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July 12, 2016

Comments

Per "wertigon" Ekström

@Piot: Yes, actually, I do not quite agree with Tomi and think he's been painting a too positive future - again. But the numbers will be in with the Q2 report for Apple. I suspect it to be worse than last quarter despite the SE (which incidentally seems to have), and the half-point will be reached.

@Wayne: Apple is in the OS market as much as Porsche is in the engine market. The problem with Apple is that they are designing their "engine" to run on pink unicorns instead of gasoline like the rest of the engines.

Sure it's a great engine - as long as you have a solid infrastructure for those pink unicorns it needs. If 90% of the rest of the world runs on gas, however, pink unicorns are not going to be offered by every gas station... And those small cuts are what is going to bleed the business dry. :)

Don't you dare tell me OS market share doesn't matter. If it didn't, Tizen, Sailfish, Ubuntu and the rest of the OSes available would still be alive and kicking, and not in their death throes...

chithanh

@Wayne Brady
> Like I said - Apple isn't always first.

Exactly, out-innovated by the competition. Nokia Money during its short life addressed more users and more countries than Apple Pay. Heck you didn't even need a bank account due to carrier billing.

> And please - enough with the "Apple is after short term profits" discredited meme already.

You don't understand what "prioritizes immediate profits over marketshare" means. Apple's refusal to release cheaper iPhones cost them customers that may never come back. Tomi wrote about it. Only recently with the iPhone SE they chose to move downmarket and that is why their market share recovers.

@Piot
> iPhone market share:

> 2014. 14.8%
> 2015. 16.1%
> 2016. 18%

Ever wonder why global warming denialists' figures frequently start at 1998? Because it is a peak year and following warming looks much more benign when compared to 1998.

Poit

@PWE
"Key competitors (Sony, Samsung, Qualcomm) made major strategic blunders which enhanced the numbers."

Please. You can't use that argument. If your agenda is correct, Sony & Samsung customers would have switched over to HTC, LG, Motorola or some other Android brand. Not Apple that is overpriced and minority platform.

Per "wertigon" Ekström

@Wayne:

Macs didn't take Apple where it is today. iPods and iPhones did, with iPads, Macs, watches and TVs a nice side profit.

@Piot:

It's very relevant to look at the competition and point out that they provided a weaker product (Qualcomm), removed unique selling points (Samsung) or had big marketing fiascos (Sony).

While the iPhone in most respects is rather overpriced for what you get, hardware wise, that does not matter since Apple still has their loyal fanbase and god-like PR department. But that will not last them forever.

I also forgot one contributing factor to the iPhone 6 success story. Tomi initially predicted 1550M units sold, with Apple at 231M units that would have given them 14.9% market share. Instead we got only 1430M units sold e.g. 16.1% market share. The premature growth slowdown benefitted Apple who sold most of their units the first two quarters. But Apple *could* have easily sold only 210M units.

When it comes to the iPhone now, there are two large items remaining before I can make a good educated guess - the Q2 earnings report, and the next iPhone reveal. My hunch tells me this will be a bad year for Apple. Let's see if that hunch is correct.

And even if Apple is not in the OS business... It's still in the platform business. And every misstep they make will cost them more than a similar misstep from Android. The question is not if they will succumb from the pressure of Android... But when.

iOS is like that one Gaul village in Asterix. There is no way that village can win, long-term, and everyone knows it. But for here and now, as long as they have that potion, they will make a dent for sure. :)

Per "wertigon" Ekström

@Wayne:

Regarding the Mac, you are missing one crucial thing; The Mac has been riding the coattails of iPod and iPhone ever since Steve Jobs came back.

The iMac moved a few units but barely made a dent in market share. It was when OSX came that interest really took off (i forget was that iMac or the generation after?), but it wasn't until iPod and iTunes that Mac sales took off.

iPods and later iPhones have kept the Macs afloat ever since. If the iPhone falls, the Mac will fall with it. But this will happen at a glacial pace. :)

That's why I'm convinced that Apple must now find a new leg to shift to, and I wish them well in that endeavor. But iPhones alone will not cut it, anymore.

Per "wertigon" Ekström

@Wayne:

The iPhone is driving ALL other Apple products at this point. That's why the iPhone is crucial. Without it I'm sure we'd see a large decline in the other products.

The iPhone is the hub in Apples strategy. As long as the iPhone lives, Apple lives.

