9 ms·

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 inn

by bsirkia 10y ago

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."

Esau 10y ago
Personally, I wonder who though Apple's growth would never end. This happens to every company sooner or later.
- mturmon 10y ago
  I was at a NASA workshop in Mountain View. An informational placard outside had two plots of growth, one with an unchecked exponential curve, and one with a curve that comes up to a peak and goes down. It asked which made more sense as a growth curve. My idealized mathematical self thought, naturally, the exponential growth curve, because it expresses what happens when y-dot equals alpha y. But I asked a passing Caltech astrophysicist, who (not surprisingly) gave a better reply. The curve that flattens out and goes down, he said, because exponential growth is impossible to sustain. Physical limits on some aspect of the system must intervene and impose a new law.
  - msellout 10y ago
    A chart of growth rate might have a peak, but a chart of the thing that is growing is more simply modeled as a sigmoid that has an initial exponential growth portion, then a logarithmic portion which ends in a plateau.
    - neutronicus 10y ago
      That depends. Time-delayed negative feedback produces a peak and a crash.
  - cloudjacker 10y ago
    > Physical limits on some aspect of the system must intervene and impose a new law. Just because Apple didn't become the first trillion dollar public company by marketcap (lets assume that chinese bank ipo for a brief second didn't count), doesn't mean that it would have broken a physical limit on the system. There was a time not long ago when 100 billion companies didn't exist and there was a time when private venture capital didn't value new businesses at 1 billion dollars although I don't see the fundamentals to support such large companies, apple, or another company, isn't breaking anything if it does achieve the ability to grow larger
    - epoch1970 10y ago
      Might inflation due to quantitative easing, for example, be at least partially responsible for the higher valuations we see today?
      - cloudjacker 10y ago
        Partially, Apple's metrics aren't that outlandish though. You could just use the age old price to earnings ratio and see it isn't wildly inflated, they make bank and speculators value it at 11 times said bank right now The higher valuations of private companies IMO has little to do with quantitative easing. Despite any bubble talk, very little funding actually goes into these private companies. The S&P 500 returns nearly 1 trillion a year to shareholders via dividends, VCs put like 50 billion into these high growth startups. Low interest rates from quantitative easing might contribute greatly, but I wouldn't say the inflation targets have much to do with it.
      - prewett 10y ago
        The inflation rate for the last 12 months was 0.9%, and has varied from 0.1% to 3.2% over the past 5 years. [1] So, no, inflation is not responsible for the higher valuations. Higher valuations come partly from businesses having more cash because they are not spending money expanding, and because the low interest rates encourage companies to borrow money to buy back stock, which increases EPS and dividends, which increases share prices. Of course, there has been some legitimate growth over the past years, too. [1] http://www.usinflationcalculator.com/inflation/current-inflation-rates/ http://www.usinflationcalculator.com/inflation/current-infla...
  - jf 10y ago
    I'd really like to see this placard. Are you able to find a copy of that placard online?
    - mturmon 10y ago
      I tried and failed before I posted. It was a metal sign placed outside "Building 3" (the Spanish-style place) here: http://naccenter.arc.nasa.gov http://naccenter.arc.nasa.gov It's not readily accessible, and there seems to be no street-view coverage there. The photos listed nearby on google maps have a location that is far enough off to be useless.
  - eanzenberg 10y ago
    My guess is most natural growth curves are exponential at early times, inflect, then reach asymptotic behavior.
  - devcamcar 10y ago
    That was a lot of words to use just to agree with the above. Well played?
joering2 10y ago
