
iPhone Sales Drop, and Apple’s 13-Year Surge Ebbs - acalmon
http://www.nytimes.com/2016/04/27/technology/apple-q2-earnings-iphone.html
======
ericabiz
I run a repair shop. We've repaired over 3,000 Apple devices for customers. We
are always chatting with our customers, so we get a ton of feedback from them
about what they're doing with their phones.

We hear a few things consistently:

1) Providers have switched from "free upgrades every 2 years" to a plan cost
and a monthly phone cost, so people now _really know_ how much their phone
costs--and many would rather save the $30 a month than upgrade their phone.
This started with T-Mobile a few years ago and now is how most phone plans
work. This is having a _huge_ impact on people's desire to buy new phones.

2) iPhone 5/5C/5S users have no desire to upgrade to a larger phone. The SE is
going to solve some of this, but it'll more likely be a scenario of "I dropped
my 5S in the toilet and it's completely dead, so I'll upgrade to a SE instead
of dealing with the hassle of finding a legit used 5S." I don't expect to see
a huge push toward the SE from current iPhone 5 users.

3) Repairs are so cheap, so easy and so effective. It's $79 for us to fix an
iPhone 5/5C/5S screen right now, and we can fix it in less than 30 minutes
typically. No reason to upgrade when your old one works just fine and you can
get it fixed cheaply.

Interestingly, the SE screen is 1:1 compatible with the 5S screen, so the SE
is coming out of the gate being cheap and easy to repair as well. I'm
typically recommending the SE if people really want a new phone.

We also ask customers about 3D Touch (the new feature on the 6S/6S+) and if
they're using it if they have a 6S. 99% of people have no idea what it is or
how to use it. They bought a 6S/6S+ because it was pink. Yep, most of the 6S
phones we see are rose gold, and that seems to be the #1 factor driving sales
of that line. If they don't care about the pink and ask me what phone I
recommend, I recommend buying a refurbished 6 over any of the 6S line. (We
don't sell phones, so I have no horse in that race at all.)

~~~
overcast
3D Force Touch was one of those features I feel would have only caught on, if
it was one of the original iPhone features. Tacking it on later, with little
to no support in apps, makes it forgetware. I actually really like the
functionality, and I completely forget it exists. There needs to be some type
of small indicator reminder that a button HAS 3D touch.

~~~
rqebmm
To me its real problem is that it's almost indistinct from long-press. Combine
that with Apple's poor UX discoverability (I'm looking at you, swipe-from-the-
side-to-see-iMessage-timestamps!) and 3D Touch is basically useless.

~~~
orbitur
3D Touch should've _replaced_ long press. I hate that I have to wait, I don't
care that it's 0.4 of a second. A long press is a concession to the fact that
there's no physical button, and 3D Touch should've solved this problem.

But instead I end up triggering a 3D Touch when I want to delete an app.

~~~
digi_owl
What surprises me is that they didn't try to use it to make the keyboard more
"physical".

If the OSK can distinguish a finger resting from a finger pressing, then you
get closer to that of a physical keyboard.

Especially if the resting part can be tied in with the vibration engine to
give a slight nudge to indicate edges of keys, or some such.

~~~
galistoca
That sounds like emulating for the sake of emulating. I'm sure even you would
hate it if you actually saw it in production. Typing on keyboard is shitty as
it is. By making it force touch, it will be much slower to finish a sentence.
When people use physical keyboards their fingers are by default resting on the
keys. When most users type on mobile, they're not. It's easier to NOT rest
fingers on the keys than resting for so many reasons, such as you not being
able to see the keys if your finger is covering them.

~~~
digi_owl
And that is where the vibrate comes in.

the keyboard is of a known layout, and by marking by feel when you move from
one key to the next you know where you are.

This allows the keyboard to be operated without looking, much like how most
people use a ordinary keyboard today once they are past the hunt-and-peck
stage.

A big reason for touch screens being a problem in many situations is that you
have to actually look at it to operate it. Physical buttons, switches and
knobs can be operated by touch alone.

Frankly way too much of modern computing relies on sight and sight alone.

Also, allowing someone to rest on the keyboard is why long typing sessions are
not such a strain on the hands. Without it, the writs has to carry the weight
of the fingers continually.

~~~
galistoca
I'm guessing you downvoted me because you disagree with my point of view. I'll
just tell you this: I have been thinking a lot about the stuff you talk about
here and even prototyped a hardware device to try out the idea. I had the same
point of view (It would be nice to have an input device I can use without even
looking) but after experimenting I realized this isn't the case.

Also this "vibration" thing you're talking about--it's obvious you haven't
thought deeply about this because if you took at least a couple of hours
thinking more about how this would work you would realize vibration itself has
nothing to do with this". I have had a phone that gave you nice tactile
feedback using vibration (Prada phone), and while it does feel nice, it
doesn't do anything in terms of letting me know my input was correct.

Anyway this all doesn't mean anything if you don't really believe me. So let
me ask you a rhetorical question: Do you think you will be able to type into a
blackberry absolutely without looking at the keyboard? Also, when exactly
would you be typing while NOT looking at a _mobile_ screen? Even on a
blackberry people have to look at the screen to make sure they didn't mistype
something (Even with all that tactile feedback). On a desktop computer typing
without looking makes sense because that's the mode in which people use the
device (whereas on a mobile phone the screen and the keyboard are attached so
looking at the screen means also looking at the keyboard)

Anyway if you really believe in these ideas, you should at least try an MVP or
any simple experiment (or maybe even some thought experiment) before being so
sure about it.

~~~
Natanael_L
The Steam gamepad and the Macbook's new touchpads can simulate tactile borders
and shapes on the surface with controlled vibration.

Combine with pressure detection and you can make Swype / SwiftKey provide a
sense of where you're dragging your finger when swipe typing, plus that you
can put emphasis on the right letters easily when swiping across groups of
letters that would make for different words, making for better precision in
the word suggestions.

It would also be much easier to implement gesture support by having areas much
easier to target that you start gestures from or end them in. You'd also
instantly get tactile feedback telling you if you made the gesture right or
not, like for switching character sets or for moving the cursor.

Lots of gestures could be supported, where you'd essentially be "asked" with
tactile feedback to push harder after making the gesture to activate the
particular action. Suddenly you solved both accessibility, discoverability and
precision, while reducing the error rate.

~~~
galistoca
What you say doesn't change anything significantly, which means it doesn't
change the way we type on mobile phones--you still need to look at the screen.
Also it's a bit of a stretch thinking because it works on a game controller
with limited number of inputs, it will work on a keyboard with way more keys,
isn't it?

As I mentioned above, I explored into building a mobile device that you can
type into without looking, and my first hypothesis was "tactile feedback is
key". And turns out there are many many other factors at play. Even if Apple
built something like you say, that won't make more people buy iPhones, it's
just an incremental innovation that doesn't significantly change any user
behavior for the better.

