11 ms·

Apple’s Hot iPhone Quarter Masks a Behind-the-Scenes Slowdown

46 points by jbegley 4y ago

smartbit 4y ago
https://archive.ph/NSe1y https://archive.ph/NSe1y
msoad 4y ago
At 27 PE Apple is not expected to grow like before. I don't think anyone is expecting Apple pulling another iPhone like product out of its sleeve
- selectodude 4y ago
  Sure it is. A company that actually isn't really growing like Exxon or AT&T have P/Es below 10. 27 is pretty high for a value investment.
- melony 4y ago
  What happened to their self-driving car and AR goggles?
  - selectodude 4y ago
    The self driving car project is looking like more of a software package that they're selling to vehicle manufacturers. https://www.macrumors.com/2022/06/06/apple-announces-multi-display-carplay/ https://www.macrumors.com/2022/06/06/apple-announces-multi-d...
  - ProAm 4y ago
    Moonshots. And Apple is never first to market with anything. They take ideas that have traction and marketplace and then try to build a better one. The car wont make it because there is not a a successful industry to steal from yet. They have a chance with AR, but there is not enough adoption yet for Apple to be successful here yet (And apple is terrible with gaming).
    - skellera 4y ago
      AR isn’t only gaming. It’s to become the interface for a person’s world, instead of just the internet. It’s an extremely powerful position to influence what someone sees everywhere they look. This is why companies are trying to break into it. Hardware is the main gap at the moment but Apple is the best hardware manufacturer in the world. The M chips are a step in this direction (high performance, low power).
      - cercatrova 4y ago
        > It’s to become the interface for a person’s world, instead of just the internet I imagine you will still use the internet in AR, otherwise how will you get information? What you probably meant is a web browser on desktops and phones.
      - ProAm 4y ago
        > AR isn’t only gaming 100% but Apple always follows others leads and then makes a better product. Right now AR/VR leans heavily into gaming as for the audience is already built in. AR has so many applications I think eventually it will destroy the VR market usability wise. Im just saying for Apple it stands a better chance than their car efforts.
        threeseed 4y ago
        > Right now AR/VR leans heavily into gaming as for the audience is already built in If you look at the numbers for VRChat it shows there is a market outside gaming. https://steamcharts.com/app/438100 https://steamcharts.com/app/438100
        acdha 4y ago
        That's a common take but I think it's based more on PC/Android fans looking for an easy dismissal than any serious understanding of the history of the field. You saw this a lot when the iPod or, especially, iPhone came out which both ignored the degree to which devices were substantially different from other ones and, especially, that there were older experiments going back to the 1990s or even 1980s but that they chose not release products which were seriously compromised by the hardware. In the case of VR/AR, we know Apple has been working on VR products since at least the early 90s but those never made it very far other than a few things like QuickTime VR. As we can see from the rest of the field it was only until the last half-decade that people were getting things like the visual quality or especially latency to acceptable levels and battery life / weight still seem to be a substantial problem.
  - yrgulation 4y ago
    I’ve been waiting for apple made ar goggles for a while now. I suspect the technology is not there yet. Facebooks mobile vr oculus sucks big time in terms of fidelity, so i cant see how decent wearable ar can be made. Cars tho yes. Cant wait for a new premium brand as european carmakers are a tad boring (unless of course you like revamped bling).
  - acdha 4y ago
    Cars are an expensive industry to get established in with a lot of details to get right and major regulatory concerns. My guess is that they looked at that, the struggles the entire field is having (Google's been at it for ages and is nowhere near ready for a consumer product), and decided that the better outcome is to build better integrations with existing companies which are really good at building cars — I know multiple people who decided what to buy in part based on who did the best job with CarPlay. AR is more complicated: there are some neat ideas but the form-factors are brutal in terms of hardware design and there is weak consumer demand. Apple has one of the most popular AR products now (AirPods) but that took a while to mitigate the compromises forced by the physical limits. I'm expecting some additional hardware from them soonish based on the references in recent developer builds but will not be at all surprised if that takes a while to find popular adoption. I think it's easy to underestimate just how hard it is to deliver an application which is compelling enough to get people to pay non-trivial amounts for. VR has been educational in that regard going from something which was too hard / expensive to fairly available but not yet having found mainstream demand.