> Google’s Android operating system continue to challenge the company with powerful, lower-price devices." Apples customers barely complained on slow iPhones, and even less at their pricing level, where many knew apple margin is 40%. "Normal" company cannot withstand such high margins because of competition. Jobs achieved opposite where many people just said "oh screw it - it will cost me plenty, but I really want it!" As of the lack of growth, I agree with you. It doesn't mean they are in serious troubles, just like a light caught doesn't mean you have a throat cancer. But the truth is that their products lost plenty with Job's departure. Apple growth barely been done due to progress, but rather because of evolution! First mass-scale touch device, first mass-storage music device (I know, there been Palm and others; but ask 10 people - who ever heard of Palm?). Those were steps of evolution. Before you couldn't type with a finger. Before you couldn't store 160GB of your music in your pocket. Etc etc. Now Apple is all about growth. There is no more evolution! There is faster CPU, if you really needed it. There is lighter phone, if you really needed it. There is faster GPU, if you really needed it. There is more fancy front-facing camera.... BUT none of those things are evolution; its just a progress. And that won't catapult Apple sales into previous levels. It simply can't. Would we see the same "disappointing" sales numbers had Jobs still be here? Most likely not. By now we would steer the "i" devices with our eyeballs, and mind control that really works and is friendly to a customer would be just around the corner... As of today under current management... it's funny, but my i device doesn't even have an FM radio built-in.
dzhiurgis 10y ago
IMHO biggest Android advantage is being open. Hardware and software is obviously better on iOS, but being closed platform I keep getting disappointed every week because I can't do x or y. I doubt that many people base their purchasing decisions on this though.
- madeofpalk 10y ago
  Ignoring of course the fact that the most important parts of Android is not open source (Google Play Services, which is at the centre of a very misguided EU anti trust case), just because Android is 'open' it doesn't mean you can do more things on it. If something is possible on Android that's because of a design decision that Google took. Besides, what happens when you run iNot someone that you can't so on Android? You going to download the source code and make a change and flash it to your decide? I doubt it.
  - dzhiurgis 10y ago
    The fact that you can load anything outside App store means a lot for advanced users. And I am not talking from OSS perspective. Besides, where have you seen OSS services? It doesn't even make sense.
    - devsquid 10y ago
      Yea exactly its one of the reasons why I love Android so much. Also the argument that Android isn't actually OSS argument is dumb. If it was closed source how have other companies forked it and successfully released their own variants? It doesn't make sense.
      - madeofpalk 10y ago
        "Forked it and successfully released their own variants" is a stretch (Amazon Fire Phone), especially when Google specifically prohibits vendors that get access to Google Play to fork Android.
allisthemoist 10y ago
"Apple may be reaching the saturation point (of the products it currently sells) among potential customers in some countries"
- oxide 10y ago
  Apologies in advance if this is a dumb question. What is Apple's next move once it saturates the market? Or, more generally, what is the next move once you've saturated a market?
  - allisthemoist 10y ago
    Product innovation I would think
  - cft 10y ago
    You make a new product. But without Steve Jobs it's hard..
  - zootam 10y ago
    creating new products and services which will continue to grow or change the markets and get new customers.
  - mozumder 10y ago
    You create new product lines. They've done the Apple Watch, Apple TV, Apple Pay, etc.. There's plenty of more options available in both the short (<5yrs) and long term (>5yrs). They've previously had consumer product lines that included cameras, game consoles, laser printers, TVs, etc.. They could revisit those markets again, or push into business markets. Really they could do anything.
  - AnimalMuppet 10y ago
    Define your market more broadly. The iPhone itself is an example of this. Desktop computers don't have much growth? Well, what else could a computer be besides a desktop?
    - 10y ago
mjfern 10y ago
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.
- iamdave 10y ago
  growth for the sake of growth Working at a small shop now, and seeing this same behavior, it's a little frightening. In our case, and from my perspective coming from a couple of startups more recently, and large enterprises prior to that: terrifyingly frustrating for a number of reasons. I'm in a great spot to make suggestions from my accumulated past, but the team and management seem terrified to make the jump and have nestled themselves nicely in the niche of "let's just do what's easy for now" while still telling themselves they want to grow grow grow, but I don't think management is quite aware of what this growth is going to mean internally for our ability to solve problems with the toolsets we have (both for support and project management).
  - fluxquanta 10y ago
