
iPhone, iPad and Mac sales are down, but Apple only cares about services now - zhuxuefeng1994
https://techcrunch.com/2016/07/26/iphone-ipad-and-mac-sales-are-down-but-apple-only-cares-about-services-now/
======
throwaway1979
As a single, insignificant data point: I just bought my first Windows laptop
after 2008. I kept waiting for Apple to release Skylake professional machines.
Just gave up waiting for them. Ended up getting a Windows Signature machine,
which came with a free tablet. Guess I don't need to wait for the iPad Air
refresh anymore as well.

I think Apple has lost its way. It has forgotten about its power users. I
think they are trying to be a luxury brand now ... limited function devices
that overpriced (but look really nice). I'm a bit bitter as I say this since I
was a huge Apple fan.

~~~
hyperbovine
You did not write anything about the actual user experience, which is telling.
Is the mere fact that there exist machines which will boot into a non Apple OS
supposed to spell doom for them or something? I just used my first Windows
machine in almost ten years as well and... guess what it still sucks.
Particularly if you are trying to develop software.

~~~
ladzoppelin
Really? Next week you can install WSL (Bash on Windows) on Windows 10 which is
amazing considering its in beta. Definitely try it if are developing on a
Windows box.

~~~
nol13
If I can viably develop on Windows instead of a slow (on my i3 laptop) Linux
VM I'll be thrilled.

Not getting my hopes up though.

~~~
dingo_bat
I'm pretty sure WSL is not enough for any decent sized dev effort. And running
Linux on a VM on an i3 would just be masochistic. Stick to Linux would be my
suggestion.

~~~
nol13
It's really not thaat bad most of the time. And I would but I don't trust
Windows updates to not eventually trash any dual boot setup, or Linux updates
not eventually trash my graphics drivers etc.

~~~
dingo_bat
WHy not switch completely to Linux? Unless you play games.

~~~
nol13
A bit of LoL here and there, plus little things like being able to cast to my
roku hassle free and reliable sleep/suspend. Was all Linux for a few years but
the man won. I know I should probably get a real dev machine but this is what
I'm working with at the moment.

Really my current development needs consist of git, ssh, node, redis, mysql,
apache, and python. If WSL can do that I'm all set.

------
Danieru
$42.4 billion of revenue in total. $6 billion of which is services. That is
not the profile of a services company. That is the profile of a company who's
PR department is running distraction on the press.

You cannot replace the revenue of a once every two years $800 purchase with
some music sales. Consummers only even spend that $800 because the cost is
hidden in a larger monthly bill.

This should be a big deal. Apple is no longer taking market share from
Android. Apple is no longer convincing consumers to replace their old iPhones.
This is a trend which should scare investors. Let Apple is still priced
assuming 11 more years of current profits.

~~~
rtpg
I think Apple has it's issues, but isn't this textbook Innovator's Dilemma?
Newer vertical looks small compared to established vertical, thus dismissed.

$400 every two years (assuming 50% profit per phone!) is just $17/month. If
Apple can convince you to pay for 2 or 3 of its services, then they're gold.

Where does the "11 years" comment come from though? How do you figure that?

~~~
andruby
If you're counting profit on the phone, you need to compare that to profit
from the service.

I doubt they are running Apple Music with a 50% profit. Most services are
probably being priced close to cost to gain market share.

~~~
rtpg
Yeah that's a good point. I don't really think these services are "at cost",
though: isn't the whole point of this industry that marginal costs are super
low?

------
cocktailpeanuts
Honestly at this point the only thing that's keeping me from switching to
Windows is XCode because I need to build iOS apps. I will immediately switch
to Windows if someone figures out a way to seamlessly build true native iOS
apps on Windows.

I've waited enough for their laptops--not because I love mac but because
that's the only option I have for the reason above--and getting tired of it.
As I am typing this on my macbook air, I have to take my hands off the
keyboard time to time because it gets too hot. Also the battery has swollen up
to a point where I can't even close the laptop. I've been waiting for a
legitimate new laptop from them for TWO years. All they released was some
minor upgrades and a "macbook" which I didn't buy because I know better than
to act as Apple's guinea pig and buy their first iteration of anything--I
learned it the hard way with my iPhones and iPads.

