It's possible that this turns out to be a real sign, and I think other commenters have some good reasons why it could be. That said, I have been an AAPL stock owner and watcher for a few years and have noticed a pattern. Every September, Apple introduces new iPhones. Later in the fall, the articles come out citing weak demand.
Note that there were articles in those years also suggesting high demand. My point being that articles suggesting soft demand happen every year. Except 2014 when the iPhone 6 came out. Everyone was in total agreement then that demand was insane (and that quarter proved to be very hot indeed for Apple).
My point is that we won't truly know what demand looked like for the new iPhones until late January when Apple announces earnings.
Apple announces it will no longer report unit sales. This is a clear shift in strategy.
I thought that at first, too. Then I read that Apple was an outlier in reporting these figures. I'm OK with Apple not reporting these kinds of numbers if it allows the company to focus on quality of product instead of satiating the salivating stockholders (of which I am one).
Orders have been cut not once, but twice.
We don't actually know this as a fact. It is pure conjecture.
It is what a bunch of so-called supply chain "analysts" say, but they say it all the time, and are almost always wrong.
I wish I could be wrong as often as these Wall Street types and still keep my job.
The only people who whiff more often than Wall Street supply chain analysts are five-year-old softball players.
Apple went on record as making their next environmental push for longer lived devices, now that they hit the 100% renewable energy goal. Given that goal and the performance boost that iOS 12 brought for older devices, lower unit sales are inevitable.
On the plus side, we might get a break from the annual IS APPLE DELIBERATELY MAKING IOS SLOW SO YOU'LL BUY A NEW PHONE??? stories, so it's a trade-off.
Their plan seems to be making it up on services and pushing app subscriptions over 1-time purchases.
> * Apple announces it will no longer report unit sales. This is a clear shift in strategy.
Yeah, this is interesting. I wonder if higher prices (to increase device ASP) for better devices (breaking the two year upgrade cycle) mean that we have now seen peak iPhone growth. For the first time in years, I have recommended old/used iPhones to multiple people over new phones.
On the other hand, Apple has increasingly emphasized services and complimentary devices in recent years. AirPods, Apple Watch, and Apple Music (to name a few) lock folks into the ecosystem and replace non-Apple alternatives.
> Apple announces it will no longer report unit sales. This is a clear shift in strategy.
It's literally the shift every analyst has been clamoring for - revenue from something other than the iPhone. So while that is slowly happening, all anyone seems to look at is the top line iPhone unit number. A number that has become less and less meaningful over time because of the growing range of iPhone models.
Apple's guidance is always conservative, and their guidance next quarter is 89-93B in revenue. If you're keeping score at home, that would be another record quarter.
Yes, totally true. Apple did face a relative drop in the iPhone 6s year (2015) because iPhone 6 demand was so insane. It's possible that this year's results will be soft.
I see this as a strategy from Apple. Unfortunately for their supplier's Apple's strategy to destroy Android seems to be somewhat counterintuitive, it involves selling fewer iPhones. It involves doubling down on premium and having these older phones last far longer. By definition that will mean a bigger used market which Apple seems to be embracing especially with the recent iOS update to actually, for probably the first time, make older phones faster for a change rather than slow them down. I think they have realized that their eco-system is far more valuable and having android owners switch to older iphones which seem to be holding up almost as well as new android devices not only does not cheapen their brand but brings in droves to the eco-system which is the thing with the real value at the end of the day.
May sound far-fetched but every step they have taken lately points to this strategy, dont be surprised when they post more record profits.
Why don't they just make a cheaper phone that can compete with cheaper android phones, which make up the majority of phones in the (larger, fastest growing) 3rd world market? And only sell them in those markets so they don't dilute their profits in premium markets? How would they capture any revenue from a "used market?" Force people to sell their used phones through Apple, kind of like what they're doing to customer options to have their devices repaired?
I would be really surprised that Apple has any intent to destroy Android as they would quickly fall into antitrust regulations. Those would hit Apple really hard.
They are much better off Google having most of the market share and having to deal with those issues
If Apple cared about destroying Android, they would simply release an affordable phone.
They have one of the most optimized supply chains in the industry, they have a massive cash war chest to use to subsidize R&D. Apple clearly chooses high margins and profit over "destroying Android".
That said, I have been an AAPL stock owner and watcher for a few years and have noticed a pattern.
Yup, it's what I told my wife when she asked, "something, something, decreased demand?" and I told her, "welcome to being an AAPL shareholder." We've owned AAPL for, I dunno, fifteen years and in at least the last ten the pattern continually repeats.
