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

[Huber]

@ReadandLearn:

Cook may be a good Supply Chain manager, but this does _NOT_ mean that he also is a good CEO. He has to prove himself in the new role before we can make that statement.

As others already have pointed out, it is fairly easy to generate profits when someone takes over a company which already is on a good track. It is _MUCH_ more difficult to become the head of an almost-bancrupt company and turn it around, like Steve Jobs did in the 90ies.

Under Tim Cook:

- The Mac Pro was never updated. It still looks like a small garbage bin and has 5 year old technology inside. Even the Apple-fans I know wouldn't touch this outdated crap with a 10' pole (not that it was a good PC when it was released, but it has become worse and worse over time)

- The Mac Book Pro was released, which cannot be upgraded and has everything soldered in. Also, it sends users directly to the USB Type C hell. Since USB Type C is not very common yet, it also sends users to dongle-hell

- The iPhone 7 was the second small update of the iPhone 6. The most "curageous" feature is the missing headphone jack. I can't remember a more boring iPhone release

- Build quality is not as good as it used to be

- "It just works" doesn't apply anymore

So no, Tim Cook is not a good CEO. He reminds me of Steve Ballmer: After Bill Gates left, things at Microsoft also went well for the first few years. Then he made all these insane decisions, like making sure that each and every Windows Mobile/ Phone version invented the wheel again - or was even incompatible with its predecessor. Or releasing W8, the worst Windows ever.

As soon as Tim Cook cannot continue the path Steve Jobs has laid down anymore and has to make "big" decisions for the future, we'll see how good he is. But I don't expect much of him.

[Abdul Muis]

@R&L

Tim Cook is really a good suply manger, no doubt about it. It cares every detail of the component price of the iPhone to maximize the profit. Such as using intel Wireless Chip instead of Qualcomm in some of the latest iPhone to cut cost, using LCD instead of Amoled to cut cost (Amoled cost more, about $10/device), using cheaper gyroscope chip in plastic iPhone (that cause a bit precision problem), using less expensive material in their HQ (change the way from what Jobs want it) to cut cost, etc. In the end, Apple product became less to build, more profit, but the premiumness of the device gone with each cut corner. Apple become just another smartphone.

[Abdul Muis]

The danger of iPhone of being iconic device, a fashion statement, under Tim Cook is when iPhone have nothing better (premium), and have to bluff to their user, while competitor keep getting better at faster pace.

Tim Cook care more about cutting the price of the device to satisfied shareholder rather than improving iPhone quality. He's become too confident about Apple brand, and believe he's as good as Steve Jobs (he's not).

One of the flaw that Apple have is the screen. Samsung cutting edge thin & bendable AMOLED display require less room for the phone bezel. Something that can't be archieve by LCD (yet). While all android phone have lesser and lesser bezel, iPhone looks becoming like a "my grandma phone" in this moment. ---- If Apple really hoard the money to better it's product, a couple of years back it's the time for Apple to invest in LG or Samsung or other manufacture to buy the AMOLED screen. ----

Sharp make Sharp Aquos Crystal, a smartphone that have no bezzel on the top & side. Followed by Xiaomi Mi Mix with even less bezel at the bottom. And NOW, Samsung with their Galaxy S8/S8+ commanding the premium line with TRUE PREMIUM feel & look (and also specs). If Apple next iPhone still have big ugly bezel, this could be a turning point. Samsung won't waste any of this momentum to mock Apple. Samsung would not hesitate to make sure everyone feel that iPhone era is already over.

The key point I want to point out here is, Tim Cook have stray from the path that Steve Jobs laid. While it's not a big deal as of now, it seems it will be a bigger problem in near future because current iPhone really have nothing special compared to the competitor. And from where I watch this tragedy, it seems Tim Cook can't handle it.

[paul]

Qualcomm Ramps Up Apple Fight, Sues iPhone Makers

http://uk.pcmag.com/smartphones/89364/news/qualcomm-ramps-up-apple-fight-sues-iphone-makers

[Winter]

@Paul
"Qualcomm Ramps Up Apple Fight,"

I am not well read in business history, but are there cases where suing your customers has been a fruitful long term strategy?

[Abdul Muis]

@Wayne Brady

"Johnny Ive is bearing the torch for lead innovator"

This is a joke right? Johnny latest innovation is calling pink a rose gold.

