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Apple's warning is a bad omen for Wall Street bulls
- nitinreddy88 8y agoI am an iphone/MBP user for past few years and currently using iphone 7/MBP 2018. While apple products and quality is superior, i dont see any improvements in iphone XS compared to my current phone. 1. Camera quality is not really that differentiating factor to spend 1200$ 2. 99.9% usage doesn’t require higher cpu If apple continues to play premium game without game changing features, soon it will be staginated Regarding MBP, they screwed beautiful piece in the latest iteration
- zepto 8y agoIf you can’t see improvements between the XS and the 7, I’m very surprised. However I do agree with the general point. The differences are getting less and less significant, and we buy new devices only when they make a meaningful difference to our lives.
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- Retric 8y agoYet, somehow BMW successfully sells new cars with minor changes every year. Eventually in the premium market it's less about the upgrade vs simply having a new device. The question is what peoples upgrade cycles will look like. IMO an average around 4 years is probably about right for cellphones.
- adpirz 8y agoWRT stock price and valuation, the current pricing generally assumes a much more frequent upgrade cycle, so even if this makes more practical sense, it means that AAPL will lose a lot of value in the transition; their transition to offering more in services is a sign that their hardware innovation has probably reached a relative maximum.
- throwaway2048 8y agoI don't think BMW has nearly doubled their prices over the span of a few years.
- c0nducktr 8y agoI think the idea is that they've just, or are moving towards, 'Luxury' pricing. Not to compare the two companies prices directly.
- ajross 8y agoBMW has solid and reliable market share, but it's small. Toyota also sells new cars with only minor changes every year. And they make four times as much money doing it. No one questions whether or not Apple will continue to make good premium phones, just if their market capitalization is appropriate for a company that makes only premium phones.
- Retric 8y agoToyota also makes premium cars. The average selling price of a new vechile in the US is 36,000$ per year which means the market for premium cars is huge. Now, the question becomes can you sell a premium Android phone? And based on current sales not really. Companies have flagship products, but they don’t sell that many of them because they don’t have significant advantages over far cheaper devices.
- ajross 8y ago> Now, the question becomes can you sell a premium Android phone? Sorry... why does that become the question? The issue at hand is whether Apple can justify a trillion dollar market cap (now down to about $750B) on its almost-entirely-premium phone sales. Whether it has meaningful competition in the premium phone sector isn't really relevant. Android can be nothing but Huawei junk and AAPL would still be overpriced.
- ummonk 8y agoI don't think people buy a new BMW every few years.
- jonknee 8y agoNo, they lease them. That's actually pretty close to what Apple wants to do as well (Tim even noted it in his CNBC sit down).
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- paxys 8y agoProblem is Apple has based its strategy and forecasts around 1-2 year upgrade cycles rather than 4.
- tanilama 8y agoBMW doesn't raise the price of their cars every year, let alone at the pace of 30%. Should that happen to BMW, I guess the consumers will happily take their business somewhere else. It is impressive enough that Apple can keep doing this for this long and only until now we see a substantial backfire of its action. And those car manufacturers don't have a margin that as lucrative as Apple's, which is 38% in the letter.
- beerlord 8y agoApple have also alienated a lot of people by not supporting an open physical standard for headphones. The day I can use the same headphone jack (3.5mm or USB-C) on my laptop and iPhone is the day I upgrade from an iPhone 6s. Plus, the carriers are encouraging SIM-only sales and for people to finance their own phones. So the 24-month upgrade cycle has been somewhat broken there.
- dfischer 8y agoAnyone that doesnt adopt innovation ends up holding onto archaic technology. The same people judged for the removal of CD drives. It’s usually always a minority voice and it doesn’t have much value in the overall trend of technology and market adoption.
- unholythree 8y agoThe technology is exactly the same. They just eliminated a standard connector from their design and now require you to supply your own DAC; either as a dongle or integrated into the headphones.
- dfischer 8y agoIt is in fact not exactly the same. Because the innovation allows slimmer, lighter design and pushes society to adopt wireless which is ultimately inevitable.
