iPhone Q1 Results: Second Year in Row that January Quarter Sales are Down in Absolute Units vs same Quarter the Year Before

So we're into the quarterly sales data in the smartphone wars. Apple reported 50.8 million units of iPhones in calendar quarter 1 ie January-March quarter. That is down 1% vs same quarter a year ago. More relevantly, this is now the second consecutive year that the first quarter of the year starts with unit sales actually down vs the same period the year before. Apple's best-ever Q1 was in 2015, when they sold 61.1 million iPhones. That came down to 51.2 million in Q1 of 2016 and now down further to 50.8 million for Q1 of 2017. Apple's peak year in total annual iPhone unit sales was of course also 2015 with 231.4 million unit sales. That came down to 215.4 million last year and now this weak start to 2017 suggests Apple heading to perhaps flat, perhaps even slightly more down sales this year. The market share picture looks worse, Q1 of last year Apple held 15.3% and now has 14.6% a decline of three quarters of one point of market share.

In terms of annual market share, Apple picked a good year to have declining sales last year, as the industry growth overall stumbled and was essentially flat. So Apple's market share did not suffer much. They dropped from 16.1% in 2015 to 14.6% in 2016. But the industry has returned to growth. The industry is now again growing at 4% per year and now if Apple sales are flat vs 2016, their market share will fall to about 14%. And until the next models arrive, there is nothing to rescue the rest of the year from the regular annual 'down-cycle' that Apple now is in. This before we consider the rumors that the new iPhone 8 may be delayed in its launch. 

If Apple ends at 14% it is nothing to sneeze at, Apple is safely the second-largest smartphone maker still this year, but Huawei might break into double-digits and if this year ends with a race say of Apple around 14% and Huawei around 12%, then NEXT year we could have a real race... Also please remember, Apple is the most profitable company in human economic history and sits on a gargantual pile of cash. They are more rich than god. So don't cry for Apple, they're definitely the biggest winner in smartphones, in handsets, in mobile, in tech and in corporate industry the planet has ever seen. But just don't think the iOS ecosystem is a 'mass market'. It is a niche market for rich people - albeit a very large niche market.  

Comments

[Tester]

@paul:

"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"

That's actually something I never thought of before but indeed may be a genuine danger. Wasn't this part of what made Microsoft tumble in recent years? They also got too much money and became complacent - just taking their place at the top of the foodchain for granted. The signs have been on the wall for quite some time for Apple, but so fat they never made the fatal misstep, at least not with iPhones. I see bigger trouble brewing with macOS gradually abandoning industry standard APIs like OpenGL which by now is already several years behind and actually hopelessly outdated.

"Chipmaker Qualcomm is planning to ask a U.S. agency to ban the import of iPhones to the U.S."

In this case I side with Apple. They may be abusive, but compared to Qualcomm they can be actually considered friendly. But if those two did each other in, it'd be good news for everybody.

[Tester]

You still do not comprehend why some people here are predicting Apple's eventual downfall, do you?

It's not because they are making money right now.
The problem some people see with Apple is that their products are getting dull, predictable and pedestrian. That's a toxic combination for a company which thrives off being a fashion brand.

And by 'toxic' I mean long-term effect. When this shit hits the fan it'll bee too late to react.

[coldspring22]

Apple taking a beating in Chinese market shows something besides that Chinese are being patriotic and buying domestic phones. The real reason is that China market is where the Android manufacturers are currently most competitive, due to the strong presence of Huawei, Oppo, Vivo and Xiaomi. Besides the aging fashion statement that iphone brings you, what does it actually do otherwise? People in China figured out that iphone actually does nothing better than a mid range Android phones costing much less from likes of Huawei and are leaving Apple camp in flocks. The danger for Apple is that if Huawei, Oppo, Vivo and Xiaomi can become equally competitive everywhere, there will be even faster downfall for Apple iphone market share globally. So China can be seen as preview of the future of smart phone market unfolding.

[b]

@Paul

Indeed Apple is going down slowly. Because of Apple's cash pile, Apple is more likely to solve its problems and challenges by throwing money than to innovate thru hard work. Innovation and shopping for a solution with a pile of money are different things.

[ReadMore]

"Indeed Apple is going down slowly."

Actually Apple was not down. They were flat. The unit sales went up 300000 year over year.
seekingalpha.com/article/4070446-surprise-apple-iphone-shipments-actually-last-quarter

Samsungs sales went down massivly and even worse the average price per unit of $232 USD, representing a 19.5% decrease from a year earlier. Apple recorded a 7% increase in the average price of its smartphones throughout 2016, up to $645 per unit sold and flat unit sales (up less than 1%)

This gives you the clearer picture how bad things are for the Apple competition.
macdailynews.com/2017/03/22/apples-older-iphone-6s-easily-outsold-samsungs-new-flagship-phone-last-year/

You shouldn´t worry about the Apples cash pile because Apple knows what it is doing with it. You don´t. We who have been following Apple for long time do know what is happening with it and it is stroke of genius and we thank Tim Cook for it. He is the wizard behind the Apple Manufacturing System.