[TizenExperts]

@Tomi
I think I missed your take on the Samsung Z4 Tizen phone?
Hit?
Dud?

[b]

@Wayne

> As for the iPhone 7, it's a fantastic phone. I love the new camera with zoom lens and portrait mode.

Wayne, you love everything what Apple has done and you will love every new iPhone Apple will release! This is nothing new!

> AirPods are fantastic. I highly recommend them even if you are using Android.

They are fantastic but they ain't fun at all (when one is loosing one or both of them and has to fork some big money to replace it). I am curious how fantastic you wound find the airpods if your daughter would loose an airPod every six months or so.

[E.Casais]

@Wayne Brady

"a much more serious mistake...and that happened under jobs....as did many others."

The most serious troubles occurred with the iPhone 6/6+, which were plagued by design and manufacturing issues.

The so-called "touch screen disease" was the most serious one (faulty design), but there were also troubles with the camera (faulty components and faulty assembly design), and with flash memory (poor component selection).

Interestingly, all those problems mark the transition to the large display line-up. So if Apple plans another major revamping of its mobile phones, then avoid the first models of that new series :-(

I am thoroughly bored by the unceasing pronouncements of Apple inevitable, proximate doom, and the opposing ecstatic panegyrics to Apple.

Apple is in no foreseeable risk of losing its position high in the perch of consumer IT, nor its profitability, nor the marketing, technical and financial foundation for its prominent role.

It is also true that the successive waves of product innovation that, every time, brought Apple to a higher level have waned.

First there was the revamping of the PC line; then the iPod; then the iPhone. Each time, Apple increased its _total_ sales and profits.

The iPad started meteorically, but never closed in on the iPhone figures, and has been inexorably following the down trajectory of a past-its-maturity product category for years now (with the entire tablet market). Apple watches and AirPods are selling (watches lower than the initial series, as far as I know) -- but one order of magnitude less than iPhones, and are just accessories to iPhones, not a new main product. Jobs declared years ago he had "cracked" the TV market -- but Apple TV is still a "hobby" for the firm. Apple Car is vaporware.

Just like "Google founders have yet to come up with a second act for the search ad business", so has "Apple management yet to come up with a second act for the iPhone business".

As far as the cash pile goes... Nokia had a big cash pile. In older times, DEC had a cash pile "that was the envy of the whole computer industry". Where are they now? Once things go haywire, cash will not save a stumbling giant that failed to rejuvenate its product line-up and operations because of egregious management failures.

But no, Apple is in no immediate danger. Not for many years.

I will repeat my prediction (based on empirical observations by others): when Apple will have completed its new campus and finalized the reallocation of its personnel there, this will mark the highest point of the company. After that, it will be a (probably quite long) plateau before the decline.

[Barney]

Here's an interesting take I got from some corporate people recently:

No, they do not love Apple. Yes, they wish that something more customer friendly came along.
The only problem is: They absolute HATE that software development for Android is a total mess, so as long as they can get their in-house software installed on iPhones through the development tools there's no chance of Android displaying iOS in that sector.

The vibe I got is that Java flat out sucks and that the Android tools are bottom-of-the-barrel crap.

Seems that Google shot themselves squarely in the foot by basing Android on Java and making native development a second-class citizen. That cannot work if for in-house development a platform needs to have everything done separately from all the rest of the computing ecosystem, consisting of Linux, Windows, macOS and yes - iOS.

So, based on that, Apple seems to be on the safe side. But if Google finally woke up and would allow native GUI development they might get under pressure - not that I'd ever seen that happen with people who didn't see this problem from the start.

[Gul Dukat]

Wanye = love Apple = Google always bad

[Abdul Muis]

@Barney

What the hell are you talking about?

"But if Google finally woke up and would allow native GUI development they might get under pressure - not that I'd ever seen that happen with people who didn't see this problem from the start."

Have you ever used any Android device? Do you know Xiaomi, Vivo, Oppo, Huawei have their own UI/GUI that doesn't looks and behave like regular android.

"Seems that Google shot themselves squarely in the foot by basing Android on Java and making native development a second-class citizen. That cannot work if for in-house development a platform needs to have everything done separately from all the rest of the computing ecosystem, consisting of Linux, Windows, macOS and yes - iOS."