That said, there do seem to be convincing arguments this time. Then I go look at the 14.8 P/E, and go back to reading Hacker News.
I haven't been following Apples sales for as long or in much detail, but the last two years those predictions have basically come true, right? The thing saving AAPL is increased unit prices, which seems unlikely to be a good long term strategy.
I guess it depends on the meaning of "saving"? iPhone unit sales have been essentially flat but revenue has been rising because of unit prices and increases in services revenue. Six Colors has a great set of charts to show the trends: https://sixcolors.com/post/2018/11/reminder-apple-financial-...
I'm pretty sure "just keep raising prices" is not Apple's long term strategy. They'll keep releasing a mix of products, and push the high end with more refined features.
AAPL right now is at $172.82, giving it a PE ratio of 14.57. Apple is currently valued way below the S&P 500's PE ratio (21.58), so it's like people expect Apple's forward earnings to tank despite having had 20% revenue growth last quarter and 31% profit growth. It's not clear to me that Apple's future prospects are that bleak.
I’m disappointed by the discontinuation of the iPhone SE, and I’m not the only one.
Frankly, all of Apple’s recently-introduces hardware options have a bad combination of being too expensive and simply not appealing enough, the lack of upgradeability on MacBook Pros being a major example.
I was really looking forward to an new SE phone, that was my upgrade plan (currently on 6). Now my upgrade plan is to transition to Andriod, or I am seriously considering going back to a "dumb phone". The cost of phones is out of control (including data plan prices), honestly not sure it is really worth it for me anymore.
The only features I want in a "smart" phone, are podcasts, camera, music, GPS/directions. I don't really even need a web browser, and I don't need any social media at all. And I certainly don't need any gaming capabilities (I still don't "get" mobile gaming, if I want to play a game I will do it on my desktop, with a mouse and keyboard, and large screen).
I might go back to carrying 2 devices, a MP3 (podcast/music player) and a dumb phone. Should cut my phone bill down significantly.
I wouldn't say that, there's just a wide range. You can spend four digits on a brand-new flagship model, or you can get a decent phone for under $150. And if you have WiFi where you spend the day, a data plan is mostly redundant.
I'm largely in the same boat. Have you considered a pay-as-you-go plan with an MVNO? I use H20 wireless [0], with an iPhone SE, and it can be pretty cheap.
Talking about the iPhones (I'm not much of a apple guy but I use an iPhone 7+) I totally agree about the new phones.
However I heard the iPhone 7 now sells for 450$ new. Given the 8s weren't a huge performance improvement, I wish tech reviewers would re-evaluate it at its current price.
I wholeheartedly recommend the iPhone 7 (or 7+), especially when you consider it's 450$ vs 1200$. As a bonus the screens are cheaper the amoled (I work in phone repair) and IMO 95% of non-hacker-news users don't benefit from the more expensive screens (either can't tell a difference or don't really care)
I just paid off my iPhone 7 through the upgrade program. And I didn’t upgrade at the end. I still have the 7. It’s a great phone and works perfectly fine. Seriously, not a single flaw.
I want the iPhone X because I want the iPhone X. There is nothing groundbreaking in the X that changes my daily life. Maybe I’m growing older and more financially conscience but it makes no sense for me to go to iPhone X.
As someone who switched from a Pixel XL to XR, I have to partially disagree. I don't have the telephoto camera nor the 4GB RAM (3GB on XR) of the XS line and the screen is not OLED. Having seen the screen quality first hand in store, I cancelled by Pixel 3 XL pre-order and got a XR, my first iPhone since 3GS. For me, the differences between XR and XS was not worth the extra 250$.
Mmm, I know someone who purchased one of those, and it seemed to be totally fine – basically the same experience as the X, but with slightly cut-down specs to reduce the cost. Presumably for all the people who complained about the cost of the X last year, no?
I got the XR. Better camera for one, nice upgrade to my 6s. Cheaper, has the full screen look. Who am I? I'm an iPhone developer and I needed the notched screen for testing my apps.
I was surprised they didn't refresh it and even discontinued it. I work at a phone repair/resell store and I come across a lot of people who prefer that size. whether it's enough to make the r/d of another SE I have no clue - admittedly most of these people are part of the "older group" and most won't want to change over to Android (mostly because change is bad) so they'll be using an iPhone no matter what
I recently upgraded to my wife's hand-me-down 5S and I've been very happy with it— it's definitely a "just right" size for me, especially compared with the borderline phablet-size 6+/7+/8+.
The major downer is the lack of a quality small screen phone that supports current-day phone networks.