Anyway, all this to me feels like it's because Apple is no more an innovator
company, instead they follow the stock market. I used to be a Windows user but
switched when Vista came out and I really couldn't stand it. I feel very
reminiscent of those times when I think about what's going on with Apple
nowadays.

~~~
fantasticsid
Maybe Apple has stopped innovating, but Windows is just not there for
developers, not even close to what Mac has been ~3 years ago.

Saying this from recent personal experience.

~~~
lj3
There are no good options these days. I know that's been the song of
developers since the beginning of software, but it does seem we've hit a bit
of a valley in terms of desktop OS's. Linux still can't quite get its foot in
the door. OS X peaked with 10.6.4. Windows peaked with 7. Everything since has
been the long, slow decline of trying to mimic mobile's success and failing.

~~~
Longhanks
Wholeheartedly agree.

I want Windows 10s graphics performance, Linux' kernel/CLI tools/open source
mindset and OS X' graphical applications/UI design/integration with my my
other devices.

Currently using OS X, but the hardware situation is frustrating (has always
been, but currently at it's worst since ~10 years), the software quality is
declining and Apple's ongoing direction towards iOS doesn't fit me.

Using Linux on my PC is frustrating, the graphics situation is terrible. All I
want is 60 fps vsync'd performance, fluid scrolling, no choppiness when moving
or resizing windows. Also, there is still a lack of many important
applications (Adobe, MS Office). The whole Gtk vs. Qt situation also
aggravates this.

Windows, for me, as a developer, is a total disaster, not only does it differ
totally from my usual UNIX environment with it's completely different way of
handling files and directories, but I also dislike the software: font
rendering is terrible (in my eyes), the switch to UWP is terrible, as is the
platform (UWP) itself, to me, the lack of choice is even worse than on OS X.
But Windows seems to be the only OS at the moment to run without major
problems on hardware of my choice with good graphics performance.

I really wished Linux would get it's graphics stack straight. I know it's not
the individual developer's fault (and most certainly, the NVIDIA/AMD didn't
help much in the past), but the current situation is still somewhat subpar.
Still, the choices at the moment all frustrate me, so I stick to what I have.

~~~
Nullabillity
What GPU do you have, and which driver stack do you use?

~~~
Longhanks
The machine on which I installed Linux had a Core i7 4770, so it came with an
Intel HD 4600. This chip did well, but of course the performance is not
enough, so I installed my GTX 770. The proprietary driver made many problems,
reported wrong refresh rates (Compiz never got above 30 fps, unless I manually
told it the refresh rate, which breaks my multi monitor setup). I tried mutter
(Gnome 3), Compton and Compiz, but none of them could easily deliver sane,
smooth 60 fps using vsync.

Kwin from KDE actually managed that, but the performance was very bad,
whenever I started playing a YouTube video for example, scrolling got choppy
and to a maximum of 30 fps.

------
cyberferret
I am always puzzled when analysts are seemingly baffled that a company cannot
keep selling more and more product each year to a finite audience and never
reach saturation point...

~~~
tfinniga
I really liked this small article about exponential growth. Exponentials don't
really exist in nature, there are pretty much always limits.

[http://radar.oreilly.com/2007/11/its-not-exponential-its-
sig...](http://radar.oreilly.com/2007/11/its-not-exponential-its-sigmoi.html)

~~~
Fomite
Pretty much this. Growth to carrying capacity looks a lot like exponential
growth for a bit and then stops. Assuming it _is_ exponential is a recipe for
sadness and disappointing earnings reports.

------
rebelidealist
This is a significant feat. Apple's $6b in revenue from services beats
Facebook's last reported quarter for the entire company.

~~~
ejcx
A lot of people in this thread are seeing $6 in revenue next to Apple's huge
worth and dismissing it. That's a lot of money, and it is growing.

In my opinion, Apple is undervalued right now (I'm biased, I own a trivial
amount of Apple stock). There is no real competitor that I've seen in the
phone and tablet space, and their services business is growing.

~~~
dpark
> _There is no real competitor that I 've seen in the phone and tablet space_

If you haven't seen them, you haven't looked. Google, Samsung, Huawei, etc.
Android is dominating Apple in market share at this point. Apple is making
great margins still, but they are not without legit competitors and have not
been for years.

------
egypturnash
I've been sitting around for the past year or so wanting to give them more
money for a new Air. Last month I tried a Surface and that came damn close to
replacing my Air for its primary job of "going out to cafes and parks with me
to draw stuff in Illustrator". I only brought it back because it had some
major issues with Illustrator dropping the first half second of stylus
strokes. Despite really hating the Windows experience.

If Apple comes out with a laptop/tablet hybrid like that, they will have my
money in a hot second.

------
fleshweasel
The wait for the new MacBook Pro is agonizing but I am convinced it will sell
like hotcakes when it finally comes out.