    Wow, are you me? Every morning we have a company wide meeting where capturing more market share is a recurring theme. And immediately after that meeting yesterday in a developers only meeting, an inordinately large amount of time was spent on discussing how we can introduce new features yet still accommodate those of our customers who don't have internet access. Because, as you know, if you want to capture more market share with software in 2016, you want to focus on people who don't have internet.
    - freehunter 10y ago
      That was a theme at a place I used to work a few years ago, but it was internally. How can we accommodate employees who don't have Internet access at home. Mainly focused on truck drivers who live a hundred miles away from their distribution center and park their truck at home at night, with the question being "how can they log their miles". So we needed a VPN that could support dial-up, and a trucker logging tool that supported dial-up, but also the helpdesk support tools needed to be able to be used on dial-up so the helpdesk could walk them through any issues interactively. But we didn't want to spend any money supporting it, so we kept a Windows 3.1 server running so we could run the Novell system that truckers used to log into the dial-up VPN with. We finally put Internet access in all of the warehouses and told the truckers they had to end their night at the warehouse and log their hours there. Several drivers quit because it was too much of a burden to drive that far every day. But then we finally got to upgrade the software to support showing customers where the trucks were at and how long it would take to get to their locations. It would be awesome if technological progress was more evenly distributed across the population.
Retric 10y ago
Innovation had little to do with this, US cellphone companies stopped heavily subsidizing phones. Apple's profits dropped.
FussyZeus 10y ago
Apple doesn't innovate terribly much, there were smart phones before the iPhone, the iPhone was just a better one. There were tablets before the iPad and the iPad was just a better tablet. Apple's strength isn't in coming up with NEW things, I would say quite the opposite as they're usually very late into any given market. Apple's strength is coming up with products that are better than the ones that came before, in their Apple-y way.
- stouset 10y ago
  And how do you not consider this innovation? Innovating isn't just about inventing new technology wholesale. It's also about packaging that technology in a way that makes it useful and desirable.
  - FussyZeus 10y ago
    That's actually a really good point, I guess my definition could use some work.
- vtlynch 10y ago
  Since when does innovating really mean making something new? I think that already has its own word: inventing. "Innovating" is a business buzz word. Its not meaningless, but I think that its meaning is far from inventing/creating.
- petra 10y ago
  In the past this has been true because their exceptional design skills. But companies learned that skill, it's not unique to Apple anymore. So for example, the Apple watch isn't objectively significantly better than Google's Watch OS. But Apple still has a lot of resources and capabilities it can deploy to make something a sucsess, like any other big company, so maybe that's what we should except from the current Apple - altough considering the circumstances - this can be very lucrative.
- Spooky23 10y ago
  The options prior were half-dead PalmOS, Windows CE devices like the iPaq, and the Blackberry. The blackberry was the ultimate pager, but didn't have a functional web browser. The Windows device was pretty much awful, and PalmOS was waiting for euthanasia.
notatoad 10y ago
>I'm sure there will be lots of "Apple has lost its ability to innovate" articles based on this Given that people have already been writing those articles for a couple years, i'm sure a drop in their revenue and missed estimates won't make them stop.
tosseraccount 10y ago
It's a bad report across the board... AAPL YOY (year over year, not quarter) : iphone down 18% ipad down 19.5% mac down 9% revs down 13.5% eps down 18.5%
- sosborn 10y ago
  > It's a bad report across the board... Just to put this into perspective: > quarterly net income of $10.5 billion
  - tosseraccount 10y ago
    Good point. "which is about a 12% decline in year-over-year quarterly revenue. It’s officially Apple’s first quarterly decline since 2003."
chvid 10y ago
It is year over year growth that has gone negative and quite significant across the board.
taneq 10y ago
It's got to be largely a zero-sum game between Android and iOS at this stage.
- droopybuns 10y ago
  I think that the boomers retiring with no more company-paid cell phone is a small market that is expanding.
coldtea 10y ago
>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. Not to mention that all the other companies (Microsoft, Amazon, Google, Facebook) have much worse ups and downs (and are also 1/3 or less the revenue and much much less the profits of Apple, Amazon comically less) but you never see "X is doomed" for them...