If the SE was updated with the latest modem, it would be wonderful. A CPU/RAM bump would be welcome but not strictly necessary. Leave the headphone jack alone, or if you must remove it at least replace lightning with usb-c for consistency's sake.
I'd pay whatever it costs for the equivalent XR - being larger is an anti-feature IMO.
I want to buy a new iPhone, but I refuse to buy a phone that cannot use the same headphones as I use on my laptop. Apple either need to bring back the headphone jack, or adopt USB-C. Until then I'll continue to use my iPhone 6S.
In the UK a new iPhone is ~£1250 there are so many more things I would rather spend that money on.
I spend so much time with my phone, I use it all day rely on it so much, it's the epicentre of my digital life.
But still, I think it's too expensive. I think once you touch the £1,000 mark you have to start proving far more worth than polished marketing. My work thankfully proved an iPhone 8, otherwise, I was going to buy an iPhone 6 or 7 [0]. I just cannot justify the extra money for the difference in the product.
If you look at the performance testing between SOCs in the Apple and Android ecosystems, you'll see that the Apple cores from two years ago are still on par with the newest performance cores in the Android ecosystem and way ahead of Qualcomm's best.
Does this mean that if someone already owns an iPhone 7 and does not want to upgrade to the newest iPhone XS or XR, the most frugal thing to do is keep using it and maybe replace the battery rather than buy a new Android phone?
> I think once you touch the £1,000 mark you have to start proving far more worth than polished marketing. My work thankfully proved an iPhone 8, otherwise, I was going to buy an iPhone 6 or 7 [0]
Fraser Spiers (famous in certain circles as an ‘iPad in schools’/productivity tools proselytizer) recently faced the same dilemma and made the switch to Android/Chromebook instead:
You can always tell what people really believe when it’s their own money on the line. I hope those schools take note the next time a snake oil salesman comes calling!
Even if you use your phone for everything, an iPhone 6 or 7 will still be a very good phone. Those who own the 6 or 7 simply have no need to upgrade yet and there isn't a large number of people left that are in the marked for their first smartphone. My employer offered to upgrade my two year old iPhone 7 to either an 8 or XR, but there's simply no reason to, it still a good phone and I still get 3 or 4 days of battery life.
Rather than cramming more stuff into the iPhone, Apple could use the next iteration to reduce cost. There's a large number of Android users that could be convince to switch, if the price is low enough and the quality is preserved. Currently the cheapest iPhone is $610 in Denmark, that's the iPhone 7 and the iPhone XR is $1020. I'm not sure who Apple is targeting with those prices, other than people who can't or won't pay the $1350+ for the iPhone Xs. Apples desire to continually increase prices simply has to scare some customers way.
Exactly. It is not that I or We cant afford £1250 or $1300 Phones. It is that we cant justify it. I cant accept my iPhone has worst antenna performance and reception compared to Android CounterParts. All using Qualcomm. Dual Sim in this year iPhone as well as Next year will still not have Dual LTE ( DSDV ), i.e Being able to call someone while using LTE on another SIM card, Standard since 2017 Qualcomm modem. Not available to Intel modem until (may be) 2020. Camera no longer the best for two consecutive year. Still no 10W charging when others are into 15W+ already. ( And even worst they actively made all the newer Lightning Cable incapable of supporting Fast Charge ) And the TCO of owning Apple devices is going up as well.
Battery Swap after Two years? $100
Camera Lens not working? $200
Screen Break or Back Glass broke? $700
Losing the Phone and don't have Backup?
Helpless.
There is something money cant buy, for everything else there is AppleCare+ with Theft Protection. ( Ad for Apple )
If they are going to charge so much for repair they might as well extend the coverage to 2 years standard.
We used to be frustrated with Apple, but every year we will see what they have been working on and thought "That is what they have been up to", forgive them for ignoring lots of small things and embrace their New innovation. The past three years I have not been exactly please with their pace. At least not when they have 10-100x the resources of Apple Pre iPhone era.
The price of a new, unlocked iPhone XR in the US right now appears to match the price of a new, unlocked iPhone 8 at this time last year.
It is generally the case that the standard current-year iPhone model takes over roughly the previous model's price point at release, and the now-previous-year model undergoes a price drop.
The introduction of a new tier (the higher-end, occupied last year by the X and this year by the XS) is a change, but has not done away with the iterations of "this year's model" and "last year's model" in the tiers below it.
I paid US$500 for my current iPhone, which is about half that price, and just about the top of what I'd be willing to pay for a device with a useful life as short as that of your average smartphone. Should I seriously expect to be coughing up 100% more to replace my current phone if it craps out?
No thanks. Those sorts of hijinks make Nokia's bananaphone look more and more attractive.
