
Apple’s Errors - ingve
https://stratechery.com/2019/apples-errors/
======
robmaceachern
This is a really great analysis of the situation but I think Ben, and Tim Cook
in his public statements, are missing one important point: iOS 12 made the
older devices (iPhone 5s, 6) run _much_ better than they were running on iOS
11 [1, 2, 3]. They improved the software so much on this iteration of iOS that
they probably relieved a lot of the hardware upgrade pressure users were
beginning to feel in the first half of 2018.

It will be very interesting to see if Apple even supports the iPhone 6
generation of hardware on the next version of iOS. If not, or if the software
performance regresses significantly, I would expect the hardware upgrade
pressure to really ratchet up again in the fall.

[1] [https://bgr.com/2018/09/20/ios-12-speed-test-vs-ios-11-on-
ip...](https://bgr.com/2018/09/20/ios-12-speed-test-vs-ios-11-on-
iphone-5s-6-6s-se-7-8-and-x/) [2]
[https://techcrunch.com/2018/09/17/ios-12-makes-your-phone-
fa...](https://techcrunch.com/2018/09/17/ios-12-makes-your-phone-faster-than-
ever/) [3] [https://www.engadget.com/2018/09/18/apple-ios12-older-
iphone...](https://www.engadget.com/2018/09/18/apple-ios12-older-iphone-
performance/)

~~~
zozbot123
> This is a really great analysis of the situation but I think Ben, and Tim
> Cook in his public statements, are missing one important point: iOS 12 made
> the older devices (iPhone 5s, 6) run _much_ better than they were running on
> iOS 11. They improved the software so much on this iteration of iOS that
> they probably relieved a lot of the hardware upgrade pressure users were
> beginning to feel in the first half of 2018.

Meh, I don't know about that. Sure, iOS 12 is great and all, but the iPhone 5S
and 6 have just 1GB of RAM. With essentially all mobile devices _not using
swap at all_ (due to the highly dubious endurance of the low-grade, Chinese-
installed eMMC storage), that's just _barely_ enough for the modern Web these
days - and newer iOS apps can't be _that_ much lighter, either! So, I fear
that the iPhone 5S and 6 are practically on borrowed time, no matter what
Apple does. The Nexus 5 is in far better shape, seeing as it came out with 2GB
and will be able to run pmOS (on a mainline kernel, no less)...

~~~
nicoburns
> that's just barely enough for the modern Web these days - and newer iOS apps
> can't be that much lighter, either!

You might be surprised. Desktop safari is _significantly_ more resource
(including memory) efficient than Chrome and Firefox. And iOS apps are written
in objective-c and swift, which are also a lot more memory efficient than say
Java or JavaScript.

Of course, 1GB of RAM is still pretty small. But if the idevices can last 5
years instead of 2, that would be pretty significant. I don't think anyone
expects them to last forever.

~~~
wlesieutre
I have two coworkers still running 4Ses, which are more than 7 years old now.
Smallish company, maybe 25 people in my office. It still makes phone calls,
sends texts, and takes photos, so they'll upgrade when it dies.

Stuck on iOS 9 with that so it might not be a good idea from a security
perspective, but I'm impressed with the hardware. At least one of them I know
had a screen replacement, but still.

------
gdubs
Armchair quarterbacking here, but the current iPhone lineup is confusing.

It’s a tired trope to imagine what Jobs would have done, but when he returned
to Apple he saw a myriad of macs and decided that Apple would kill them all
and sell 4: a laptop and a desktop in pro and consumer models.

Apple started grabbing more market share by providing all these different form
factors, but in the process they’ve lost the simplicity that has always been
their hallmark: walk into a store, pick the pro device or the consumer device.
No choice paralysis.

It also muddles the consumer signaling that has always driven Apple — there’s
a new high-end device, it’s obviously different than last year’s, and people
know you bought the newest, hottest device.

Part of that is a mature market. But part of it feels like the company of “a
thousand no’s for every yes” is saying “yes” a lot.

Jobs talked often about creative destruction and how making great things
involves being bold and killing some of your favorite things; that seems to
have been replaced with a certain amount of timidity.

