>The Apple Watch has sold more units in the first nine weeks following its launch than either the iPhone or iPad did at the same point after their respective releases, Apple CFO Luca Maestri said on Tuesday. 
That's reading sequential quarters, which pretty much nobody in finance (who wants to be taken seriously) does, because it overlooks seasonal factors. The year-on-year figure (which serious financial people do use) is up over 100% from $5.9bn. The stock market maybe is concerned that China is too important and that if its stock market is plunging, so will sales of Apple stuff.
Here's what analysts are expecting, via the Bloomberg Terminal.
Revenue: $49.4 billion
iPhone units: 48.8 million (whisper number is 50 million)
iPad units: 10.9 million
Mac units: 4.9 million
Revenue guidance: $51.06 billion
Revenue and EPS are actually better in their earnings report.
The only thing that’s worse is that they sold 1.3 million fewer iPhones and .1 million fewer Macs. iPads are right on. Revenue guidance is $49b to $51b.
In general, Wall Street doesn't act the slightest bit rationally around Apple. No matter how record-breaking Apple's numbers are, there's always some insane analyst that projected even higher numbers, which means everybody then reports Apple as a "miss" (even though they always beat their own estimates, and meet or beat all of the sane analyst predictions, which is most of them). And since it's a "miss", stock drops.
Really, what's more shocking is those very rare times when the stock climbs after-hours after an earnings report (or after the WWDC keynote or the annual September event).
edit: was incorrect on my numbers.
Expected revenue for Q3 was 46-48b (see Q2 earnings press release). So they beat the estimate by 1.6 billion.
The 49-51b number is the Q4 estimate.
The Company posted quarterly revenue of $49.6 billion and quarterly net profit of $10.7 billion, or $1.85 per diluted share. (...) Gross margin was 39.7 percent compared to 39.4 percent in the year-ago quarter.
Investor conclusion: Apple is not doing so well. There is something wrong with the stock market when a company post record profits, almost 40% margin (on electronics) and that's seen as an omen.
I understand it is the opposite, brokers bet earlier that the results would be even better and are now unloading the bets at a lower price (causing the market correction) but even so it is amazing how detached stock brokerage is from investment and how close it is from gambling.
Funny, I reach the exact opposite conclusion: people were willing to pay a specific price for Apple dependent on the expectations of future earnings. Those earnings didn't meet expectations, therefore the market adjusted the price. Working as intended.
The 49-51b number is the Q4 estimate.
Here is a spreadsheet of analyst predictions: http://fortune.com/2015/07/21/apple-earnings-expectations-q3...
They range from $48b to $53b.
Pointing to the stock market as some sort of paragon of rationality is not a bright move. You may want to reconsider your stance.
So people adjust their predictions, stock prices fluctuate, hopefully no one cares because Apple missing predictions by a couple million bucks is materially irrelevant for the company and couldn’t be any more materially irrelevant if it wanted to.
Or are saying they missed the estimate that some analyst pulled out of their ass ?
Clear as mud maybe.
>The Apple Watch has sold more units in the first nine weeks following its launch than either the iPhone or iPad did at the same point after their respective releases, Apple CFO Luca Maestri said on Tuesday.
> On the Watch, our June sales were higher than April or May. I realize that’s very different than some of what’s being written, but June sales were the highest. The Watch had a more of a back-ended kind of skewing.
A lot of people are taking the "wait and see" approach to the watch, a lot of reviews said to wait for v2, and they don't really have their developer ecosystem in order yet.
If the results still look like this in, say, October 2016, then I think we can say the conclusion is clear.
What's wrong with it?
For starters, it's no-go for left-handed people. If you put the watch on your right hand, the controls are all on the arm side, rather than the hand side of the watch. On a normal watch that's not a big deal because you barely access the controls. The solution then is to turn the watch upside down, but then the controls are still awkward and since they made the strange decision not to center the control. One wonders why they went with "watch" controls at all.
