Apple (AAPL) halted, lowers Q1 2019 revenue guidance to $84 billion

Apple Inc. shares are halted in after-hours trading. The company is lowering their revenue guidance for Q1 2019.

85

Apple Inc. CEO Tim Cook issued a letter to investors after the market close providing an update to shareholders. The company had previously provided revenue guidance of $89-93 billion for the Holiday quarter, but have slashed that down to $85 billion. This is very unusual for Apple, as they rarely miss their own guidance. One major point that Cook made in this letter is that weakness in emerging markets has affected sales. 

"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China. In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad." Clearly the ongoing trade war with China is affecting Apple's earnings visibility.

Here's the full letter:


To Apple investors:

Today we are revising our guidance for Apple’s fiscal 2019 first quarter, which ended on December 29. We now expect the following:

  • Revenue of approximately $84 billion
  • Gross margin of approximately 38 percent
  • Operating expenses of approximately $8.7 billion
  • Other income/(expense) of approximately $550 million
  • Tax rate of approximately 16.5 percent before discrete items

We expect the number of shares used in computing diluted EPS to be approximately 4.77 billion.

Based on these estimates, our revenue will be lower than our original guidance for the quarter, with other items remaining broadly in line with our guidance.

While it will be a number of weeks before we complete and report our final results, we wanted to get some preliminary information to you now. Our final results may differ somewhat from these preliminary estimates.

When we discussed our Q1 guidance with you about 60 days ago, we knew the first quarter would be impacted by both macroeconomic and Apple-specific factors. Based on our best estimates of how these would play out, we predicted that we would report slight revenue growth year-over-year for the quarter. As you may recall, we discussed four factors:

First, we knew the different timing of our iPhone launches would affect our year-over-year compares. Our top models, iPhone XS and iPhone XS Max, shipped in Q4’18 — placing the channel fill and early sales in that quarter, whereas last year iPhone X shipped in Q1’18, placing the channel fill and early sales in the December quarter. We knew this would create a difficult compare for Q1’19, and this played out broadly in line with our expectations.

Second, we knew the strong US dollar would create foreign exchange headwinds and forecasted this would reduce our revenue growth by about 200 basis points as compared to the previous year. This also played out broadly in line with our expectations.

Third, we knew we had an unprecedented number of new products to ramp during the quarter and predicted that supply constraints would gate our sales of certain products during Q1. Again, this also played out broadly in line with our expectations. Sales of Apple Watch Series 4 and iPad Pro were constrained much or all of the quarter. AirPods and MacBook Air were also constrained.

Fourth, we expected economic weakness in some emerging markets. This turned out to have a significantly greater impact than we had projected.

In addition, these and other factors resulted in fewer iPhone upgrades than we had anticipated.

These last two points have led us to reduce our revenue guidance. I’d like to go a bit deeper on both.

Emerging Market Challenges

While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China. In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.

China’s economy began to slow in the second half of 2018. The government-reported GDP growth during the September quarter was the second lowest in the last 25 years. We believe the economic environment in China has been further impacted by rising trade tensions with the United States. As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed. And market data has shown that the contraction in Greater China’s smartphone market has been particularly sharp.

Despite these challenges, we believe that our business in China has a bright future. The iOS developer community in China is among the most innovative, creative and vibrant in the world. Our products enjoy a strong following among customers, with a very high level of engagement and satisfaction. Our results in China include a new record for Services revenue, and our installed base of devices grew over the last year. We are proud to participate in the Chinese marketplace.

iPhone

Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline. In fact, categories outside of iPhone (Services, Mac, iPad, Wearables/Home/Accessories) combined to grow almost 19 percent year-over-year.

While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be. While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements.

Many Positive Results in the December Quarter

While it’s disappointing to revise our guidance, our performance in many areas showed remarkable strength in spite of these challenges.

Our installed base of active devices hit a new all-time high—growing by more than 100 million units in 12 months. There are more Apple devices being used than ever before, and it’s a testament to the ongoing loyalty, satisfaction and engagement of our customers.

Also, as I mentioned earlier, revenue outside of our iPhone business grew by almost 19 percent year-over-year, including all-time record revenue from Services, Wearables and Mac. Our non-iPhone businesses have less exposure to emerging markets, and the vast majority of Services revenue is related to the size of the installed base, not current period sales.

Services generated over $10.8 billion in revenue during the quarter, growing to a new quarterly record in every geographic segment, and we are on track to achieve our goal of doubling the size of this business from 2016 to 2020.