~~~
specialist
The middle of their current lineup is confusing. I love my Watch 4 and 2105
iMac, so the anchors at either end remain solid choices.

I'm ready to buy another (my 5th) laptop and I can't figure out which one I
want, delaying my purchase.

Do I want a bigger iPhone or a smaller iPad? Now that I'm finally buying more
ebooks than printed books, I'm paralyzed by indecision.

~~~
r00fus
Apple needs to find another way to do market segmentation that doesn't rely on
a confusing product selection for customers.

Even as a dedicated Apple fan, I simply was too confused as to whether I
should have gotten an XR, XS or Max.

------
achompas
Ben, in his article:

> Secondly, thanks in part to the lack of information, this miss is catnip for
> confirmation bias: everyone has their pet theory about what Apple is doing
> wrong or how they will ultimately fail, and it has been striking the degree
> to which this revenue warning has been breezily adapted to show that said
> critics were right all along (never mind that many of those critics trotted
> out the exact same explanations in 2013 and 2016).

HN, in its comments on Ben's article:

\- Apple downgraded its forecast because it needs to refresh the iPhone SE

\- Apple downgraded its forecast because its phone prices are too damn high

\- Apple downgraded its forecast because its phone lineup is too confusing

\- Apple downgraded its forecast because iOS 12 has improved performance and
postponed upgrades for another year

These confirmed biases all have a "developed market" vibe. I believe they're
also meaningless in the context of last year's iPhone X launch. Apple _killed_
their estimates last year. Everyone is forgetting this!

None of these theories address Ben's point about the lack of smartphone
differentiation in China (arguably Apple's most important market), which is
(IMO) a more interesting discussion _and_ a stronger headwind to Apple's
financial prospects.

I agree with Ben that the "S" designation is probably hurting the company, as
it introduces 8-quarter "seasonality" into their financial projections because
Chinese consumers are only buying heavily-differentiated form factors.

I _disagree_ that consumers will always buy the flagship iOS device. Then
again, this earnings report just confirms my own bias for phone pricing. :)

~~~
szggzs27
Very good comment. All we know is that Apple underperformed in China and their
strategy to expand asia needs revision. I agree with Ben's points that product
substitution and third parrty software providing the integrations are the main
drivers for deceleration of sales.

------
meritt
> Apple seems to have underestimated iPhone SE demand to a significant degree

I would love to purchase a new iPhone (or Android) if they were to make a new
device with a comparable form factor to the SE. Instead, everything has
progressed to these two-handed monstrosities that have resulted in fanny packs
[1] becoming fashionable again simply to hold the damn things.

[1] [https://www.today.com/style/fanny-packs-are-so-popular-
they-...](https://www.today.com/style/fanny-packs-are-so-popular-they-
make-25-percent-accessory-t145246)

~~~
personlurking
Last month, a Redditor explained why the SE form factor likely won't be
returning.

[https://www.reddit.com/r/apple/comments/a68a1v/we_get_it_you...](https://www.reddit.com/r/apple/comments/a68a1v/we_get_it_you_like_the_size_of_your_se_no_its_not/)

~~~
Despegar
It's also much better for the platform that there isn't such a wide range
between screen sizes. It's incredibly hard to make UIs scale from the SE to
the XS Max and both be as functional and good looking on both.

~~~
zozbot123
> It's also much better for the platform that there isn't such a wide range
> between screen sizes.

Not a wide range? What about the iPad and iPad Pro? iOS apps need a responsive
interface anyway.

~~~
graeme
Ipad apps are separately purchased apps though.

~~~
droussel
Not always, a lot of apps are universal and can be installed on both iPhones
and iPads, with the UI being adapted to each.

