
While iPhone sales remain stagnant, Apple services hit $10B in revenue - doener
https://arstechnica.com/gadgets/2018/11/apple-services-reach-a-whopping-10-billion-in-revenue-in-q4-2018/
======
GeekyBear
Given that Samsung just reported a 33% drop in smartphone sales from the same
quarter last year, Apple reporting a .4% increase in their smartphone sales vs
the same quarter last year sounds pretty good.

[https://www.telegraph.co.uk/technology/2018/10/31/samsung-
re...](https://www.telegraph.co.uk/technology/2018/10/31/samsung-reports-
record-profit-despite-smartphone-sales-slump/)

[https://www.anandtech.com/show/13540/apple-
announces-q4-fy-2...](https://www.anandtech.com/show/13540/apple-
announces-q4-fy-2018-earnings-revenue-up-sales-not)

~~~
slivym
I think we should attach an important health warning. Samsung release their S9
in March 2018, whereas Apple released the iPhone X in November. So this
quarter is the drop from Samsung's first full quarter of their new flagship
sales to one year later. Apple's quarter is the drop from the last full
quarter before their new flagship to a quarter where they released a new
flagship.

~~~
GeekyBear
Both companies have a similar release schedule every year, which is why we
compare to the same quarter a year ago.

Unfortunately for Samsung, falling smartphone sales figures have been an
ongoing problem.

>Samsung’s mobile phone sales have been taking a hit this year. It’s a
downward trend that started during last year’s holiday quarter and has
persisted throughout 2018. Both IDC and Strategy Analytics report that
Samsung’s smartphone sales have dipped around 13 percent in the recent
quarter. That follows a 10 percent decline in Q2, a 2 percent drop in Q1, and
a 4 percent dip in Q4 2017. It’s a clear sign that Samsung’s Galaxy Note 9 and
Galaxy S9 devices haven’t been competitive at the high-end

[https://www.theverge.com/2018/11/2/18055094/samsung-
smartpho...](https://www.theverge.com/2018/11/2/18055094/samsung-smartphone-
sales-decline-2018-report)

~~~
slivym
I don't think that it's fair to say that Apple's release schedule has been
similar between now and the previous year. Last year the iPhone X was
announced in September and released in November/December (by region) and it
was arguably the biggest upgrade Apple made since the iPhone 4. So it's fairly
obvious that Q3 2017 was an almost uniquely low year. Compare that to Q3 2018
where Apple announced AND shipped the iPhone Xs in September.

I don't disagree that there's a larger trend going on, I'm just saying that
this isn't a particularly good data point because there are other underlying
factors.

~~~
GeekyBear
Apple is one of those companies whose fiscal year doesn't match the calendar
year.

The numbers that were just released are for their fiscal fourth quarter which
covers sales through the end of September, so we are talking about a couple of
days worth of sales in 2017 with only the (then) new iPhone 8 variants for
sale but not the iPhone X and a couple of days worth of sales in 2018 with
only the iPhone XS variants for sale but not the iPhone XR.

I don't really see any calendar related difference for Samsung's flagships
between 2017 and 2018.

I don't see any of that being greatly material when you look to explain the
difference between a tiny year on year smartphone sales increase for Apple and
a massive year on year smartphone sales drop for Samsung.

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howlingfantods
The average sales priced for an iPhone increased nearly 30% from $618 to $793.
Services now account for 16% of revenue. Apple is gradually shifting from a
device maker to an ecosystem company that consumers pay a premium initial fee
to enter and pay an additional recurring free to use.

~~~
diminish
Yet services would be better if units sold gets increased. So cheaper models
are a must. So it's so far an excellent strategy milking the high end keeping
the units sold not fall.

~~~
howlingfantods
Services might be better, but I suspect that budget conscious consumers would
also spend less on services, compared to customers willing to spend $1200 on
an iPhone XS. I imagine their FP&A team has done pretty thorough analysis that
the extra sales from fewer products at higher margins will offset the
incremental increase in revenue from more (potentially lower value) services
subscribers.

------
hacker_9
I mean sure 'Stagnant' means that there was no growth, _but it also implies_
that this is a bad thing, which in this case it obviously isn't. Clickbait
title.

~~~
cm2187
How high do you think they can go in term of prices? And do you think they
will sell many £1000 smartphones in a recession? Stagnant volumes is not an
imminent problem but the share price is a forward looking metric.

~~~
ForHackernews
iPhones might be a Veblen good. They could probably release a $5000 or $10,000
model and there would be a market for it. Plenty of people buy $50,000
watches.

~~~
zelos
Didn't Apple stop making the super expensive Apple watch, though?

~~~
ForHackernews
The Apple watch is a low-status dorky, uncool watch. The iPhone is a cool,
high-status phone.

~~~
joejerryronnie
Patek Philippe or nothing!

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tpetry
Stagnant sales with a much more expensive smartphone, i don‘t think anybody
wouldn‘t live to have the same „problem“.

~~~
diminish
Many analysts thought higher average selling prices were possible because of
demand inelasticity at the forerunner iPhone.

Service revenues would get boosted by lower prices if units sold increase.

Cook is doing a fine balance of prices, sales, services. Very successful so
far. Yet I'm afraid the only way is down from here.

~~~
tguedes
Why down? If iPhone sales remain stable, which they should, iPhone customers
are extremely loyal; as long as they continue to grow in their Other and
Services category, there will be a lot of growth for the company.

Plus whatever device that comes out for AR will be interesting. Apple still
continues to understand strategy and the technology landscape better than any
other company.