Wearables grew by almost 50 percent year-over-year, as Apple Watch and AirPods were wildly popular among holiday shoppers; launches of MacBook Air and Mac mini powered the Mac to year-over-year revenue growth and the launch of the new iPad Pro drove iPad to year-over-year double-digit revenue growth.

We also expect to set all-time revenue records in several developed countries, including the United States, Canada, Germany, Italy, Spain, the Netherlands and Korea. And, while we saw challenges in some emerging markets, others set records, including Mexico, Poland, Malaysia and Vietnam.

Finally, we also expect to report a new all-time record for Apple’s earnings per share.

Looking Ahead

Our profitability and cash flow generation are strong, and we expect to exit the quarter with approximately $130 billion in net cash. As we have stated before, we plan to become net-cash neutral over time.

As we exit a challenging quarter, we are as confident as ever in the fundamental strength of our business. We manage Apple for the long term, and Apple has always used periods of adversity to re-examine our approach, to take advantage of our culture of flexibility, adaptability and creativity, and to emerge better as a result.

Most importantly, we are confident and excited about our pipeline of future products and services. Apple innovates like no other company on earth, and we are not taking our foot off the gas.

We can’t change macroeconomic conditions, but we are undertaking and accelerating other initiatives to improve our results. One such initiative is making it simple to trade in a phone in our stores, finance the purchase over time, and get help transferring data from the current to the new phone. This is not only great for the environment, it is great for the customer, as their existing phone acts as a subsidy for their new phone, and it is great for developers, as it can help grow our installed base.

This is one of a number of steps we are taking to respond. We can make these adjustments because Apple’s strength is in our resilience, the talent and creativity of our team, and the deeply held passion for the work we do every day.

Expectations are high for Apple because they should be. We are committed to exceeding those expectations every day.

That has always been the Apple way, and it always will be.

Tim


Developing...

CEO

Asif Khan is the CEO and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.

From The Chatty
  • reply
    January 2, 2019 1:45 PM

    Asif Khan posted a new article, Apple (AAPL) halted, lowers Q1 2019 revenue guidance to $84 billion

    • reply
      January 2, 2019 1:46 PM

      Only $85 billion? Jorbs is spinning in his urn.

    • reply
      January 2, 2019 1:47 PM

      have they tried a new more expensive iphone

    • reply
      January 2, 2019 1:50 PM

      STOCK REOPENED DOWN 7%

    • reply
      January 2, 2019 1:53 PM

      Apple related stuff that is weird to me: They sell the iPhone 8 for like 50 bucks less than the new XR. The 8 is over a year old. Why wouldn't anyone pay the extra 50 and get the new shit?

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        January 2, 2019 1:55 PM

        because the 8 is the last one with a home button and headphone jack, and many people don't like the new bullshit

        • gmd legacy 10 years mercury mega
          reply
          January 2, 2019 1:57 PM

          holding on to my SE until it falls apart

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          January 2, 2019 2:08 PM

          8 does not have a headphone jack

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          January 2, 2019 2:10 PM

          6s was the last with a headphone jack. My 7 doesn't have one.

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            January 2, 2019 3:02 PM

            aah yeah. i am still rocking a 6s plus. i went to get a new XS but the damn thing was $1,500. fuck that shit

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              January 2, 2019 3:04 PM

              you don't actually have to buy the most expensive model possible

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                January 2, 2019 3:08 PM

                the prices are still ridiculous. i just priced out an XR and it comes up $1,134.46

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                  January 2, 2019 3:12 PM

                  the XR ranges from $750-$900. the middle 128GB model is $800

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                      January 2, 2019 3:16 PM

                      so yes, things get expensive when you a) buy the highest end model and b) add insurance and tax to the cost assessment

                      Google's flagship (Pixel 3 XL) isn't any cheaper..

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                        January 2, 2019 3:16 PM

                        And the Pixel 3 is about two years behind in performance

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                        January 2, 2019 3:18 PM

                        the XR is the lower end model though isn't it?

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                          January 2, 2019 3:25 PM

                          big another device you think is a better deal and let's look at specs and performance to see how they compare

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                          January 2, 2019 3:26 PM

                          No, the XR has the same SoC that the XS does. Its the highest performing smartphone alongside the XS.

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                            January 2, 2019 4:30 PM

                            Of the new phones though it is the lower end model since it has less ram, no OLED display and no dual cameras.