~~~
KurtMueller
What do you think is taking so long? I'm waiting too - it's hard :).

~~~
dijit
Firmware weirdness with skylake.

Something about how it handles suspend, I remember the linux kernel having
massive problems too, and they don't employ the same level of power saving
optimisations as Apple do.

~~~
commandar
The Surface Book had power management-related firmware weirdness for its first
couple of months as well. That said, Microsoft had it fixed by ~January-
February as I recall it.

------
niftich
Well, they're not really wrong; while it's true they were selling high-margin
hardware and making a handsome profit, they've been a vertical for many, many
years, and all that hardware install base is just to get their services into
people's hands.

While earnings calls always try to put a positive spin on the facts, I don't
think their calling attention to their services is a distraction; it's simply
pointing out what several people already knew: that selling 'services' on an
ongoing basis is better in the end than selling actual tangible objects, which
you can only sell once.

~~~
mmanfrin
I think in general that selling ongoing services is a good business model, but
Apple's bread and butter and golden goose has been hardware. Their enormous
cash reserves were built by hardware, not software. Certainly software was a
bit part of making that happen, but the margins and money came from hardware.

------
jbandela1
Anecdotal, but for me, I feel my iPhone is now good enough for my use and feel
no compelling urge to upgrade. My guess is that many people feel the same way
about the iPad.

~~~
bitL
Don't worry, new iOS release will show you what a clunker you actually have!
;-)

------
jwatte
If Apple services were best of class, eco system leading stars, this approach
would make sense. When we get iTunes and iCloud, well, their Kool Aid is
probably spiked...

~~~
ricksplat
You're the first person I've seen make this point. All the way down here, and
it's by far the most glaring issue with this picture. Apple's services are
kind of a bit flimsy. They're at best an expensive value added service for
their devices. The only reason I use Apple Music/iTunes under Windows is
because I have an iPhone. Otherwise I'd probably be using Spotify.

Apple is a devices company first and foremost. The services augment these
devices. To say that services are some kind of a way forward for growth
neglects the fact that these devices are a gating factor for these services.

Services are an enticing revenue model because they guarantee a steady income,
while developing a good device experience is "hard". But it's a hard way to
make money, with your revenue constantly consumed by labour costs. Only
"products" can provide the kind growth a devices company needs. Leo Apotheker
got caught up in this with HP - thankfully wiser minds prevailed and they
backed out before it was too late.

------
unfamiliar
>But it looks like the company is investing a lot on services as we can see
with the Apple Music redesign happening just a year after the launch

This is a bit of a stretch. The "redesign" is basically a new skin on the
original, fixing confusion that should have never existed in the first place.
I don't think it constitutes a major development from such a large company and
a year's worth of work. Meanwhile the Mac product line sits gathering dust and
Siri either makes incremental improvements or goes backwards.

It saddens me to say but Apple seems to have become one of these lumbering
giants that is too slow to change course and adapt to the changing
surroundings. Are they just too scared to move fast in case they lose what
they have? Or is there some systemic problem that is dragging the pace down?
I'm sure any one of the engineers working there has 100 ideas and the
enthusiasm to move them forward.

------
bsaul
I don't want to be pessimistic, but making money by milking profits out of
existing products while loosing market shares and not opening successful
busines lines is exactly the sign of failing big companies. Blackberry was
making profit until very late.

I see signs of decline on everything apple does, from failing products ( watch
), to failing software ( xcode, macos having the same network connectivity
issues for years and not releasing anything new for years, ios still relying
on decade old software stack and an aging cocoa framework).

The only true technological success i've seen from apple recently is what
they're doing with swift, and it's maybe not a coincidence that it was aimed
at being a cross platform, community driven technology.

------
mrgreenfur
I wonder how much of this downturn is due to not much exciting hardware being
release by manufacturers? Intel hasn't released anything much in the last few
years, video cards are already overpowered for 99%, phones are pretty much all
the same, etc.

Seems like there is no need to upgrade pc hardware or phones these days and
VR/IoT hasn't really taken off in any way.