~~~
galistoca
Like you said, you still need look at the screen to see if you're typing in
correctly. I am not sure if you read my original comment, but this is one
thing I learned while experimenting that's obvious in hindsight. On your
computer, you can type _completely_ without looking at your keyboard because
you are looking at the monitor/screen which is a separate device from the
keyboard. On a mobile device, they are a single screen. Which means you still
have to look at the screen portion of the "screen" even when you don't need to
look at the "keyboard" portion. Which is why it doesn't make any
groundbreaking improvements even if implemented. At best it's just some minor
add-on convenience. Your steam controllers example is exactly the same as
computer keyboards because you're looking at a large screen (which is again a
separate device from your gamepad) when you're playing games.

~~~
Natanael_L
Your assumption is that they only help accuracy. Instead they can allow you to
visually hide important UX elements and yet keep them discoverable.

I'll have to think a bit longer to come up with good examples.

Edit: non-scrolling swipe gestures are where this is the most valuable.

Improved Google Photos app image selection: a hard press would start
selection, and as you continously to drag to select it would provide tactile
feedback for where the image borders are, making accidental selection less
likely and quicker to detect. Selection would stop on release (to make
scrolling easy). Hard press and swipe again to continue the selection.

~~~
galistoca
If you trace this thread all the way back to its root, the guy said having
tactile feedback will solve the problem of not being able to type without
looking, and I said I have tried and it doesn't. Of course there are many ways
tactile feedback can improve experience. But in any case, I don't think it's a
significant change. Even if you could do all you mentioned it's just an
incremental innovation. When iPhone first came out it changed everything by
getting rid of physical keyboards because a "soft" keyboard that adapts to its
container app is much more flexible than a physical keyboard. That started
this entire app ecosystem. But I don't think these nifty little touch UI
innovations will change anything further as far as iPhone is concerned. As an
example 3d touch is an interesting and sometimes even magical technology but
it hardly makes any difference in purchase decisions.

------
skywhopper
It probably doesn't help that the subsidy model has completely changed. But
personally, I think iPhone performance has hit a point where one doesn't
really feel the need to upgrade right away. I was so ready to upgrade when the
contract on my 4 expired. It was really a pain to use after a couple of years.
But my 5S has now lasted me two and a half years and other than wishing I had
more storage capacity, there's really nothing compelling in the new models for
me to want to upgrade. The build quality and battery are so good that I don't
feel like it's even getting worn out. The better cameras would be nice, but
otherwise? I just can't justify the cost, much as I'd like to, so long as my
5S keeps performing.

I do think Apple needs to focus their money and efforts on improving their
services and software integration. There's a lot to like in Apple services,
but there's a lot of rough edges and weird gaps, and too often I feel like
apps get written and then abandoned. If you bundle an app, it should have a
dedicated team that keeps making it better, faster, easier to use all the
time.

I also feel like Apple has a real chance to make a mark on the home automation
market if they chose to do so. The best stuff out there is still pretty bad,
and pretty much all of it spies on you. Based on how they've been adding
context-aware features to iPhone in a very privacy-conscious way, Apple is the
one company I would still trust to actually try to do home automation in a way
that respects my privacy. And they have the money to invest in making it
happen. But while I'm sure their hardware would be well-made, can they raise
their software polish to the same level?

~~~
yoodenvranx
> I think iPhone performance has hit a point where one doesn't really feel the
> need to upgrade right away

I have a cheap 2014 Motorola Moto G and I have the same "problem". Yes, there
are hundreds of modern phones out there which are several times faster and
have way better hardware but the Moto G is fast enough for me.

I usually just browse the web, type a few messages in Whatsapp, take a few
pictures, ... and the phone does all of this well enough so that I just don't
have any reason to invest 500+ Euro in a new phone.

Another bonus is that if I accidentally drop my phone I can just buy a new one
(or two) and it will still be cheaper than an iPhone or other similar phones.

~~~
_delirium
You might not even get a perceptual performance boost at all. I recently
upgraded from a 2013 Moto G to a current-gen Nexus 5x and it feels about the
same, maybe even slightly slower, in terms of latency for common tasks and how
often it gets bogged down. I think part of the problem is that the new phone
has a higher-res screen, which some apps (like Facebook) adapt to by shipping
much larger icon sets, loading higher-res images and video, etc., which
negates any performance improvements. The camera is definitely nicer, though.

~~~
barrkel
The 5X is slower in single thread code than the Nexus 5 from 2013. It has 6
rather than 4 cores but not many apps can take advantage.

~~~
gjvc
Nexus 5 is one of the all-time greats of the smartphone era.

~~~
auggierose
Yep. I got one too, and see no need to upgrade anytime soon.

------
bsirkia
Incredible that this is the first time in 13 years that Apple hasn't posted
quarterly growth. I'm sure there will be lots of "Apple has lost its ability
to innovate" articles based on this, but growing for the last ~52 straight
quarters is insane.

And I don't think one quarter without growth is enough evidence to conclude
"Apple may be reaching the saturation point among potential customers in some
countries" or "other smartphone makers using Google’s Android operating system
continue to challenge the company with powerful, lower-price devices."

~~~
mjfern
There is something fundamentally wrong with our system that "growth" is used
as the main metric for assessing business success. It's growth for the sake of
growth (and more $), and not deploying business to solve hard customer
problems and to make the world a little bit better.

~~~
darkclarity
That's a big reason why private businesses are better than public ones.
There's no need to push for unsustainable growth at the behest of busybody
investors.

~~~
bluthru
I feel Apple would be better as a private company but it's too late at this
point.

~~~
rtpg
Is there a way for a company like Apple to secretly buy back stock? I feel
like at one point it would show up in the books...

~~~
beeboop
Not really, no. There are laws in place to force transparency in stuff like
this, and rightfully so.

------
JamilD
The expectation was $2.00 EPS, Apple reported $1.90. AAPL is down in after-
hours trading right now, at 95.91 from 104.35 at market close (as of 5:20 PM).

This is a significant earnings report as it's the first to break 13 years of
continuous growth. Revenue was down 13%.