Second, it's not really a watch, is it? It's a lot more than a watch. A watch for me is mostly a fashion accessory. But these things are ugly. I find it very strange that Angela Ahrendts from Burberry is in charge of retail, but they didn't do what Burberry does... get watch companies to make the watches and then tack on their logo. I would love a Burberry type watch (despite my watchmaker friend telling me how much crap they are), which, by the way, has many interactive features with my iPhone. But what Apple offered was an ugly, clunky, underpowered second screen that I have to constantly charge.
All that said, I think they might figure out how to make a good Apple Watch (as long as they don't treat it like they've treated the Apple TV, which IMHO, has gone backward with each version -- give me local storage!).
In any case, being a non-starter for left-handed people won't hurt the product much. Neither your personal opinion nor mine are important; data about the overall market is what you want to look at.
In all seriousness, watches are generally worn on the non-dominant hand. I'm not really sure why that is, I only know for me wearing a watch on my left hand leads to inconvenience and scratches.
But not all left-handed people are alike. Some of us write "hook" style, and some of us write basically like a mirror image of a right hander; and from what I've read it is correlated to whether we are right-brained or left-brained. So maybe that also makes a difference in whether a watch on our left hand makes sense.
Often after not using the product long enough to see if it's really a problem. Or, perhaps to discover what really is there (as opposed to what seems to be missing). These people -- quite astonishingly -- seem to not appreciate how much testing and prototyping Apple does with new product categories.
And then, to denounce the product as likely-to-fail in tech forums due to their personal lack of interest.
Such people are trying to answer an aggregate market question, with weakly-informed personal tech prejudices.
Anyway, this mode of reasoning has proved to be quite misleading; it has missed the boat on every major Apple product category. So yes, I think these observations don't really move the conversation forward.
And Other Products 2015 explicitly does include Beats Electronics.
And wikipedia (https://en.wikipedia.org/wiki/Beats_Electronics) says that Beats revenue in 2013 was $1.5 billion.
If all that is right -- and it may not be -- then that implies that Beats + Apple Watch < $1b revenue, which would indicate that something is very wrong. Indeed, it would imply that something is SO wrong that I doubt I have the facts above correct.
EDIT: Duh, thanks thedaveoflife, obviously the $1.5b for 2013 Beats is an annual number, not a quarterly one. And of course the iPod numbers are presumably shrinking. That explains it.
The Watch is only first generation so the benefits will increase. The first generation iPhone didn't have a camera, for example. The current Watch is a tethered device.
Selling the health and safety benefits of a wearable shouldn't be too hard for Apple and Google.
- The iPod enabled you to take your music with you in a much more polished and convenient form factor (sorry, Rio).
- The iPhone enabled you to have much more functional mobile experience (in a much more polished and convenient form factor... sorry, Blackberry).
- The MacBook Pro... "
- The Apple Watch enables you to... ... what? I'm honestly asking.
You can't physically put a bigger screen on your wrist. No one has come up with a convenient input device for interacting with it. Sure, battery, processing power, and connectivity will improve as hardware does. But none of those change the basic proposition. What is the problem that it solves?
Continuous health monitoring is helpful, but I think obesity statistics bear out how much people generally care about their own health.
I can see an alternate past where the iPhone was instead a watch, and now we're all communicating via watches (albeit those first few generations would have been bracelets). But competing against an entrenched surfeit of cell phone screens? I just don't see it.
(Side argument familiar to Tesla owners: also, now you have tech curve depreciation is what was formerly a more value-retaining object, if you're thinking of just using it as a watch)
> I think obesity statistics bear out how much people generally care about their own health.
I was surprised at how quickly and readily I started going along with my watch's insistence to get up off my butt and walk around from time to time. I don't know why I obey my watch when that's something I should be doing on my own, but I'm no longer neglectful about it. Also, don't underestimate the value of gamification. I now get points and awards for standing throughout the day, walking lots, and exercising. It's dumb and I have no excuse for not doing those things without my watch pestering and then rewarding me. And yet, now I'm walking more.
But back to the notifications. I've said this here before, but I was amazed at the silent navigation feature. Whenever I request a route through Apple Maps (on my phone or my watch) and start it, I can put my phone in my pocket and start walking. When I get to an intersection, my watch gives one series of taps if I'm supposed to turn left and a different one if I should turn right. I can walk through sketchy neighborhoods with my head held high, without wearing the "I'm lost - rob me!" signal of hunching over my phone. I just keep moving until it tells me to change direction. I swear, it's like a superpower. I'm not even kidding.