The price of their flagship is ever increasing though. Pointing out that their 'budget' model is now at the same price as their old flagships isn't really making a good case for the affordability of iPhones.
Also in the UK, and I can't remember the last time I actually bought a phone outright. I resigned myself years ago to paying ~£40/mo for a contract and insurance. Every 2 years I get an upgrade to the latest iPhone.
I'm in the UK and I buy my phones outright, through my company.
I pay about £15 pcm for unlimited data and more of everything else than I can use. I buy a phone when I feel like it, usually about every 18 months to two years. Currently very happy with my P20 Pro. Advantages (to me) are that I can switch network whenever I feel like it, and I own the phone from day 1.
I bought an S7 (1 year old) off ebay for ~£300, and I pay £10/month for service (with giffgaff so I can adjust the plan monthly if I need more or less data for a given month).
I don't get an iphone, but it's a fair bit cheaper...
This is the funniest thing I've read in a while. I remember the rest of the world mocking the American model for cell phone plans (contract lock-in with high monthly rates in exchange for cheap uogrades) and praising the model used in the UK and most of the EU (no contract, incredibly cheap rates but phones are purchases outright). American carriers finally came around to adopting the UK/EU model in the past few years as people began to become more accepting of the idea that the latest smartphone is worth keeping for more than 2 years if it means halving their monthly service payment and now you're telling me the UK has adopted the old American business model?
I find this to be hilarious for reasons I can't quite articulate but going from a model where service is decoupled from hardware to a model where you're contractually obligated to pay a set bundled fee is a 180 degree switch too inexplicable to ignore.
It's almost £800 in Denmark. I really do prefer iOS for smartphone, but I'd never buy an iPhone with my own money. Of cause I think a fair price for a phone is closer to $50, but that's just a reflection of my usage.
I'm guessing next year's refresh will feature a much lower price. I think Apple is finding out the hard way that increasing prices means lower volumes. They might even pull off a mid year price reduction. They've done that before.
Despite not owning one, I believe Apple can easily fix most of their issues by simply reducing the price and growing volumes again. They are about to lose the teenage market. That's mostly a cost problem. For the past few years they've cashed in on their popularity by squeezing the high end of the market. Now that that is running dry, they need to pay attention to their bottom line again or they risk permanently alienating a new generation of users.
My guess is that a 500$ base model that doesn't suck, would be quite popular. Of course their problem is that they have little to differentiate the 1200 $ model from that and that most of their competition is selling quite nice phones at or below that price.
Not an economics expert at all, but what happens if profit per unit is still more significant? Maybe Apple is targeting something like:
Total Profit = Volume * Profit Per Unit
So even though Volume is smaller because units are more expensive, the increased markup increases the total profit and that's the reason why they are getting ~90% of the profits in the industry. This idea makes more sense to me considering guidance for the next quarter won't include volumes.
Is there any reasoning behind only targeting volume that I am unaware of? Genuine question.
Apple also makes money from ecosystem software services where I assume profit margins are even richer. So there is incentive to increase the user base.
I wonder if Apple is purposely trying to financially destabilize their suppliers in order to gain leverage over them.
I have a 6S and I'd love a new phone, but at the end of the day the trade off for getting to work on my startup is that I need to prioritize spending money on things that will actually contribute to my happiness or well being in some way. And since I know a new phone isn't going to improve my life in any way, that just makes it really easy to dump the money into crypto or whatever instead.
> They are about to lose the teenage market. That's mostly a cost problem.
What, do teenagers suddenly stop wanting things just because they can't afford them? When did that start?
I think it's easy to confuse "sales volumes are dropping among teens because of price" with "teens don't want iPhones anymore." Those are not the same things at all.
Apple has always (quite successfully) focused on total profit, not total revenue or volume.
As the upgrade cycle slows, they are cramming more technology into the phone to justify upgrades, increasing the base price and thus increasing the profit per replacement phone.
They'll continue to sell models with a reduced cost (such as the iPhone 7, still for sale), but they will likely continue to not have "cheap" phones.
For people who are on longer upgrade cycles, I tell them that phones are historically supported by Apple in OS updates for 5 years after initial release. So while that iPhone 7 may be nearly half the cost of the XR on sale, it also likely has half the remaining supported life. This usually gets them thinking about the pricing as an ongoing cost (of the device, replacements, and likely repairs over time) which IMHO is a healthier way of reasoning about such expenses than just shininess or upfront cost.
> I think Apple is finding out the hard way that increasing prices means lower volumes
IMHO this is getting the causation backwards.