- pooppaint 8y agoThis trope is like 2016 (or whenever the hell it was) either way it’s old and it’s dumb. Buy a dongle, attach it to your headphones and leave it or get air pods. That is what the market is doing. I mean I’m not thrilled with lack of a headphone jack but the overall market for iPhones doesn’t really care.
- beerlord 8y agoIts not old and dumb - Apple introduced USB-C in the iPad Pro. I won't buy a new iPhone until it supports it as well.
- abc_lisper 8y agoSince it seems like the season of anecdotes, I will also chime in. I thought iPhone 7 was good enough until I tried the iPhone XS. It is far superior in every way over iPhone 7, and I am very happy I made the purchase. The webpages load before I say blink, the screen is big, and I am enjoying reading books on it now. Other than that the camera is excellent and better everyway over my old iphone. I am not making this stuff up.
- X-Istence 8y agoI upgraded from an iPhone 7 to an iPhone XS and FaceID and the faster processing speeds have been huge improvements for me too. I find myself frustrated now when I am using a mobile device that doesn't respond as quickly and efficiently as my iPhone XS. The speed at which apps open/websites load, and the accompanying battery life... huge fan. My iPhone 7 would last until about 7 PM before it needed another charge, my XS lasts all day + night and I find myself using it more than I did my 7.
- conductr 8y agoIt’s still a replacement phone vs an upgrade phone. When you need to replace, get the latest, otherwise no urgency to upgrade.
- eeeeeeeeeeeee 8y agoI also went from 7 to X and it was a massive upgrade. The speed alone, but the screen is where I really noticed it.
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- deepakhj 8y agoI'm the opposite. I love all of the new hardware. 1. I went from the 6S -> XS 2. 2015 MBP -> 2018 MBP. The only annoyance was the touch bar in Chrome. 3. Apple Watch Series 0 -> Apple Watch 4 LTE. I can track my surf sessions and take texts/calls in the water.
- valarauca1 8y agoThe only reason I'd seriously consider upgrading is if they fixed the typing speed. The input latency on iPhone has just _horrible_, and I know after another iOS update it'll be just as bad. I taught myself to touch type at about ~80WPM with my thumbs, and how I have this bad of habit of typing a full google search query, and just staring my phone for 90seconds until all the text magically fills in and my phone shakes with haptic feed back that should've occurred nearly 2 minutes ago. It is such a cheap experience I had to turn haptic feedback off because its not even remotely synced to touch inputs.
- shaklee3 8y agoIf you think Apple products are quality, especially on the mbp, is superior, you need to try a high-end pc. Don't compare a $3k mbp to a $1k PC.
- jonknee 8y agoThis may be interesting to people. AAPL currently has a 3.38% share in the S&P 500 (VOO, SPY, etc) and a cool 9.72% share in the tech heavy NASDAQ 100 index (QQQ). Should be quite a volatile morning for QQQ.
- noitsnot 8y agoI would like to believe it's built-in to a certain extent thanks to the past few months, which includes the warning iPhone sales numbers weren't going to be reported with earnings. Let's say it dives further, since it just went below the 52 week low. Aapl might lose 40-50% of it's all-time high value which seems petty odd. What do I know, though. I've only started following them during the bull run where no one could do wrong. Aapl had increasingly record sales and the stock repeatedly stalled, probably due to fears of what just occurred.
- jonknee 8y agoAAPL dove 7.55% in after hours once the news hit, so a large gap down is very likely. Some skepticism was definitely baked in, but this is a very unusual move (no pre quarter warnings since 2002!). All big tech joined in the selling as well so something like QQQ is going to be hit a lot harder than the S&P (QQQ down over 2% in AH).
- cinquemb 8y agoAnother thing is that yesterday made a triple top on ESH19 at ~2520 on the daily timeframe after all the pension buying last week of dec, so the recent run on equity indices were already facing some pretty stiff resistance.
- noitsnot 8y agoYes, the large gap down is a given, since 7.5% was already in after-hours. I guess I was thinking more long-term overall dive than daily. The markets have been pretty volatile for the past month or so. It's odd but a one day 500+ Dow drop isn't really unusual at this point.
