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]

@Huber:

"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."

That's the same I heard from my boss, who is a hardcore Apple fan - he'd never buy a non Apple product. But especially with recent Mac offerings he had been decidedly unimpressed - it's no longer possible to do cheap hard drive updates, the build quality has decreased and in general the feeling of 'quality' is not there anymore.

This only works as long as the customer still feels some advantage, despite these issues. But the problem is - Apple has been deviating from Steve Jobs's route to success ever more since Tim Cook took over. They are increasingly making the hardware more proprietary and also make it increasingly harder to do cheap software ports from other platforms. The OpenGL issue I already mentioned is one of the biggest areas for software developers - after all it had been the foundation for being able to have a unified code base for Android and iOS (and where Windows Phone was a no show which surely was a major contributor for the software shortage.)

This all can only work until a certain point, if the induced friction gets too high the scales may very quickly tip over. Consider this: Many Apple users have a feeling that the quality of Apple products is not what it used to be. And developers have a feeling that Apple wants to monopolize their time with sticking to more and more proprietary APIs. This didn't even work out for Microsoft, despite all the bells'n whistles they added for 'better' desktop apps, the vast majority still uses that crusty old Win32, because it plays nicely with all that third party code out there, which cannot be said for the newfangled stuff. That had been one failure after another - heavily promoted, always touted to be the next better thing as sliced bread but falling victim to developers' apathy one after another.

[SuperCycle]

"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"

Apple has a bottle neck and it is the manufacturing. It is easy to ramp up production from 1 million to 2 million and from 2 to 4 to 8 to 16 to 32 million it becomes much, much harder to ramp up from 256 million to 512 million. They are investing billions to do that but it took 7 years to get to 256 million so this ramp up will take several years. They have to build cities to for that. Apple has one factory were they have over 200 000 people working for them (through Foxconn.) imagine that you have to build a city sized of Tallinn so that you can accomondate all your workers. It costs huge amount of money and wont happen over night. Apple did not go full speed to China before they had production cabapility to serve China Mobile. Apple signed the deal when they were ready and able to keep China Mobile going. Same thing happens with India. They are ramping up now when they have a deal with the Indian goverment. Apple has not waisted anything. These things just take time and lots of negotiations AND money. Apple has done soon nearly 1000 billion revenue from the iPhone and they will do another 1000 billion from it. This time much faster.

Sorry to say but it is unbelievably stupid to say that Apple Watch is somekind of stupid side project. Apple Watch will be bigger than Nokia in revenue. That is absolutely nothing to sneeze at. 4 billion dollar revenue that includes Apple Watch, AppleTV and Beats products this quarter alone!! Nokias revenue for this quarter was 4.9 billion euros. Apple is totally capable of doing lots of different things at the same time. And don´t start talking about Mac Pro because that is not failure Apple itself. It is also Intel´s failure not to deliver what Apple is asking for. You though have to remember that designing a microprocessor is extremaly expensive and costs billions and to do that for one customer only is a risky business even though it is Apple who you are talking with.

[Tester]

@SuperCycle:

Same blah, blah as everyone. And the same mistake commonly made by Executives. Measuring the future viability on current profits is not going to work - ever!

As has been said, Apple is constantly doing some economic mistakes. None of these have any immediate effect on their profitability - but what they DO have is an accumulating effect on their product's standing in the market. If they believe they can stand apart and not care about the rest of the world, one day they WILL commit the fatal mistake. With the current CEO that outcome is a given, so my personal guess is that Tim Cook will be removed from his position before that happens. Just look at Microsoft for a good warning example that all the market power in the world cannot make up for management mistakes forever.

[SuperCycle]

"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."

I need to correct you because you are way out with this thing.

