You don’t need to be a computer scientist to work out why iPhone sales are down

“It must be tough being Tim Cook, the CEO of Apple. Well, perhaps we shouldn’t be too sympathetic: in 2018 he took home $15,682,219, and his earnings since 2011 are estimated to be not far south of three-quarters of a billion dollars,” John Naughton writes for The Guardian. “For that he has to run the world’s most successful tech company. But that’s probably a doddle compared with trying to manage the expectations of Wall Street and the world’s media, both of which have an obsession with Apple that sometimes borders on psychosis.”

“It’s not that long, for example, since the fevered speculation about whether Apple would be the first trillion-dollar company reached a climax on 2 August last year when it finally scaled that particular greasy pole. But since October its shares have dropped 20% and it’s been overtaken by Microsoft – yes, ye olde Microsoft! – as the world’s most valuable company,” Naughton writes. “What was most striking, though, was that the slowdown in iPhone sales should have taken journalists and analysts by surprise.”

“Everyday experience should have told them that the iPhone picture was changing. I’ve lost count of the number of friends, colleagues and acquaintances who are happily still using their four- or five-year-old iPhones,” Naughton writes. “There are 5.5 billion adults on Earth, of whom 5 billion have a mobile phone and between 3.5 billion and 4 billion have a smartphone, of which between 800 and 900m are iPhones.”

Read more in the full article here.

MacDailyNews Take: Again, units don’t matter. There are only so many quality users on the planet. Keeping them happy, as every measure of customer satisfaction shows Apple has amazingly well done to date, is what matters. As long as the users buy apps on the App Store, subscribe to Apple Music, add iCloud storage, use Apple Pay, etc., they can replace their hardware with Apple hardware at their own pace.

iPhone has higher customer satisfaction than Android, meaning that Apple gains iPhone users from Andoird via normal churn as users graduate to real iPhones.

Yes, the iPhone replacement cycle is lengthening, but with so many iPhone (and iPad) users and with customer satisfaction so high, it really doesn’t matter. The market is mature and there are only so many quality users on the planet. Apple has that market cornered. The types of people who’ve settled for Android aren’t likely to buy as many apps or subscribe to services. They want free. They’re not worth much after the sale. The iPhone knockoff peddlers like Samsung can have them.

This is, of course, Apple’s point with ceasing the reporting of unit sales. It’s the user base, the quality of the user base, and services that matter more now. That’s where the growth is and where it will be for many, many years to come.MacDailyNews, January 5, 2019

MacDailyNews Note: Today is Martin Luther King Day in the U.S. and the markets are closed. As usual on such trading holidays, we will have limited posting today.

34 Comments

    1. @MDN

      That satisfaction rate has turned a corner, if losing losing 300 billion in market value is any indication. Apple can no longer sweep Cook’s greed under the rug. It’s a destructive monster that can no longer be controlled or ignored.

      The market and millions of consumers are basically fed up with Tim Cook. Unless Apple can show them new leadership and point the company in a new direction, the bloodletting will continue and Apple’s reputation will further turn to shit.

            1. Still waiting for you small bunched to justify your ongoing festering bullshit, lies and hateboy fantasies.
              Here’s the question again: If you dislike the products and company so much why don’t you just go away and buy something else? For fucksake, they are ALL just phones and computers.

            2. “Still waiting for you small bunched to justify your ongoing festering bullshit, lies and hateboy fantasies.”

              Still waiting for you to grow up and stop harassing those with a different opinion.

              No, the Apple criticism has accelerated for years now under Cook for a variety of missteps by a very large “bunch” of posters.

              “Your ongoing festering” Apple Apologist 🐂💩 has gotten OLD years ago and how CLUELESS can you be.

              “Here’s the question again: If you dislike the products and company so much why don’t you just go away and buy something else?”

              @Sean Obviously you are too immature to handle an honest answer. Obviously you are too immature to handle CONSTRUCTIVE CRITICISM of ANYTHING Apple. Obviously you are too immature to handle decades old Apple fanboys that deeply care and expect nothing short of EXCELLENCE from Apple. Obviously you are too immature to UNDERSTAND …

            3. Incessantly generalized negative comments are not “opinions” worth the space they take up.
              You’ll notice there is another kind of person here — who makes positive comments most of the time, with a negative one on specific topics.

              And incessant bitching, whining and name-calling does not constitute “constructive criticism”.

              Constructive criticism requires
              – a foundation of trust and goodwill
              – no name-calling
              – no innuendo
              – specific and concrete criticism and suggestions for change

              The question remains — if Apple and its products are so awful, why don’t you just go elsewhere? Unless you are poor, I’m sure the investment would be worth the dramatic improvement in your lives.

