on mostly undisturbed.

" So, in fact your constant harping of Android moving to 90% market share is a complete canard, a misdirection play, a relatively useless, economically un-actionable factoid."

Useless for whom? If you are among those profit-greedy leeches that thrive off the Apple ecosystem, yes, sure, it's irrelevant that you ignore the rest of the population. But if you want to operate some mainstream business with broad appeal - sorry, big fail!

The mobile world doesn't solely consist out of profit making schemes, much revolves around offering some service to your customers that won't make any direct profit from mobile. And none of these businesses are factored in anywhere in mobile profit statistics, no matter whoever compiled them. I know lots of people who just own a cheap old Android phone but still are active users of mobile services - just not those where Apple & Co. are making money from.

[Maggan]

So it all comes down to one thing. Apple users are stupid. And Android users (and I presume Apple critics) are intelligent.

That's it. Apple's downfall is assured. Because their customers are stupid. And not intelligent. Like Android users are. Like people posting here are. Smart people. A cut above the rest. A cut above the stupid 10% that buy Apple gear.

Apple users are sheep. Because they are stupid. And don't buy Android. 90% of all mobile phones sold are Android. If only the stupid sheep were like the rest of the world and bought Android, they wouldn't be sheep.

And if they get smart they will buy Android. Because you can't be smart and buy Apple gear.

Yep.

Watertight analysis. Cut and dried. Simple as that. It all comes down to 800 million people being stupid. That explains everything.

The doom is coming to Cupertino. Any day. Just you wait. The smart people said so. Any day now. Just not today.

At least that's what I am reading from the folks here who are down on Apple's future.

/M

[RottenApple]

@Maggan:

That's just as silly as the common viewpoint of the Apple fanbase that Android users are commercially useless which is just plain insulting.

It is true, though, that Apple makes a good living off some people's stupid attitude. For example, is it really necessary to replace a phone every two years and again buy the latest and greatest available? I know enough people who still own a 4 year old Android phone, like for example an HTC Desire, and are happy with it, feeling no need to spend money on new hardware. They still actively use their phones and the occasional app, though. But according to some people's logic they have no commercial value because they spend lightly and don't buy every crappy app that just happens to be the item of the day.

I think the main difference is that the majority of Android uses thinks more economically, and therefore are bad targets for get rich quick business schemes. And some people seem to think that this kind of business is the only worthwile business.

THAT's pathetic - and we have several of them milling around here.

[Tomi T Ahonen]

So we're litigating Tizen still now?

Why is it impossible for mobile to have 3 platforms when videogaming console wars have had 3 platforms for decades? The one handset maker who has more than a quarter of the market - like Nokia had, and what Samsung now has, is the one player who can essentially guarantee a top 3 platform position if they really want to do it (and invest enough to do it). Nobody else can guarantee that. Google won with Amdroid. iPhone will end with single digit market share. There was in 2011-2012 and still theoretically is today a window of opportunity for that third platform. It will never be Windows. Blackberry is out of it. bada was on the path (better launch even than iPhone in the first 18 months or so) but with Tizen Samsung blew it.

If you want to accuse me of being wrong on Tizen, my positions are clearly here on this blog for all to see. What I would expect from my readers, is to acknowledge that I did not hide from that forecast, but actually it was me who told you that my forecasts had changed as we heard the various bad news about Tizen. So if you want to claim I was wrong, I think the fair point is to point out, at least I was honest enough to tell YOU that my forecast was no longer valid. Not how like IDC did with their moronic Windows Phone forecasts, from 18% to 6% in four consecutive forecasts they never told us they had made drastic downgrades and they never told us why they changed. They expected us just not to notice.

At least I tell you always immediately when my forecast changes. You want to skewer me for my Tizen forecast in 2011? Go ahead, I will stand proudly with the position that based on the market in 2011, that was a smart move by Samsung and they later messed it up. If I knew now only what I knew in 2011 of that market, I would still say that was the right move by Samsung and Tizen could easily become the second biggest OS in the world. If Samsung today had half of its smartphones running Tizen (and we know they hate Google and its Android power) then yes, Tizen would be bigger than iOS and Tizen would be second biggest. Thats before any other of the many hardware vendors who in 2011 were committed also to Tizen smartphones.

Tomi Ahonen :-)

[AppleTurfer]

I know we normally eschew financial talk but it's worth noting that right now, Apple is not only the most valuable company in the world by market cap, but it's 50% larger than the company in 2nd place which is Exxon.

This with a PE of 16 so its not some Internet bubble inflated stock price. General Motors has a PE of 19. Google's is 28 and Amazon's is infinite since they lose money.

[My name is KHAN]

@Tomi

I'm sorry if my words were too sharp. Just as I state before, I think you were a great forecaster. But you're wishing that there were a third ecosystem. The key word here is wish. This is based on your experience in nokia/symbian era that a company that have their own (not sharing) OS will have a competitive advantage. Which is true. And based on your expertise you predict that Tizen could be a stronger third ecosystem than WP/BB.

But Google Android is a mark of new era. The era of sharing the OS/ecosystem will ease the R&D cost of a company and will accelerate the innovation. But each of that company could still have competitive advantage to differentiate their hardware. This bring benefit to user, and make the user sticky to Google/Android ecosystem. For example, I don't want to be tied up to Samsung or Sony or Lenovo or LG or HTC. I want to be able to purchase any (android) phone I want, and have all my data in the next phone without headache.

Anyway, I really think that you were wayyyyyyyyyyyyy better than IDC, canalyst, etc. And although you were wishing Tizen as the third ecosystem, you thinking with your cold head that Nokia will use Android and don't think Nokia will magically use some unknown ecosytem.