- mikkergp 4y ago
  I'm curious if and what the next big computer thing is. I think a lot of people saw the iPhone coming at least 10 years before it got here. I bought palm pilots realizing they weren't what I really wanted but the hope has been there for a while. Is there anything right now that will reach that? Obviously VR is the hope but I think we're pretty split on whether we want that. I can't really see Google Glass type thing replacing the iphone. There's some intresting stuff in this microsoft future of computing video about surfaces and glass, but It doesn't feel like one revolutionary consumer leap to get there: https://www.youtube.com/watch?v=wraF2DjALls https://www.youtube.com/watch?v=wraF2DjALls
  - Spooky23 4y ago
    I think it’s the computer. Microsoft’s platform has never been weaker. For all the growth in phones, every professional worker on the planet is sitting in front of a PC.
    - acdha 4y ago
      > Microsoft’s platform has never been weaker. For all the growth in phones, every professional worker on the planet is sitting in front of a PC. Or a Mac, or a Chromebook, or an iPad. It's hard to talk about this as a monolith since there are pretty distinct groups — most of the people I know who get to choose their device are using Mac or Linux (which is admittedly an atypical crowd of developers, scientists, lawyers, architects, etc.) but there are a ton of people who have professional jobs where that's not the case (e.g. everyone I know who works in healthcare uses some kind of Windows device which is so locked down that it might as well be an iPad, and I know some people at government agencies who are favoring ChromeOS for security reasons since you can lock those devices down so hard). I make that distinction because it doesn't help Microsoft very much strategically if the cashier at McDonald's is sitting in front of a Windows box because they're interacting with a single application and will use whatever their next employer has standardized on when, say, they go somewhere which uses Square. Someone who uses Office is a bit more but as an increasing percentage of people aren't doing anything which they couldn't do in a browser, that's not as strong as it used to be. None of that means that Microsoft is going away but I think it does leave them really wondering how to avoid falling behind the next trend like they did with mobile devices.
- kgwgk 4y ago
  Not sure if that's what you mean but that could be understood as "the price/earnings ratio has gone down to just 27 because the growth expected currently is lower than what it used to be". In 2010-2019 it was rarely above 20 and it even went below 10. The decade average was 15.
- mark_l_watson 4y ago
  This will probably never happen, but what I want is: 1) only two personal devices (Apple Watch and small iPhone) that both contain my digital life, use biometrics to securely identify me, etc. 2) larger "environmental" devices from many manufacturers like wall displays, beautiful furniture that has magically appearing keyboards, mice as needed, perfect car integration, etc. The large environmental devices would be 100% securely sharable and be in private homes, hotels, offices, metro stations, etc. With either my Watch or iPhone, no matter where I am, if I need to, I would have my work life, entertainment life, etc. at my fingertips. iPadOS 16 beta has StageManager that is sort-of OK for providing a more general desktop environment. I would expect my Watch or iPhone to trigger whatever I need in my environment. I get so tired of being "sys admin" for my digital devices. I want to spend as close to zero time doing this as possible. Similarly, my Dad is having his 101 year old birthday next month and although he has always been very good with computers, it is frustrating trying to help him remotely. So: In addition to what I mentioned above, I would like to have VR/AR for quick telepresence to help him and other family members who might be 100s of miles away physically.
- bee_rider 4y ago
  They basically won the smartphone round of the game. We don't know what the Next Thing is, they don't either, nobody does. If they are (unknowingly) working on what will be the Next Thing, it is probably in "wearables and accessories" because that seems to be where their experiments live. But the fact that that section of their company is basically noise at the moment just reflects the fact that the Next Thing hasn't arrived yet. I don't think we should put too much thought (as the article seems to) into their quarter-to-quarter results in the Land of Lost Devices. The point there isn't to sell lots of devices, it is to either try new ideas (which will probably fail because we only get like one big new device class per generation) and have a foundation to quickly try and catch up if their competition finds the Next Thing.
jwr 4y ago
