Ondrej Holzman Headlines announcing Apple's first year-over-year revenue decline since 2003 appeared in all the world's media. The situation, which had to inevitably arise sooner or later, brought a number of questions to the discussion field - for example, what will happen to iPhones or whether Apple can grow again.
The Californian giant has become a victim of its own success. Sales of the iPhone 6 and 6 Plus were so massive a year ago that the current "esque" models, which did not bring nearly as many changes, could hardly respond to them. Moreover, a year later, the smartphone market is even more saturated, and Tim Cook cited the strong dollar and difficult economic conditions as other factors for the decline.
"It's a high bar to overcome, but it doesn't change anything about the future. The future is very bright,” he assured Cook. On the other hand, iPhones are still the essential driving force of the company. They account for more than sixty percent of total revenue, so their first ever sales slump after eight years of constant growth is of course a potential problem.
But all this was expected. Apple's financial results, which in the second fiscal quarter of 2016 they accounted for $50,6 billion in revenue and $10,5 billion in profits, were practically the same as the company itself estimated three months ago.
Still, shareholders weren't entirely satisfied by the numbers, with shares falling 8 percent a few hours after the announcement, wiping nearly $50 billion off Apple's market value. This is more than, for example, the total value of Netflix, but Apple is still clearly the most valuable company in the world.
Moreover, whatever the slump in sales and profits may signal, Apple remains an unprecedentedly successful company. The kind of profit that the iPhone maker generated last quarter couldn't be reported by Alphabet, Facebook and Microsoft combined. Even if we add up their profits, they still lose $1 billion to Apple.
Worse year-on-year financial results in the last quarter, however, will not be unique. Apple assumes that the current quarter will not be as successful compared to last year, even though, for example, with iPads, Tim Cook expects at least a slight stabilization after a steep drop.
Another such quarter is bad news for shareholders. Although we can expect Apple's profits to be high again, shareholders are much more interested in growth. Tim Cook and co. they will have to try to find new ways to revive growth as quickly as possible.
Whatever the new iPhone 7 will be, it will be difficult for Apple to achieve the same success with it as with the six-figure iPhones. Interest in them has increased significantly compared to previous generations mainly due to the fact that they brought large displays. How pointed out John Gruber, iPhone 6 and 6 Plus sales were practically an anomaly in the second quarter of last year (see chart), and if not for that, the iPhone 6S and 6S Plus would likely have continued on a constant growth curve.
With iPhones, Apple will have to start focusing a lot more on how to attract customers away from the competition, as the number of people who don't yet own a smartphone, on which sales success has been built, is getting smaller and smaller. However, in the last six months, Apple has seen more migrations from Android than ever before, so it's doing quite well in that regard.
But you can't just stick to iPhones. At Cupertino, they realize that this product won't be around forever, and the sooner they can replace or supplement it with something else, the better. After all, Apple's dependence on the iPhone is now huge. That's why, for example, the Watch was introduced. But they are still at the beginning of the journey.
Similarly uncertain, especially from the point of view of financial success, which is now being discussed above all, other markets, which are being speculated about in connection with Apple, are also looking out. It's practically an open secret that the company is looking into the automotive industry, and it's almost certainly looking into virtual reality, which is starting to take off.
But in the end, Apple could be helped, at least in the near term, by something quite different from traditional hardware. In contrast to all other segments, the last quarter saw a great success in services. They experienced the best quarter in history and it is clear that they are not stopping expanding their portfolio of Apple services.
They are interconnected containers. The more iPhones sold, the more customers will use Apple services. And the better Apple's services are, the more customers will buy the iPhone.
In the coming quarters, press releases with Apple's financial results may indeed not include the adjective "record" as has been the custom in recent years, but that does not necessarily mean that it will never happen again. Apple just has to adapt to the new reality in the market not only with smartphones, and investors will buy Apple shares by one hundred and six. But this process can easily take several years.