Apple do no stash a cash hoard and Apple is doing things exactly right. The story goes like this (very short version)...
They need a new iPhone and theyt start looking for companies that produces components for the phones. They find one company that does what they need. They talk with them and ask "how many components like this can you produce per week per month per year?". They say 1 million per year. Apple tells them we need 200 million of those in a period of 2 years. How much will it cost to ramp up the production to this level?. Then the component manufacturer comes up with the amount and Apple looks in to that and tells them good we will borrow the money to ramp the production up. You have to be ready then and then. We will buy everything that you can produce and you are not allowed to sell this component to anybody else before you have served our needs for it.

So Apple uses its money to secure the production of its phones. The component manufacturers are happy because their customer is doing things for them and they have secured a huge deal. Apple has "borrowed" billions and billions to its supplier in this way and it is money well spend.

[Winter]

@SuperCycle
"So Apple uses its money to secure the production of its phones."

Apple's cash reserve is now $250B. That is about the worth of 250 million iPhones at inflated retail prices. For that money they could buy the factories that make the phones. Even you must feel that is a little excessive.

I know why they do this, in addition to the sheer power. By hoarding the money off-shore they do not have to pay taxes. So, in the end, Apple is a big tax evasion company.

[Readandlisten]

"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 developmennt"

as I said before.Apple seriously do nor care any nore what the other companies does. They will handle their problems by them self. It is cheaper to develop programs to iphones that it is to android phones. That is a fact plus the TCO is less than the competition

Apple's cash reserve is now $250B. That is about the worth of 250 million iPhones at inflated retail prices. For that money they could buy the

factories that make the phones. Even you must feel that is a little excessive."
off-shore they do not have to pay taxes. So, in the end, Apple is a big tax evasion company"

'
, Apple is constantly doing some economic mistakes"

Could you be more specific? What are those "economic mistakes" when Apple is doing better than any publicaly traded company IN THE WORLD! Apple executive team is the best in the whole world. Tim Cook is the best CEO in the history of the human kind. We wish him after many years of service happy retirment days as a President of the United States of America.

Apple is BTW the biggest tax payer in the USA. Do not blame Tim Cook that your tax system sucks elephant di"s. If you need a good tax system then copy it from the Estonia.

[Readandlisten]

"Apple's cash reserve is now $250B. That is about the worth of 250 million iPhones at inflated retail prices"

You really can suck the air out of the tire. That much inflation would give Apple 80% profit margins instead of healthy 38%. It is clear that you will not be the next CEO of the Apple so stop trashing Tum Cook.

[Winter]

@Readandlisten
"Could you be more specific? What are those "economic mistakes" when Apple is doing better than any publicaly traded company IN THE WORLD! Apple executive team is the best in the whole world."

Hoarding cash is not what enterprises are intended to do. It is inefficient and on this scale it is bad for the economy.

[Readandlisten]

"Hoarding cash is not what enterprises are intended to do. It is inefficient and on this scale it is bad for the economy"

Do not make me to repeat myself. I have already explaint what and how Apple uses this money what they have. You have to read the financial statements and then you realize that Apple Manufacturing System has over 1,5 million people working for them and over 160 Billion dollars invested in to that. Need a other company? Look at the Toyota. They have a city named after them. Their balance sheet looks very similar to Apple. Their profit margins are no where near that Apple has. Apple does it all the time and that means that the customers are happy with the TCO. (Total Cost of Ownership)

[Winter]

@Readandlisten
It is utterly ridiculous to claim that Apple has to keep enough cash in hand to buy up their complete production for a year. That is utterly inefficient use of capital.

I know why they all do it, tax evasion and an unwillingness to innovate (more of the former than the latter).

[Huber]

Another "problem" of having so much cash on hand is that all hedge funds in the world will monitor you closely, like a pack of lions monitors its prey.

Needless to say, these hedge funds also have a huge amount of money at their disposal - for examples, look at the asian crisis of 1997 or the pound crisis of 1992, where the Bank Of England lost against George Soros and his hedge fund.

As soon as these funds see Apple in troubles, they will all attack Apple, thereby trying to get their hands on Apple's cash.

No matter how such an attack will end, Apple won't have $250,000,000,000 anymore afterwards, even if tehy win. Defending yourself against this is expensive as hell.