[b]

@ReadMore

>Actually Apple was not down. They were flat. The unit sales went up 300000 year over year. seekingalpha.com/article/4070446-surprise-apple-iphone-shipments-actually-last-quarter

According to Tomi, Apple is going down. Tomi wrote: "Apple reported 50.8 million units of iPhones in calendar quarter 1 ie January-March quarter. That is down 1% vs same quarter a year ago."

[Readandlisten]

"According to Tomi, Apple is going down."

Yes he should correct his mistake and next time listen to what Tim Cook says.

Though Tomi always corrects his mistakes.

[Readandlisten]

"macOS gradually abandoning industry standard APIs like OpenGL"

Apple is not the only one who has abandoned OpenGL. You can ad to the list everybody plus Microsoft. The support just isn't going to be there anymore.

Apple really does not care what "everybody" else are doing. If they consider something to be legacy stuff they will throw it out. Same whining we had with the case of Flash.
Apple wont wait for others to start the committee meetings. They do their own and much faster. This is the case with the A-series processors where they were first let down by Intel and then screwed by Samsung. We remember what happened with Motorola and IBM. You can bet that in the first possibility Apple will do things by themself and now it is Metal. Countdown for Intel has already started and it is only matter of time when Apple will ditch Intel from their supply chain. Intel has been ignoring Apples needs for too long now.

Qualcomm is not a threat to Apple. Apple can buy Qualcomm with the money that Tim Cook has in his jeans pocket.

[Gul Dukat]

@Tester

"That's actually something I never thought of before but indeed may be a genuine danger. Wasn't this part of what made Microsoft tumble in recent years? They also got too much money and became complacent - just taking their place at the top of the foodchain for granted. The signs have been on the wall for quite some time for Apple, but so fat they never made the fatal misstep, at least not with iPhones. I see bigger trouble brewing with macOS gradually abandoning industry standard APIs like OpenGL which by now is already several years behind and actually hopelessly outdated."

Not right.
Google = Have BIG money = good = iinovate.
Apple = Have BIG money = bad = not iinovate.
Reason, Apple CEO = bad CEO = not smart
Same, Microsoft old CEO = bad CEO = not smart.

[Gul Dukat]

@Tester

"The problem some people see with Apple is that their products are getting dull, predictable and pedestrian. That's a toxic combination for a company which thrives off being a fashion brand."

Right.
Use Mercedes Benz = expensive and best
Use iPhone = expensive and not best

old time
iPhone = dumb person = fashion only
android = smart person

now time
Galaxy S8 = beautiful = fashion
iPhone = no fashion. no sell. dumb*2 person

[Gul Dukat]

@coldspring22

"The danger for Apple is that if Huawei, Oppo, Vivo and Xiaomi can become equally competitive everywhere, there will be even faster downfall for Apple iphone market share globally. So China can be seen as preview of the future of smart phone market unfolding."

Huawei, Oppo, Vivo, Xiaomi = sell good
Huawei, Oppo, Vivo, Xiaomi = rich
rich = more store = more country

Huawi, Oppo, Vivo, Xiaomi = more sell good = more rich
Apple = will down more country

[Gul Dukat]

@Wayne Brady

Apple = no pay tax = you happy?
you happy = you iddiot!!
no pay tax = all usa lost!!

[Gul Dukat]

@Wayne

I question you.
Galaxy S8 = fashion = beautiful
How apple fight?
Apple no fashion now.
Apple lost

[Tester]

@ReadAndListen:

It's clear that you completely missed the point.

Yes, OpenGL may be nearing the end of its life as a state-of-the-art graphics API.
But here's the catch: The lastest version is 4.5. Apple supports 4.1 (or 4.2, not sure) but on both Linux and Windows the implementation is OPEN, i.e. it's not the OS vendor which decides what it can and can not do but the graphics driver developers. And both systems are at 4.5, fully supporting all recent features. This is strike #1 against Apple: OpenGL is even more a dead end on macOS than the other platforms.
Strike #2 is Vulkan: Microsoft never added one bit of support to implement Vulkan, yet the system is open enough that the graphics hardware vendors were able to provide support on their own. Same on Linux. Not so much on macOS. The totally botched situation right now is that you can target both Windows and Linux with an industry standard, forward looking high performance graphics API. To support Apple, well, bad luck: You have to use a proprietary API with a somewhat different philosophy.
Why is this bad? Because unlike OpenGL, Vulkan works great on Windows and both NVidia and AMD are fully behind it. The question now is: Will the software developers do all the extra work for a minority platform with notoriously shitty graphics hardware? I consider it mostly unlikely. Microsoft could afford their own API for two reasons: They were a) the majority platform and b) the competing API simply was not good.