Who do you want to fool in here?

[ReadandLearn]

On the other news... Apple has started the invasion in the Indian front...

http://www.marketwatch.com/story/apple-assembles-first-iphones-in-india-2017-05-17-6485236

Samsung is the biggest in the India and the one to loose the most and Apple will hit them hard. Apple will now start to gonquer India the same way they have done in the China. It took nearly 10 years to accomplish this and only now the manufacturing starts to be on the level to do this. Also there was problems with the laws in India and now they also have a deal with the Goverment of India. Give two years and Samsung is the second biggest mobile phone manufacturer.

On the other news... Apple is set to become a major player in the health industry. Health industry is a trillion dollar business and with the brilliant base layed with the HealthKit, ResearchKit, Apple iPhone and Apple Watch Apple has an excellent start to change that industry.

On the other news... Apple is set to become a major player in the automotive industry. Automotive industry is a trillion dollar business and with the brilliant base layed with the Apple Maps and its 3D AR and VR technologies.(Apple bought Saab 3D rapid mapping tecnologies several years ago and that went totally unnoticed by the press (https://www.youtube.com/watch?v=3apAXzf3JTg) this will get a street level view in few years). With these technologies Apple has an excellent start to change that industry too. Also with the excellent financial health Apple can indroduce huge fleets of cars that can be used in pay as you go model.

Apple will not only be the first "trillion dollar company", but it will also be the first "two trillion dollar company". This will not happen in one year. It will take the same amount of time that what iPhone needed to become the biggest player in the business shiffoning 83% off of the profits of the whole industry. All the thanks goes to the leadership of the Tim Cook and his fantastic leutenants and the whole Apple crew.

Now you can continue with your Apple is doomed rant....

[Abdul Muis]

@ReadandLearn

I think Tim Cook will find that India were very different compared to China, and this failure in India will haunt him in a big way.

"shiffoning 83% off of the profits of the whole industry."

I believe Tomi already debunk the profits myth, and we can get banned or deleted to bring such a BS here.

[ReadandLearn]

On the other news...

http://www.asymco.com/2017/03/16/gravity/

You should read Horace more often too.

[Barney]

@Abdul Muis:

I do not think you have understood one word I was saying.

What I was talking about is corporate in-house software development. This has nothing to do with different GUI implementations. If those were incompatible on the software level Android would be in real trouble. Development for corporate in-house libraries is mostly done in C and C++ because it needs to run on a variety of different systems.

But Android's GUI related software does not run on C or C++, it runs on Java!
And interfacing with native code on Java is, to put it mildly, a mess.
Those same people also told me that all their Apple development eschews Swift for the same reason - they prefer Objective C because it interfaces more seamlessly with the rest of their code. It's not as bad with Swift as Java on Android but it's a roadblock nonetheless.

@ReadandLearn:

Sorry, no. Apple's biggest problem is clearly that they do not grow by branching out into more market segments but by trying to peddle their main product to more customers. That's not a business model that ensures unendangered growth. Yes, they surely may get some inroads into the Indian market but large as that may be, it's still a finite number of customers that may get lured in by low prices but will jump ship once they are asked to pay for real. All very optimistic and speculative but if that's Apple's entire gamble on the future I find it highly disappointing. What Apple needs is not new markets but new products!

[Winter]

@Wayne Brady
"Apple makes more money selling OTHER things to iPhone customers....more than all the money made by Android phone manufacturers."

You are here worshiping a parasite because it sucks up people's money without peer. Why should I adore a company because it is without equal in sucking up money?

What is in it for me?

[E.Casais]

@Winter

Please, no hyperboles.

What Apple is doing is what many, many other firms have been doing for over a century in every possible economic sector where this was possible. Vehicles, for instance.

Just in the case of mobile phones, do you remember the massive accessory business of Nokia in its heydays?

[Winter]

@e casais
"Please, no hyperboles."

I just translated the words of Wayne. This is what he wrote, just in less euphemistic words. He writes that he adores Apple because they make the most money of them all. Money they hoard.

[paul]

Tim Cook is testing a glucose tracker for the Apple Watch

https://www.theverge.com/2017/5/19/15662316/apple-watch-glucose-tracker-tim-cook

FDA will have so much fun messing with Apple on this. For more info just see what how FDA had fun playing with 23andme!