~~~
graeme
Oh interesting. If there is a separate install is it still potentially a
universal all? I guess I was wrong.

~~~
droussel
I'm not sure I understand the question. You need to install it on both your
iPhone and your iPad for sure. But universal apps are the exact same binary.
But a lot of developers prefer to create 2 different app, 1 for iPhone and 1
for iPad for various reasons; charging separately for each being one possible
reason.

------
malshe
It's amazing that how everyone but Apple knows how to run their business.

~~~
mtgx
My belief is that Tim Cook's has been running Apple based mostly on inertia
from Steve Jobs. As long as things worked mostly the same way, then not much
needed to be changed to the formula. It's "easy" to increase revenues, when
you benefit from the previous popularity of iPhones, a lot of previous
revenue, and most of what you need to do involves launching the iPhone in _new
countries_. Actually, BlackBerry benefited from a lot of these factors, too,
when its revenue kept growing outside of North America, despite losing market
share rapidly to the iPhone in the US.

But now that things are getting more different, such as prices becoming much
higher, a possible economic downturn around the corner, mid-range phones
becoming "good enough" for most people, the loss of subsidies from carriers,
and so on, Tim Cook is getting a little "lost" in all of this, and doesn't
know the best way forward. Worse, he may have already chosen a way forward
(Apple becoming more "fashion-focus" for instance) and it may be the _wrong
way_.

~~~
addicted
This was probably a good time for Apple to broaden their mac range, and expand
their computer market share. Under the Steve Jobs era, the Mac was always a
premium product, and focused on capturing industry profits rather than market
share. I think switching to focusing on market share would have been a very
good change for them to make.

As a high end product, the mac is likely not gonna make them much more profits
than it already does. However, additional market share would further
strengthen their customer base for the areas which will make them money.
iPhones, iPads, and services.

If Apple were to release a 5-600$ laptop it likely wouldn't make them much
money, but it would create more mac users, and I suspect mac users are
significantly more likely to own iPhones and pay for services like iCloud and
Apple Music than Windows and Linux users.

And TBH, Apple has a massive market in the enterprise just waiting for some
competition. You can see this in the rapid and popular uptake of Google @ Work
services, and Chrome OS in the enterprise and education services. People were
looking for a simpler alternative to the entire MS Exchange ecosystem, and
once again, while these may not have been massive money spinners on their own
(though they definitely could have been that as well), they would form a
strong solid base to sell iPhones to.

~~~
JumpCrisscross
> _I think switching to focusing on market share would have been a very good
> change for them to make_

This would kill Apple. It's a profit share company. It's a profit share
culture. Customer and culture are tightly knit; you don't change one without
altering the other.

------
ken
I was already skeptical in general of articles about Apple doom -- we've seen
those for decades. This year, I'm extra suspicious of any articles that lead
with a chart of Apple stock, without showing for comparison the stock market
overall.

 _Every_ company is suffering right now. AMZN, MSFT, FB, NFLX, and GOOG are
all down 20-40% from their respective peaks 3 months ago, yet nobody seems to
see reason to write articles saying that, say, Amazon's latest offerings are
strategic errors.

~~~
rconti
I suspect you haven't read the article and stopped after glancing at the first
graph. While the graph was, as you say, without context, the point was to
illustrate numerous _other_ stock hits due to iPhone misses.

~~~
ken
No, I never comment without reading the article.

But it strikes me as no different from any other divination. If it's true that
"these errors really were predictable", why are they writing only after the
fact, and why only about Apple?

Every time a stock goes up, down, or stays level, journalists and bloggers
come up with some justification for it, and say that it was obvious in
hindsight. It's usually plausible, but if it's so obvious, why can't they ever
predict it?