• Q2 EPS: $1.90, down 22% YoY, versus expectations of $1.99

• Q2 revenue: $50.6 billion, down 13% YoY, versus expectations of $52 billion

• Gross margin: 39.4% versus 40.8% last year and expectations of 39.47%

• iPhone unit sales: 51.2 million, down 17% YoY, versus expectations of 50.7
million

• iPhone ASP: $644.25, down 2% YoY, versus $651 expected

• iPad unit sales: 10.2 million, down 19% YoY, versus expectations of 9.4
million

• Mac unit sales: 4.03 million, down 11% YoY, versus expectations of 4.6
million

• Q3 revenue guidance: $41 billion and $43 billion, versus expectations of
$47.35 billion

~~~
rdtsc
> AAPL is essentially in freefall right now, down from 104.35 at market close
> (~97.00 around 5 PM).

It looks like it is just going back to where it was in Feb? (90 or so). I
guess if it keeps heading down below that it would be alarming.

------
IkmoIkmo
Well, they had a good run. I wonder what's next.

I don't think anyone was surprised though, around 2014 we saw the writing on
the wall. I mean take the Nexus 5, I have plenty of friends who have one and
it's basically like they bought a microwave. It just works, it's fine, and
they're expressing 0, and I really mean 0 interest in upgrading their
microwave. They'll keep it for as long as the battery lasts and they don't
break it. And that's really a last-generation phenomenon, before two years ago
I was looking forward to new mobile tech. Now the changes aren't meaningful
anymore.

And now people are openly expressing it, too. Like the CEO of sony, who spoke
about the end of innovation in smartphones a few months ago. I mean take my
dad, he just bought an LG G3 for $8 a month on a 2 year contract. Now this
phone is 2 years old, not top of the line... but it's $8 a month and it comes
with a nice screen that's almost double the PPI of the latest iphone, 3gb of
ram, a nice snapdragon 801 chip, 3000 mAh battery, it just works fine and it's
just really cheap. In two years, the latest G5 will be $200 too, and you'll
buy G3 like phones for $100. What can we innovate in smartphones that's worth
$700 to most people? That used to buy you a magical device that could do
things nothing else could, in your pocket just a few years ago.

Anyway, I wonder what's next for Apple. There's no rumours of anything
happening except its car. Wearables will expand. But they're all late or super
late to market in these product categories. That's not a bad thing, they'll
obviously make money, but it's not comparable to creating a real smartphone
industry.

~~~
mattmanser
Nexus 5 was phenomenally good though for the price point/no-crapware bundle.
Coupled with Android finally being good enough to at least rival iOS, it was
the start of a new era. Certainly in the UK, since buying my Nexus 5, android
has gone from like 6% to 40% of mobiles hitting the websites I manage (the EU
market has always been heavily iOS skewed compared to America).

My battery crapped out rather quickly, but a replacement has extended its
life.

~~~
IkmoIkmo
> The EU market has always been heavily iOS skewed compared to America

On the contrary! iOS relative to Android is more popular in the US than in the
EU.

------
abritinthebay
In this thread: lots of people making unfounded assumuptions and drawing dumb
conclusions when anyone who has been paying attention knew this was coming as
_Apple even said so last quarter_.

The last year quarter was buoyed by previous quarter supply constraints
causing a lot more sales in many categories and products.

It's not that this quarter was bad (it was fine) it's that last years quarter
was SO GOOD and last quarter had no major supply constraints that we see this.

Basically - Apple has got so good at the supply chain it's hurting their
numbers for quarters with no new releases.

But sure, start speculating about [insert your favorite phone] and writing
screeds about phone subsidies/performance/innovation/whatever. It won't be
right... but you'll feel better I guess.

~~~
wdewind
As someone who basically looked at this as confirming what I believed about
the iPhone 6/\+ (ie: that it is too big and no one likes it and Apple's sales
are going to fall), thanks for this post. Changed my view.

~~~
abritinthebay
You're very welcome!

I think sales are going to slow down but that is a case of less growth to be
had in western markets.

Still plenty of growth opportunities in other markets but they'll be slower

------
rrggrr
50.6b net income on 39.4% gross margins. A bit early to be writing Apple's
obituary or anything even close. Retail is suffering nationwide and I suspect
Apple is caught up in this decline.

~~~
nugget
More likely mobile is headed quietly down the path of the PC - fewer
generational improvements means people keep devices longer and there isn't as
much of a reason to buy new hardware so sales flatline. Great business still
but Wall Street hates that narrative. They want the next hot growth market --
VR perhaps when its killer app moment arrives.

~~~
rrggrr
I'll say this: Amazon Echo cut Apple's growth balls right off. That's a $2b
revenue business Siri can kiss goodbye.

~~~
coldtea
> _I 'll say this: Amazon Echo cut Apple's growth balls right off. That's a
> $2b revenue business Siri can kiss goodbye._

$2b is spare change for Apple -- I don't see Echo going places anyway, it will
end more or less like the Kindle is now.

In fact, Amazon's whole profit was around $100 million last year -- and it's
the first year it ever had any profit IIRC. I don't see those $100 million
profit per year threatening the $18 BILLION profit per QUARTER anytime soon.

~~~
aetherson
If you're talking about "threats," I don't see what retained earnings have to
do with anything. Amazon's revenue is roughly half of what Apple's is --
Amazon is significantly smaller, but it's in same ballpark as Apple, not
orders of magnitude smaller.

Amazon prices its products for thin margins and aggressively moves into new
product spaces (sometimes with spectacular failures). Apple prices its
products for thick margins and returns a lot of money to investors with stock
buybacks. Using profits as a metric to compare these two companies
holistically is specious.

~~~
coldtea
> _Amazon prices its products for thin margins and aggressively moves into new
> product spaces (sometimes with spectacular failures). Apple prices its
> products for thick margins and returns a lot of money to investors with
> stock buybacks. Using profits as a metric to compare these two companies
> holistically is specious._

I thought capitalism was a for-profit endeavour. Unless Amazon runs as a non-
profit, it's just people investing in perpetuity based on pure
belief/speculation of imagined future profit (and of course, on actual stock-
based profits). Not that different from any pyramid scheme, which is why
historically the stock market has periodical bubbles and crashes.

Those kind of rewards for the kind of actual prospects the company has are
more or less a speculative bubble, with little basis on objective reality.
$600 billion in "cash" on the other hand, that's something to keep you going
and to talk about.

Apple could even get to be privately owned company with their buybacks --
Amazon wouldn't even stand a year as one at their churn rate.

> _Amazon prices its products for thin margins and aggressively moves into new
> product spaces_

Walmart does thin margins too -- but with huge revenues and profits compared
to Amazon.

------
blondie9x
The era where cell phone companies offered phone subsidies as trade for a
customer's long term commitment has ended. The impact this is having and will
continue to have on smartphone sales is profound. It is much more likely that
customers will upgrade their devices less frequently. We are already beginning
to see the impact in Apple and Samsung earnings.

~~~
eli
I don't really buy that. Can you point to any evidence people are updating
devices less frequently? Apple sold more iPhones in Q1 of 2016 then they did
in Q1 of 2015 so are you extrapolating from a single down quarter?

~~~
Retric
I personally did not upgrade from the 4s because the subsidy ended. Relatively
the iPhone 6 vs 5 was an unusually big jump for Apple which confuses the
issue.

~~~
r00fus
Data >> anecdotes

~~~
Retric
Woosh. Sure, and the laws of supply and demand change when your talking about
a phone. Cost up, demand down.