And maybe that's my final answer: The Apple Watch enables you to... project the Internet onto reality. You can get much of the same effect with phone apps, but a phone doesn't have the intimacy to really make the bridge between your data and the outside world. On paper it doesn't sound like that big of a deal, but after wearing it around for a little while I'd sure hate to give it up.
I think that's going to come down to insurance involvement. And God knows how that ends up given the innumerable potential deals that could be made.
> On notifications
I do agree on that. Maybe another way of phrasing it is "It enables you to not take out your phone." Which is no small thing in a lot of circumstances.
The only issue here is... doing that well is UI. I think history teaches us that if there's one thing third party software is terrible at then it's interface.
You should have a look at the size of the fitness sector. We fatsos might care about our health intermittently, but we tend to periodically overspend desperately trying to catch up. If Apple can persuade me that the iWatch will make me lose weight all the time, I'm happy to hand them my life savings.
I personally think the watch is pointless until it remains a dumb sensor hub (and it stays at a luxury price point), but being the central point for overall health monitoring is the killer spot for wearables. Sport, medical and insurance companies will be on it in seconds, followed by child-safety, elder care, entertainment, payment, the lot. Smartphones will look clumsy in comparison.
(edit to answer your enabling question: if it becomes the focal point for continuous health monitoring, it enables me to know exactly what's going on in my body at all times without having to see a doctor and book exams.)
Here's a pic, the only thing finished :-)
The safety aspect is also huge. "Help I've fallen and I can't get up"... or you're in a car accident or seriously injured...
Your watch is always on you. Not true yet because it might be charging. :-(
Health gamification is a shift, but I don't see it being a major shift without incentives being tied to it. As the story went on the Prius, one of the biggest impacts in testing was putting an instantaneous MPG display on the dash. And driving habits suddenly change.
But there's a short term financial incentive there. I'd argue that people just don't fundamentally think about their health that way. That this soft drink today will cost me $x on average 30 years from now by increasing my risk for something? Does not compute.
47.5 million iPhone shipments missing expectations by 1.3 million units, even with both iPad (whose ASP came at $415 below the $426 expected), and Mac units coming in as expected.
Greater China sales tumbling by 21% from $16.8 billion to $13.2 billion, in the quarter when the Composite was hitting multi year highs, and the July crash was not even on the horizon.
Guidance now sees Q4 revenue at $49-$51 billion, or below the $51.1 bn consensus estimate, with a warning about the strong dollar.
And all this happened in a quarter in which they bought back $10 billion of its own stock.
In after hours AAPL seems to be down 7% as a result of all this. Which is worrying considering how big of a part of the overall market they are.
Possible trading strategy here, trade the suppliers, and main games makers on apple results?
For example, INVN is barely down at all while Apple is down >7%, implying that whatever component INVN supplies is still in demand by Apple (i.e., that part of their earnings were not bad).
it's pretty amazing how spot on the estimates are to the actual figures for AAPL compared to other stocks.
The reason it's down is probably because there was no surprise and the numbers came a bit shy of what the estimates were but regardless, I view it as an overreaction.
My long term outlook on iPhone and Apple is positive, they've essentially established a monopoly on the luxury market segment which is always a growing market with fat margins while Samsung is feeling the squeeze from Chinese phone makers undercutting them (http://www.usatoday.com/story/tech/personal/2014/10/07/samsu...), it has a similar tone to giants that have fallen (Motorola, Nokia failed to stay relevant after increased market entrants that ate into their margins). Samsung's immediate response will be to continue to spend big bucks on R&D since they can't copy Apple anymore while nothing stops Chinese companies from copying Samsung (as Korean conglomerates behave ruthlessly on it's home turf, so do the Chinese) and reaping the benefits of piggybacking. Also growing wages and demand for increased social welfare in Korea evidenced by the foul cry over the recent merger of Samsung's holding companies, screwing over it's investors and seriously putting a smear on South Korea's corporate governance, market trust is low (message is clear, if you invest in Korea, you can't fight the powerful conglomerate families or the government which share the same bed, see Morningstar) from the failure of government to lay down the law (so much for President Park's promise to reign in the Chaebols or conglomerate families).