                            It's also the model I went with because I got one for $100 through work but if it weren't for that I would have stuck with my 7 if I had to buy one at full price.

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                              January 2, 2019 4:44 PM

                              There are feature tradeoffs but benchmarks are identical between the XR and XS: https://www.macworld.com/article/3318198/iphone-ipad/iphone-xr-benchmarks.html

                              XR still has portrait mode with the single lens configuration. The telephoto lens on the X/XS/Plus models is lower quality than the standard. Its better than digital zoom ofc but its a small trade IMHO. The biggest tradeoff is the OLED display, but that's reasonable given that the XR is a cheaper device. Their LCDs look terrific, I think the XR and iPad Pro are among the best I've ever seen, so I don't think its that much of a downgrade. There was 3GB of RAM on the iPhone X and can't think of any issues I had that were related to multitasking, so practically speaking I don't think this is a tangible downgrade either.

                              Given the difference in price I'd expect lower performance out of the XR but that isn't what we got at all, plus it has longer battery life. I'd have had no problem buying the XR if it was an option when I was making my purchase, but that's clearly why Apple released the XR when they did.

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                  January 2, 2019 3:15 PM

                  How did you price an XR to $1134.46? The highest I got it was $900 for a 256GB model: https://www.apple.com/shop/buy-iphone/iphone-xr/6.1-inch-display-256gb-black-verizon#00,13,31,42

                  • reply
                    January 2, 2019 3:16 PM

                    apple care... which i would absolutely never skip for any apple product

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                      January 2, 2019 3:24 PM

                      Ah. I do the monthly no-interest purchase that comes with AppleCare included. The X and XS are expensive but I also use them more than any device I own, so paying it off monthly takes the curse off of that.

                      If the XR had come out a month sooner I might have gotten that instead of the XS, its really nice, its faster than other flagships, and it sacrifices very little compared to the XS (force touch and OLED)

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                        January 2, 2019 3:26 PM

                        yea I pay about $50/mo. given how much I use it I can justify it.

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                    January 2, 2019 3:16 PM

                    he's being dumb and including ancillary costs that aren't part of the actual device cost

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                      January 2, 2019 3:17 PM

                      how is that dumb?

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                        January 2, 2019 3:18 PM

                        because those things have nothing to do with what the price of the actual phone is

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                          January 2, 2019 3:22 PM

                          do people buy a $1,000+ phone and not get apple care? how do i avoid paying sales tax? the phone cost $800, but i can't get it for less than $1,100

                          • reply
                            January 2, 2019 3:24 PM

                            I do not have applecare on mine, no. i have the official leather case (sweet patina bro) and a tempered glass screen protector.

                          • gmd legacy 10 years mercury mega
                            reply
                            January 2, 2019 3:29 PM

                            applecare is a must, cases are unacceptable, raw dog for life

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                              January 2, 2019 3:30 PM

                              same. cases suck. my dad's phone is like 1 inch thick and you can barely see through the plastic bullshit covering the screen.

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                              January 2, 2019 3:31 PM

                              used to be completely this way, but i love the official leather one. starting to look pretty sweet as it develops [-sweat stains]- a patina. also doesn't slide out of my damn hand every 3 minutes.

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                                January 2, 2019 4:03 PM

                                Official leather case is amazing. I think the phone looks and feels better with it. The protection and correction of camera bump are just bonuses.

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                                January 2, 2019 7:12 PM

                                after all the bitching in this sub thread i just ordered an XS Max with 256gb. my 6s plus has a shattered screen and jumped from 20% power to 1% in like 30 seconds today and I almost got stranded downtown. i feel dirty spending that much on a god damn phone

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                                  January 2, 2019 7:26 PM

                                  That’s the one I got. It’s great.

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                                    January 2, 2019 7:27 PM

                                    Also it’s not just a phone. It’s a pretty fucking powerful computer in your pocket.

                                    • reply
                                      January 2, 2019 8:37 PM

                                      Exactly, they aren’t phones anymore. Hell I work on my phone almost as much as my Mac.

                            • reply
                              January 2, 2019 3:33 PM

                              Recently Apple has started offering AppleCare as a monthly addon, where you pay a monthly price.

                              This is a much better deal since you have no obligation to pay it if you decide it isn't worth it, or sell the device. It charges through iTunes billing.