If in Apple's case it's all because of product/market issues with the iPhone
line, then why does it happen to correlate almost exactly with the Dow losses?
Is this really an Apple error at all? Is Apple failing because they can't
weather the same storm as everyone else without even getting wet?

~~~
addicted
The author is largely quoting his own historic posts to make his point.

Whatever flaws the author's argument may or may not have, all the 3 points he
presents were points he had made in the past, and not after the fact.

------
jseliger
This is essentially a long way of saying, "Phones are now seeing marginal
improvements, just like PCs. The market is saturated." Or nearing saturation.

I wrote this in another thread, but when my iPhone 6 or 6s seemed to be
failing a couple months ago, I just bought an iPhone 7 instead of the Xs or
whatever the new hotness is. I can afford it but find it too expensive and the
improvements marginal. Seemingly a lot of people are doing what I'm doing.

~~~
tptacek
The piece explicitly rebuts that idea, most especially in its conclusion but
also as the premise for why the market in China was poorly served by the
schedule for the XR. You can disagree with it, but you can't reasonably claim
that it's a long-winded way of saying the market is saturated.

~~~
achompas
It's funny to see the parent's comment in response to an article that
literally claims

> [...] phones, thanks to their centrality in people’s lives as well as the
> greater likelihood of harm, will always have a faster replacement cycle than
> PCs.

Also funny: parent is committing a form of confirmation bias _responding to an
author concerned about confirmation bias._

------
doctorpangloss
These hot takes have really been blaming the consumer lately. Maybe because it
sounds more intellectual to make broad stroke economic observations rather
than talk about personal experiences with iOS versus Android phones, which
often sound like flame wars.

I think people should be honest. Instead of suggesting that Chinese consumers
have this or that idiosyncratic (implied stupid) preference, for which they
have only broad market evidence, commentators should just say what they
actually know from personal experience: that Android phones really, truly
suck. That WeChat is an ecosystem of jank. That most Chinese consumers are
actually smart people and agree with that premise, to the tune of the billions
they spent on iOS devices every year anyhow.

------
simonh
I agree with absolutely everything he says, but I think a big factor not
covered is that I don't think it's only about N versus NS version popularity.
How different those major releases with new form factors are from past models
really matters and particularly in China. The 7 was in theory a form factor
update, but it wasn't different enough. The 5 was a major update, but as the
article pointed out it was a particularly bad cycle.

I think the problem is there aren't that many different distinctive shapes you
can make a phone. Apple has done extremely well in this regard. The jewel case
design and the X design with notch are both outstanding examples. The 6 sold
so well because it was, for an Apple phone, huge. But the jewel case lasted 4
years (more including the CS). Dramatically increasing the screen size works
once. If they stick with the X form factor another few years they will lose
the distinctiveness factor. However major form factor updates aren't something
you can pull off every year indefinitely, for technical reasons sure, but
especially when you have a huge accessories market.

It's really amazing how successfully Apple has maintained their design lead
and distinctiveness, but there's no way they can pull the most unique, most
amazing new rabbits out of the hat every single year.

------
sambroner
I'm surprised that Apple made these forecasting mistakes despite having the
foresight to release an extremely performant iOS 12.

This (performance focus) seemed like a capitulation to market saturation and
longer device ownership cycles.

Either way, I think device makers are going to get hammered as tech plateaus.
Focusing on longevity and usability will be huge differentiators. Apple's
iOS12 seemed like a good move to prepare for this change.

------
aylmao
Not to be under-estimated either: Android in general and Chinese phones.

Android has gotten pretty good. I broke my iPhone 7 earlier this year and am
using a Pixel 2-- I thought I'd switch back, trade it for an X or an XS as
they became available, but to my surprise I actually like it quite a bit.

Many of the complaints I used to have about Android have been worked out, and
there's some cool features (like Night Sight) that I think I'd miss if I
switched back.

Moreover, a lot of cool Android phones were released this year-- I'm sure the
next iPhone, since it wont be an S, will be cooler and bring about a more
radical change.

This past year in Android saw the release of many cool Chinese phones. I'd say
the most exciting phones of the year came from Chinese manufacturers and
featured creative ways to try to get rid of bezels and the notch-- finger-
print sensor behind the srceen, two screens, notch-less with automatic
mechanical parts, I recently even saw a slider-phone [1]! There's the promise
of foldable phones too, which has me intrigued.

My cousin got a mid-tier Xiaomi phone-- it wasn't very expensive but it's
pretty neat. If you do the side-by side comparison, it's not as great as an
iPhone, but at the price, and for his use-cases, the big screen and fast chip
are enough of a fit. I don't know how much iPhones cost in China, but I
wouldn't rule out the fact that tariffs and macro-economics aside, Chinese
phones have just gotten good enough, are probably more widely available, and
honestly also just seem more exciting and creative.

Never thought I'd say this, but I hope Apple (and other manufacturers too)
take some clues and inspiration from Chinese phone manufacturers ¯\\_(ツ)_/¯.

[1]:
[https://www.youtube.com/watch?v=7HCcP0YexTU](https://www.youtube.com/watch?v=7HCcP0YexTU)