The point was in most peoples minds the iPhone 4 vs 5 jump was smaller than
the 5 vs 6. And the 5 needed a new connector. So, we are stuck with an apples
to apples to oranges comparison.

Samsung sales also dropped that's significant and they lack a stark A vs B
model year comparison due to massive numbers of phones being regularly
released. [http://www.gsmarena.com/samsung-
phones-9.php](http://www.gsmarena.com/samsung-phones-9.php)

------
cthulhujr
>Its newest smartphone, the four-inch iPhone SE, went on sale in late March,
too late to affect the most recent quarterly results, but analysts hope to get
more insight into how it is selling.

Went to the Apple Store in my large metro and they were out of almost every
model. The associate searched other stores and there wasn't much within 1500
miles. Anecdotal, but it looks like the demand is outpacing the supply of the
iPhone SE. It'll be interesting to see the sales numbers.

~~~
mikestew
Two to three weeks from the Apple Store when I checked this morning. I don't
know if it's heavier-than-expected demand, or if they just don't keep that
many in the pipeline (which I guess amounts to the same thing). My wife just
broke hers (yes, again), so the plan is to at some point give her my 6S and I
get a new 5SE, because I want my smaller screen back. It would seem that
perhaps I'm not the only one.

------
reubenswartz
For me, the main reason to upgrade phones is to get a better camera, so I can
take better pictures of my kids. Other than that, most of the features are
"nice to have". Don't get me wrong, I like Touch ID, I like the big screen of
the plus (but not the size and slipperiness of the phone), but nothing has
been a compelling upgrade, other than camera improvements.

In many ways, this is a credit to Apple doing a great job. On the other hand,
the real challenge with driving iOS upgrades is software. There's no killer
app that requires the latest hardware, unless you care about games and maybe a
few drawing apps on the iPad.

~~~
r00fus
Dunno about you, but TouchID is indispensable to me. I would not buy another
phone without it (or something as secure).

With TouchID + strong alphanumeric password, I can be secure in my person. My
data is far more valuable than just the hunk of metal and glass it resides on.

I think Apple should do an expansion of their 2008 iFund, but writ bigger (and
maybe focused on the watch and apple TV).

~~~
mdorazio
Out of curiosity, in what way do you feel TouchID makes your phone more secure
than just a password? Someone could steal a glass you've touched along with
your phone and unlock it with a bit of effort. From a technical standpoint,
the only thing TouchID adds in terms of security is preventing someone from
peering over your shoulder at a passcode as you enter it, but a would-be thief
is more probably far more concerned with selling the hardware than ransoming
your data. And if they want your data, iCloud and other services are the real
weakpoint.

~~~
coldtea
> _Out of curiosity, in what way do you feel TouchID makes your phone more
> secure than just a password? Someone could steal a glass you 've touched
> along with your phone and unlock it with a bit of effort._

Well, quite a lot more effort.

I don't want my data/photos/etc to fell pray to a phone thief -- or a guy that
finds the phone after I dropped in a cafe. And Touch ID does that fine.

The "fingerprint on glass" scenario you mention concerns dedicated people
targeting my data especially -- which is not something I realistically care
about. If such people were after my data, they could also use a crowbar and
beat me till I tell them my secrets...

> _but a would-be thief is more probably far more concerned with selling the
> hardware than ransoming your data._

Yes, and I am more concerned about my data than about the hardware -- after
all at that point it is already in the thief's hands.

~~~
mdorazio
It's actually less effort, though. It's basically impossible at this point to
brute force an iPhone password, and even if you use TouchID a thief could
theoretically still try and break in using the backup numeric password. Also
it's been shown that depending on how you use your phone, usable fingerprints
can be lifted right off the screen (you touch it all the time after all), so
someone who is after your data doesn't even need a separate fingerprint
source. To me, TouchID is a convenience feature, not a security one.

~~~
r00fus
Where has that been demo'd using anything like a realistic scenario? Every
iPhone since the 3GS had oleophobic glass - combine with cloth pockets and any
fingerprints are not going to be high-quality enough to survive for long.

~~~
mdorazio
Here you go: [http://www.heise.de/video/artikel/iPhone-5s-Touch-ID-hack-
in...](http://www.heise.de/video/artikel/iPhone-5s-Touch-ID-hack-in-
detail-1966044.html)

The oleophobic glass coating is a joke, at least on my 5s. I can easily make
out a clear fingerprint from touching the screen with a solid press.

------
FreedomToCreate
So anyone thinking planned obsolesce might move itself up the Apple priority
list? Their per quarter revenue is still massive, but Wall Street always
expects more. At its current rate of stock buy back, Apple could buy back all
of its stocks and go private in a few years. They could rid themselves of
market fluctuations in regard to stock and pump out products while continuing
making the ridiculous amounts or revenue and overcome the need to take
shortcuts for the sake of Wall Streets obsession with non-stop growth.

~~~
adrenalinelol
This was inevitable for Apple; their stratospheric valuation has expected
growth priced in. Given the company's inability to foster the same ambition
Steve Jobs instilled in it, they can only ride on their existing product line
for so long.

I do find their lack of acquisitions strange given how much capital they are
sitting on. There are a lot of markets w/high barriers to entry they'd have no
trouble getting their foot in the door(Gaming, On Demand Streaming, etc...).

~~~
jsight
At a PE ratio that is heading rapidly towards the single digits, I would argue
that they don't have growth earnings growth priced in at all.

------
tma-1
> The Company also announced that its Board of Directors has authorized an
> increase of $50 billion to the Company’s program to return capital to
> shareholders. Under the expanded program, Apple plans to spend a cumulative
> total of $250 billion of cash by the end of March 2018.

My god, that $50 billion expansion is 7% of the company at the current market
cap.

~~~
adventured
It's actually an even more astounding 8.65% of the current market cap ($578
billion).

I'm glad to see them returning capital to shareholders. However I worry about
the debt they're taking on in order to do so, due to most of their cash being
overseas. If things continue to slide for them, for whatever reason (iPhone
loses favor, smartphone sales keep contracting globally, something replaces
the smartphone, etc), it will pin them into a disastrous situation of
extremely high debt and crashing sales (while having committed to very large
payouts to shareholders).

~~~
rtpg
Well, they can always bring their cash back right? (it will be taxed, but it's
still a formidable warchest) Or somehow pay back debt through some overseas
shenanigans....

Not a great situation to be in but I can't imagine it getting big enough to
where Apple could no longer handle it. Maybe I'm underestimating interest
rates

~~~
lmm
If they ever start losing money couldn't they just move the same amount in
from overseas? It wouldn't be profit so it wouldn't be taxed, no?