by bsirkia 10y ago

Esau 10y ago

Personally, I wonder who though Apple's growth would never end. This happens to every company sooner or later.

mturmon 10y ago
I was at a NASA workshop in Mountain View. An informational placard outside had two plots of growth, one with an unchecked exponential curve, and one with a curve that comes up to a peak and goes down. It asked which made more sense as a growth curve. My idealized mathematical self thought, naturally, the exponential growth curve, because it expresses what happens when y-dot equals alpha y. But I asked a passing Caltech astrophysicist, who (not surprisingly) gave a better reply. The curve that flattens out and goes down, he said, because exponential growth is impossible to sustain. Physical limits on some aspect of the system must intervene and impose a new law.
- msellout 10y ago
  A chart of growth rate might have a peak, but a chart of the thing that is growing is more simply modeled as a sigmoid that has an initial exponential growth portion, then a logarithmic portion which ends in a plateau.
  - neutronicus 10y ago
    That depends. Time-delayed negative feedback produces a peak and a crash.
- cloudjacker 10y ago
  > Physical limits on some aspect of the system must intervene and impose a new law. Just because Apple didn't become the first trillion dollar public company by marketcap (lets assume that chinese bank ipo for a brief second didn't count), doesn't mean that it would have broken a physical limit on the system. There was a time not long ago when 100 billion companies didn't exist and there was a time when private venture capital didn't value new businesses at 1 billion dollars although I don't see the fundamentals to support such large companies, apple, or another company, isn't breaking anything if it does achieve the ability to grow larger
  - epoch1970 10y ago
    Might inflation due to quantitative easing, for example, be at least partially responsible for the higher valuations we see today?
    - cloudjacker 10y ago
      Partially, Apple's metrics aren't that outlandish though. You could just use the age old price to earnings ratio and see it isn't wildly inflated, they make bank and speculators value it at 11 times said bank right now The higher valuations of private companies IMO has little to do with quantitative easing. Despite any bubble talk, very little funding actually goes into these private companies. The S&P 500 returns nearly 1 trillion a year to shareholders via dividends, VCs put like 50 billion into these high growth startups. Low interest rates from quantitative easing might contribute greatly, but I wouldn't say the inflation targets have much to do with it.
    - prewett 10y ago
      The inflation rate for the last 12 months was 0.9%, and has varied from 0.1% to 3.2% over the past 5 years. [1] So, no, inflation is not responsible for the higher valuations. Higher valuations come partly from businesses having more cash because they are not spending money expanding, and because the low interest rates encourage companies to borrow money to buy back stock, which increases EPS and dividends, which increases share prices. Of course, there has been some legitimate growth over the past years, too. [1] http://www.usinflationcalculator.com/inflation/current-inflation-rates/ http://www.usinflationcalculator.com/inflation/current-infla...
- jf 10y ago
  I'd really like to see this placard. Are you able to find a copy of that placard online?
  - mturmon 10y ago
    I tried and failed before I posted. It was a metal sign placed outside "Building 3" (the Spanish-style place) here: http://naccenter.arc.nasa.gov http://naccenter.arc.nasa.gov It's not readily accessible, and there seems to be no street-view coverage there. The photos listed nearby on google maps have a location that is far enough off to be useless.
- eanzenberg 10y ago
  My guess is most natural growth curves are exponential at early times, inflect, then reach asymptotic behavior.
- devcamcar 10y ago
  That was a lot of words to use just to agree with the above. Well played?