~~~
ttul
I would never in my life use a Chinese phone. Chinese manufacturers are
_guaranteed_ to be in the pocket of the CPC and its security services.
Moreover, their record on security and privacy is poor. For a device that is
so intimately tied to my personal data, the premium I pay for Apple's brand is
vastly inferior to the value I would lose by constantly worrying about my
privacy with a Chinese handset.

~~~
kakaorka
Although I prefer iPhones, I don’t think any American manafacturer is not in
the pocket of the NSA.

~~~
ttul
At least NSA follows the rule of law. Yes, you can argue they sometimes don’t,
or they they push things. But there is simply no comparison at all with China
where there is no rule of law at all.

------
maxdo
The price is a big factor. Yes , people will buy the luxury phone , because
there is a demand for that but it’s limited. Governments of so many counties
spending so much money to financially educate people. They are not that
stupid. I was going to do an upgrade , when XS and XS Max price was announced
I was thinking that’s too much I’ll just buy the 1 y.o. iPhone X and that’s
it. Instead they pushed “budget” $800 phone. Phones are going from specs
competition back to normal branding and appealing. Means there will be strong
resistance to buy not premium phone for premium price. They raise the price
since 2 y.o. iPhone 7 almost 2 times. iPhone 7 was the premium device for the
same price as XR. The main mistake they did is abandon iPhone X. They should
release iPhone X , XR could be iPhone X hardware with non OLED screen , and
price lower then X , that would stimulate the demand. Instead I will wait for
the next year to switch to relatively new borderless form factor. And first
time ever I’m checking what’s Samsung i going to present. I’m just not that
stupid to spent $1,500 for smartphone even premium one , also not going to
spent $800 for outdated XR. The main benefit of new iPhones is borderless
trend introduced by Xiaomi 3 years ago. With outdated screen the benefits of
this solution are zeroed. That’s actually why iPhone 8 lineup also failed.
It’s not borderless. Instead of stimulating the biggest reason to upgrade
Apple locked it with extreme pricing and not leveraging biggest trend for 3
years. Only premium segment of Apple products got this trend.

~~~
oflannabhra
Besides your personal anecdote, there is no data to support you premise. Price
increases for the flagship iPhone have resulted with increases of the average
selling price across the entire line.

One of the major points of the article is that _potentially_ , the XR just
like the 5C, did not perform as well as Apple expected, because consumers want
to buy the "best."

------
protomyth
_Customers still prefer Apple’s flagship iPhones, no matter how expensive they
are._

That sounds an awful lot like the wishful thinking that was around Apple in
the early 90's when Apple was going bankrupt and almost got bought by Sun.

~~~
ryanwaggoner
The difference is that Apple is a cash-printing machine, making _$100 billion
dollars per year_ in revenue from the iPhone alone. Seems like people really
_do_ like those phones, and a comparatively tiny drop in the revenue one year
doesn’t mean that’s changed.

------
akmarinov
Didn't Apple move to a 3 year S cycle?

Like iPhone 6, then iPhone 6s, then iPhone 7 all being the same phone and then
introducing a new design with the X.

So with this past year being the XS, this year will be the whatever XS 2 is,
but with the same design, then we can expect a new design next year.