Unfortunately the window to grab market share is ending, and 15% market share is not going to save the iPhone. Unless iPhone has enough market share there will be but one way - down. It will be a slow and steady descent however, not the free-fall fiasco that was Nokia... :)

Wayne Brady

Fun new fact. Salesforce has decided it can no longer deal with the cost of supporting the fragmentation that is the Android handset market. From now on, Salesforce will only support Google Nexus and Samsung Galaxy handsets. That's it.

Not said in the press release....but you KNOW it's true....is that far and away most Salesforce customers are using iPhones anyway. There's no possible way Salesforce could make this policy if they had any significant revenue at stake.

Per "wertigon" Ekström

@Wayne:

"You mention "declining marketshare" but that's from a myopic pov. Those cheap Android phones selling to "dumb phone" users are not taking anything away from Apple."

No, on the contrary they take *everything* away from Apple - everything that makes that alternative ecosystem attractive. Not right away of course. Each of these stab the giant and mighty Apple by a small, almost invisible thorn.

One bee is not a problem. Hundreds, thousands though...?

This is a slow process. It'll take atleast a decade before Apple is below 10% in market share. But it will eventually happen, unless Apple can now iPod their iPhone like they have iPodded their Mac... :)

It's like dementia. Once you start seeing the symptoms, it'll take years before death occurs...

Sergeant Casm

@PWE
Excellent analogy, especially the causality between dementia and death.

Per "wertigon" Ekström

@Wayne:

"I'm sure Apple will take ANOTHER 10 years and and another couple hundred billion added to their existing $200B they have in the bank."

Except that kind of gravy train can't really be expected once the growth of the market stops and it becomes another maintenance business, like the PC and tablet businesses.

I'd even expect the smartphone switching rate to sink from 18 months to up to 3-4 years during this time. I think this is what might explain the growth slowdown - not that people aren't replacing phones at the same time, but that many are not upgrading at the same crazy pace they did before. Apple switching to a 3 year cycle for the iPhone more or less confirms it, methinks, though it's just idle speculation at this point. :)

Per "wertigon" Ekström

@Wayne: Try $1B-$500M in profits, or so. That's what Apple is looking at in 2025.

Apple cannot make it with current market share because the iPhone can no longer drive sales of Apple devices (or is very close to it). It's as simple as that. Something else must drive the device sales now, instead of the iPhone.

We will see just how right (or wrong) I am this coming tuesday, but that's where the arrows are pointing. :)

Abdul Muis

@PWE

--
repost from http://communities-dominate.blogs.com/brands/2016/07/average-smartphone-user-touches-screen-2617-times-per-day-in-76-separate-sessions.html
--

Qualcomm is selling more chips for high-end smartphones
https://www.engadget.com/2016/07/21/qualcomm-is-selling-more-chips-for-high-end-smartphones/

Qualcomm shipped more Snapdragon chips this quarter than even it expected, and for that reason (and others), made more money. It reported sales of 201 million high-end chips, beating its estimates by at least 6 million

Per "wertigon" Ekström

@Wayne:

So you mean the current trend of obscene profits will turn for Apple? Glad you agree with me! :)

@Abdul: Interesting, that means one of two things;

1. Smartphone market as a whole grew more than expected Q2
2. Apple lost a whole chunk of the premium segment in smartphones.

Again we'll know for sure sometime in mid August... :)

Abdul Muis

@Wayne

In the past, android is still at young, forking bring benefit. Now it's different.

ch

@Per

It depends on how you define the premium market. If you look at the $500 or more market than no, Apple didn't loose market share. If you look at the smartphones with a 820 or equivalent than Apple lost a big share in the premium market. In my opinion the second is correct and the premium market start today at the lower price than in the past

Per "wertigon" Ekström

So, Apple unit sales AGAIN down, by a considerable amount (15%) YoY, despite SE. Just imagine how bad this would be without the SE.

Who told you so? :)

Again, here are the numbers I'm using, for reference:

https://docs.google.com/spreadsheets/d/1hIbcjggIqiYF9lS2LbLWMcOypA6NoqTs-7EawsAEyfw/edit#gid=0

So the iPhone might move again above 200M units, but now we have Q3 coming which will probably also be lower than last year for Apple...

Unless iPhone 7 is a monster phone (and nothing indicates it will be), I think Apple will hit peak units this year.

mac software

Nice Post! Thank You! Keep on!

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