I often think that our constant obsession with GROWTH hurts other, potentially worthy goals. If a company doesn't show growth, it is quickly labelled as "in trouble" or "dead". Why? Why can't we have an Apple that is the size it is now, but concentrates on making better products? If you look at the last 10 years of Apple products, it is clear that many decisions were made to favor growth (e.g. revenue) over customer satisfaction. Their products are often made worse and delight us less, because someone decided that growth is more important. I run my own business and growth is not my #1 goal. But I have the comfort of being able to make that decision, as it is my (self-funded) business. I wish we could ease up on the pressure to grow. EDIT: the replies are completely missing my point. No need to explain how the stock market works. Just please consider, for a moment, a world where companies don't have to prioritize growth over everything else.
- astrange 4y ago
  If you're not busy growing you're busy dying. Staying stable in a world where everything else changes doesn't sound any easier than growing to me; when you become irrelevant you don't make steady flat profits, you just die.
- refurb 4y ago
  It's not people demanding growth, it's the companies claiming they are growing and the expectation that sets. Nothing wrong with a steady state company. There are plenty of them. But that has implications that companies need to live with.
- donavanm 4y ago
  Ignoring the “how publicly traded companies equities function” aspect. What would be the medium to longer term outcome of Apple “making better products?” In an open market I would assume that better products drive new users and/or increased revenue. The way Id measure that is probably something like units sold, ASP, LCV, etc which should all feed back to top or bottom line. And if revenue or profit is increasing id call that … growth? So it seems a bit tautological. UNLESS you mean to measure better products some way besides revenue, units sold etc. And then Im really interested in what that quantification would be, and why it would lead to different outcomes.
substation13 4y ago
I would love for Apple to make a smart wall planner / calendar using e-ink
- euroderf 4y ago
  Or a variant with touch screen drag-n-drop for productivity nerds.
  - Maursault 4y ago
    I want a mac nano in AppleTV form factor for about the same price.
jhallenworld 4y ago
Apple slowdown is OK, but: * They should pay out more in dividends- share the wealth with the owners. * They have been borrowing money for stock buy-backs. This is weird to me- they could just use their cash to do this. https://www.barrons.com/articles/apple-bonds-stock-buybacks-51659361679 https://www.barrons.com/articles/apple-bonds-stock-buybacks-...
- colinmhayes 4y ago
  The market generally prefers buybacks over dividends because of the tax advantage. Borrowing money has been much cheaper than repatriating cash up until the last few months.
- macintux 4y ago
  Borrowing money to buy stocks is cheaper than repatriating their foreign cash. They’re hoping the U.S. will offer another tax holiday for companies hoping to bring that money home.
  - hackernewds 4y ago
    Which is why interest rates being so low is a scam. Apple credit rating is also AA+ so they're borrowing at virtual nothing interest. Why use cash you can grow vs use more debt.
- purplerabbit 4y ago
  Two ideas: 1. If you can borrow at 2 or 3%, it might be worth it to keep cash-on-hand so you can jump on unexpected opportunities that may arrive in the future. 2. Paying dividends makes stock price go down. So it's basically equivalent to deciding to sell a small percentage of shares on behalf of each of your investors. Which is why fewer companies are worrying about dividends
- ProfessorLayton 4y ago
  It's not weird to borrow money essentially for free, it's actually prudent. This may change if/when interest rates rise, but until then it's more optimal to borrow.
subsubzero 4y ago
Who is buying apple products every year anyways? I have my iphone from 2018(I don't want a gigantic phone they offer now) and my home macbook is from 2014 and works perfectly. The last apple product I bought is airpod pro's and those were from a friend with an apple discount 2+ years ago. I wonder if apple will suffer from a reliability issue(too reliable!) like appliances built in the 1950's. Meaning you buy an apple product and it lasts forever and doesn't need to be replaced.
- dmix 4y ago
  My work does... we get new Apple stuff whenever it comes out (they buy phones and laptops for workers). And a lot of our employees are always buying new Apple Watches and iPads for personal use. Never underestimate corporate spenders.
- threeseed 4y ago
  Apple has 860 million people who have active subscriptions. They are quite happy to have people on older devices so long as (a) they buy a subscription and (b) they buy another Apple product in the future. Numbers to date show them succeeding on both fronts.
Sateeshm 4y ago
Considering Apple car might be a serious thing, is it a good idea to buy some apple stock now, as long term investment?
- astrange 4y ago
  It's not a good idea. Buying $VTSAX is a good idea; anything else is you amusing yourself.