------
jonknee
tl;dr it's hard to find lots of new people every quarter who can afford $600
phones.

~~~
matwood
Or it's just gadget saturation in general. My MBP from a few years ago works
great. Some of the older iPads I have at work are just fine. The iPhone 6/6+
also works just great. At some point, the marginal utility of a new device
just isn't there. It is what happens as markets mature.

~~~
deegles
My iPad v1 still works. Not great, but it's still around.

~~~
viraptor
Isn't that still on iOS 5? I'd be afraid to connect it to the internet now.
(it's not supported/updated anymore)

------
_nullandnull_
I'm not surprised. I think Apple underestimated the demand for the iphone SE
64 GB. Its been out of stock in most stores since it was released. Apple's
shareholders should be asking why can't anyone buy it in a store? Also many
people don't want wait two weeks to receive their phone when they buy it
online.

~~~
stouset
People can't buy it in a store, because like pretty much every model that came
before it, they're massively supply constrained.

They've gotten better about it, but there's only so much you can do when
you're producing a high-tech item being purchased tens of millions of times
per week globally.

~~~
_nullandnull_
Looks like the SE didn't matter. Interesting note from Apple conference call.
"2:11 pm iPhone SE not included in these results, as it launched after the end
of the quarter, but demand has been very strong. Demand exceeds supply, but
we're working hard to meet demand. iPhone SE puts us in strategic plan to
attract new customers."

Source -
[http://www.macrumors.com/2016/04/26/q2-2016-earnings/](http://www.macrumors.com/2016/04/26/q2-2016-earnings/)

------
yoda_sl
The key numbers from the Press Release: The Company posted quarterly revenue
of $50.6 billion and quarterly net income of $10.5 billion, or $1.90 per
diluted share. These results compare to revenue of $58 billion and net income
of $13.6 billion, or $2.33 per diluted share, in the year-ago quarter. Gross
margin was 39.4 percent compared to 40.8 percent in the year-ago quarter.
International sales accounted for 67 percent of the quarter’s revenue.

So not really a surprise from what they announced at previous quarter.

------
grandalf
I love my iPhone 6+ but while overall the ecosystem is getting better, the
device is more laggy and glitchy than previous models.

Apple Pay always gets triggered by accident when I try to unlock using the
fingerprint, and once in a while random apps seem to heat up the phone and
drain the battery before I realize what is going on.

I think small things like the minor points of perceived quality that I'm
describing can have a big impact on sales. When a phone costs $800 people
expect a very solid experience with no glitches.

~~~
yourapostasy
Absolutely on point. There are numerous points where the polish is missing.
For smartphones at Apple's preferred high-end price point, if the user
experience doesn't feel like the designers anticipated user needs, then an
Android will look "good enough". The gap between "good enough" and "just
works" is gigantic, and is only breached by psychotic amounts of attention to
detail:

1\. Create an appointment, set the geographic destination, start setting
alarms and about half the time Calendar crashes.

2\. No gesture to make a copy of an appointment in Calendar.

3\. No API for Siri.

4\. Dial into a conference call with a passcode. Start a second call, and try
to dial into another phone number with a passcode from Contacts or Calendar.
It dials the number but not the passcode (iOS ignores everything after the
phone number for the second call).

5\. Come back into cell range from a long absence and receive a barrage of
voicemail notifications about voicemails you've previously been notified
about.

6\. Add a field in Contacts, and the cursor and focus stay in the "add field"
area of the record, while the actual field is above that area. You have to
scroll up, find the field as the keyboard appears, then key in the field.
Older versions of iOS had the behavior correct: adding a field moves the focus
to the field in the record.

These and more warts arguably should not exist in a high-end, premium
smartphone.

~~~
bluedino
Trim a video, save as original, and then you "lose it" until you go back home
and then back to photos

------
partiallypro
Sales faltering...just wait until the margins dip. Hardware margins the size
Apple has enjoyed are incredibly rare and never have lasted with any company,
period. Their hardware margins are on par, or even above many software
vendors, which is just unsustainable. It's a great product, but the upgrade
cycle is lengthening, and margins are going to fall. Same happened to the PC,
same started to happen with the tablet, and the same will happen to the phone
market.

~~~
adventured
> Hardware margins the size Apple has enjoyed are incredibly rare and never
> have lasted with any company, period

Intel has routinely maintained gross profit margins of 60%+ for decades on its
microprocessor sales. Their hardware margins put Apple to shame.

~~~
john_reel
Isn’t it closer to 30% when you factor in the cost it takes to build a fab? I
remember reading something about that.

------
c-slice
I think we just reached peak smartphone. What's next?

~~~
swalsh
VAR - Virtual/Augmented Reality.

Also, i'm hoping my future glasses have some kind of mechanism built in that
will let me text with my mind... even if that means thinking about moving
shapes or colors or something to do it.

~~~
supercoder
VR is still about 10 years away before it moves into the mainstream. Currently
it's just looking like a gaming accessory and has a long way to go before it's
much more

~~~
majani
But VR/augmented reality is still the next big thing. The demand in commerce
and advertising is for more and more invasive media, I'd say any prediction
towards this goal is dead on. It's just a matter of finding well priced,
socially acceptable gear.

------
revelation
Are we past peak-smartphone or is this just noise from model release
schedules?

It took PCs 20+ years to get good enough, smartphones managed the same in much
less than 10 it seems.

~~~
tetraodonpuffer
now that phones are quite fast and have good cameras, what is the main driver
towards upgrading? so that you go from 300ppi to 500ppi? not going to make
much of a difference and for most people not worth the upgrade costs.

The only issue is that phone manufacturers have even more of an incentive to
bloat the OS more and more (and make it slower and slower on old models) and
to deprecate it faster (on older models) so they can sell more hardware if
people want to get the latest security fixes / software

~~~
exacube
in general, hardware improvements will drive new swanky software, and make
computing on smartphones closer to a first class citizen (remember motorola's
laptop+phone dock, where the phone powers the laptop?).

another big pain point is battery (and battery consumption). still waiting on
hardware (and software in conjunction) to get more efficient. you'll remember
how power hungry PCs were in the beginning and how much better they are now
(laptops notably).

feels to me like we still have many years to go, and many more "big"
technology investments.

~~~
petra
Xiaomi's redmi series can last a day of heavy use and even 2 days with lighter
use. So i wonder why isn't this solved for others already.

------
fataliss
Sweet, time to buy more. I was holding off since it was obvious that prices
over 100$/share without any new products to excite the imagination of traders
with no technology background wasn't going to last forever. It' always
interesting to me how wall street lacks any depth in their analysis. Direct
sales and revenues are basically the only metrics they look at. Which is fine
for a small company but when you are looking at a 700B company, spending 8B a
year in R&D being that shortsighted is almost funny.

------
venomsnake
For any exponential function comes time when its growth cannot be sustained.
Smartphones are boring and mature, we haven't had killer app in ages - welcome
to the PC market of 2007.