The downfall of Samsung might play right into Apple's hands if they launch a surprise attack and release a phone in this segment with cheaper hardware but with the same good software.
Considering Samsung has a repeated history of copying market innovators, undercutting to win significant market share, and dragging out the legal process until finally settling, failure to break into the luxury market will be the downfall for Samsung's phones in an increasingly decreasing margin game.
All of this is great for Apple.
edit: Someone accuses me of being an Apple fanboy when I'm an Android user happy with his Motorola phone, I don't see why that changes anything. Sent from my Android phone.
That's a good position to be in for any company.
College kids may one day decide Apple is not cool.
Consider this : http://finviz.com/map.ashx?t=sec (finviz: a heatmap visualization of the stock market )
Note that Apple is in "Consumer Goods", not "Technology".
At least one market analyst thinks their competitors are Proctor & Gamble and Coca Cola.
They dominate because Steve Jobs realized what business they're in, and none of their competitors have. This is like when the railroads' lunch was eaten by the tractor trailer because the railroads thought they were rail companies, when in fact they were transportation companies. Samsung and all the other competitors think they're in the device business, but they're not. They're in the UX business.
It helps to have Steve Jobs, who was actually a user experience zealot and in a normal org would have been the CUXO, masquerading as a CEO. As an example, think of the difference between being an Apple vs. Samsung customer, all the way through the value chain. Shopping in that beautiful airy Apple store, experiencing those matte textures and ingenious packaging while unboxing your new devices, the industrial design wizardry that constructed a machine with such amazing fit and finish and tight panel gaps and textures, software that (sometimes, mostly) just works.
Jobs was a strong enough leader to make a bunch of mostly-orthogonal disciplines (e.g. manufacturing, industrial design, software engineering, packaging design) subservient to the company's ultimate objective, which is UX. It doesn't hurt that Apple tends to execute best-in-class on each of these axes, but that's tactics not strategy.
The big question for the future is whether Tim Cook understands this. It's left as an exercise for the reader whether the Apple watch is a product made by a UX company or by a company intent on duplicating the financial success of the ipad and iphone by cargo-culting the "create new device class" methods that worked before.
Apple's biggest asset is the fact that it's the only computer company to care about UX. All other companies try to sell computers as if they're engineering or business tools designed for engineers or business people.
So you'll often get a load of crap and bloatware which is only really there to underline the fact that a lot of engineering has happened. (It's like Japanese hifi which always has something like "SuperDynamic Extra Bitwidth HyperTechnology" on the front somewhere, so you can tell it's not just another generic amp, or something.)
Only Apple tries to sell computers to non-technical people.
Nokia would have done the same thing if they'd moved into the computer market, but they didn't. They got very close with phones, but Nokia were never run by a dictator, so the culture was too unstructured and chaotic to really nail it.
Microsoft tried it with Win 8 but got it unbelievably, insanely wrong, mostly by thinking all you have to do is dumb down the UI and add really loud colours. (Clue: no.)
Unfortunately I think the plot has been lost with Watch, which is a lifestyle product whose only real point is to be a lifestyle product.
Unlike everything else Apple has made, it's not obviously useful and trying to be beautiful - it's trying to be beautiful, because Apple.
I hope that's not the beginning of a trend. Maybe a serious use case will appear, but it's clearly not doing it for the market yet.
Imagine not having to carry your Company ID card, your credit/debit/loyalty/gym card or any home/car/locker keys or your insurance/drivers license whatsoever for the rest of your life.
This combine with tracking your health, could be its USP.
As the hardware evolves (in 2 years - where its hopefully independent of your Phone), all you need is your watch to go to the gym, or take your dog for a walk.
Iteration/Execution is key, of course. As long as Apple realizes its more important to fix bugs & not keep adding broken features to more broken features (like Apple Music & iTunes 12.2 - which have been horrible IMHO) they should have enough of a user base to make the Watch a household product like the Phone.