Meaning that their China not upgrading problem, as per the article, will
continue for at least another year.

~~~
shen
In that case you can argue the 8 is also the same as the 6. It's not.

~~~
akmarinov
According to the article, people in China only care about the external design,
so in that sense the 8 is the same as the 6.

------
zanybear
Hindsight is 20-20. When Apple released a forecast of 89 billion dollars with
the bulk of the revenue from the new devices, it seemed more like wishful
thinking, I should have shorted the stock. I wonder if the smart money didn't
do that... they would have recognized this right away. It would have been the
perfect moment to bet.

------
PaulHoule
It is easy to over-analyze this.

Sooner or later Apple's growth was going to slow down. If it wasn't this
quarter, it would be another quarter.

Apple can settle down and be a nice, profitable phone manufacturer. If Apple
is going to grow a lot more it is going to have to get into a new and
radically larger business line and that seems awfully hard.

------
OldHand2018
Fools and their throw-away culture can stuff it. Luxury goods last a long time
and you don't replace them on a regular basis. Angela Ahrendts is probably
bringing some much needed sanity into the tech industry. Getting a new phone
every year is not sustainable.

------
jgrahamc
Since I love the iPhone SE so much I made a special forum just for those of us
who want to discuss it: [https://seclub7.com/](https://seclub7.com/)

------
snazz
Is the psychology really that people prefer having last years “best” than this
year’s “good”? This has not been my experience with close relatives, but the
data seems to show it is in general.

------
lordnacho
If the XR did badly because it wasn't perceived as the top-of-the-line, is
there some other phone that people bought instead?

~~~
post_break
A $29 battery for their current iPhone.

------
benologist
I think Cook's pretty happy to paint over Apple's errors with growing services
revenue. Someone probably showed him how it grows into an iPhone killer that
requires 100,000s fewer employees and no device at all. Then when he got his
AOL dial-up bill for the 1090th time he realized this kind of innovation could
carry Apple for decades.

------
x0x0
I think the thing I realized (and obviously n=1) is there's no longer a single
apple product I recommend to friends and family.

A new iPhone xr with a storage bump and a good charger is over $1k with tax. A
MacBook air is similarly $1600 plus with 256g and a warranty and tax.

There are perfectly serviceable 500 Androids and $750 windows laptops. Apple's
software isn't good enough to double the price.

~~~
criddell
I only recommend Apple stuff to relatives because they can go to a store when
they need help. I wish companies like Google, HP, Dell, Samsung, and any other
big consumer tech companies would open their own stores.

A secondary reason is that I still think Apple has a pretty big advantage when
it comes to security and privacy. When you see Google starting to push RCS
messaging with no default encryption you realize how little they really care
about their user's privacy.

That said, the only Apple hardware I own is an iPad.

~~~
SyneRyder
_> I wish companies like Google, HP, Dell, Samsung, and any other big consumer
tech companies would open their own stores._

They seem to be doing that - Microsoft has a large retail store in Sydney,
Australia, and Samsung has retail stores in several Australian cities of
varying sizes (the Sydney one is huge). The one in my city (Perth) is just a
tiny pop-up stand, but they still do simple on the spot repairs of my Galaxy
S8. Perhaps worth noting, some of the Samsung employees there were ex Apple
Geniuses who had switched.

------
Jemm
OK, reasons I personally am not buying an iPhone right now:

° My current phone works fine. ° VOIP is very poor on iOS, especially compared
to Android. ° Price. ° Apple trying to push platform lock-in and therefore
crippling features on devices. ° Lack of headphone jack. ° Lightning
connector.

Otherwise, I'd be on board in a heartbeat. Here are things I like:

° I love that Apple focused on speeding up iOS. ° I feel that I can trust
Apple a bit more than Google and the others. ° I am also not a huge fan of
Android. ° Apple's hardware is predictable and of good quality.

I wish Apple would put more sensors like SDR and such into their devices. Also
wish they would put GPS in the wifi only iPads.