46 points by jbegley 4y ago

https://archive.ph/NSe1y https://archive.ph/NSe1y

At 27 PE Apple is not expected to grow like before. I don't think anyone is expecting Apple pulling another iPhone like product out of its sleeve

selectodude 4y ago
Sure it is. A company that actually isn't really growing like Exxon or AT&T have P/Es below 10. 27 is pretty high for a value investment.
melony 4y ago
What happened to their self-driving car and AR goggles?
- selectodude 4y ago
  The self driving car project is looking like more of a software package that they're selling to vehicle manufacturers. https://www.macrumors.com/2022/06/06/apple-announces-multi-display-carplay/ https://www.macrumors.com/2022/06/06/apple-announces-multi-d...
- ProAm 4y ago
  Moonshots. And Apple is never first to market with anything. They take ideas that have traction and marketplace and then try to build a better one. The car wont make it because there is not a a successful industry to steal from yet. They have a chance with AR, but there is not enough adoption yet for Apple to be successful here yet (And apple is terrible with gaming).
  - skellera 4y ago
    AR isn’t only gaming. It’s to become the interface for a person’s world, instead of just the internet. It’s an extremely powerful position to influence what someone sees everywhere they look. This is why companies are trying to break into it. Hardware is the main gap at the moment but Apple is the best hardware manufacturer in the world. The M chips are a step in this direction (high performance, low power).
    - cercatrova 4y ago
      > It’s to become the interface for a person’s world, instead of just the internet I imagine you will still use the internet in AR, otherwise how will you get information? What you probably meant is a web browser on desktops and phones.
    - ProAm 4y ago
      > AR isn’t only gaming 100% but Apple always follows others leads and then makes a better product. Right now AR/VR leans heavily into gaming as for the audience is already built in. AR has so many applications I think eventually it will destroy the VR market usability wise. Im just saying for Apple it stands a better chance than their car efforts.
      - threeseed 4y ago
        > Right now AR/VR leans heavily into gaming as for the audience is already built in If you look at the numbers for VRChat it shows there is a market outside gaming. https://steamcharts.com/app/438100 https://steamcharts.com/app/438100
      - acdha 4y ago
        That's a common take but I think it's based more on PC/Android fans looking for an easy dismissal than any serious understanding of the history of the field. You saw this a lot when the iPod or, especially, iPhone came out which both ignored the degree to which devices were substantially different from other ones and, especially, that there were older experiments going back to the 1990s or even 1980s but that they chose not release products which were seriously compromised by the hardware. In the case of VR/AR, we know Apple has been working on VR products since at least the early 90s but those never made it very far other than a few things like QuickTime VR. As we can see from the rest of the field it was only until the last half-decade that people were getting things like the visual quality or especially latency to acceptable levels and battery life / weight still seem to be a substantial problem.
- yrgulation 4y ago
  I’ve been waiting for apple made ar goggles for a while now. I suspect the technology is not there yet. Facebooks mobile vr oculus sucks big time in terms of fidelity, so i cant see how decent wearable ar can be made. Cars tho yes. Cant wait for a new premium brand as european carmakers are a tad boring (unless of course you like revamped bling).
- acdha 4y ago
  Cars are an expensive industry to get established in with a lot of details to get right and major regulatory concerns. My guess is that they looked at that, the struggles the entire field is having (Google's been at it for ages and is nowhere near ready for a consumer product), and decided that the better outcome is to build better integrations with existing companies which are really good at building cars — I know multiple people who decided what to buy in part based on who did the best job with CarPlay. AR is more complicated: there are some neat ideas but the form-factors are brutal in terms of hardware design and there is weak consumer demand. Apple has one of the most popular AR products now (AirPods) but that took a while to mitigate the compromises forced by the physical limits. I'm expecting some additional hardware from them soonish based on the references in recent developer builds but will not be at all surprised if that takes a while to find popular adoption. I think it's easy to underestimate just how hard it is to deliver an application which is compelling enough to get people to pay non-trivial amounts for. VR has been educational in that regard going from something which was too hard / expensive to fairly available but not yet having found mainstream demand.