The simple fact is that the small mistakes on Apple's account are increasing, and if they continue to make cross-platform software development a hassle, they will lose. They are not Microsoft which at their best commanded 95% of their market. Apple is at less than 20% in smartphones and less than 5% in PCs. The main issue with these mistakes is that at first they won't register as fatal.
But taking OpenGL as an example again, until now this wasn't something that would seriously affect software making decisions. But Vulkan is an entirely new game. It has a good chance to become the de-factor 3D standard, it will be available on all platforms, including Android, but not Apple. This will increase costs for Apple software development because the platform loses one major point of synergy with the rest of the computing world, and once this results in business decisions that leave Apple on the side, it will be too late.

[Huber]

I don't think that the beginning decline of Apple already shows in their balance sheet. But I see a growing trend that people are less enthusiastic about Apple.

I hear diehard Apple fans saying that things went downhill after Steve Jobs left. That their new iMac had problems synchronizing the data with their old Mac, which never happened in the past. That they would have prefered a Mac Pro instead anyways, but the Mac Pro is so ridiculous that the iMac was the saner choice.

I hear people saying that the days of "it just works" are gone.

I see people sticking to their old Macbook because they don't like the USB Type C hell Apple wants them to go (and buy a bag full of dongles).

This is a change in the general mood, and it is currently compensated by people still buying Apple, albeit more and more with less and less enthusiasm.

If Apple continues this way, they will fall of a cliff in a few years. Of course, Apple can still reverse course. But I don't think Tim Cook is capable of this, so let's see.

[Readandlisten]

"But I don't think Tim Cook is capable of this, so let's see"

Do you realize that you are talking about worlds best CEO that knows Apple better than anybody in the world. He has worked in the Apple over 23 years. He is the one who greated the machine that is Apple today and in the future. He also made us filthy rich.,

[Tomi T Ahonen]

Hi everybody

Ok, we're back to this 'Apple is doomed' debate. And its time to bring in 'Good Cop' version of me. I love Apple...

Apple is Not Gonna Darned Die. It isn't about to lose its crown as the most profitable company in human history. Listen to that. Apple is not about to lose its position as the most successful company ever. Apple is SAFE to remain the most successful company of any industry, of all time, into the FORESEEABLE FUTURE. For many many years.

Why? Because they own the top-end of the premium segment of the most sold technology on the planet. An industry that is still GROWING (smartphones) and will keep on growing for at least the next four years. Even if Apple slowly bleeds some market share - as long as it holds its premium slice - it will SAFELY be ludicrously profitable and obscenely rich. Just getting RICHER.

Now while Apple is the most successful business humankind has ever seen - Apple's OPPORTUNITY was wasted. This astonishing company could have been FAR richer STILL. They sacrificed far more growth and profits for short-term nonsense and for stupid side projects like the Apple Watch. That will NOT KILL the company. But it means Apple squandered huge opportunities. If they played the OBVIOUS low-cost smartphone trend smartly, they'd STILL be the most profitable company in history - but have 20% market share today and FAR FAR FAR more SALES and FAR FAR FAR more total profits and a FAR FAR larger total market for their ecosystem. This is a BLUNDER by stupid management.

The fact Apple is the richest company ever, is not by smart management by Tim Cook. The reason Apple is the richest company ever, is that Steve Jobs returned to teach Apple to pursue only profitable luxury niche markets with outrageously-priced premium products (starting with the iPod music player) and then - completely unrelated to Steve Jobs's brilliance, Apple's revival coincided with the global revolution of smartphones (Apple was VERY late to smartphones, idiots in charge, desperately avoiding obvious opportunities). If Jobs had done the smart thing with smartphones, he would have never bothered with the Motorola Rokr nonsense - back when I was still employed at Nokia - this is year 2001 - we already feared the day Apple would launch its own phones. But idiots at Apple squandered another SIX YEARS before they finally bothered give us the iPhone.

Apple's dominant position is the ruthless relentless pursuit of their Apple iSheep style customers who trust Apple to do it right, with the restricted Apple nonsense of non-conforming non-industry standard and crippled products - designed with a philosphy of simplicity and perfection. If that is your cup of tea - nobody has ANY chance of ever toppling Apple at this game. Nobody will ever take that hard-core 10% who buy Macs, and have iTunes accounts and use both iPhones and iPads. Some of those can be identified by their lumpy and increasingly unfashionable iTags on their wrists.

