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

[Per "wertigon" Ekström]

@Wayne:

You realise it sounds like you're making a lot of excuses right now, yes?

Apple is no longer beloved in all circles everywhere:

https://www.theverge.com/2016/11/7/13548052/the-macbook-pro-lie

But, yes, this situation can still be rectified, it's a leaking roof, nothing more. What worries me is that Apple shows no inclination of fixing that leak...

[Tester]

I never bothered reading up on the new MacBook Pro but I heard several Apple fans cursing about it - and seeing its specs it looks like a product right out of Tim Cook's cloud-cuckoo-land, where practical considerations do not matter and corporate agenda is relentlessly pushed while completely ignoring the needs of the prospective customers.

That article and what it links to is precisely the stuff I've been talking about. It's not too late to fix the mistakes but if Apple continues on this route they'll end up in serious trouble because they'd run the risk of losing their most important customers - the developers!

[Gul Dukat]

Denial, Denial, Denial...

Blackberry = Denial = Cliff
Apple = Denial = Cliff

Tim Cook = bad CEO
Wayne Brady = good iSheep

[Abdul Muis]

Google new secret weapon for the next billion DAU (daily active user)... a less than US$100 phone that really work well.

http://www.androidauthority.com/android-go-usa-market-773723/

"Looking at all of this, it would be easy to assume that Go is solely designed for emerging markets, but this isn’t entirely the case. Rather than focus on a particular market, Android Go is being billed as a solution to provide a fluid experience for devices that cost less than $100 and while these devices are exceptionally popular in developing countries, Google also revealed the second largest market for sub-$100 entry level devices is in fact, the USA."

"How big is the market? According to Google, a third of all global Android shipments in 2017 will be in the sub-$100 market. Considering that there are hundreds of millions of activations of Android devices each year – with 2 billion active devices in the wild right now – there’s a lot of scope for Android Go. We’re expecting to hear more and have a preview of Android Go towards the end of the year, and the first devices with Go configuration will launch in 2018."

[Tester]

@Wayne Brady:

"What they need lack is what all Android lacks...regular access to security and OS updates."

I'm just waiting for some customer who got screwed by an unupdated phone suing the carrier and manufacturer for negligence. Then things will get interesting.

[Per "wertigon" Ekström]

@Wayne:

You need a Macbook to develop iOS apps. If developers do no longer buy Macbooks because well, they are sub-par... Devs will be far more unwilling to invest in the iOS ecosystem.

Like I said before, this can easily be fixed. Release a MacBook Developer edition, bam, problem solved. It would cost Apple very little and most Apple devs would not mind paying a premium for that.

So, it is a leaking roof. But it's easily fixable at this stage. Once a few thousand developers have already jumped ship, however...?

[E.Casais]

"They [...] are decent for the most part for how most would use them. What they lack is [...] regular access to security and OS updates."

Basically, all sub-200 $/€ Android phones replace the entry-level feature phones of 10 years ago, with their typical usage patterns (lots of voice calls, messaging and music, some social networks, PIM and games, a bit of browsing and throw-away photography).

For those, a full-fledged Android with its entire library and the capability for unrestricted app installation are overkill. A few hard-coded apps are enough, installable apps can be restricted to the limit of usability, and OS updates (frequent or even at all) unnecessary -- just like with feature phones of yesteryear.

[Tester]

@Wayne Brady:

"I expect the used iPhone market to remain vibrant."

With the added caveat 'provided that Apple doesn't screw up.'
And here lies the problem: What is being considered 'screwing up'? For some users Apple has already crossed the line, for others they are dangerously close but for many it's still ok.

The point being, a company like Apple better fully steer clear of that moniker at all!

That 'unprofessional' MacBook Pro is just a perfect example of a product that completely ignores the needs of the intended customer base. What developers want is a computer with no compromises, they want replaceable parts, they want a multitude of different connections (because they have lots of devices with a multitude of different connectors) and they want uncompromised graphics power to even run heavy duty applications. So why are the connections crippled to something most hardware needs an adapter for, why is everything soldered in and why does it come with some middle-of-the-road graphics solution?
There's also the danger that this turns away the game developers, because by now Macs have the reputation of being notoriously underpowered and even worse, you have to code a different backend to harness the power that is available.

To summarize: Being a software developer I am the prospective customer for such a thing but it's just not worth the price they ask for it. It just doesn't hold up in any way to my Windows PC which cost half of that price but is running circles around it.

Who is to say that with this attitude they won't do similarly questionable things to some future iPhone generation as well? And this business is moving so fast, it only takes one botched release to make their market share tank. We have seen before how quickly some bad hardware can hurt a manufacturer.