mikkergp 4y ago
I'm curious if and what the next big computer thing is. I think a lot of people saw the iPhone coming at least 10 years before it got here. I bought palm pilots realizing they weren't what I really wanted but the hope has been there for a while. Is there anything right now that will reach that? Obviously VR is the hope but I think we're pretty split on whether we want that. I can't really see Google Glass type thing replacing the iphone. There's some intresting stuff in this microsoft future of computing video about surfaces and glass, but It doesn't feel like one revolutionary consumer leap to get there: https://www.youtube.com/watch?v=wraF2DjALls https://www.youtube.com/watch?v=wraF2DjALls
- Spooky23 4y ago
  I think it’s the computer. Microsoft’s platform has never been weaker. For all the growth in phones, every professional worker on the planet is sitting in front of a PC.
  - acdha 4y ago
    > Microsoft’s platform has never been weaker. For all the growth in phones, every professional worker on the planet is sitting in front of a PC. Or a Mac, or a Chromebook, or an iPad. It's hard to talk about this as a monolith since there are pretty distinct groups — most of the people I know who get to choose their device are using Mac or Linux (which is admittedly an atypical crowd of developers, scientists, lawyers, architects, etc.) but there are a ton of people who have professional jobs where that's not the case (e.g. everyone I know who works in healthcare uses some kind of Windows device which is so locked down that it might as well be an iPad, and I know some people at government agencies who are favoring ChromeOS for security reasons since you can lock those devices down so hard). I make that distinction because it doesn't help Microsoft very much strategically if the cashier at McDonald's is sitting in front of a Windows box because they're interacting with a single application and will use whatever their next employer has standardized on when, say, they go somewhere which uses Square. Someone who uses Office is a bit more but as an increasing percentage of people aren't doing anything which they couldn't do in a browser, that's not as strong as it used to be. None of that means that Microsoft is going away but I think it does leave them really wondering how to avoid falling behind the next trend like they did with mobile devices.
kgwgk 4y ago
Not sure if that's what you mean but that could be understood as "the price/earnings ratio has gone down to just 27 because the growth expected currently is lower than what it used to be". In 2010-2019 it was rarely above 20 and it even went below 10. The decade average was 15.
mark_l_watson 4y ago
This will probably never happen, but what I want is: 1) only two personal devices (Apple Watch and small iPhone) that both contain my digital life, use biometrics to securely identify me, etc. 2) larger "environmental" devices from many manufacturers like wall displays, beautiful furniture that has magically appearing keyboards, mice as needed, perfect car integration, etc. The large environmental devices would be 100% securely sharable and be in private homes, hotels, offices, metro stations, etc. With either my Watch or iPhone, no matter where I am, if I need to, I would have my work life, entertainment life, etc. at my fingertips. iPadOS 16 beta has StageManager that is sort-of OK for providing a more general desktop environment. I would expect my Watch or iPhone to trigger whatever I need in my environment. I get so tired of being "sys admin" for my digital devices. I want to spend as close to zero time doing this as possible. Similarly, my Dad is having his 101 year old birthday next month and although he has always been very good with computers, it is frustrating trying to help him remotely. So: In addition to what I mentioned above, I would like to have VR/AR for quick telepresence to help him and other family members who might be 100s of miles away physically.
bee_rider 4y ago
They basically won the smartphone round of the game. We don't know what the Next Thing is, they don't either, nobody does. If they are (unknowingly) working on what will be the Next Thing, it is probably in "wearables and accessories" because that seems to be where their experiments live. But the fact that that section of their company is basically noise at the moment just reflects the fact that the Next Thing hasn't arrived yet. I don't think we should put too much thought (as the article seems to) into their quarter-to-quarter results in the Land of Lost Devices. The point there isn't to sell lots of devices, it is to either try new ideas (which will probably fail because we only get like one big new device class per generation) and have a foundation to quickly try and catch up if their competition finds the Next Thing.