                              Essentially you are losing money by not doing the monthly version of AppleCare, unless you 100% know you will keep the device for 24 months anyway and don't want another monthly 'subscription'

                            • reply
                              January 2, 2019 4:22 PM

                              raw dog with no AppleCare had a 3G, 4, 5, 6, and now an 8 without a crack or scratch AMA

                              • reply
                                January 2, 2019 4:25 PM

                                i'll revise that to say the glass back of my 8 has the faintest scratches if you hold it up to the light. who cares.

                    • reply
                      January 2, 2019 11:26 PM

                      People need to consider secondary and tertiary costs to anything they buy. It’s good budgeting. Like when you buy a new SLR camera you’re going to spend extra money on accessories and gear.

                • gmd legacy 10 years mercury mega
                  reply
                  January 2, 2019 3:25 PM

                  gonna agree with Shane, new models too damn expensive, also the XR looks like a toy should be $100 with those bezels

                • reply
                  January 2, 2019 4:34 PM

                  and you'll keep it for 3-4 years instead of the old 2 year cycle when you paid $800 and actually end up with lower total cost of ownership over time than in the past

            • reply
              January 2, 2019 3:10 PM

              don't get the one with 512GB of storage then?

              the XS Max is awesome. love it.

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                January 2, 2019 3:12 PM

                i consider getting the max storage absolutely required. i fucking hate icloud, and i've gotten the low storage models in the past and ALWAYS run out of space and it's the worst fucking shit ever

                • reply
                  January 2, 2019 3:14 PM

                  the middle is 256GB... can't imagine how that's not way more than enough for a damn phone :P

        • reply
          January 2, 2019 2:32 PM

          iPhone 8 doesn't have a headphone jack either. I hated the iPhone 6/7/8 but love the X/XS. Replacing the home button with swipes is the best thing that's happened to the iPhone since the iPhone 5/SE.

          Anyway, I guess they charge $50 less for the iPhone 8 because they can? Its performance its still faster than other non-Apple devices so the price isn't too bananas given that slower Android flagships cost more.

      • reply
        January 2, 2019 2:15 PM

        Is that right? The price difference is $200 in Canada, which makes more sense.

    • reply
      January 2, 2019 1:54 PM

      maybe they should stop making $1,500 phones?

      • reply
        January 2, 2019 2:17 PM

        In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad."

        The problem isn't that high end iPhone SKUs got more expensive just like each of the last few years. The problem is we're now in a trade war with China and iPhones of any price last longer and longer due to Apple's impressive hardware improvements.

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          January 2, 2019 3:04 PM

          Still on my 6 from 2014. I used to upgrade them for about $200 (with a two year contract). Now they cost $1000+. That's a huge difference and a disincentive to upgrade (to put it mildly).

          • reply
            January 2, 2019 3:22 PM

            That was also addressed in the letter:

            ...we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies

          • reply
            January 2, 2019 3:59 PM

            You could get on the Apple Upgrade plan easily if you're really into monthly contracts.

        • reply
          January 2, 2019 3:27 PM

          Was just talking about this with my coworker. It's going to be really hard in the next several years to make phones worth buying over existing products.

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            January 2, 2019 3:29 PM

            they are trying to combat that with the monthly fee and then you get to upgrade your phone every single year i guess.

            • gmd legacy 10 years mercury mega
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              January 2, 2019 3:30 PM

              they'll have 60 month 4% loans for the next model when it hits $2000

            • reply
              January 2, 2019 8:43 PM

              The street loves ARR

        • reply
          January 2, 2019 7:47 PM

          "Greater China"

          We've made a terrible choice. I hope the people in "Greater China" can fix this mistake at some point.

        • reply
          January 2, 2019 9:07 PM

          I think in general, across the whole industry, phone sales are just slowing down. There's no real point getting a new phone every 1-1.5 years anymore. It was inevitable that it would mature eventually and big changes are more hard won and slower to roll out. Apple is more vulnerable than other companies because so much is tied up into iphone.

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        January 2, 2019 3:00 PM

        Imagine how much lower revenue would be if they didn’t.

        (

      • reply
        January 2, 2019 3:27 PM

        That hasn't helped the rest of the industry which is suffering from the same slump, it might help in a short term way, but then you just end up with an even worse problem the next year.

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          January 2, 2019 3:37 PM

          HMD/Nokia reported 71% year on year growth in the third quarter. They went from not existing to being in the top ten worldwide smartphone producers in less than two years.

          And most of their products are keeping well away from those price points.