[ReadandLearn]

"my Windows PC which cost half of that price but is running circles around it

Windows PC never runs circles around a Mac. Never has and never will. Nobody wants to have a headache that the Windows is.

[Winter]

ReadandIgnore
A "Windows PC" with Linux or BSD runs circles around a Macbook

[Tester]

@Readitandnotlearn:

My 5 year old Windows PC got hardware in it that puts Apple to shame. Even better, if some part gets old I'll just replace it. If all goes well and nothing serious breaks it will still run circles around Macs in 5 years, for a very modest upgrade price.

@Winter:
Why should I put an OS on that computer that doesn't run the software I need for work? :P

@Wayne Brady:
Apple doesn't need to do everything wrong - just enough to anger its customers. Just like Microsoft didn't do everything wrong with Windows 8 - but all the improvements under the hood couldn't make up for the botched UI.

With Macs they already managed to thoroughly piss off a significant portion with these shitty products.

[Tomi T Ahonen]

Hi Everybody

(ya-ya, I will do the quarterly data, soon-ish..)

Wanted to post this as just spotted it. Many (including me) have hoped for info on the forked Android and unregistered Android user count. We have a good indication to roughly estimate that size of the market.

Google announced just at the end of last week, that it has hit 2.0B users on Android (includes tablets). This gives us a good comparison point for the unregistered and forked OS Android phone users (ie mostly Chinese brands). As you know, I counted 2.6B Android smartphones in total in use globally at end of the year. Out of Google's 2.0B active Android users we have to eliminate tablet users - say 200M roughly - then it leaves 1.8B as active Android official, registered smartphone users (vs my 2.6B number for apples-to-apples comparison). Thus about 31% of all Android smartphones (800M out of 2.6B) would be the forked. Sounds about right. Very large part of that will be in China.

So for an 'ecosystem' argument point-of-view, out of the nominal installed base of 2.6B Android phones, the real 'reachable' market is only 1.8B Android phones. That compares with the real number I have for iOS iPhone users, at 600M so Android currently for the practical real market is about 3x larger than iPhone smartphone market. Remember that reality for both is however larger, as an ecosystem, when we add tablets etc. Then we get to that roughly 2.0B total Android vs 1.0B total iOS/Apple users ie 2x larger, but most who own either of those alternative devices, will ALSO have that same OS smartphone - so for uniques, the 3x number, 1.8B to 600M is the relevant comparison.

I am sure many of the readers would love these numbers. When I do the Q1 market share numbers, I'll also add this insight there.

Tomi Ahonen :-)

[Huber]

@Wayne: "You say things that the sales numbers dispute. Mac sales are higher than ever."

Don't you read what other people post here?

Yes, people still buy Apple products, but more and more reluctantly. I already have posted the example of a friend who replaced his old Mac Pro. But not with the current Mac Pro (which is a laughable piece of crap, even in his eyes), but with an iMac.

This put the first dent in his Apple-love.

Then he had troubles synchronizing the data of his old Mac pro to his new iMac. He was very dissapointed, he said things like this never happened under Steve Jobs.

This put the second dent in his Apple-love.

Also he says that the build quality of his iMac seems lower than what he is used from Apple.

This put the third dent in his Apple-love.

But _OF COURSE_ Apple _DID_ sell him his new iMac.

So according to you, everything is fine. No need to worry for Apple. They got a new sale after all, so why bother?

If you don't see that this is very short-sighted, you have a problem.

Apple-fans talk to each other, now they are talking about how dissapointed they are. 5 years ago they talked about how satisfied they are with their purchases.

Let this guy be dissapointed a second and a third time, and he won't continue to buy Apple.

[E.Casais]

"Yes, people still buy Apple products, but more and more reluctantly."

With the figures generally available, there is no way to distinguish between the slow-down due to customer discontent and what is caused by market saturation.

In the case of Apple, I suspect the former effect is still quite low, while the latter one is being felt in quite a hard way (witness increasing market saturation in mobile phones overall and prolonged market decline in tablets).

[Tester]

The nasty problem with consumer dissatisfaction is that it is slow burning rot that tends to finally hit the fan at the most imopportune time. Sure, you can sell an inferior product to a customer which needs it, but that customer will only grudgingly buy the thing.

You may even be successful and repeat such business a second time, while that guy still hopes that things will improve. But if it happens the third time, many people will jump ship, and clueless executives ask themselves 'what went wrong? This worked so well before.'

[Huber]

@Wayne: "Again, you are using an anecdote of one and ignoring the many repeated studies of customer satisfaction which is sky high"

And yet there is a growing number of articles/blogs on the net where formerly Apple-fans criticize Apple for their new products.

This is something relatively new and cannot be hand-waved away.

"In reality Apple products are better made and better supported than any other option."

