Apple not the only one down…

[Analog Kid]

A lot has been made on these pages about Apple being down 40 percent recently and touting it as a sign Apple has lost its way, doesn’t know what its doing, has disappointing products and is generally in trouble. But it’s all touted out of context.

The entire tech market is down. Samsung, often seen as Apple’s biggest rival, is down 95 percent in profits.

https://www.cnn.com/2023/04/26/tech/south-korea-samsung-q1-profits-plunge-intl-hnk/index.html

…but largely nothing but crickets heard around here.

Working in retail we can see people more hesitant to spend money on tech. Yes, we see Apple selling less than before, but everything else tech is selling less than before. People in general are presently wary of the economy and their financial security.

People are pointing to M2 being a disappointment compared to M1. There might be a bit of that given M1 was such a game changer and M2 a moderate upgrade, but Apple has often introduced devices with moderate upgrades that still sold well. Hell, the entire tech industry does that. Drastic upgrades and change are rare, not the norm.

The “Apple has gone bad” argument is so much nonsense.

The focus of that article is on Samsung's memory business. Apple isn't a rival of Samsung in memory.

This is just the unwinding of the supply chain fiasco of last year... Intel got hammered with a huge loss of revenue also.

I think a lot of this is due to factors beyond these companies control. I know people want to stop thinking about Covid, but we're still seeing the economic impacts of that event. When the world started to move inside because of the pandemic, it caused a huge shift in demand from services (restaurants, gyms) to goods (computers, Pelotons). That led to a massive stress on the supply chain which is responsible for the inputs to those goods and the global supply chain doesn't handle massive shifts in demand very well. The problem just got worse as people in many countries came out of the pandemic with unexpected savings and a need to change lifestyles yet again.

This led to massive part shortages. Manufacturers who were used to buying parts a month or so before consuming them were seeing lead times grow and needed to buy a quarter in advance, 6 months, a year, 18 months... The fear was that if you didn't have an order on the books and enough inventory on hand, you couldn't produce and couldn't survive.

This spun the whole component supply chain into overdrive. While true consumer demand was spiking, OEMs were trying to grow their inventory from a month to 6 or 12 months-- the only way to get 10 times your typical inventory is to order 10 times as many parts. Suppliers started the slow process of ramping capacity to meet the demand.

But all this is because of the rate of change in demand. Nobody thinks we're going to ship 10 times as many devices forever. As soon as demand leveled off (in part because governments are trying to cool their economies to keep inflation in check) lead times on components started to level off. Now suppliers could fill new orders in a month again. But OEMs have 6 to 12 months of stock on hand-- so they don't need to place an order at all anymore until a month before their current inventory runs dry.

So a small shift in consumer demand leads to a massive shift in demand on the component suppliers (95% at Samsung, Intel, etc) because there is a massive buffer stock out there.

 

[Gudi]

I think there are many reasons why all tech is down: [...] Much of this is not specific to Apple, however Apple has had its share of mistakes recently and, as such, lost marketshare.

Let's make it all about Apple and one true reason. The Post-PC era is real and it is here. And as predicted by Steve Jobs, PC guys are feeling a bit uncomfortable with change away from their baby. When you say Apple made mistakes and lost marketshare, then you don't speak about tablets, phones and watches. You don't speak about the largest technology company in history of mankind. You only speak about trucks.

 

[The-Real-Deal82]

How often do people tend to upgrade their Mac’s? My wife has a 2017 MacBook Pro that is still going strong apart from the battery not being as good as it used to be. She uses it for graphic design and it still handles Adobe Creative suite and Keyshot fine. Macs have always been at the more niche end of the market for computer users so could it be that sales are down simply because people don’t need to upgrade very often?