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            January 2, 2019 3:40 PM

            That is great for them, and I am glad they found their market. There is definitely a story where some phone makers have found a way to make it work in certain markets (one of the reasons why Apple points out their weakness in China).

            But if you only look at the US, this is a very different story, so basically Apple is getting hit by both weakness in China and lack of upgrade sales in the US.

            http://arc-anglerfish-washpost-prod-washpost.s3.amazonaws.com/public/L7T654O4SNHD7AKCI2YGVELXNA.png

            • reply
              January 2, 2019 3:51 PM

              I don't have numbers for the US, but much of their growth has been in western markets like the UK.

              I totally get what's hitting Apple, I'm just commenting on your 'rest of the industry which is suffering from the same slump' remark, apparently referring to cheaper phones.

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                January 2, 2019 4:02 PM

                True, I will agree that the one area that hasn't suffered is cheaper phones. The main point I was making, is that people aren't upgrading as much, because they already have the cheapest phone available, which is already in their pocket.

                There might be a way to mitigate it with cheaper phones, but that is not going to work for Apple who would have to put out a rebadged iPhone 8. They did pretty well with the iPhone SE, but that was also at a time when people were still not sure about larger screens.

                I don't doubt there is room for a cheaper iPhone in their lineup, but it isn't going to get people to bite like crazy for an upgrade because it won't really be a big upgrade from what they have.

                This is basically how it will go:

                1. "I won't spend $1000 to upgrade from my iPhone 7"

                2. Apple releases $499 iPhone XR mini with same chip as the iPhone 8 but a smaller screen than the XR.

                3. "Pfft, at best a side-grade over what I have, I will just keep my current phone"

                Repeat the same 3 steps over again until people hit the 36-48 month sweet spot and start to look into buying a new phone.

                What people really want is for Apple to knock the price of all their phones down by $300-400 but that isn't going to happen because the losses would be even higher than what they are reporting today.

    • reply
      January 2, 2019 1:55 PM

      Why can trading be halted when there's bad news? That seems dumb

      • reply
        January 2, 2019 2:11 PM

        to stop a panic selloff when the full story isn't known yet.

      • reply
        January 2, 2019 3:42 PM

        So Congress can do after hours trading so they don't get fucked.

      • reply
        January 2, 2019 8:24 PM

        That's my question. Who's decision was it to halt trading? Under what criteria?

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          January 2, 2019 9:02 PM

          The SEC and Apple.

          • reply
            January 2, 2019 10:45 PM

            But why?

            Apple: Hey, SEC, we're gonna announce some bad news and don't want to lose too much money, plz stop trading of our stock!

            • reply
              January 2, 2019 10:47 PM

              Yeah I guess I don't understand the timeline on how this stuff works. Judging by what briefcase posted, trading resumed pretty quickly after the announcement or whatever but why was it a problem in the first place? Do they halt trading before all announcements like this?

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                January 2, 2019 11:09 PM

                A pre-announcement of earnings is material information.

                Companies, regulators, and market makers halt trading so that the information can be disseminated to everyone. This prevents panic selling/buying and volatile moves.

                Apple is one of the largest companies in the Dow, S&P 500, and QQQ.

                A trading halt usually happens in anticipation of an announcement of news that will affect a stock’s price materially, whether it be positive or negative news.

                Today it was clearly bad news.

                • reply
                  January 2, 2019 11:13 PM

                  Ah, so it happens every time someone as big as apple announces earnings or similar?

            • reply
              January 2, 2019 10:57 PM

              apple is owned by virtually every index fund known to man, and has a huge effect on the market. makes sense? I'm just guessing though. tmwtb probably knows more

      • reply
        January 2, 2019 10:55 PM

        Yeah it's weird why not just announce it after hours

    • reply
      January 2, 2019 1:55 PM

      Ripple

    • reply
      January 2, 2019 3:05 PM

      Good. Maybe they will price their top iPhone models a bit cheaper. Over $1100 for a phone is insane.

      • reply
        January 2, 2019 3:22 PM

        Yup. We will see if they are reading the market properly

    • reply
      January 2, 2019 3:17 PM

      [deleted]

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      January 2, 2019 3:21 PM

      Their 5G offerings have to be amazing.

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        January 2, 2019 3:22 PM

        5G won't matter for years.

        • reply
          January 2, 2019 10:58 PM

          Fair, just thinking of the office and RDP and cloud throughput via hotspot. My own needs are the same- years out.