I think Apple saw the stagnation in unit sales happening anyway as people no longer see newer features and tech improvements as 'must-haves' and are keeping their phones for longer for that reason. As opposed to people keeping their phones longer because new ones cost too much.
This is surely part of the reasoning behind their open pivot to an emphasis on devices lasting longer and optimising iOS for older devices, ie they know people are keeping their devices longer, therefore they're marketing: if you want a phone to last longer then Apple is the vendor for you.
Of course to maintain profit levels they have to take the gamble that people then are prepared to pay more initially for a phone. Hence the differentiation between the Xr (new 'regular' model) and the Xs premium models. And the increase in ASP during 2018 due to the introduction of the X at the high end would have shown the gamble to be the right one.
Once certain demographics consider their phones to be "good enough", they are going to use them until they break or apps stop working.
Apple wants such people to feel to feel comfortable spending more money once they do upgrade their phone.
A percentage of this higher cost is put into newer, more expensive hardware; this allows Apple to focus on differentiating technology on the higher end models (edge to edge retina screens! stupid-good cameras! no home button! facial recognition! you can video conference with your coworkers looking like animated poop!)
What was wrong with the 5c? Was it too cheap to be worth it to the bottom line? I thought it was a nice phone for the price. Referbs of it typically cost less than $100.
Basically, the delta in speed and functionality gains for new models isn't what it used to be, so people hang onto old phones longer. Personally, I buy ~$150 androids because I tend to drop them, and a $1k phone would be a bad idea for me.
The end of "phone subsidies" probably also plays into this.
That might be true but most phones are not running application that leverage that performance. The apps are more often than not optimised for lower performance and if you spend most of your time in Safari/Messenger/Instagram/Whatsapp A12 wont give you a lot of performance bump as compared to A11
I'm genuinely curious - what apps use/need all this power?
And this is a genuine question, my usage is probably 'typical' and not pushing the device so I don't know what people do with their phones that takes advantage of this processing power.
Just good old "Market Saturation" I'd say. Phones became about as good as people needed them to be in the last 5 years. Everything that's been added recently is just fluff and I'd say most people are just sticking with what they've got, or replacing with an established model where possible.
Near everybody who is going to have a smartphone already has one of some sort. That combined with people getting bored with the marginal increase of capabilities has killed hype for unnecessary upgrades.
The increased pricing changed how I perceive replacing my X with a new one. I used to routinely upgrade yearly up to the SE. Now, I'll keep I plan to keep using it until it no longer functions. Similar to my laptop upgrade cycle which is every 3 years now.
I think Apple is biting themselves in the foot with the increased pricing. I think it is significantly slowing down the replacement cycle. My dad typically buys my old phone and then his phone goes to my mom. Now, he replaced the batteries since no phone is coming his way through me.
Apple fully expects the replacement cycle to slow. They said that they are trying to make phones last longer. They are focusing on service revenue and accessories like the Watch.
For me it is because they’ve become too large. Last year I got an 8 as I really needed a new device and the size is pushing it. The X models are larger still
I think the reason has nothing to do with the iPhone 8, 8 Plus, X, XR or XS. I think the reason has to do with 2 back-to-back iOS updates that didn't hugely slow down my iPhone 7 Plus.
I'm used to really wanting the newer iPhone when I update iOS 12 months after buying but the last 2 updates haven't fit that mold.
There is also just a general kind of burn out. In phones, in social media, etc. Maginal utility from consumer tech is now so marginal that people are starting to not upgrade every year. It was bound to happen. I’m sure someone will come up with a more creative name for this when it starts to impact stock prices.
iPhones and the iOS speed focused updates are really showing the longevity of the device. My wife has the 7+ she got when it came out. I got her the battery change out for $30, and the device is great. It got faster with iOS 12. She has no need for a better device. Upgrades now really are incremental, with much of the technology 'good enough'.
I have the X. It works great. Nothing in the XS makes me want to upgrade. I would like the XS Max, but I'll just wait for next year. And next year, my wife will get my X which further extends its usefulness.
Readit News
2017: "'Anemic' iPhone 8 demand drags Apple shares lower", https://www.reuters.com/article/us-apple-iphone/anemic-iphon...
2016: "Apple may be cutting iPhone 7 orders as demand falls", https://www.cultofmac.com/456431/apple-may-cutting-iphone-7-...
2015: "Apple stock slides on claims of slashed iPhone component orders, weak iPhone 6s demand", https://appleinsider.com/articles/15/12/01/apple-stock-slide...