          1. Who is the sheep-est of them all…..
            Who is the dumbest of them all…..
            Who is the broken of them all….

            You say it’s me of them all..
            No way it’s true after all.

  1. Wrong MDN says unit sales don’t matter, Really? how about Apple then loses 100 million of the? Ever sale matters AND Apple has to keep them happy.. Unit sales ALREADY mattered,, Wall street noticed declining sales, and SOME took their money to a place with more growth potential, Maybe MDN has a long event horizon, but I’m out 6 figures. My friends with Android phones are VERY happy with their phones AND alot of them buy plenty. Like newer phones, gaming platforms, and high powered PCs that Apple doesn’t want to sell. Apple missed the sales mark by a pretty small number, Every sale matters. Always be selling

    1. Agreed, sales always matter this is what MDN (& friends) is trying to rationalize their way around.

      The reality is that all markets eventually mature, which results in a flattening out of the growth curve. Because the Stock Market is forward-looking, this is an inevitable inflection point on Stock value.

      The growth curve had flattened – – and more importantly, everyone saw it, as illustrated by all the “what happened?” chatter back in 2016 when that year’s new iPhone rollout didn’t have huge growth over prior years…and again in 2017, and in 2018. Apple kept Wall Street happy by trying to escape upscale with higher unit prices. And that worked for awhile, but nothing lasts forever.

      To remain relevant, what Apple needs to do now is to either strengthen their value paradigm to justify their retail prices, or cut their price (and of course, its better to do both).

      And before we get the MDN Fanboys trying to claim that its already a great value & great price (and lamely downvoting in a “Shoot the Messenger” fallacy)… No, it is not: the proof is in that it has been the Market who has decided – – normal people voting with their wallet – – which is why replacement battery sales are way up, and AAPL is way down.

  2. IPhone sales will settle into a steady replacement period. But Apple can no longer afford to ignore yearly attractive upgrading of Macs as part of it’s income picture. Nor let the 2013 Mac Pro trash can debacle occur again. Mac Pro’s MUST be upgradeable!

    Apple needs to pay close attention ALWAYS to it’s complete product lines. NO excuses or mollifying contradictory remarks like “The Mac is important to us “ when by your actions it clearly is not.

    1. Yes..a comprehensive product line and ecosys! With no deliberate handicaps to force customers in a certain path.
      Let us play freely , even if it is in your walled gardens Apple.

  3. This may sound blasphemous to Apple stock holders — and certainly it’s not good news for them in the near term — but I have real and true hope this downturn in the stock and perception of the company leads to some very good things over the next few years and it’s not like I’m worried they’re going to run out of money to do great things with. For one, it might just refocus the company on some things outside of iOS or lead to some innovative products to create new revenue streams. Perhaps they’ll rethink their virtual abandonment of server product development to create something more viable for back ends that support the education and business markets. Maybe we’ll see some actual pro hardware. A return to regular updates of Mac hardware. In so many ways, it’s like they haven’t even been trying to kick ass at anything but the iPhone. I get that it’s the biggest segment and kind of the flagship family of devices and they ought to be spending a lot of time on it . . . but c’mon Apple. Invest some of those billions in some different product lines. Granted, I understand that can actually lead to a LACK of focus and I’m not wanting a confusing lineup of devices all over the place like in the mid and late 90s . . . One can only hope Project Titan is real thing or that the original content will pay some dividends. At the end of the day, though, Apple does need to get into some emerging markets like India to make investors happy. They also need to generate some excitement in some other categories that build some excitement around the brand like they used to. Sometimes people don’t have to buy all the stuff you make but they still need their imaginations captured — it adds value across the entire lineup.

    1. I agree. Let’s hope it’s the kick in the pants they sorely needed that gives Apple pause and forces a rethink to action. Their somnambulant state finally coming to an end.

    2. “They also need to generate some excitement in some other categories that build some excitement around the brand like they used to. Sometimes people don’t have to buy all the stuff you make but they still need their imaginations captured — it adds value across the entire lineup.”

      Whole hartedly agree …. !!!
      To much secrecy, too shrouded… nothing there to anticipate with a sense if wonder ! Nothing tangible to fantasize and wonder about.. no apparent road map that provokes the imagination.

      Hope you are listening Tim and team!

      1. IF there is a SE2 that ships in 2019 …

        … it will probably be priced at $999.