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        January 2, 2019 3:36 PM

        That is when people will start wanting to upgrade possibly. However 4G is enough for most people. 3G to 4G was such a huge leap, 5G won’t have the same impact for the basic internet usage most of us do on our phone and also data caps really put a damper on the benefits of 5G.

      • gmd legacy 10 years mercury mega
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        January 2, 2019 3:37 PM

        they're skipping straight to 6G

      • reply
        January 2, 2019 7:41 PM

        Apple is not releasing true 5g phones this year. The carriers are expected to rebrand late as 5g, though.

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      January 2, 2019 3:25 PM

      People don't upgrade their old phones as often as they used to, this has been hurting everyone who makes phones, and Apple is no different. In fact Apple might be worse off in some ways because they support older devices so much longer than their competitors and their phones are known to last longer.

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        January 2, 2019 3:31 PM

        I still roll with an iPhone 6 and it's fine for every thing I do. Texting. YouTube. Shack. Twitter. Mail. Spending 1000+ on a phone when the median household income is what 45k? Is insane

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          January 2, 2019 3:37 PM

          Exactly, your current phone works great, why would you upgrade?

          That is the same thing more and more people are thinking:

          http://arc-anglerfish-washpost-prod-washpost.s3.amazonaws.com/public/L7T654O4SNHD7AKCI2YGVELXNA.png

          • reply
            January 2, 2019 3:51 PM

            Same situation with PCs. From the late 90s through the late 2000s most of us took for granted that we'd be doing rebuilds every 18-24 months. Since the i7 860/920 and especially the i7-2600 we saw PC lifespans increase dramatically. I went from 18-24 month upgrades to holding onto PCs for 4-6 years (or 8 years in the case of my prior Mac desktop) and it was more than powerful enough to run the most demanding games.

            I expect that I'll be holding onto my iPhone XS for a while. It was easy to justify smartphone upgrades every two years but we crossed the line of diminishing returns with the 6S, despite ever accelerating performance increases since then. I think its why Apple is making such a push for augmented reality and more camera functionality, those are easy features to push on the mass market which are also demanding on hardware. Even then the A11 is just beastly and I can't imagine that the A12 and A12X are going to wither away anytime soon. The next big consumer feature to justify buying a flagship phone will probably be powerful machine learning on device, basically Siri that is as capable as competing cloud based assistants but done entirely on the phone itself. We're many years away from that happening.

            Either way, its very similar to the upgrade trajectory we saw with PCs many years ago.

            • reply
              January 2, 2019 4:07 PM

              I think the last "god I want to upgrade" iPhone was the 6. The 6S is where they hit the performance plateau for me. The X was an easy upgrade because I dislike the 6/7/8 design so much, and going forward will be a tough sell since the XS is just so fast.

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          January 2, 2019 3:48 PM

          My wife got me an iPhone 8 just yesterday, pretty much against my wishes. But the on/off button on my iPhone 5S stopped working the day before that (had to turn on assistive touch to compensate) and she was like, “Oh no, you have to get a new phone.” I said, “Why? This phone is fine for what I need and the assistive touch is tolerable for now.” But then she just shows up with a new one. Fortunately, it was at the end of my contract so I’m getting it almost for free (yeah, right).

          But no headphone jack? I was not in the market for buying a new pair of headphones. Fortunately, Apple has a $10 adapter so I semi-dodged that bullet. Still have to get a new case though and pay some kind of activation fee.

          Anyway, no way I’m paying $1K for a phone just to browse the web, play some games, send email/texts and take the occasional photo.

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            January 2, 2019 3:54 PM

            But aren't you paying that 1000 for the phone it's just bundled into your new contract for the x number of years?

          • reply
            January 2, 2019 4:01 PM

            You're getting it for free? Which carrier?

            You sure you don't already have a leasing fee on top of your service bill each month?

          • reply
            January 2, 2019 4:36 PM

            How did you still have a contract with a 5S? That should have been paid off 3 to 4 years ago at most.

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          January 2, 2019 4:23 PM

          No porn??

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        January 2, 2019 3:43 PM

        Same as true as for iPads. As for macs well they run the margins hard there with little tech innovation so they are assholes there.

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        January 2, 2019 4:03 PM

        yeah we've pretty much plateau'd I think for smartphone innovations.