That market is a GOLD MINE. Because Steve Jobs, THE Steve Jobs, taught Apple management how to feed the iSheep, that company will NOT mess up their local flock. There will be beautiful Macbooks and fabulous iPads and gorgeous iPhones with awesome Apple-ish solutions. For the rest of us, the Apple products are increasingly seen as nerdy and quirky and limiting and stupid and hopelessly overpriced like most of the planet looked at Hummer SUV vehicles as ridiculously overpriced 'only an American could love this' tpe of tech.

Apple has its loyal army that is HUGE and roughly speaking its 10% of the planet. The people who love Apple or aspire to it. That is a niche market.

Now - the relevant point to our discussion is not the 'eminent DEATH' of Apple nor any eminent COLLAPSE of Apple, but the SHATTERING OF THE ILLUSION. There has been an illusion in the USA that somehow because Apple is a big player in mobile and seen as the rival to Samsung, that therefore iOS is an equal rival to Android. That illusion is being shattered as we speak. You've seen how many media brands abandoned their silly iPad media plans. Now we see the EXACT same movie - now there are tons of brands who are abandoning their Apple Watch projects. There is NO MASS MARKET under an Apple brand!

So if you want a niche rich-person market in the USA and the West, feel free to include iOS in your smartphone OS strategy alongside Android. In that part of hte world where 5 out of 6 people alive live, iOS is irrelevant.

This ILLUSION of Apple world-reach is the only thing that is now happening. This will be PAINFUL for Apple fans, because increasingly we will hear stories of disappointments - no longer the glory of Apple greatness. That is painful. It does NOT mean that Apple's new products will lose their appeal. If you go Apple, you never come back. The iCult is a one-way street. But it IS only a niche. A huge and massively profitable niche yes, but it is not a mass market (while as a market it is large. I mean 'mass market' as the business terminology it is used, as taught in MBA schools).

This illusion of Apple somehow being as big in smartphones as say Xbox or Playstation were in videogames - still had lots of believers in the USA. Nobody on this blog - you, my readers, were under any such illusions, as we've had this debate a decade ago. We knew - you guys KNEW that Apple's iPhone will not hold more than about 10% market share once the turbulence of the smartphone wars settle. Apple may be lucky and end up a bit above the 10% range say 11% or 12% but none of you reading this blog are even suggesting Apple could somehow reverse its gradual decline in market share to get back to 20% haha.

So YOU GUYS KNEW THIS. But come on! 'death'? Decline? Ruin? No, there is nothing like that coming to Apple. They are THE most profitable business we have ever seen in corporate governance, and are richer than god. They are DOING ALL THINGS RIGHT to HOLD ONTO THEIR FANS. They are not winning new fans (to any meaningful degree, inspite of Tim Cook's propaganda) but they ARE holding their current fan base. And that means, listen to this carefully - Apple will continue to be the most profitable company in human history.

So there. The Apple fan has spoken :-)

(now please resume the squabbles about Apple's pending demise)

Tomi Ahonen :-)

[Winter]

A small remark. A company that stashes a cash hoard is not doing its business right. If a company has too much cash to invest sensibly, it should return it to the stockholders or start a bank.

Instead, Apple uses short term cash positions to avoid paying taxes that only feed stock speculation and builds rediculously expensive buildings.

[Huber]

@Tomi:

You write: "Apple's dominant position is the ruthless relentless pursuit of their Apple iSheep style customers who trust Apple to do it right, with the restricted Apple nonsense of non-conforming non-industry standard and crippled products - designed with a philosphy of simplicity and perfection. If that is your cup of tea - nobody has ANY chance of ever toppling Apple at this game. Nobody will ever take that hard-core 10% who buy Macs, and have iTunes accounts and use both iPhones and iPads."

My point is that recently iSheep have told me that the current Apple offerings lack in simplicity and perfection: Ranging from being unable to connect their iPhone out of the box with their new Macbook (without a dongle) to having problems synchronzing the data of their new iMac with their old Mac Pro.

Of course this is just anecdotal evidence, but these people I have talked to are dissapointed by Apple. I'd assume that they are not the only ones.

Of course this doesn't spell doom for Apple - after all these guys still are buying Apple products. Bit _IF_ this trend continues, I do think that this is dangerous for Apple.

Or am I completely wrong here?

[Gul Dukat]

@Huber

Tomi = Stat guy
Tomi = busy
Tomi = not know rumor

You = right
Apple = slide down
Apple = not strong now
Apple now CEO = no smart guy
Apple = need new CEO