joering2 10y ago

> Google’s Android operating system continue to challenge the company with powerful, lower-price devices." Apples customers barely complained on slow iPhones, and even less at their pricing level, where many knew apple margin is 40%. "Normal" company cannot withstand such high margins because of competition. Jobs achieved opposite where many people just said "oh screw it - it will cost me plenty, but I really want it!" As of the lack of growth, I agree with you. It doesn't mean they are in serious troubles, just like a light caught doesn't mean you have a throat cancer. But the truth is that their products lost plenty with Job's departure. Apple growth barely been done due to progress, but rather because of evolution! First mass-scale touch device, first mass-storage music device (I know, there been Palm and others; but ask 10 people - who ever heard of Palm?). Those were steps of evolution. Before you couldn't type with a finger. Before you couldn't store 160GB of your music in your pocket. Etc etc. Now Apple is all about growth. There is no more evolution! There is faster CPU, if you really needed it. There is lighter phone, if you really needed it. There is faster GPU, if you really needed it. There is more fancy front-facing camera.... BUT none of those things are evolution; its just a progress. And that won't catapult Apple sales into previous levels. It simply can't. Would we see the same "disappointing" sales numbers had Jobs still be here? Most likely not. By now we would steer the "i" devices with our eyeballs, and mind control that really works and is friendly to a customer would be just around the corner... As of today under current management... it's funny, but my i device doesn't even have an FM radio built-in.

dzhiurgis 10y ago

IMHO biggest Android advantage is being open. Hardware and software is obviously better on iOS, but being closed platform I keep getting disappointed every week because I can't do x or y. I doubt that many people base their purchasing decisions on this though.

madeofpalk 10y ago
Ignoring of course the fact that the most important parts of Android is not open source (Google Play Services, which is at the centre of a very misguided EU anti trust case), just because Android is 'open' it doesn't mean you can do more things on it. If something is possible on Android that's because of a design decision that Google took. Besides, what happens when you run iNot someone that you can't so on Android? You going to download the source code and make a change and flash it to your decide? I doubt it.
- dzhiurgis 10y ago
  The fact that you can load anything outside App store means a lot for advanced users. And I am not talking from OSS perspective. Besides, where have you seen OSS services? It doesn't even make sense.
  - devsquid 10y ago
    Yea exactly its one of the reasons why I love Android so much. Also the argument that Android isn't actually OSS argument is dumb. If it was closed source how have other companies forked it and successfully released their own variants? It doesn't make sense.
    - madeofpalk 10y ago
      "Forked it and successfully released their own variants" is a stretch (Amazon Fire Phone), especially when Google specifically prohibits vendors that get access to Google Play to fork Android.

allisthemoist 10y ago

"Apple may be reaching the saturation point (of the products it currently sells) among potential customers in some countries"

oxide 10y ago
Apologies in advance if this is a dumb question. What is Apple's next move once it saturates the market? Or, more generally, what is the next move once you've saturated a market?
- allisthemoist 10y ago
  Product innovation I would think
- cft 10y ago
  You make a new product. But without Steve Jobs it's hard..
- zootam 10y ago
  creating new products and services which will continue to grow or change the markets and get new customers.
- mozumder 10y ago
  You create new product lines. They've done the Apple Watch, Apple TV, Apple Pay, etc.. There's plenty of more options available in both the short (<5yrs) and long term (>5yrs). They've previously had consumer product lines that included cameras, game consoles, laser printers, TVs, etc.. They could revisit those markets again, or push into business markets. Really they could do anything.
- AnimalMuppet 10y ago
  Define your market more broadly. The iPhone itself is an example of this. Desktop computers don't have much growth? Well, what else could a computer be besides a desktop?
  - 10y ago

mjfern 10y ago

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.