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      January 2, 2019 4:06 PM

      They need to get back to making 3 phones. Entry level small phone, flagship and flagship xl

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        January 2, 2019 4:08 PM

        I'd love to see a small phone again but I think the iPhone 7 at $450 is their entry for now. SE was their best phone until the X

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      January 2, 2019 7:13 PM

      RIP America

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        January 2, 2019 10:43 PM

        "we believe there are other factors broadly impacting our iPhone performance... some customers taking advantage of significantly reduced pricing for iPhone battery replacements."

        In case anyone wonders why the make it hard to replace batteries.

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          January 2, 2019 10:48 PM

          both my wife and Dad thought they were due for new phones but got battery replacements instead and were fine with the phone again.

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        January 3, 2019 1:15 AM

        yeah, totally oblivious to the fact THAT THEY ARE TO EXPENSIVE, when top earning high-rollers makes decisions 'for the masses' its going to end bad. Technically I know the newest phone are better (on paper) than the previous iterations, but its mostly invisible to the end user, which is their Achilles Heel. We as consumers have been honed that technical evolution will, over time, bring better technology to a lower price, its the Moore 'thesis' of modern times. That means the prices of their phones should be constant (in currency) but with more technical prowess and evolution it should, year by year, become more functional/faster etc. But no Apple hiked the prices into fantasy land, barring anyone not a real fan from jumping aboard, and to top it off they don't seem to understand that they have entered the long lonesome road into pricing themselves out of the mass-market. Yeah , some will say that's not their goal, and yeah it will take a long time before it will hurt them badly, this might be true, but in the end for the sustainable growth they require, mass-market appeal is inevitable, and that they will fail on the path the are on.
        I mean I've used Ipad's since second gen, and its one of the most used devices I've ever own, and it works wonderfully, however the battery it getting pretty bad in my latests one so I looked into buying the new Ipad PRO, and fuck me, here in Sweden (inc. tax) it was about $1300 !! seriously, unless you earn filthy money that's insane for a device that just used for 'consuming' media, no matter the technical specification. My first Ipad was really, really expensive at $750 at the time, but now ? its in fantasy land. Safe to say, they priced themselves out of my life.

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          January 3, 2019 6:22 AM

          You said yourself it lasted for years and that you used it a lot. Did you not get your moneys worth? What's the equivalent that you're comparing it to in the modern lineup? Are you really comparing a second generation iPad to an iPad Pro?

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            January 3, 2019 6:59 AM

            Well yeah, I don't argue its been a great device and I've used it alot, I did not directly compare a second gen iPad with the new Pro, I said I've used iPad in different iterations <since> second gen (only skipped first year) however my latest is the one just before pro was released, Ipad2/air ? they really have confusing names, anyway, yeah at the time when I bought it is was very expensive (imho) and it was not an easy decision, yet now they are even more expensive, even when inflation is considered.
            So yeah they are going into fairy land with their pricing and it will bite them. Its like they have become consumed by their hubris and think there's no limit to their unique 'value' and that high price automatically gives you a seal of quality/value. No matter what you think, technical evolution has been, almost without exception, about giving more performance/functionality for the same price in a year by year basis. My latest computer (4mo) is cheaper (in actual $) than my previous (3yo), yet much more capable, faster, more memory, bigger SSD etc. What makes Apple think they can gouge customers without any lash-back ?

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      January 2, 2019 8:11 PM

      apple needs to branch out of phones eventually, seems like we hit a bit of a plateau on that front.

      I want an apple watch that monitors everything in my body, blood flow, glucose, hydration, sweat, temperature. it will probably be pointless but nerds like me would love to pretend we are living in optimal fashion

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        January 2, 2019 8:41 PM

        Yeah they should start making computers

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        January 3, 2019 4:23 AM

        Services is their highest growth area. While iPhone hardware contributes the majority to revenues, that’s because they have the highest sales volume and highest margins in Apple’s product lineup. Their growth, and it’s been this way for several quarters now, is in their services category which includes iCloud, music and apps.

        Another thing people are missing from apple’s revised guidance is that margins are down only 0.5%. This tells us that the $1000 iPhones increased in retail price step in step with their increased build of materials cost. Contrary to popular opinion, the iPhones prices didnt go up arbitrarily.

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        January 3, 2019 6:28 AM

        Watches are a bit limited on technology related to health. They are getting better and cheaper, though.

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        January 3, 2019 7:34 AM

        No idea why they aren't making monitors and routers and shit.