The new Macbook Pro is soldered and glued together. My Dell Latitude is much more serviceable. This was not the case in previous generations.

The iPhone 7 can't be connected out of the box with the Macbook Pro. You need (another) dongle.

The Mac Pro looks like a medieval abacus next to its competition.

It's not 2012 anymore, Apple does make mistakes - in the eye of iHeep!

[Abdul Muis]

http://www.valuewalk.com/2017/05/batteries-beats-headphones-apple/

"The woman, who has asked to remain anonymous, said that she was disappointed with Apple’s decision because it wasn’t specified on the headphones or the packaging what brands of batteries should be used. The woman had several burns on her hands and face, but she was seeking reimbursement to replace only her headphones and items of clothing that she was wearing, notes Engadget.

In a statement to the Australian Transport Safety Bureau (ATSB), the woman described what happened: “As I went to turn around I felt burning on my face. I just grabbed my face which caused the headphones to go around my neck. I continued to feel burning so I grabbed them off and threw them on the floor. They were sparking and had small amounts of fire.”

At the time, the ATSB said that both the battery and its cover melted and stuck to the floor of the aircraft. Further, regulators stated that the passengers had to endure the smell of melted plastic, burned hair and burned electronics for the rest of the flight. The woman said people were choking and coughing the entire way home.

It is not known if the woman will continue her action against the U.S. firm, but the tech giant is adamant that the Beats device was not the cause of this unfortunate explosion. What we cannot ignore here is the way Apple is pushing back instead of regretting the explosion of the headphones. With exploding batteries being a common phenomenon nowadays, it is clear that the Cupertino-based company does not even want to be linked to such an incident."

[b]

Nokia and Apple sign patent license and business cooperation agreement, settle all litigation

https://www.apple.com/newsroom/2017/05/nokia-and-apple-sign-agreement-settle-all-litigation/

[Huber]

@Wayne: "Apple left "self serviceable" products years ago. Nothing new there. And would you rather take your laptop to an Apple store, or mail it back to Dell? Talk to Apple's support or Dell's (not the corporate support where a pretty penny has been paid, but regular retail support)."

Of course I'm talking about Dell corporate support - we talk about Mac Books pro and Dell Latidudes here after all, not about some cheap consumer notebooks.

"nobody's phones are better made or supported than iPhones. No are anybody's laptops/pc's. And when they are similarly made...they are JUST as expensive or more."

Bullshit, sorry. My Dell Latitude is much easier servicable than the Mac Book Pro. E.g. I don't have RAM which is soldered in, instead I can replace the DIMMs.

This already saved me lots of time a few years ago when I got faulty RAM in my notebook. Took a few minutes to replace it.

I know you are an Apple-fan who has the opinion that Apple can do no wrong, but even you should recognize that a professional notebook should be servicable. It is OK for a cheap consumer notebook to be glued and soldered together, after all you get what you pay for. But it is not tolerable for a >€1000 pro device intended for business work.

"Yes, the blogosphere has been filled with the "pro community" being upset with the new Macs. But the sales difference from the blogs. Sales are up."

Yes, wannabes who want the latest shiney iToy and have the money still like to buy it. But the "real" professionals are alienated. You know, these are the guys who made sure that Apple survived in the 90ies/ early zeroes, before iPod, iTunes and iPhones arrived.

Alienating these professionals is a bad idea, because without them Apple merely produces toys. But seemingly Tim Cook is rather worried about the BOM cost than about the long-term prospects of the company.

"This state of affairs is not new. Antenna Gate, Map Gate anyone?"

Except that these were bugs. The Mac Book Pro is _DESIGNED_ to alienate professionals. This is something different.

"Just look at LTE and large screen phones."

One thing is to miss a feature. Another thing is a "professional" notebook which is soldered and glued together. Apples and oranges, you know.

"Nobody likes dongles...but they are transitional."

Yes, there will be a transition to USB Type C hell, where all cables look the same/ have the same connectors, but still are dedicated cables for dedicated tasks. Now _THIS_ will be fun!

[Abdul Muis]

Talking about MacBook,

http://gizmodo.com/why-i-bought-a-chromebook-instead-of-a-mac-1778403065

"Chromebooks have surpassed sales of Mac laptops in the United States for the first time ever. And that doesn’t surprise me. Because roughly a year ago I made the same switch. Formerly a lifelong Mac user, I bought my first PC ever in the form of a Chromebook. And I’m never looking back.

Driven by the kind of passion that can only be found in the recently converted, I have aided and abetted friends in renouncing the sins of gluttony and pride uniquely found in the House of Apples. I have helped them find salvation with the Book of Chrome. Glory be the Kingdom of Chrome, for your light shines down upon us at a quarter of the price.

..................
"