My answer to your exercise is that Tim Cook indeed tried to duplicate the same formula to a new device. Some problems are that there is such a small screen real estate, the UX would need a different approach. Another is market fit for the demographic that are into luxury. Would wearing the apple watch make you look cheap and "techie" or send other unintentional messages about you? The people who wear watch these days seems to be those that wants to flaunt their 100k Rolex or older generation. I remember people stopped wearing watches when cell phones displayed time, (I never wore one, I relied on my internal clock), an entire generation might have never wore a watch before, could the apple watch end up like the iPad where people first buy it out of curiosity and nobody bothers with it afterwards? Who knows but Apple will have enough cash to screw up several times now (if they do reach trillion dollar market cap). If Tim does make the Apple Watch a success, it would be huge for Apple. You just convinced your loyal iPhone buyer they need a watch now too. Experience and lessons gained with Apple Watch could lead to more wearables, maybe we'll see Tim do his take on the Google Glasses.
(edit: go ahead fanboys, I got lots of karma for next time.
go ahead and down vote my previous threads while your at it.)
now that is creepy.
I'm not even an Apple user but it doesn't mean I can't analyze and form my own opinions. So your argument here is moot that there's a massive conspiracy of Apple lovers downvoting your comment. I certainly am not a fan of Apple but you gotta give credit where it's due, it's headed to be the first trillion dollar company this year or the next so I pay attention.
And I can't downvote anyone since I'm a mere peasant with under 300 karma points.
Good reason to stick to index funds.
Index outperforms vast majority of money managers but that's a whole other topic.
FWIW he does a podcast with Merlin now, called Irreconcilable Differences, but it's not primarily about tech.
College kids may buy an iPod based on it being cool but they sure as hell aren't going to spend thousands on a iPhone, MacBook or iPad based on nothing more than the perceived gain of social status.
The fact is that PC laptops (apart from Surface) are largely cheap junk with bloat ware and questionable antics eg disabling software updates all of the place. Likewise iOS is far more polished, far better supported over the long term and is the primary development platform compared to Android.
History has shown that people won't buy Apple products based on coolness alone eg. Cube, Newton, eMate.
College kids never spend a lot on trying to gain social status.
What's with the Samsung bashing on an Apple thread?
Market saturation calls for distinguishing yourself, and it's tougher to do this in the lower end market vs. luxury. Cars are everywhere, yet Ferrari & Lamborghini are constantly finding new customers in emerging markets. This hasn't been easy for the rest who are fighting each other over the average joe. There are so many players on this level and stakes are high especially because the margins are thin. Failing to stay relevant will drive them out. Failing to deliver across the board will not suffice. One reason Hyundai has been so successful here is that they offer a lot more value for the price to the average driver. Today, the brand has improved, car has improved as American cars have. In fact, the industry has improved a great deal because people in this segment is very demanding but without the rewards of high margins a luxury or supercar producer might enjoy.
As your income grows, your taste begins to change, and luxury brands know this very well. Do you really need a button that gives you extra 200 HP on demand? Will embedding diamonds in your dashboard increase km/L? The typical questions a non-luxury buyer will ask won't apply to those that demand the absolute best. One reason might be social hierarchial reasons, if you were a hedge fund manager and you were golfing with your other hedge fund buddies equally looking to impress clients and sell image of success, an Acura isn't just going to cut it.
Cars are in a whole new category and there are a lot of tangibles and bells and whistles that symbolize or embody a car brand where in the smartphone world it's all about smoke and mirrors and how to market your overrated stuff as the latest shiny thing to attract as many gullible people as you could to hand you their wallet.
So, no cars can't be compared to consumer electronics in terms of brand loyalty or user experience.
ex. (warning hypothetical stereotypes here that I just thought of) J.A.P. wouldn't want to be caught dead with an old iPhone (what would Samantha think of her now) but might be using an older iPad if it means she can still play Candy Crush at home before bed and tucked away in a drawer.
Countries like China, however, have a huge growing middle class and represent a ton of opportunity.