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      January 3, 2019 2:04 AM

      I think it's complete common sense why they are in this position. They status quo'd their last years products against a market that flipped the fuck out the previous year against those changes. They bring absolutely nothing new to the table besides speed increases.

      Steve Jobs saw the corporate idiocy when it came to incremental upgrades, he still did it due to Moore's law but he tried to push a new global secure market with every major hardware upgrade. That created customer loyalty and investor money dump retardation.

      Meanwhile stupid ass upper level salesman who have been snorting and buttchuggin the Apple profit wave are wondering how this could have happened.

      Literally none of this is hard, a complete idiot could lead apple to rising profits year after year if they weren't so busy modifying and fetishing their fucking spreadsheets.

      Everything it takes to make Apple one of the best companies for the next 40+ years is on Youtube https://youtu.be/_1rXqD6M614 (and every Steve Jobs clip/speach) but like in EVERY publicly traded company from the 60s on til now it is run by the most inept idea-less moron with even dumber fuck head board members.

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      January 3, 2019 6:13 AM

      It’s not the prices, it’s not the longevity (we’ve had that for years already), it’s not headphone jacks (lol).

      Nobody besides Samsung competes with Apple at the high end in western markets, and Samsung isn’t exactly lighting the world on fire.

      Besides the trade and economy stuff, I think it’s just that cheaper Chinese phones have just gotten really good.

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        January 3, 2019 6:27 AM

        That's a pretty good assessment

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        January 3, 2019 6:34 AM

        The Chinese economy is slowing so it would make sense that cheeper alternatives would be more attractive at this time.

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        January 3, 2019 7:08 AM

        huawei phones are killing it ... I think they passed Apple earlier this year in phone market share.

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        January 3, 2019 7:16 AM

        It’s not the prices.... cheaper Chinese phones
        so then it is about the price ? I can by absolute certainty say that among my friends almost all (there are of course a few that don't like apple for 'reasons' ) would buy an iPhone if it competed in price compared to high-end android phones (and I'm not referring to Samsung they also seem to be in a rut, but more One+, Huwaei, an others) . Hell I love my One+6 but would easily swap for a iPhoneX if it was anywhere close in price. And I have several friends (many not technically inclined) that used to have iPhones since day oone, that just threw their hand in the air when +1000$ prices for a new fucking phone came up (aka the X-effect), now many of them have Android phones instead.
        So yeah in the end it really is about price, apple, even though their walled in garden, have a very high usability, yet when it comes with a price tag of selling once kidneys, you have to get your priorities right.

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          January 3, 2019 7:19 AM

          Do you think Apple is more concerned with profitability or selling the largest quantity of devices?

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            January 3, 2019 7:22 AM

            They're related concepts, but clearly based on their pricing model and margins they are more concerned with profitability of individual units.

            Was this a real question?

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            January 3, 2019 7:32 AM

            well they seem to show that they do *not* want to go after highest quantity of devices sold, yet in the end its inevitable as continues growth *requires* it, unless they magically convince everyone (of current consumer base) to swap phones every year or even more often, they need to get new customers in for growth.
            So I would say that they indeed are focusing on profitability (in the near term) yet I think that does not automatically correlate to profitability long the long run. There have been already a few turn-overs in technology where companies grew bigger and complacent, gouging prices living on the seal of quality or yesteryears, then bam, some new technology/invention/manufacturing/etc comes along and turn everything around.

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      January 3, 2019 6:32 AM

      I know that Apple has said the repair business hurt sales. But it amazes me / doesn't amaze me at all that they don't realize their price increase has driven people to keep their phones longer and repair them. (Of course if they realized that they never would have increased the price so there is the doesn't amaze me part).

      If they lowered their low end phone price back down $200 and their highest end phone down $400 (and scaled in between) I bet their volume would pick up and it would more than offset the losses in revenue from the cheaper phones.

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      January 3, 2019 7:25 AM

      I just dont think people care about phones the way the used to. Ther average user wants a decent battery life, good camera, enough storage space and the ability to text, youtube and facebook. Beyond the people who have a real interest in the subject, no one is interested anymore, phones are just something you have the same way you have a fridge or a washing machine. You dont want a crap one that will cause you headaches, but you're not interested in upgrading until you need to.

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        January 3, 2019 7:41 AM

        I offered my wife the new iPhone and she said she preferred her smaller phone (that just had a battery replacement). Other than the annoying TouchID and vastly inferior camera, it's still a good device for her.

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