“As rare as last week’s Apple revenue warning from CEO Tim Cook may have been — the company last issued a revenue warning in June 2002 — the company has had other bad quarters in the iPhone era,” Ben Thompson writes for Stratechery. “What makes this quarter seem so much worse was both the already negative sentiment surrounding the shift in Apple’s reporting (the presumption being the company wanted to hide declining unit sales), and also the fact that Apple’s management forecast was so off: here is CFO Luca Maestri on last quarter’s earnings call: ‘As we move ahead into the December quarter, I’d like to review our outlook, which includes the types of forward-looking information that Nancy referred to at the beginning of the call. We have the strongest lineup ever as we enter the holiday season and we expect revenue to be between $89 billion and $93 billion, a new all-time record.'”
“In fact, the only record, such that there was, was the size of the miss,” Thompson writes. “So what went wrong?”
“I believe that Apple’s management made three critical errors in their forecast for this last quarter that were predictable precisely because they had made the same errors before,” Thompson writes.
Apple’s errors:
1. China and ‘S’ Cycles
2. Non-Flagship iPhones / staggered release of iPhones
3. iPhone Destiny / assumption that iPhone growth is inevitable
Tons more in the full article – recommended – here.
MacDailyNews Take: The problem for Apple in China, as Thompson explains, is WeChat. Apple has much less “lock-in” and is only competing with hardware and features like dual SIMs (to which they were late). As Thompson writes succinctly, “Apple is far more exposed to challenging macroeconomic conditions in China than they are elsewhere thanks to their relative lack of a moat.”
toy makers know to never overstock their most desired toys leading into christmas, you can kill its jealous allure and take it down, especially if you are forced to put the “sale” price tags because the every kid can easily get one and not feel privileged
Cook’s errors are myriad, starting from the second he took over. Yeah, he made investors a short-term ton of cash but it was at the long-term expense of ripping off and alienating once loyal Apple consumers… and destroying a once greatly admired company with ground breaking products and services.
8-years later virtually everyone knows who he is. We have seen all the wizard’s tricks and smoke, right up until the little doggy pulled back the curtain. Cook is no wizard. He’s just a greedy, lazy, incompetent bean counter and Jobs appointed temporary caretaker. Time to send this activist on his way.
The wizard of OZ indeed wearing the Emperors clothes these days. Short term he was the fight man ie keep Jobs vision flowing but it should never have been an 8 year job from 5 years out at the very latest the replacement process should have begun to look for a more visionary replacement for a efficient take over. In fact after the first two years or so if Cook was remotely insightful,he should have been panning God his eventual successor and grooming that person within if possible. There is not the remotest sense that he had even now of doing any of that. The functionary has been given the ‘reins’ and rather likes the power buzz, and now he reigns till they drag him kicking and screaming from the gilded tower.
What Apple neglected to account for was the vehemence of Trump’s rhetoric, which which was inflammatory and insulting to the Chinese, and bound to cause a consumer backlash. Many U.S. exporting companies may soon feel pain in other markets as the president has insulted many countries which used to feel warmly to the U.S.A. but don’t appreciate insults from a boorish idiot.
This … although with the refinement that one may choose to boycott Apple not out of anger of the Americans, but out of a fear of your own repressive Government.
Under Tim Cook Apple has lost the capacity to ‘Think Different’.
Apple thinks like the mainstream unimaginative globalist liberals.
True that Apple hasn’t had a fresh idea in a decade.
But you ran that idea off the rails with your second sentence. Apple is very cunning at ripping off customers and hiding the money overseas. Up until Tim’s skirt fell down, everyone here thought that a company that only made ~45 products and had a tiny minority market share with each one was worth more than a trillion dollars. Clearly Apple was very innovative in lining the pockets of its executives and pulling the wool over the eyes of its formerly loyal customers.
Are all greed-fueled corporations liberal? I think not. Sociopathic international corporatists are very imaginative and are the vast majority of them not liberal in the slightest. In Apple’s case, Tim’s definitely pushed for androgynous fashion hipster image. You will never see Apple every portray in its marketing a working man on a messy construction site using an Apple product in the dirty real world. But don’t be mislead. The touchy feely commercials and value signaling is all about distracting the masses from the profiteering and corruption and corporate welfare that signifies modern business. The #1 mission of every corporate leader is to exploit the masses. Privatize the gains for the few, socialize the losses and then bitch about governments not being capable of managing the crap that corporations dump on them. Repeat that often enough and all ends of the political spectrum will lose faith in democratic institutions and instead start worshipping the feudal corporations, which offer zero transparency and no personal accountability by design. Corporations are the very definition of conservatism. If such medieval undemocratic business structures worked so well in the Dark Ages, we can’t possibly have corporate reform and regulation today. says the extremist conservative.
“Apple thinks like the mainstream unimaginative globalist liberals.”
You are dead wrong! You actually claim liberals can “think?”… 😉
Its not to late to turn this around. Apple needs to invest heavily in robotic manufacturing. And maybe decentralize manufacturing. Phones sold in america should be made in America. Phones sold in India should be made in India. Phones sold in China should be made in China. Then there would be a direct incentive for the local population to support/buy the product they make. Maybe then the Chinese government might encourage their population to buy iPhones.
Bottom line trade war or no trade war Apple needs to invest in a sustainable future that protects its intellectual property and focus less on making wall street happy one quarter to the next.
Heck if I was Trump, I would strike a deal with North Korea; If you guys will reform your government, end your human rights crimes and open up your country, the United States (apple; iPhones) will work with South Korea (samsung,LG: maker of iPhone X screens) to bring iPhone manufacturing to North Korea. Can you imagine how China would fear a unified Korea and friendly Japan.
The tables can be turned. China’s greatest strength could also be there greatest weakness. With a cheap workforce, China can out bid and starve the competition. But you know what, with robotic manufacturing coming sooner then later, a large population may turn out to be more negative then positive. Cheap labour is good, but a robot army is better.
The real critical thing is we stop giving our intellectual property and ideas to an enemy determined to enslave us. The united states should only work with people that respect our laws and share our values. We should give our business to people that share our values. Samsung is not our enemy, they are our healthy competition. South Korea and United States are not perfect but we share similar values. If we could bring North Korea online with its natural resources and population, China might be encouraged to change their ways.
North Korea has neither natural resources, nor population. China will never fear them.
There seems to be a lot of other things too which you either don’t know about or understand. Nothing you write makes any sense.
Time to start saying “Beleaguered Apple again? I really miss Steve Jobs, as human as hew was.
Are ‘hew’ joking? Hew gotta be kidding. Hew aren’t for real. Saying “beleaguered” isn’t right for Apple, and it is t right for Hugh, hew or you.
You mean asshole and abusive to family and most !
Regardless of China and other issues on the negative side… yet on the positive side , some improvments in overall revenue distribution and breaking records in some markets…..
I believe Tim should return his gigantic stock performance based bonus of 120 million, which he cashed in September of 2018.
It would be the honorable gesture on his behalf.
Imo.