jwr 4y ago

I often think that our constant obsession with GROWTH hurts other, potentially worthy goals. If a company doesn't show growth, it is quickly labelled as "in trouble" or "dead". Why? Why can't we have an Apple that is the size it is now, but concentrates on making better products? If you look at the last 10 years of Apple products, it is clear that many decisions were made to favor growth (e.g. revenue) over customer satisfaction. Their products are often made worse and delight us less, because someone decided that growth is more important. I run my own business and growth is not my #1 goal. But I have the comfort of being able to make that decision, as it is my (self-funded) business. I wish we could ease up on the pressure to grow. EDIT: the replies are completely missing my point. No need to explain how the stock market works. Just please consider, for a moment, a world where companies don't have to prioritize growth over everything else.

astrange 4y ago
If you're not busy growing you're busy dying. Staying stable in a world where everything else changes doesn't sound any easier than growing to me; when you become irrelevant you don't make steady flat profits, you just die.
refurb 4y ago
It's not people demanding growth, it's the companies claiming they are growing and the expectation that sets. Nothing wrong with a steady state company. There are plenty of them. But that has implications that companies need to live with.
donavanm 4y ago
Ignoring the “how publicly traded companies equities function” aspect. What would be the medium to longer term outcome of Apple “making better products?” In an open market I would assume that better products drive new users and/or increased revenue. The way Id measure that is probably something like units sold, ASP, LCV, etc which should all feed back to top or bottom line. And if revenue or profit is increasing id call that … growth? So it seems a bit tautological. UNLESS you mean to measure better products some way besides revenue, units sold etc. And then Im really interested in what that quantification would be, and why it would lead to different outcomes.

substation13 4y ago

I would love for Apple to make a smart wall planner / calendar using e-ink

euroderf 4y ago
Or a variant with touch screen drag-n-drop for productivity nerds.
- Maursault 4y ago
  I want a mac nano in AppleTV form factor for about the same price.

jhallenworld 4y ago

Apple slowdown is OK, but: * They should pay out more in dividends- share the wealth with the owners. * They have been borrowing money for stock buy-backs. This is weird to me- they could just use their cash to do this. https://www.barrons.com/articles/apple-bonds-stock-buybacks-51659361679 https://www.barrons.com/articles/apple-bonds-stock-buybacks-...

colinmhayes 4y ago
The market generally prefers buybacks over dividends because of the tax advantage. Borrowing money has been much cheaper than repatriating cash up until the last few months.
macintux 4y ago
Borrowing money to buy stocks is cheaper than repatriating their foreign cash. They’re hoping the U.S. will offer another tax holiday for companies hoping to bring that money home.
- hackernewds 4y ago
  Which is why interest rates being so low is a scam. Apple credit rating is also AA+ so they're borrowing at virtual nothing interest. Why use cash you can grow vs use more debt.
purplerabbit 4y ago
Two ideas: 1. If you can borrow at 2 or 3%, it might be worth it to keep cash-on-hand so you can jump on unexpected opportunities that may arrive in the future. 2. Paying dividends makes stock price go down. So it's basically equivalent to deciding to sell a small percentage of shares on behalf of each of your investors. Which is why fewer companies are worrying about dividends
ProfessorLayton 4y ago
It's not weird to borrow money essentially for free, it's actually prudent. This may change if/when interest rates rise, but until then it's more optimal to borrow.

subsubzero 4y ago

Who is buying apple products every year anyways? I have my iphone from 2018(I don't want a gigantic phone they offer now) and my home macbook is from 2014 and works perfectly. The last apple product I bought is airpod pro's and those were from a friend with an apple discount 2+ years ago. I wonder if apple will suffer from a reliability issue(too reliable!) like appliances built in the 1950's. Meaning you buy an apple product and it lasts forever and doesn't need to be replaced.

dmix 4y ago
My work does... we get new Apple stuff whenever it comes out (they buy phones and laptops for workers). And a lot of our employees are always buying new Apple Watches and iPads for personal use. Never underestimate corporate spenders.
threeseed 4y ago
Apple has 860 million people who have active subscriptions. They are quite happy to have people on older devices so long as (a) they buy a subscription and (b) they buy another Apple product in the future. Numbers to date show them succeeding on both fronts.

Sateeshm 4y ago

Considering Apple car might be a serious thing, is it a good idea to buy some apple stock now, as long term investment?

astrange 4y ago
It's not a good idea. Buying $VTSAX is a good idea; anything else is you amusing yourself.