~~~
marblar
That’s a logistic function, not an exponential.

~~~
venomsnake
Expecting x% growth year over year is exponential, I think

------
Shivetya
Well besides the obvious about the decline in phone sales I think the primary
reasons is Apple's steadfast refusal to get in lower margin markets. Sorry,
but a four hundred dollar phone is still not cheap enough especially when you
consider the monthly usage fees following the purchase.

Then we see tablets and all Apple has done is release newer models with higher
price points and worse more expensive add ons.

Finally, their cheapest desktop is eleven hundred and cheapest laptop is nine
hundred for a low powered system, the first realistic laptops start at
thirteen hundred. No I don't really count the Mac Mini because it never seems
to register on people's radar and by the time you add on the monitor and such
its up close to eight and nine hundred.

I won't even touch that Watch, its price or the silliness of that is the price
of just the bands.

Apple's failure is that it won't go low. They don't have to go rock bottom but
they damn well need to push "LE" models or the like. Redo the first Air with a
few minor upgrades as the Air LE, 299... get an iMac out for the public nearer
seven hundred. Get the rest of the iMac line back into realistic pricing
especially for SSD upgrades. Please update the Mac Pro, really how long are
they going to ignore it?

tl;dr Apple simply priced them out of too many markets, either out of
ignorance or arrogance.

------
epalmer
I just upgraded from being a long time iPhone user to a nexus6p and an
delighted. Most of the UI makes more sense to me. The camera is amazing and
the integration with Google apps as first class apps is a positive. Being able
to voice command the device without a power cord plugged in is an added
benefit. I can't imagine going back to iPhones.

------
reuven
My wife has an iPhone 4. She's not a technical person; she just wants a phone
and some apps. She has no interest in upgrading.

Moreover, her iPhone 4 was the first smartphone in our family. Since she got
her phone (and stuck with it), I've gone through at least four or five phones
-- always because they broke, not because I was interested in upgrading.

So I'm guessing that while there are lots of Apple gotta-have-the-latest
people out there, most people just want a phone that works. And if Apple's
hardware and software quality are good (or even half-good), then people will
just keep using their old phones.

Which means that Apple will continue to sell phones, but the number of people
who will buy or upgrade each year will shrink, at least to some degree.

It should also be noted that Apple is still very profitable! It's just _less_
profitable than it was last year.

------
toyg
Apple is not doomed, but I think they've taken their eyes off the ball a bit.
Watch and iPad Pro are me-too products, and the switch to flat interfaces cost
them a lot of differentiation IMHO. They've cheapened their brand and they
don't seem to know what market they should really disrupt.

~~~
cowpewter
The iPad Pro is actually really awesome for artists. Pro + Pencil is a better
experience than a Wacom Cintiq display, and it's a whole tablet for about the
same price point, not just a display.

~~~
wslh
Any experience on the Microsoft Surface? It seems it works very well for
artists also.

~~~
allsystemsgo
Apple Pencil is pretty incredibly and trumps the stylus offered by Microsoft
IMHO.

------
Corrado
I've said this before but I think it's because my socks are most definitely
still on my feet, and have been for the last several years. Apple used to come
up with new, distinctive, products that had me gasping for air and
figuratively knocking my socks off. Not anymore. I don't want to say it's
because of the loss of Jobs but it sure seems that way. I really like Tim but
he seems like a production guy instead of a product guy.

Come on Apple, where are the revolutionary products of yesteryear? 3D
displays? AR/VR technology? Home automation? iPod headphones? Voice
recognition (ala Alexa)? I used to look to Apple for a glimpse of the future;
not anymore. :(

------
jsz0
The concerning part of this is how little Apple did to get ahead of the market
saturation problem before it started impacting sales. They had plenty of
warning. Analysts have been predicting this for years. They waited way too
long to release iPhones with larger displays. Then it takes more than a year
to update the 4" model and when they do it gets released with a nearly
identical enclosure to a 3 year old phone. Current rumors suggest the iPhone 7
may share a very similar design to the iPhone 6/S which is just baffling to me
if true. When market saturation is a problem it seems like the absolute worst
thing you could do is keep recycling 2-3 year old designs.

------
Aelinsaar
Is this something that Apple can address with more competitive pricing in
China?

~~~
scholia
More competitive pricing would reduce margins. Apple has chosen to pursue high
margins and high profits rather than market share. That's how it accumulated
roughly $200 billion in cash.

~~~
Aelinsaar
Exactly. Does that leave them with the flexibility to fundamentally change
their business model to narrower margins?

~~~
scholia
In theory, yes, but Apple sells premium products at premium prices and many
people actually _like_ paying more.

There's inevitably a show-off element to it, but I think there's psychological
research to show that people appreciate products more when they pay more for
them. (But I can't find any evidence from a quick google....)

------
Geojim
Cut prices on their ageing cash cow, or start flogging that faltering horse?

Smart money's on the latter. Kinda painful to re-watch the Apple II moment
while android ambles off into the sunset with all the users....

------
matt_wulfeck
I'm curious what other people think about the ecosystem as a catalyst, in
particular Apple Pay. It seems to be that squeezing between iPhone owners and
everyday purchases would be very lucrative.

~~~
mmanfrin

        It seems to be that squeezing between iPhone owners and everyday 
        purchases would be very lucrative
    

And something that Banks will very strongly oppose. How many places can you
use Apple Pay right now? I _love_ Android Pay, but the only store I can use it
at is Walgreens -- no where else I go takes it. Banks still hold a huge amount
of power at the point-of-sale market, and they will not give up their margins
to Apple.

~~~
jws
US here… my pharmacy, grocery, gasoline station, and computer hardware store
all take it. It's not like I spend money anywhere else. (Also three of those
four have negligently compromised my credit card numbers in the past, so I
appreciate giving them as little data as possible.)

Only one restaurant I go to takes it, the one that has little terminals at
each table. I'm not sure how the mechanics will play out for restaurant
payment. Personally I don't like the table terminal, but maybe someone will
come up with a bill carrier that can take payment.

~~~
Mister_Snuggles
Here in Canada, we have mobile debit/credit terminals that the waitstaff bring
to the tables. They currently support swipe, chip & pin, and tap, so I assume
that they'd support Apple Pay without too much trouble.

------
erydo
This is a small anecdote, but: I'm happy with my current iPhone and the
current models aren't additionally compelling enough to me to upgrade.