[Readandlisten]

Apple in the China is SuperCycled and Apple will hit the India with the FULL POWER this and next year.

http://www.techrepublic.com/article/apples-remarkable-china-success-lost-in-earnings-translation/

[Readandlisten]

@Huber

Stop worrying. Apple is the biggest hedge fund in the world and they do their work better than anybody in the world.

[SuperCycleissameasReadandLearn]

"Needless to say, these hedge funds also have a huge amount of money at their disposal - for examples, look at the asian crisis of 1997 or the pound crisis of 1992, where the Bank Of England lost against George Soros and his hedge fund."

That was funny. xD Soros is not.a person to &uck Tim Cook. Soros is the one that gets t&cked. This is like that you try to teach your father how to make babies so don't.

[SuperCycleissameasReadandLearn]

"Apple has done what virtually no other company has done: figure out how to make money in China. Lots of it."

India is next.

[SuperCycleissameasReadandLearn]

"No matter how such an attack will end, Apple won't have $250,000,000,000 anymore afterwards, even if tehy win. Defending yourself against this is expensive as hell"

What type or types of moron are you?
Tim Cook already explained this.

On the.other.news... Canada and Mexico had.a secrete summit to.actually build the wall. The wall is going to be according to 1800 lines and main objective is to keep idiots inside. Wall around Washington was also on the table.

[Gul Dukat]

@SuperCycle

"Apple has a bottle neck and it is the manufacturing. It is easy to ramp up production from 1 million to 2 million and from 2 to 4 to 8 to 16 to 32 million it becomes much, much harder to ramp up from 256 million to 512 million. They are investing billions to do that but it took 7 years to get to 256 million so this ramp up will take several years. They have to build cities to for that. Apple has one factory were they have over 200 000 people working for them (through Foxconn.) imagine that you have to build a city sized of Tallinn so that you can accomondate all your workers."

You talk factory, not computer.
In Computer 2 up to 4, 4 to 8, 8 to 16.... 256 million to 512 million.
In factory, we talk product line.... 1 product line at 1 time.

if product line = 1 million iphone/month,
apple want 10 more million iphone = 10 more product line.

simple.... !!!!
Add 1 product line, add 1 more product line...
No double, and double... we no play black jack...

and then
apple no make factory. if apple want lot product, they buy foxcon time. foxcon make apple, playstation, xbox, etc.
apple pay foxcon more, from $12/iphone, up 10% to $13.2/iphone, foxcon happy, give apple priority. simple.

you talk no simple, is trick talk, fool talk

[Gul Dukat]

@Supercycle

apple sell q4-big q1-big q2-small q3-small old time
apple sell q4-big q1-medium q2-small q3-small now time

mean no full capacity.
if full capacity = all quarter sell big number = over stock.
so, you reason = wrong reason!!!

[Gul Dukat]

@SuperCycle

"Apple do no stash a cash hoard and Apple is doing things exactly right. The story goes like this (very short version)...
They need a new iPhone and theyt start looking for companies that produces components for the phones. They find one company that does what they need. They talk with them and ask "how many components like this can you produce per week per month per year?". They say 1 million per year. Apple tells them we need 200 million of those in a period of 2 years. How much will it cost to ramp up the production to this level?. Then the component manufacturer comes up with the amount and Apple looks in to that and tells them good we will borrow the money to ramp the production up. You have to be ready then and then. We will buy everything that you can produce and you are not allowed to sell this component to anybody else before you have served our needs for it."

Give me know company name you talk... we want know name.

[Gul Dukat]

@Readandlisten

"Could you be more specific? What are those "economic mistakes" when Apple is doing better than any publicaly traded company IN THE WORLD! Apple executive team is the best in the whole world. Tim Cook is the best CEO in the history of the human kind. We wish him after many years of service happy retirment days as a President of the United States of America."

Tim make big money to apple = Steve Jobs make Apple good.
Understand this.
With no steve jobs, Apple dead.
Apple now CEO is make Apple worse