Note that there were articles in those years also suggesting high demand. My point being that articles suggesting soft demand happen every year. Except 2014 when the iPhone 6 came out. Everyone was in total agreement then that demand was insane (and that quarter proved to be very hot indeed for Apple).
My point is that we won't truly know what demand looked like for the new iPhones until late January when Apple announces earnings.
* Apple announces it will no longer report unit sales. This is a clear shift in strategy.
* Orders have been cut not once, but twice.
* Suppliers have been slaughtered in earnings reports.
* Suppliers have cut staff and are trying to control costs.
I agree there is a "cry wolf" element to this, but sometimes the wolf really does show up.
I thought that at first, too. Then I read that Apple was an outlier in reporting these figures. I'm OK with Apple not reporting these kinds of numbers if it allows the company to focus on quality of product instead of satiating the salivating stockholders (of which I am one).
Orders have been cut not once, but twice.
We don't actually know this as a fact. It is pure conjecture.
It is what a bunch of so-called supply chain "analysts" say, but they say it all the time, and are almost always wrong.
I wish I could be wrong as often as these Wall Street types and still keep my job.
The only people who whiff more often than Wall Street supply chain analysts are five-year-old softball players.
On the plus side, we might get a break from the annual IS APPLE DELIBERATELY MAKING IOS SLOW SO YOU'LL BUY A NEW PHONE??? stories, so it's a trade-off.
Their plan seems to be making it up on services and pushing app subscriptions over 1-time purchases.
Yeah, this is interesting. I wonder if higher prices (to increase device ASP) for better devices (breaking the two year upgrade cycle) mean that we have now seen peak iPhone growth. For the first time in years, I have recommended old/used iPhones to multiple people over new phones.
On the other hand, Apple has increasingly emphasized services and complimentary devices in recent years. AirPods, Apple Watch, and Apple Music (to name a few) lock folks into the ecosystem and replace non-Apple alternatives.
https://stratechery.com/2017/apple-at-its-best/
It's literally the shift every analyst has been clamoring for - revenue from something other than the iPhone. So while that is slowly happening, all anyone seems to look at is the top line iPhone unit number. A number that has become less and less meaningful over time because of the growing range of iPhone models.
Apple's guidance is always conservative, and their guidance next quarter is 89-93B in revenue. If you're keeping score at home, that would be another record quarter.
Dead Comment
I see this as a strategy from Apple. Unfortunately for their supplier's Apple's strategy to destroy Android seems to be somewhat counterintuitive, it involves selling fewer iPhones. It involves doubling down on premium and having these older phones last far longer. By definition that will mean a bigger used market which Apple seems to be embracing especially with the recent iOS update to actually, for probably the first time, make older phones faster for a change rather than slow them down. I think they have realized that their eco-system is far more valuable and having android owners switch to older iphones which seem to be holding up almost as well as new android devices not only does not cheapen their brand but brings in droves to the eco-system which is the thing with the real value at the end of the day.
May sound far-fetched but every step they have taken lately points to this strategy, dont be surprised when they post more record profits.
They have one of the most optimized supply chains in the industry, they have a massive cash war chest to use to subsidize R&D. Apple clearly chooses high margins and profit over "destroying Android".
Deleted Comment
Yup, it's what I told my wife when she asked, "something, something, decreased demand?" and I told her, "welcome to being an AAPL shareholder." We've owned AAPL for, I dunno, fifteen years and in at least the last ten the pattern continually repeats.
That said, there do seem to be convincing arguments this time. Then I go look at the 14.8 P/E, and go back to reading Hacker News.
I'm pretty sure "just keep raising prices" is not Apple's long term strategy. They'll keep releasing a mix of products, and push the high end with more refined features.
AAPL right now is at $172.82, giving it a PE ratio of 14.57. Apple is currently valued way below the S&P 500's PE ratio (21.58), so it's like people expect Apple's forward earnings to tank despite having had 20% revenue growth last quarter and 31% profit growth. It's not clear to me that Apple's future prospects are that bleak.
Frankly, all of Apple’s recently-introduces hardware options have a bad combination of being too expensive and simply not appealing enough, the lack of upgradeability on MacBook Pros being a major example.
The only features I want in a "smart" phone, are podcasts, camera, music, GPS/directions. I don't really even need a web browser, and I don't need any social media at all. And I certainly don't need any gaming capabilities (I still don't "get" mobile gaming, if I want to play a game I will do it on my desktop, with a mouse and keyboard, and large screen).
I might go back to carrying 2 devices, a MP3 (podcast/music player) and a dumb phone. Should cut my phone bill down significantly.
I wouldn't say that, there's just a wide range. You can spend four digits on a brand-new flagship model, or you can get a decent phone for under $150. And if you have WiFi where you spend the day, a data plan is mostly redundant.