- gesman 8y ago20% loss on AAPL is in order. However crowd’s sentiment is quite pessimistic. No bull market ended with crowd being pessimistic. IMHO smart money are gaming news outlets to score few upcoming wins at the expense of average investor
- jonknee 8y agoAAPL is down 30.3% in the last 3 months (before tomorrow's plunge!). The market sniffed this one out a while ago.
- nihonde 8y agoI agree. This will be another manipulation cycle. It happens with AAPL every January, except this time Tim used the opportunity to slam the current President’s trade policy.
- dfischer 8y agoSmart money is already out because the market is in a downturn and people are in denial. Smart money buys in when weak hands sell at the worst moments. More down before up.
- pxeboot 8y agoI know it doesn't apply to most HN readers, but iPhone pricing has really gotten out of reach to most of the world. Doesn't seem surprising that sales have begun to stagnate.
- tinbad 8y agoI don’t know. In the US, the cheapest brand new iPhone (7) is $449. I think it’s just more that Apple has heavily expanded their offering upmarket.
- wvenable 8y agoThere is a problem with perception, though. For $449 you get a phone that, by Apple's own marketing, is 4 generations behind. Subjectively it's a much less appealing product but still almost $500.
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- blago 8y agoiPhone 7 is only two generations behind and a very capable device. I use one and it probably has at least another 2 years of good life left.
- hn_throwaway_99 8y agoActually, reading your comment made me realize that perhaps one thing that is making people less likely to upgrade is that there are now so many versions and models that it's not readily visible how "old" your phone is, so there is less status-climbing pressure to upgrade. I mean, when I read your comment, I couldn't remember how old the iPhone 7 actually was - I had to Google it. The iPhone XR, XS Max, XS, X, 8 Plus, 8, 7 Plus and 7 were all released in a span of just over 2 years. With so many different models, I think there is probably less social pressure to upgrade because it's no longer like "OMG, why do you have the 3-year old iPhone?!" when no one can remember when all the jumble of versions came out anyway.
- whoisjuan 8y agoThe reality is that phone cycles are becoming longer since the price of the devices keeps going up. The iPhone 6 basic model was $649 USD at launch. The iPhone X basic model was $999 USD at launch. The most recent Pixel starts at $799 USD the basic model. I'm still bullish on Apple because their ecosystem strategy is pretty smart and you can see that reflected in their small customer churn. Basically, lower demand today means potential higher demand later. However, this is a golden opportunity for Google to come and disrupt the cycle entirely with a killer product and generate the Apple fan base churn that nobody has been able to pull. I just don't see what technology could produce that. Perhaps Soli (https://atap.google.com/soli/ https://atap.google.com/soli/), which got an FCC approval today.
- ummonk 8y agoEnvironmentally, I think this is a good thing. Given Apple's longer software support for its hardware, you can pay more for an iPhone now but hold on to it longer, reducing e-waste.
- sparkling 8y agoAgreed. Not we just need the batteries to keep up with this.
- chaser7016 8y agoOh Google ATAP wonder who they stole that tech from... https://news.ycombinator.com/item?id=18566929 https://news.ycombinator.com/item?id=18566929
- wvenable 8y agoGoogle needs a real iMessage/Facetime competitor and then they can start chipping away at Apple's network-effects. But Google has no consistent messaging strategy and is placating the carriers with RCS.
- paul9290 8y agoWonder who Google ATAP stole that technology from... https://news.ycombinator.com/item?id=18566929 https://news.ycombinator.com/item?id=18566929
- olivermarks 8y agoApple has stopped innovating, it's as simple as that...
- millstone 8y agoThis has been said every year since I was born.
- throwaway12iii 8y agoAnd the company went bankrupt (if it wasn't bailed out by MS).
- jjtheblunt 8y agoThat's completely mistaken, as Apple innovates in silicon, which is invisible in itself but drives things like incredible battery life, smooth scrolling, etc.
- olivermarks 8y agoI meant innovating to create new product lines and compelling reasons for buyers to upgrade. I didn't mean technical innovation, rather the marketing genius that enabled Steve Jobs to launch exciting new products that people would stand in line all night to buy the day they became available.
- deepakhj 8y agoAirpods? Apple Watch?