~~~
sahaskatta
I wouldn't agree. Innovation for portable laptop/tablet form factors had been
slow for quite some time, but I think there's a small uptick again. Everything
from the Razer Blade which supports a external dGPU to devices like
Microsoft's Surface Pro 4 and Surface Book are pretty exciting.

On other fronts, $99 "laptop containers" which utilize your smartphone's
computing power are popping up:

SuperBook: [https://www.kickstarter.com/projects/andromium/the-
superbook...](https://www.kickstarter.com/projects/andromium/the-superbook-
turn-your-smartphone-into-a-laptop-f)

NexDock: [http://nexdock.com/](http://nexdock.com/)

And finally: $250 Chromebooks have started to get so good that it's actually
viable replacement for a large portion of people who do most of their work in
a browser anyways!

------
bogomipz
I will ignore the sensational nonsense headline from TC.

So revenue from services up 19% and App Store growth is up 27% which are quite
impressive numbers yet all the media seems to be talking about is "is the
Apple Goldrush over?" The market for smartphone is fairly well saturated in
the majority of first world countries. And they are using that success to sell
services that run on those devices which seems to be working. How is this a
back drop against which to paint a picture of decline and impending demise?

------
panic
This focus on services seems like a bad sign for Apple's product quality.
Apple's goal of making their products a great, cohesive experience aligned
well with their profit incentive to sell hardware. Trying to get customers to
use services they may not really want could have a negative effect on the
overall product. We've already seen some of this with ads in the App Store.

------
Jayakumark
I waited for my macbook upgrade to have 5th Gen Intel processor , became 6th
gen and now 7th Gen. Guess they will never catch up to latest generation

------
Animats
Is Apple Pay even a thing any more? The near-field readers in stores seem to
have disappeared when the chip card readers went in.

~~~
commandar
Most places that I've seen have installed NFC readers at the same time they
upgraded to chip readers.

That said, I've yet to see anyone actually _use_ contactless in the wild.

I did, once. Because Discover was offering 10% cashback when they launched
Apple Pay support, so I loaded up my card on my buddy's iPhone and went to
Best Buy to buy a Surface Book. I've had zero other incentive to use
contactless otherwise.

~~~
pdpi
Contactless is a perfectly mundane and unremarkable thing in the uk. Just
about everywhere you go accepts All of Visa, MasterCard or Apple Pay,
including the underground. There is currently no other way to pay for London
busses other than Oyster or contactless.

~~~
commandar
It's honestly mundane in it's availability in the US as well; I just haven't
seen anyone actually _using_ it.

------
xHopen
Windows? come on, come on.

------
mrfusion
Why is the stock up? I'm confused.

~~~
Infinitesimus
Stock prices tend to fly when reality exceeds Wall Street expectations - even
if those expectations were poor to begin with (the opposite is also true)

------
a_small_island
>"12.9-inch iPad Pro"

I had to look this up. It's real. A 13" iPad. Are these still labeled as
tablets? Same size as my laptop screen.

~~~
vessenes
I have one. It's excellent.

~~~
DoodleBuggy
For what is it excellent? What do you use it for?

To me it has weirdly uncomfortable ergonomics, and it's still nothing more
than a jumbo iPhone. I have long tried to like iPad but I find no use for it.

~~~
drunkenazi
I got one for work use, and it slowly turned in to my at home laptop
replacement. Definitely shines at casual consumption, the only time I use it
productively is when it acts as a second display (meaning my laptop is
productive).

Regular uses: \- Streaming video, cool and quiet, unlike my laptop (especially
if it is sitting on fabric, like a lap or bed) \- Dual monitors on the go
using duet \- Quickly looking things up with someone else (instead of sharing
a phone screen, or starting a computer) \- Playing games in places where a
laptop would be uncomfortable (heat and noise) or overkill: human resource
machine, worm.is, hearthstone \- Skype (including conference calls)

Less commonly: \- Insanely long battery life for replaying downloaded videos
on flights (last flight was ~15 hours, ~8 hours watching iPad video, <10%
battery used)