iamdave 10y ago
growth for the sake of growth Working at a small shop now, and seeing this same behavior, it's a little frightening. In our case, and from my perspective coming from a couple of startups more recently, and large enterprises prior to that: terrifyingly frustrating for a number of reasons. I'm in a great spot to make suggestions from my accumulated past, but the team and management seem terrified to make the jump and have nestled themselves nicely in the niche of "let's just do what's easy for now" while still telling themselves they want to grow grow grow, but I don't think management is quite aware of what this growth is going to mean internally for our ability to solve problems with the toolsets we have (both for support and project management).
- fluxquanta 10y ago
  Wow, are you me? Every morning we have a company wide meeting where capturing more market share is a recurring theme. And immediately after that meeting yesterday in a developers only meeting, an inordinately large amount of time was spent on discussing how we can introduce new features yet still accommodate those of our customers who don't have internet access. Because, as you know, if you want to capture more market share with software in 2016, you want to focus on people who don't have internet.
  - freehunter 10y ago
    That was a theme at a place I used to work a few years ago, but it was internally. How can we accommodate employees who don't have Internet access at home. Mainly focused on truck drivers who live a hundred miles away from their distribution center and park their truck at home at night, with the question being "how can they log their miles". So we needed a VPN that could support dial-up, and a trucker logging tool that supported dial-up, but also the helpdesk support tools needed to be able to be used on dial-up so the helpdesk could walk them through any issues interactively. But we didn't want to spend any money supporting it, so we kept a Windows 3.1 server running so we could run the Novell system that truckers used to log into the dial-up VPN with. We finally put Internet access in all of the warehouses and told the truckers they had to end their night at the warehouse and log their hours there. Several drivers quit because it was too much of a burden to drive that far every day. But then we finally got to upgrade the software to support showing customers where the trucks were at and how long it would take to get to their locations. It would be awesome if technological progress was more evenly distributed across the population.

Retric 10y ago

Innovation had little to do with this, US cellphone companies stopped heavily subsidizing phones. Apple's profits dropped.

FussyZeus 10y ago

Apple doesn't innovate terribly much, there were smart phones before the iPhone, the iPhone was just a better one. There were tablets before the iPad and the iPad was just a better tablet. Apple's strength isn't in coming up with NEW things, I would say quite the opposite as they're usually very late into any given market. Apple's strength is coming up with products that are better than the ones that came before, in their Apple-y way.

stouset 10y ago
And how do you not consider this innovation? Innovating isn't just about inventing new technology wholesale. It's also about packaging that technology in a way that makes it useful and desirable.
- FussyZeus 10y ago
  That's actually a really good point, I guess my definition could use some work.
vtlynch 10y ago
Since when does innovating really mean making something new? I think that already has its own word: inventing. "Innovating" is a business buzz word. Its not meaningless, but I think that its meaning is far from inventing/creating.
petra 10y ago
In the past this has been true because their exceptional design skills. But companies learned that skill, it's not unique to Apple anymore. So for example, the Apple watch isn't objectively significantly better than Google's Watch OS. But Apple still has a lot of resources and capabilities it can deploy to make something a sucsess, like any other big company, so maybe that's what we should except from the current Apple - altough considering the circumstances - this can be very lucrative.
Spooky23 10y ago
The options prior were half-dead PalmOS, Windows CE devices like the iPaq, and the Blackberry. The blackberry was the ultimate pager, but didn't have a functional web browser. The Windows device was pretty much awful, and PalmOS was waiting for euthanasia.

notatoad 10y ago

>I'm sure there will be lots of "Apple has lost its ability to innovate" articles based on this Given that people have already been writing those articles for a couple years, i'm sure a drop in their revenue and missed estimates won't make them stop.

tosseraccount 10y ago

It's a bad report across the board... AAPL YOY (year over year, not quarter) : iphone down 18% ipad down 19.5% mac down 9% revs down 13.5% eps down 18.5%

sosborn 10y ago
> It's a bad report across the board... Just to put this into perspective: > quarterly net income of $10.5 billion
- tosseraccount 10y ago
  Good point. "which is about a 12% decline in year-over-year quarterly revenue. It’s officially Apple’s first quarterly decline since 2003."

chvid 10y ago

It is year over year growth that has gone negative and quite significant across the board.

taneq 10y ago

It's got to be largely a zero-sum game between Android and iOS at this stage.

droopybuns 10y ago
I think that the boomers retiring with no more company-paid cell phone is a small market that is expanding.

coldtea 10y ago

>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. Not to mention that all the other companies (Microsoft, Amazon, Google, Facebook) have much worse ups and downs (and are also 1/3 or less the revenue and much much less the profits of Apple, Amazon comically less) but you never see "X is doomed" for them...