[0] https://www.h2owirelessnow.com/mainControl.php?page=planMin
However I heard the iPhone 7 now sells for 450$ new. Given the 8s weren't a huge performance improvement, I wish tech reviewers would re-evaluate it at its current price.
I wholeheartedly recommend the iPhone 7 (or 7+), especially when you consider it's 450$ vs 1200$. As a bonus the screens are cheaper the amoled (I work in phone repair) and IMO 95% of non-hacker-news users don't benefit from the more expensive screens (either can't tell a difference or don't really care)
I want the iPhone X because I want the iPhone X. There is nothing groundbreaking in the X that changes my daily life. Maybe I’m growing older and more financially conscience but it makes no sense for me to go to iPhone X.
7 is still a gem.
The XR is honestly a huge misstep, IMO. It's bigger, heavier and dramatically more feature-less than its 2018 counterparts. Who is this phone for?
Not an Apple fan myself, but everyone I've heard has praised the XR for basically being an XS with a cheaper screen.
Personally, I think the price points for these phones have become irrational. Supposedly their entry level model, the XR starts at €859.
Hopefully they'll bring back something like it.
If the SE was updated with the latest modem, it would be wonderful. A CPU/RAM bump would be welcome but not strictly necessary. Leave the headphone jack alone, or if you must remove it at least replace lightning with usb-c for consistency's sake.
I'd pay whatever it costs for the equivalent XR - being larger is an anti-feature IMO.
I spend so much time with my phone, I use it all day rely on it so much, it's the epicentre of my digital life.
But still, I think it's too expensive. I think once you touch the £1,000 mark you have to start proving far more worth than polished marketing. My work thankfully proved an iPhone 8, otherwise, I was going to buy an iPhone 6 or 7 [0]. I just cannot justify the extra money for the difference in the product.
[0] https://www.johnlewis.com/browse/electricals/mobile-phones-a...
https://www.anandtech.com/show/13614/arm-delivers-on-cortex-...
If you buy an older iPhone, you're still going to get performance that is equivalent to a $1000 dollar Android flagship without the premium price.
Given that buying a brand new Pixel phone only gets you two years of OS updates, you're also going to get at least that much support after the sale.
Fraser Spiers (famous in certain circles as an ‘iPad in schools’/productivity tools proselytizer) recently faced the same dilemma and made the switch to Android/Chromebook instead:
http://www.speirs.org/blog/2018/11/18/on-switching-from-ios-...
https://www.relay.fm/canvas/72
Rather than cramming more stuff into the iPhone, Apple could use the next iteration to reduce cost. There's a large number of Android users that could be convince to switch, if the price is low enough and the quality is preserved. Currently the cheapest iPhone is $610 in Denmark, that's the iPhone 7 and the iPhone XR is $1020. I'm not sure who Apple is targeting with those prices, other than people who can't or won't pay the $1350+ for the iPhone Xs. Apples desire to continually increase prices simply has to scare some customers way.
They're already doing this, while flogging the decreased functionality as "improvements".
Battery Swap after Two years? $100 Camera Lens not working? $200 Screen Break or Back Glass broke? $700 Losing the Phone and don't have Backup?
Helpless.
There is something money cant buy, for everything else there is AppleCare+ with Theft Protection. ( Ad for Apple )
If they are going to charge so much for repair they might as well extend the coverage to 2 years standard.
We used to be frustrated with Apple, but every year we will see what they have been working on and thought "That is what they have been up to", forgive them for ignoring lots of small things and embrace their New innovation. The past three years I have not been exactly please with their pace. At least not when they have 10-100x the resources of Apple Pre iPhone era.
It is generally the case that the standard current-year iPhone model takes over roughly the previous model's price point at release, and the now-previous-year model undergoes a price drop.
The introduction of a new tier (the higher-end, occupied last year by the X and this year by the XS) is a change, but has not done away with the iterations of "this year's model" and "last year's model" in the tiers below it.
https://i.redd.it/jclu70hbjzw11.png
I paid US$500 for my current iPhone, which is about half that price, and just about the top of what I'd be willing to pay for a device with a useful life as short as that of your average smartphone. Should I seriously expect to be coughing up 100% more to replace my current phone if it craps out?
No thanks. Those sorts of hijinks make Nokia's bananaphone look more and more attractive.
I pay about £15 pcm for unlimited data and more of everything else than I can use. I buy a phone when I feel like it, usually about every 18 months to two years. Currently very happy with my P20 Pro. Advantages (to me) are that I can switch network whenever I feel like it, and I own the phone from day 1.