As others have said, the tech market is on its backside on the whole as consumer spending has tanked due to high inflation and price hikes around that and of course people are cautious due to uncertain financial security. It’s the same with iPhones, most people I know use older models and aren’t interested in the new 14’s because they have gone up significantly in price. This is apparently also making the refurbished market grow. People on Mac Rumours aren’t your average consumer in my opinion and where people here desire the latest every year in some cases, most people couldn’t care less. Let’s face it, most of these devices are good enough for several years and this is something Apple and others are starting to adapt to. Prices are going up as less people buy to maintain profit margins and the only people who lose out are those that are now paying £1099+ for an iPhone. The fact is, nobody needs to do that anymore and less people are.

 

[Gudi]

How often do people tend to upgrade their Mac’s?

Once every (other) decade. 😆

 

[Gudi]

While many people have several iOS devices (iPhone and iPad) the type device used for work is still a PC. There are many tasks that just don’t do well on iOS. In fact, most office work doesn’t. PCs play an important role and need to be updated.

That's exactly the point Steve Jobs tried to make over 10 years ago. PCs are always going to be useful for specific tasks. They'll just make up a tiny fraction of all computing devices, which means their sales numbers will come down to a much lower level and stay down there forever. Office work in a cubicle is not the future, although it makes good visuals for a dystopian movie. The future is going to be more the chip in your brain kinda sci-fi trope.

 

[Warped9]

The future is going to be more the chip in your brain kinda sci-fi trope.

Thats a frightening thought. Too many people today already behave like robots.

 

[Gudi]

Thats a frightening thought. Too many people today already behave like robots.

But they are choosing this life style in a Huxley's 'Brave New World' hedonism. Look at all the Uber drivers and Amazon workers, they are slaved to an app, which controls their every move and keeps them on the run.

 

[AL2TEACH]

they are slaved to an app

Lol, maybe the app helps them do the work better as drivers.

 

[Gudi]

Lol, maybe the app helps them do the work better as drivers.

They are not workers hired as drivers. They are pseudo self-employed service providers, who need to auction for every individual delivery job via an Amazon app. So it is guaranteed that only the lowest, most desperate bidder gets paid at all. Of course this is all highly illegal in Germany.

 

[dmccloud]

Not financial losses no, the gap was filled via price hikes in Europe and Asia. Apple clearly knew sales were going to slow so put prices up to cover any potential losses.

Apple would have had to jack up the prices by a lot more to turn losses into billions of dollars in profit. The math proves you wrong on multiple levels. The other consideration is that now that we are three years post-COVID and lockdowns, Work-From-Home, etc., the pace of buying computers and computer accessories has slowed dramatically because people either have everything they need to work from home already or they have returned to the office and consequently no longer need to update their home equipment.

Not so anymore. The iPhone 14 is almost exactly the same as the iPhone 13 with the same chip! The iPhone 14 max is $100 less than the Pro but it doesn't have the same camera system, it has a year old chip, it doesn't have Pro Motion or the ugly pill hole cut out that is supposedly cool. So you pay almost the same and all you get is a bigger screen. Who would buy that? Then if you actually want a decent phone you have to shell out $1k or more and you still don't even get a decent telephoto lens or real fast charging.

The Mac's are all pretty good but the market for buying computers as a whole has dramatically shifted since COVID and lock downs, the economy has dramatically shifted and a lot of people just don't have extra money like they used to do buying a new Mac or iphone or iPad is a lot harder specially at the price points Apple is selling.

Taken as a whole. Lack of true hardware and software innovation, a lack of stability on iOS, a lack of pro features on Pro iPads, and cost is all a recipe for disaster.

Also in terms of privacy and advertising Apple almost introduced a back door into all of their OS with CSAM scanning which is a huge violation of trust, trying to put more ads and services is also a problem.

Maybe Apple hasn't lost their way but they have certainly gone in some wrong directions and dropped the ball. They are not innovating but following. They have segmented to death every product line they have with all the Pro BS instead of just delivering the best in each product category it seems they try to squeeze out as much profit as possible and hold back as many features on purpose for no other reason than to get people to buy up.

All of this starts to piss people off. Jobs is turning in his grave.