- olivermarks 8y agorelatively small markets, more gadgets than core products like the iphone
- ohnope 8y agoI hope they don’t do anything drastic, like roll back their admirable focus on making iOS work astoundingly well on older phones, potentially delaying the need for people to upgrade. But I doubt that was a key factor in the lackluster holiday sales.
- pxeboot 8y agoHopefully not. The long usable lifespan is one of the reason resale values are so high, which helps many justify the high price of a new phone.
- kart23 8y agogang
- etherealny 8y agoThe market has to e saturated
- bitrrrate 8y agoI just don’t get how an already highly profitable, premium device maker raking in billions of dollars a year makes people nervous by not making as money billions as expected. It’s a simplistic view I know but come on. Really, Apple will hit an innovation wall at some point and decline as a company. Even Bezos has said as much about Amazon.
- JohnWatsman 8y agoyou seem to fundamentally misunderstand the market. The worry isn't that apple as a company is going to cease to make a profit. The issue is that given the new information on how apple is performing, people would like convert their shares into cash given what they can get versus what they expect to receive in the future by retaining those shares. Is your argument that in a rational market apple reporting worse than expected performance should have no affect on the value of the company? It's one thing to pinpoint why the specific information being released is inconsequential, or to argue that the magnitude of the market's reaction is disproportionate or moving the stock in the wrong direction, but your argument seems to be simply raise the question. You're essentially responding to information that says maybe apple isn't as great of a company as we all thought it was yesterday by saying "apple is a great company."
- ccnafr 8y agoYou didn't need a warning from Apple. Has anything good ever come from a trade war?
- themagician 8y agoSo many comments about product features and dongles, USB-C and certain design elements of Apple notebooks… these are all trivial. Apple’s growth for the last 10 years has been very heavily weighted towards the iPhone, and now everyone has one… or two or three or their are on their 11th. The market saturated. Everything is an iPhone, even non-iPhones. It wasn’t going to continue forever. It’s why they’ve been creating new products like the Apple TV and Apple Watch. But they haven’t yet found something like the iPhone that literally everyone wants. Maybe they find a universal computing platform, maybe they don’t. But Apple’s future doesn’t rest on adding back the headphone jack or getting rid of the touchbar or so-called “game changing” or “killer” features on existing platforms. If you want Apple to sell one billion devices again then it’s gotta be some real sci-fi level shit. As pretty as the iPhone was, it’s the software that made it magic and set a new standard for how we interact with machines. That “next thing” is probably voice, but no one even seems close. Siri, Alexa, Google Now, Cortana… it’s BlackBerry, Nokia, Palm, etc.. Give me that Hollywood-level magic where the machine gets it right 99% of the time, goes beyond what I thought possible and responds instantly. Impossible? Maybe. But so was a fully optimized touch-based OS before someone did it.
- sparkling 8y ago> That “next thing” is probably voice, but no one even seems close. Am i the only person who has zero interest in voice control? I got a iPhone 4S very early, the first phone that had Siri installed and i can not remember ever using it. Not even trying it out just for fun.
- themagician 8y agoYou could have said that about touch screens before the iPhone too. Even after it came out people remained skeptical. No one wanted to tap on a sheet of glass when it sucked. One day it didn’t suck anymore and everything was different. 10 years and a billion devices later it worked out. Voice will have the same revolution at some point. You have zero interest in it now because it sucks. When someone makes it not suck so badly you’ll give it another go.
- thenanyu 8y agoI think they have one trick left to play in the short term — I wouldn't be shocked if many people would upgrade their iPhones (who otherwise wouldn't do so) if they released a USB-C version.
- Nerdfest 8y agoI'm not really sure why this has anything to do with "Wall Street". Just because something changes for one company doesn't mean it's a trend. Apple is in trouble because they pushed their prices beyond where even the ardent fans will buy it without thinking. This big thing though is the amount of free advertising they're getting as the darlings of the media has dropped drastically. This is a huge part of how they got to the point they are now. It used to be that a new model launch was front page news ... that's no longer the case, and the biggest Apple stories seem to be their mistakes. I think people don't really get how much that free media coverage has helped their sales. For a few years "tech" stories meant Apple stories.