It is sad that it is being made such a media sensation. It is clear that no tree grows to the sky and everything has its limits. No one can keep increasing their profit and it has to stop at some point or drop again after extraordinary successes, that's just a natural thing. Only then will a number of the unenviable begin to point to it as an indicator of failure and take great pleasure in it, which I find disgusting.
The whole problem is called Akcio's company. The shareholder wants to buy at price x and sell at price x+y.
I think it's not harmful, it's not above healthy competition. As a user and a fan, it's all about the product, and I'm sure you're not alone.
I hope this will be some form of motivation for Apple.
The decline of iPhones was probably necessary and I think that the situation will improve by the end of this year. On the one hand, the small SE will bring enough, and on the other hand, the first wave of upgrades will occur among fans of "big phones". For example, I have a 6plus myself and I didn't even think about buying a 6s, the benefit of an immediate upgrade was not worth talking about. After one generation, however, it can realistically become a topic for consideration. Regarding the iPad, I would agree with Cook in terms of "stabilization" - the tablet market probably has no room for growth for anyone, but a certain stabilization is probably realistic.
The only thing where I think Apple made a definite mistake (and the responsibility lies with Cook one way or another) is Macs. Apple was the only company that managed to grow a lot in classic computers, and the now mentioned decline is still a dream result in this area. But it seems to me that they did not fully appreciate this success themselves, and instead of raising the priority in this area, various questionable statements appear (for example, engraving into computers as such after the launch of the large iPad). Despite the critics, the new Macbook is good and successful, but it is essentially the only novelty. Otherwise, even "silent component upgrades" such as the Mac Mini are neglected. We will see what news will appear this year, the potential of this area is not negligible.
Yes, the potential is there, but Apple still doesn't use it much, at least in some areas. E.g. anyone waiting for a new large mobile Mac, at the same time decently upgraded, has been waiting in vain for a long time. They canceled the 17″ and the 15″ is not moving much. In addition, the quality and stability of the Mac OS stagnates (at least from the users' point of view), so anyone who has 50-100 thousand ready for a new Macbook with a 15" display (with a 17" display is out of luck), is practically just waiting for some important novelty.
In my opinion, Apple rests on its laurels and suffers mainly from the fact that many simple-minded people take Apple as a symbol of something exceptional. Technology companies make sales mainly from single-minded users, who are not so much concerned with technical solutions as with logos. I consider myself an IT geek. I bought my friend an iPhone and an iPad just because I don't want to worry about it. It is a device for me power users. According to my old Note 3, iPhones are only toys for blondes. Macs are following the same path. Nothing to expand, almost nothing to connect, little to set. Apple was a technological leader. Today, some plastic Asus has better processors, faster memory, more modern ports than Apple. A year is waiting for Skylake. Outdated graphics. 4 year old design. Mac mini not upgraded for years. If it's an upgrade, it's better. Non-expandable memory. Max dual core processor. All this in 2016. It's a tragedy. Desktop keyboard without backlight as under Maria Theresa. Silena price tag. They are desperate.
Please give a few examples of how you came to the conclusion that Apple is "devices for me power users"? How long have you been using a Mac, iPhone…? Thank you Hajek
I base it on what kind of people around me buy Apple products. One is mostly well situated, but less technically proficient and less demanding users. They mainly care about the logo. I have a couple of ajtak friends and they mostly run on Linux. One ma widle and one MacBook. For me, Apple would come to mind only in the form of Hackintosh. I'm thinking about it. And if I were to use an iPhone or iPad, I would have to jailbreak it. Then it's terribly arranged.
Well, I'm from the IT field and I can say that among consultants (and I really mean purely technical consultants, no business or marketing!) Apple has been increasing a lot recently. The share of Linux is indeed higher in this group, but it is certainly not "mostly" in my area.
As for the jailbreak, in my opinion, the interest in it is rather inertia, but the real reasons have decreased a lot. I'm not dealing with pirated software now, that's another topic, but in the past there were indeed things that pushed for a jailbreaker, but for a long time I didn't really feel the need for it at all.