I personally would love to see the end of "Pro" phones and tablets. It is ridiculous. Return to offering a simple product line with the best of everything and just charge for the larger size. Get rid of the "air" on MacBook and just have a MacBook and a MacBook Pro. Stop holding back features like Promotion just to push people into a higher cost bracket.

I could go on and on.

There are many reasons for Apples poor sales performance but I think a lot more of it is self inflicted rather than just the economic market factors. More people are going to get fed up if they don't change some of the things I mentioned.

There will always be the die hard Apple fanatics who will empty their pockets gleefully but the rest of us will only take so much.

So much misreading of both Apple and the market as a whole here. When it comes to the iPhone, the Pro and Pro Max have always had features the base models lacked. With the 14, those features include dynamic island (which actually makes the "notch" useful), 48MP main camera lens, ProMotion display with Always on capability, and stainless steel frame, which makes the Pro and Pro Max slightly more durable than their aluminum counterparts. The 14 and 14 Plus are using the same SoC the 13 Pro and Pro Max used, but with one additional GPU core (A15 Bionic with 6CPU/5GPU cores), rather than the A15 the 13 and 13 mini use with only 4 GPU cores.

The four quadrant model was needed back in the last 90s to corral Apple's tendency to release a bunch of models with similar specs but different labels, but Jobs himself ditched that model prior to leaving Apple and his subsequent death. Jobs himself also told Tim Cook to run Apple as HE saw fit rather than constantly asking "What would Steve Do?", so there is no grave turning to speak of. Even under the 4 quadrant model, Apple had "Pro" and consumer models in both laptops and desktops, so the pro moniker has withstood the test of time.

It's also strange to see you accuse Apple of no true hardware and software innovation, especially when Apple Silicon has transformed the Mac side of the business. A lot of your comments are really personal opinion rather than provable facts (your derision of the Dynamic Island as a "pill" being one glaring example). What people are overlooking in the midst of the sales numbers for Mac is that the services side generated record revenues, and that is by far the most profitable segment of Apple, since overhead is so much lower than in any physical product line.

 

[The-Real-Deal82]

Apple would have had to jack up the prices by a lot more to turn losses into billions of dollars in profit. The math proves you wrong on multiple levels.

iPhones have gone up £150 compared to last year so for me that’s a significant price hike. When they sell millions of them in Europe and make more than 51% margin, I’d say they’ve bridged the gap significantly.

 

[dmccloud]

iPhones have gone up £150 compared to last year so for me that’s a significant price hike. When they sell millions of them in Europe and make more than 51% margin, I’d say they’ve bridged the gap significantly.

Most of those margin estimates are based off incomplete information and wild guesses. Apple is driving profit off the services side more than any other segment of the business. There was a twofold reason for increasing prices outside of the US as well: increased price of the A16 SoC itself and changes in exchange rates.

 

[ignatius345]

A lot has been made on these pages about Apple being down 40 percent recently and touting it as a sign Apple has lost its way, doesn’t know what its doing, has disappointing products and is generally in trouble. But it’s all touted out of context.

People love nothing more than to trot out their preferred spec bump or price point and say "if the MacBook Air had 16GB of RAM standard and cost $999 this wouldn't have happened!!" -- as if the world is populated by tech hobbyists.

 

[The-Real-Deal82]

Most of those margin estimates are based off incomplete information and wild guesses. Apple is driving profit off the services side more than any other segment of the business. There was a twofold reason for increasing prices outside of the US as well: increased price of the A16 SoC itself and changes in exchange rates.

Those price hikes are also a very good reason why many haven’t bothered upgrading their Apple products this year too. They can’t have it all.

 

[StarShot]

A lot has been made on these pages about Apple being down 40 percent recently and touting it as a sign Apple has lost its way, doesn’t know what its doing, has disappointing products and is generally in trouble. But it’s all touted out of context.
.....
The “Apple has gone bad” argument is so much nonsense.

Apple (AAPL) down 40% recently, what are you smoking???
Today an ALL time high $174.20 before the close. 2000, about 70 cents a share after going through several stock splits.