I have an iPhone 5S and don't want a larger one. When the iPhone SE came out,
I was excited until I found out it didn't have force touch, which was the main
interesting feature to me about the new lineup. Other than Apple Pay it seems
I have very little reason to upgrade until this one dies or breaks. I don't
see being satisfied with their product as a black mark against them.

~~~
dijit
I have a 6s and I'd really like to go back to my 5s, for me that was "peak
phone", did everything I wanted, in a good form factor, great battery life,
was the perfect size.

I originally upgraded because I wanted NFC and "it was time", but nothing is
using the NFC chip in my phone so why bother?

I'm considering buying the SE but my girlfriend is hampering me, she says a 6s
is a status symbol. I guess for a lot of people they'll just upgrade anyway.

------
okc
I only see it as a matter of time before brands like Xiaomi make cheaper and
better products for sale beyond their current dominance in 'developing
countries'. We need to catch up.

~~~
petra
There was recently a story saying $400 smartphones are almost as good as
flagships. Also huawei is attacking the american market with a great $200
phone.

~~~
okc
I got a phone in Taiwan 1 year ago which was a third of the price of a recent
laptop/tablet I purchased in England. The phone had far better specs.

Check out the Redmi Note 3, on sale in India for about £100:

The Xiaomi Redmi Note 3 is available in two RAM and storage versions - one
including 2GB of RAM and 16GB of inbuilt storage, and other 3GB of RAM and
32GB of inbuilt storage. The 2GB variant is priced at Rs. 9,999, while the 3GB
variant is priced at Rs. 11,999.

The highlight of the new Redmi Note 3 is it packs a hexa-core Snapdragon 650
processor (four Cortex-A53 cores clocked at 1.4GHz and two Cortex-A72 cores
clocked at 1.8GHz). Other specifications of the smartphone are identical with
the original, including a 5.5-inch full-HD 1080x1920 pixels IPS display and
offers 178-degree viewing angle. It runs MIUI 7 based on Android Lollipop and
supports dual 4G SIM cards (Micro + Nano).

The Redmi Note 3 packs a 4050mAh battery with fast charging support that can
charge up to 50 percent in 1 hour. On the camera front, the Xiaomi Redmi Note
3 sports a 16-megapixel rear camera with phase detection autofocus (PDAF) and
two-tone flash. It also houses a 5-megapixel front camera. It measures
150x76x8.65mm and weighs 164 grams.

For connectivity, the handset supports 4G LTE (compatible with Indian LTE
bands), VoLTE, Bluetooth, 3G, GPRS/ EDGE, GPS, Glonass, Wi-Fi, and Micro-USB
options.

Source: [http://gadgets.ndtv.com/mobiles/news/xiaomi-redmi-
note-3-to-...](http://gadgets.ndtv.com/mobiles/news/xiaomi-redmi-note-3-to-be-
made-available-in-open-sale-today-830696)

~~~
petra
There are a lot of negative reviews about xiaomi's heavilly modded OS, huawei
on the other hand, is more of a pure android experience.

------
mark_l_watson
I have been a happy Android user for years but was planning on switching to an
iPhone next time for compatibility with my iPads.

I changed my mind because of the Google Fi service. I can get a compatible
phone for $200, and I project my monthly service plan would be less than half
than my Verizon plan, given my usage patterns. I do worry that Google might
drop the Fi service, or change the features/cost in the future though.

------
adav
Apple's probably just biding its time with the iPhone while it works to soup-
up the Apple Watch - add cellular, more power, more battery, smaller package.

I reckon the iPhone (and maybe iPad) will transition into just a dumb
accessory screens.

My thinking is that this follows the trend: Desktop (power on your desk) ->
Laptop (power in your bag) -> Smartphone (power in your pocket) -> Watch?
(power on your person)

------
dschiptsov
It is probably end of the era moment, like the end of PC back in 2005.
Personal Computer is nothing special and even status/luxury brands does not
make real difference. PC is mere cheap commodity.

Now there is moment when smartphone is just a phone. Apple or any other brand
- does not make real difference.

Some, say, MicroMax or Huawey Android stuff is about $150, and it gives you
everything, except 3D.

It is just a phone.

------
jdlyga
The 6S and 6S plus didn't offer a ton of new features really besides being
faster. The 3D-touch screen is nice for quick shortcuts but not a killer
feature.

Basically, the only reason why I would personally want to upgrade is for the
bigger screen on the plus model and the battery life that comes with it.

------
circa
I'm not surprised at all. I don't get why people are. Anyone who wants one,
pretty much has one at this point. Those who have them within the past few
years are most likely happy with them. The bubble won't exactly burst but it
will decrease.

------
smitherfield
>Apple said it would raise its quarterly dividend 10 percent to 57 cents a
share and increase the amount of stock it buys back to $175 _billion._

Surely that's the NYT's typo and they mean million with an M, right?

EDIT: Not a typo, see mbrubeck's reply below.

~~~
mbrubeck
No typo. A year ago they had authorized $140 billion, and had already
repurchased more than $80 billion.

[https://www.apple.com/pr/library/2015/04/27Apple-Expands-
Cap...](https://www.apple.com/pr/library/2015/04/27Apple-Expands-Capital-
Return-Program-to-200-Billion.html)

($175 million would be less than three hundredths of one percent of Apple's
market cap.)

~~~
smitherfield
Ah, thanks. Kind of a hard to parse sentence; I read it as buying back $175bn
_this quarter._ Which would be 30% of their market cap and represent all their
cash on hand.

~~~
beezle
They do not have that much cash on hand. Apple already has over $100B in
common and exotic debt that has been used to pay for both dividends and this
buy back program. So that pile of cash sitting overseas? On its way to being
mostly spent. And if the Congress critters start pressing companies to
repatriate, a big tax bill looms too.

------
Animats
Apple is doing just fine. But there's been no Next Big Thing since Jobs.
Apple's watch is a dud. Nest's products don't work well. It's like Sony after
Akio Moreta died; the company plugs on, but the light has gone out.

~~~
megablast
> Apple's watch is a dud.

Why do certain people say this? The watch is a $6.5 billion business in its
first year. That is a huge success. Nothing compares to that.

------
intrasight
I think that Apple would be wise to invest a few billion in solving the
fundamental problem of batter life. That is the key missing ingredient for
everything else we want in the future for mobile tech.

------
yeureka
I hope the lack of growth in hardware sales makes the company improve their
services and lower their hardware prices instead of trying to increase
hardware replacement rates via shorter life cycles.

------
zyngaro
The most innovative thing Apple can do now to reverse the course of things is
to decrease their outrageously high prices (especially in Europe) and phase
out these ridiculous 16GB models.

------
talmand
So, does this mean we shall start seeing "the iPhone is dead" click-bait
articles like we see with other similar tech products when their sales slump
for various reasons?

------
abraca
I'm glad Apple has some competition with Android. I made the switch to Android
after I got multiple "dud" iPhone 6's which stopped working after a few days.

------
dvhh
In weird analogies, I think the 5S is the Apple's playstation 2 ( good enough
for everything and really really no incentive to upgrade except for the
enthusiasts ).