I don't quite understand the first paragraph. Purely technical consultants use Apple products today, but certainly not among IT experts in your area?
I agree with the second paragraph.
Isn't it the advantage that you don't have to worry about basic communication tools? Don't you worry about viruses, patches, drivers, restarts, lots of unnecessary and complex settings, etc.? Believe me, if you buy an Apple and survive a few months, you will find out that the simplicity, debugging, reliability and quality of the entire system is more important than the number of cores, the power of the graphics and the number of megapixels of the camera... Let's talk about the computer and the phone today we want But I agree that there are a LARGE number of users who are satisfied with more than one brand and do not understand the benefits.
Blatant stupidity...agree with Hajko.
I disassembled the PC to pieces, I was always able to put it together for everyone around me, both in terms of HW and SW. Most people using a cheap PC would deserve a MAC. I switched to it myself, and after initially worrying about what would work or not, I'm glad that I don't have to deal with all the crap about why something doesn't work for me anymore, and when I get a PC in my hands from the administrator, I'll be relieved that I don't have it at home.
And if you want to do more on your Mac than just tap on icons, this is of course not a problem. I don't see anything more or less that would indicate that the user is just an IT illiterate. I only see more pleasant handling without cramping.
It's such a note. If a person has an iPhone or an iPad, it's probably great to have a Mac to go with it. Then the potential of those devices will be used. But then I read that iOS devices sell tens of millions and Mac only 4 million and we are falling. How do I connect all those iOS wonders to Widlim? What's the bonus that I have iOS?
I'll just note that the Mac has a much longer replacement cycle, I've had it for about 5 years, whereas the iPhone often changes every year (even the iPad doesn't sell nearly as much as the iPhone, again a longer replacement cycle). Therefore, it is not logical to estimate the percentage of people who connect iOS devices to Mac based on sales per quarter.
I don't think a MAC with OSX is that necessary for an iPhone/iPad. It's an advantage, but basically everything else works. And for example, for corporate use, the IOS package from MS - Outlook and mobile Office - has been used more and more recently, where even Microsoft itself admits that iOS is the optimal platform for it. On the contrary, iCloud today has decent support even on Windows, etc.
Probably the only point where another Apple device is necessary is the Apple Watch, they simply cannot go without an iPhone, but otherwise the necessity of "Apple only" is far less than is sometimes said.
That's what I thought. The opposite is true. All Apple devices, iPods, iPads... have always been planned and manufactured primarily for Apple customers. Logical. Therefore, Mac, as a base, raises the comfort of these devices much higher. The iPhone "got out of control" and took off into the world at such a pace that Apple had to react and create a system that allows the phone to at least function a little independently. If someone is really interested in learning how it was, I recommend the book Cesta k mobilum. Success!
The book "Cesta k mobilům" is really interesting, however, I would quite argue with it in several places, I remember a lot of the mentioned things personally and I don't quite agree with P. Zandle.
But to the topic - the very strict connection to Apple was for the first iPods, which had an unusual Firewire for PCs, and in addition, iTunes did not exist on PC at that time. In fact, however, this connection was already withdrawn sometime with the second generation of iPod, when iTunes support on Windows began, the reason being the understanding of the potential of selling media (at that time, music), which moved Apple a little further. The iPhone/iPad was also usable outside of OS X from the beginning, in later generations it is even possible to do without the iTunes software on the computer.
That's how I remember it, I got nervous too :). If you feel like it, here is a short feuilleton :). I think everyone will understand..
http://janhajekhajek.blog.idnes.cz/blog.aspx?c=428869
I agree that it can be done without a computer, but it is similar (with an exaggeration) to a TV without a remote control. I stand by the fact that the Mac is the foundation.
Ondřej I Holzman to be a grammarian.
Would it be time for an open position?
if I connect the year 2014 with 2016 in the graph, it is actually standard growth, only last year was really an exception