~~~
cm2187
You think customers are going to spend more than their rent into their
smartphone?

~~~
ryanwaggoner
We’re a very long way from that. Do I think customers will continue to buy a
smartphone every couple years AND also pay $20-30 per month for various
services like music, tv shows, software, etc? Yep.

------
mark_l_watson
Apple services definitely are on an upward trajectory for quality and breadth.
Two years ago I thought Siri was a bit of a joke because the voice recognition
and accuracy/usefulness of results was not there for me. Different now: about
4 months ago I deinstalled the Google Assistant from my iPhone and now just
use Siri. Siri is still not as good but there is the privacy issue. Siri is
good enough for me.

I still prefer Google for the Play Music + commercial free YouTube bundled
service, and also GCP is my favorite cloud service.

~~~
wycy
Out of curiosity, what do you use Siri for that it can be good enough?

I use Siri almost exclusively for reminders (e.g., "remind me at x PM to do y"
or "remind me when I get home to do z"), and even with this limited use case I
often end up with baffling reminders in the future (my favorite reminder is to
"make farts"\--I never did remember what it was supposed to be.) Beyond
reminders I've yet to find a compelling, reliable use case.

~~~
browsercoin
It's amazing that I would be having a random discussion and to check a fact, I
would ask Google because Google Search Engine.

Google reads the answer in a natural human like way. It works well.

Countless dinner arguments arbitrated by Google via Google Voice by a simple
ask. Shit saves marriages I bet.

"wtf you mean the Mongol Empire didn't last long? hold up, lets ask Google
about the Crimean Khnate that still kicked ass up till the 17th century"

"i dont fucking believe you, i want a divorce"

"...ey google what year did Crimean Khanate close"

 _During the 16th and 17th centuries, the Crimean Khanate was an important
center of the slave trade. In 1774, it was released as a nationally
independent state, following the Russo-Turkish Treaty of Küçük Kaynarca, and
formally annexed by the Russian Empire in 1783, becoming the Taurida
Governorate_

"thank you Google for saving our marriage"

 _Your welcome._

\--goes to work the next morning, sees divorce lawyer ads--

~~~
ryanwaggoner
Your marriage is very different than mine. Not just because of what you argue
about, but because you think the injection of a fact provided by a robot in
the cloud is what’s missing from the path to de-escalation.

~~~
browsercoin
wow, that is some seriously good insight.

next time I will marry Google Home

------
jaxtellerSoA
Maybe if the price of an iPhone wasn't MORE than buying a decent a laptop then
their sales wouldn't be stagnant.

------
mirekrusin
stagnant /ˈstaɡnənt/ – showing no activity.

so they're selling 0 iphones? really?

~~~
abrowne
Wiktionary says

> 1\. Lacking freshness, motion, or flow; decaying through stillness.

> 2\. (figuratively) Without progress or change; stale; inactive.

A stagnant pond isn't empty, the water just isn't moving or changing. Same
with sales numbers here.

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gehsty
Stagnant is not a fair way to describe selling 46.8 million iPhones.

~~~
nounaut
Stagnant implies it's not growing, not that it's not selling.

~~~
chongli
Stagnant carries a connotation of some dark, oxygen-deprived mire that
suffocates fish and smells horrible. It invokes images of death and decay. Not
exactly the idea I had in mind when I hear of the sales numbers.

~~~
onion2k
_Not exactly the idea I had in mind when I hear of the sales numbers._

The global market size for mobile phones is still growing. If Apple's sales
aren't growing at least in line with the size of the market then their market
share is shrinking. Selling a lot in a stable market is great. Selling a lot
in a growing market is ... less great.

~~~
akvadrako
What market are you talking about? Apple is only in the premium phone market.

~~~
onion2k
_Apple is only in the premium phone market._

I must have been talking about the premium phone market then, obviously.

~~~
pbhjpbhj
Which premium mobiles are getting growing volume right now then?

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beerlord
Apple takes a 30% commission on any revenue passing through the store, and 15%
on subscriptions.

These fees are exorbitant - they are merely ringing a credit card,
transmitting a few megabytes of data, and performing a basic examination of
the app itself. The oligopolistic position that they hold is their main point
of value.

~~~
gehsty
Its also ironic apple are suing Qualcom regarding licensing fees which are
paid as a percentage of the hardware cost, as they believe that this means
Qualcom profit from apples innovation unfairly, you could argue that Apples
policy is the same with the App Store - why do they get a percentage? They add
no extra value for high value transactions, surely a low fixed fee would be
more aligned with apples values :)

~~~
bunnycorn
Because most of the R&D that Qualcomm does (and as a fabless, IP is their real
business) ends up on Android phones, while Apple pays the biggest slice.

Therefore, they are getting their chips from Intel.

Apple doesn't have anything to do with Qualcomm anymore, they get the package
from Intel.

Qualcomm can battle Intel in court if they want. Good luck for them...

~~~
gehsty
I guess I mean the principle that a percentage is taken - why should apple
take more of a higher price transaction when there are no material differences
in cost to them?

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rickdg
It's all about the #donglelife and getting everyone to pay for having an ios
app.