------
ThomPete
Apple still have $233,000,000,000 in the bank. More than the federal reserve,
more than Google, Microsoft, and Facebook combined.

They could buy their way out of this I am pretty sure.

~~~
tcoppi
Buy their way out of it? How? They obviously don't have anything profitable to
invest their excess cash in, since it is either sitting in the bank or going
to stock buybacks or dividend increases.

~~~
ThomPete
[http://www.marketwatch.com/story/apple-hints-at-big-
acquisit...](http://www.marketwatch.com/story/apple-hints-at-big-acquisition-
to-cure-growth-ills-2016-04-26)

~~~
tcoppi
Yeah, because Beats has been working out so well for them.

If they could get something to improve their cloud services competitiveness vs
Google, maybe something like Dropbox, I could see that helping them long-term.
Otherwise I don't think anything they could acquire would be anything more
than a play at becoming a conglomerate ala GE at this point, there simply
aren't many companies with a proven core product out there that can help Apple
get out of this mess, except by expanding outward.

Not that there is anything wrong with being a conglomerate, Alphabet/Google is
basically on its way to becoming one too, and GE is wildly profitable, I just
don't see Apple playing well in that space. They need to concentrate on
something.

~~~
ThomPete
It worked fine for MS.

I think Apple have no where to go than to buy companies. In fact most of their
revolutionary products were products or technologies they bought.

It's typical apple strategy, they are just worth so much now that it's hard to
see their acquisitions as anything but a drop in the water. Until now I guess.

They could buy Twitter, they could buy Box (or dropbox) or some other cloud
solution, they could buy Stripe, they could buy Slack, they could buy so many
companies and use their size to leverage those into something truly
groundbreaking.

So I don't think it's that far out.

------
Ayaz
Until some months ago, I had a factory unlocked iPhone 5 which I used for 2+
years. I had no reason to switch to a more recent model, other than the (at
times) nagging need for the finger-print lock. Then, out of the blue, the
battery on my iPhone began to malfunction, in that, it would only let the
phone stay on for a couple of minutes unless it was plugged constantly to a
power source.

I bought an iPhone 6S, space gray, factory unlocked at around $650 (excluding
tax). I sent my iPhone 5 back to Apple for a recycle. They gave me $200 in
iTunes gift money. So, all in all, I got a new iPhone 6S for $450 (excluding
tax).

------
erikj
I wonder if Apple is going to find a new market with the potential for massive
growth any time soon. So far smartwatches don't seem to be such a market.

~~~
greedo
The Apple watch outsold the iPhone in it's first year, so a bit premature to
write it off.

------
hellameta
No surprise. I mean... at the end of the day these are flat touch screens...
it couldn't last forever. This is great - onto the next!

------
InclinedPlane
Apple incapable of breaking the laws of thermodynamics and physics by
continuing uninterrupted growth forever. Film at 11.

------
tn13
Well there will always be regression to mean. I wonder what is the case with
their App revenue.

------
seizethecheese
Apple is the Ford of smartphones. As the auto industry currently stands, the
top selling model each year doesn't earn more than 1% of the industry's total
revenue. The question is whether smartphones will eventually become similarly
fragmented, or if the ecosystem network effect will maintain a "winner take
most" effect.

~~~
brisance
Even with such results the iPhone sells much better than "1% of the industry's
total revenue".

------
mrmondo
Every year I see a similar post over hyped a few months before a new major
model is released. Then it won't be long before I see a post stating Apple's
sales and stock are at an all time high. I swear this happens every year.

------
known
I'm happy with my iPhone 4S

------
sixQuarks
So now we found out how long Apple was able to ride Steve Job's coat tails.

~~~
simonh
Because under Steve Jobs they would have continued to increase revenue and
profit by the same margins every year until they owned the entire planet, and
then continued to grow by colonizing Mars with Elon Musk. Or something.

------
hasan459
why sales drop?

------
Rockerczy
Appointing process optimizer Tim Cook was the biggest mistake of Steve Jobs

------
nfbush
Perhaps in small part due to recent FBI case?

~~~
adventurer
Tim Cook has stated there is huge room for growth in China. I believe their
inflated currency and recent market issues/corruption plays a big role on why
the guidance isn't stronger. The emergence of cheap Xiaomi dominance doesn't
help, either.

------
noir-york
$175 billion in buy backs?! Wow, its expensive propping up the share price to
keep Wall Street happy...

There is only so much hardware innovation, there are only so many people on
the planet with $600 to spend on a mobile phone.

Apple should really move whole heartedly into services (as evidenced by
revenue up 20%); build a gmail / dropbox competitor - stop thinking of itself
as a consumer hardware maker, that era is over.

~~~
nathancahill
You don't know how buybacks work do you?

~~~
noir-york
Buybacks decrease outstanding shares, and increase earnings per share, which
drives up share price. But its not a great way to increase EPS, as opposed to
increasing EPS via operational means.

~~~
bduerst
If you know EPS is a terrible price inflation tactic, why did you
automatically assume it's Apple's motive and gripe about it?

If the market price is lower than intrinsic value, then the buyback is a good
idea.

------
datahack
I don't know. My iPhone 5s recently died. I went to the Apple store. I looked
at the new models. I looked at the version they have that looks like the 5s
with better mechanics. I paid $269US for a replacement iPhone 5s. I just
couldn't figure out a reason to upgrade. I have the same problem with the
iPad. I'll probably upgrade at some point, but the battery life isn't better
(and in fact I'd have to repurchase all of the extra phone-sleeve type
batteries I have to buy due to Apple's inability to comprehend there are
customers that care more about convenience than slimness and weight), and of
course storage capacity (which hasn't really changed).

I can't be that unusual a customer. I think a lot of people are just done
upgrading. For a while there in 2009/11/13 (or was it 10/12/14?) every time
you upgraded it really did make a difference... a "quantum leap" in
technology. Now, I feel like upgrading just changed the style (and
unfortunately accessories) of my phone. Rumor is the 7 is going to do away
with standard headsets. That would be a deal breaker for me. I am fatigued of
not only replacing the phone, but the $300 in accessories it takes to
power/add accessories/run the phone every 2 years.

This whole subject around quarterly earnings at Apple always makes me think
about this larger trend here called peak stuff. Material consumption is
falling in Western countries. Steve Howard did that great interview on the
subject on NPR: [http://www.npr.org/2016/01/22/464013718/ikea-executive-on-
wh...](http://www.npr.org/2016/01/22/464013718/ikea-executive-on-why-the-west-
has-hit-peak-stuff)

Apple's products were the pinnacle of aspirations besides a car or home in
much of the world, and now... well... they're less so. Still popular, still
great products, but maybe there is starting to be some fatigue. It's probably
good. Anyone who things unlimited growth as a model on a planet with finite
resources is still living in the 20th century anyways.

Maybe that's contributing.