        We already see this in terms of how the smallest footprint iPhone is the XS and not the XR. Apple is functionally testing the market to determine who will pay a premium for a smaller phone.

        The reality is that the SE appealed to two distinct groups. The one is the smaller form factor and the other is the smaller wallet factor.

        But of course Apple should be willing to give us the first if it doesn’t hit the second…but just like automobiles, the product marketing has telegraphed that bigger is better and that it always has to cost more.

          1. I fear you are 100% spot on, -hh…

            Yes, I’m afraid that I am correct. I don’t want that to be the case, but the business marketing & patterns are far too strong to ignore.

            In the meantime, I shifted my AAPL dividends last year into buying Gold …as Steve said “Milk it for all its worth, then move on…”

            FYI, for those interested in this kind of portfolio hedging/diversification, the iShares Gold Trust (IAU) is a lower overhead alternative to SPDR Gold Trust (GLD).

  4. I made a post on my facebook today how Apple put the 4″ SE back up for sale and it sold out in 1 day. If that doesn’t scream missed opportunity, I don’t know what does. And then to validate it further, almost everyone who posted on my thread said they WANT a 4″ and are waiting to buy one, if it becomes available. I am willing to bet the sliver of sales Apple lost/is missing is very related to lacking a smaller footprint phone. And because it’s smaller, the price would also fill a gap to get a “new” phone, but not drop $1,000. This is a microcosm of WHY Tim Cook should be replaced as a CEO. He is lacking vision and execution all over the place.

    1. I am willing to make a bet that there will be a new SE this year with design cues from iphone X and the new ipad pro form factors.

      With this orchestrated pent up denand ….it will sell like hotcakes

    2. Exactly right. The SE MISS is epic failure on Cook’s part! He is racking up lost opportunities faster than Tom Brady fourth quarter comebacks. The broken record fanboys keep posting the same naive wishful thinking. I’ll believe it when I see it. Proud owner of two SE phones and have not bought a Mac Pro since the last obsolete cheese grater. For roughly 30 years upgraded the Mac Pro every three years to keep up with my employer. Those days are long gone, thank you Jony and Tim… 😡

      1. I had expected Apple to leave the SE for a year two, then drop the XR price $300 and remove the SE.

        My neighbors are mostly 35 – 60 years old. Although I see newer iPhones, four still use SE and 6 still use 5S. Average age 38.

        They’ve all looked at at my XR, played with it and said that they prefer the one they have because (this has all been said before on MDN, ):

        Fits their hand and pocket
        Button at top and a physical Home button.
        Fear/Dislike biometric logins.
        Still works (the 5s users all have attached battery pack cases)
        Don’t use many if any 3rd party Apps.
        Don’t like change.
        It’s not about the money.
        It’s all they need.

        1. No change.
          Easy to use.
          No Apps.
          99$

          GreatCall/dp/B01DRV2BBY/ref=asc_df_B01DRV2BBY/?tag=hyprod-20&linkCode=df0&hvadid=241891400817&hvpos=1o6&hvnetw=g&hvrand=9090313460830294451&hvpone=&hvptwo=&hvqmt=&hvdev=t&hvdvcmdl=&hvlocint=&hvlocphy=9030987&hvtargid=pla-491200618976&psc=1

            1. They’re not Sr. citizens afraid of technology or luddites. They like to text, most FaceTime with their families, and most have owned the 2 and 2S and or 4s. They like the iPhone they currently have and what it offers. Longevity IS a selling point of Apple. Personally I think it shows that there isn’t yet a “killer app” that requires them to upgrade.

      2. So, confirmation that Slavish Sycophant Lapdog GoeB, is now an irrelevant, retired, sad old git who really has no need for a new MacPro and is just grandstanding, as if being a boondocks wage slave for 30 years accords him the ability to run Apple!
        Truth is, GoeB is a serial moaner using his pet bully pit – MDN, to advance his own obsessional hatred of a gay CEO. Like all blowhards and lacking any hoof_in_mouth irony awareness gene, he complains endlessly about folk not giving T’rump any credit, only to deep dive into a hypocrisy-free zone of perpetual Apple bashing.

  5. It’s wonderful how the armchair CEOs in the press seem so wise. And yet, last November in China on Singles Day the iPhone XR was the top selling smartphone. Kind of goes against the narrative.

    http://www.iphonehacks.com/2018/11/apple-popular-china-singles-day.html

    Samsung’s new S10 will cost about $1800 and the new foldable phone is expected to cost almost $2300. I don’t see the media pundits running to the fainting couch over that.

    https://www.androidauthority.com/samsung-galaxy-fold-price-945177/

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