I don't get an iphone, but it's a fair bit cheaper...
I find this to be hilarious for reasons I can't quite articulate but going from a model where service is decoupled from hardware to a model where you're contractually obligated to pay a set bundled fee is a 180 degree switch too inexplicable to ignore.
Despite not owning one, I believe Apple can easily fix most of their issues by simply reducing the price and growing volumes again. They are about to lose the teenage market. That's mostly a cost problem. For the past few years they've cashed in on their popularity by squeezing the high end of the market. Now that that is running dry, they need to pay attention to their bottom line again or they risk permanently alienating a new generation of users.
My guess is that a 500$ base model that doesn't suck, would be quite popular. Of course their problem is that they have little to differentiate the 1200 $ model from that and that most of their competition is selling quite nice phones at or below that price.
Total Profit = Volume * Profit Per Unit
So even though Volume is smaller because units are more expensive, the increased markup increases the total profit and that's the reason why they are getting ~90% of the profits in the industry. This idea makes more sense to me considering guidance for the next quarter won't include volumes.
Is there any reasoning behind only targeting volume that I am unaware of? Genuine question.
I have a 6S and I'd love a new phone, but at the end of the day the trade off for getting to work on my startup is that I need to prioritize spending money on things that will actually contribute to my happiness or well being in some way. And since I know a new phone isn't going to improve my life in any way, that just makes it really easy to dump the money into crypto or whatever instead.
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What, do teenagers suddenly stop wanting things just because they can't afford them? When did that start?
I think it's easy to confuse "sales volumes are dropping among teens because of price" with "teens don't want iPhones anymore." Those are not the same things at all.
As the upgrade cycle slows, they are cramming more technology into the phone to justify upgrades, increasing the base price and thus increasing the profit per replacement phone.
They'll continue to sell models with a reduced cost (such as the iPhone 7, still for sale), but they will likely continue to not have "cheap" phones.
For people who are on longer upgrade cycles, I tell them that phones are historically supported by Apple in OS updates for 5 years after initial release. So while that iPhone 7 may be nearly half the cost of the XR on sale, it also likely has half the remaining supported life. This usually gets them thinking about the pricing as an ongoing cost (of the device, replacements, and likely repairs over time) which IMHO is a healthier way of reasoning about such expenses than just shininess or upfront cost.
You mean like the iPhone 7, which retails for $449?
IMHO this is getting the causation backwards.
I think Apple saw the stagnation in unit sales happening anyway as people no longer see newer features and tech improvements as 'must-haves' and are keeping their phones for longer for that reason. As opposed to people keeping their phones longer because new ones cost too much.
This is surely part of the reasoning behind their open pivot to an emphasis on devices lasting longer and optimising iOS for older devices, ie they know people are keeping their devices longer, therefore they're marketing: if you want a phone to last longer then Apple is the vendor for you.
Of course to maintain profit levels they have to take the gamble that people then are prepared to pay more initially for a phone. Hence the differentiation between the Xr (new 'regular' model) and the Xs premium models. And the increase in ASP during 2018 due to the introduction of the X at the high end would have shown the gamble to be the right one.
Once certain demographics consider their phones to be "good enough", they are going to use them until they break or apps stop working.
Apple wants such people to feel to feel comfortable spending more money once they do upgrade their phone.
A percentage of this higher cost is put into newer, more expensive hardware; this allows Apple to focus on differentiating technology on the higher end models (edge to edge retina screens! stupid-good cameras! no home button! facial recognition! you can video conference with your coworkers looking like animated poop!)
Basically, the delta in speed and functionality gains for new models isn't what it used to be, so people hang onto old phones longer. Personally, I buy ~$150 androids because I tend to drop them, and a $1k phone would be a bad idea for me.
The end of "phone subsidies" probably also plays into this.
And this is a genuine question, my usage is probably 'typical' and not pushing the device so I don't know what people do with their phones that takes advantage of this processing power.
The iPhone 6 to iPhone 7 single core boost looks like ~40% for comparison.
I think Apple is biting themselves in the foot with the increased pricing. I think it is significantly slowing down the replacement cycle. My dad typically buys my old phone and then his phone goes to my mom. Now, he replaced the batteries since no phone is coming his way through me.
On the upside, it's better for the environment.
I'm used to really wanting the newer iPhone when I update iOS 12 months after buying but the last 2 updates haven't fit that mold.
I have the X. It works great. Nothing in the XS makes me want to upgrade. I would like the XS Max, but I'll just wait for next year. And next year, my wife will get my X which further extends its usefulness.