Singlehandedly, our favorite Mac and iPhone maker has disrupted yet another staid, old industry. In this case it’s the stock market where Wall Street is all ablaze because Apple missed their expectations.
Yes, Apple’s sales have dipped— not plummeted— after the meteoric rise of the iPhone 6 era, yet the company managed to rake in more than $10-billion in profits. On a down quarter. With the economy fading away. While other tech giants also missed analysts expectations. You know what? I’m tired of all this manipulated nonsense.
iPhone sales dropped, Mac sales dropped, iPad sales dropped again, revenue dropped, and profits dropped. Why not sound the alarm? Everything is dropping, right? Well, isn’t everything dropped elsewhere? Except at Amazon, the company that analysts track while they’re not wearing any clothes (like the emperor). Funny thing. True story, too. Apple’s profits were more than 20-times Amazon’s. But Amazon is growing and that’s what Wall Street likes.
In trying to figure out what happened I’m left with a number of thoughts.
First, China. Revenue from China dropped a staggering 26-percent. Why? China has entered a slow-growth period and that impacts how people spend their money, and that impacts what (or, rather ‘how many’) Apple sales, so, ipso facto and Voila! Sales slowdown.
Second, there’s the iPhone 6 issue. Large screen smartphones were long the growing trend before Apple stepped in a couple of years ago with the iPhone 6 and 6 Plus. That means plenty of demand awaited the iPhone’s introduction and Apple kept the slave shops working overtime to meet fantastic demand that didn’t stop for nearly 18-months (with the peak in the last holiday quarter).
In other words, the iPhone 6 line caused Apple’s sales units, revenue and profits to soar beyond where the previous growth averages should have taken it. Expectations went along the growth curve fabricated by iPhone 6’s massive success and without another act to push the dynamics higher, revenue and profits dropped with the iPhone 6s line, but back inline to where the previous averages occurred.
Even Apple’s down quarter, the one every analyst loves to use the word ‘horrible’ on, was not so horrible with profits. Apple knows how to make a buck and just made enough bucks to top recent earnings from Microsoft, Google, Facebook, Amazon, and very nearly Samsung’s profits. Combined.
Third, there are two issues which play together. The first is the general slowdown in the developed world’s various economies. Apple sells products, actually rather expensive products, so even in a slight downturn that harms other companies and competitors, Apple’s sales will go down, too, but profits will remain the highest among competition. That’s the case now.
Finally, Apple needs to step up the product line. Watch is the only new product since Steve Jobs died and that was five years ago. Five years. A five year span brought Apple the retail stores, the iPod, and iTunes. A lesser span of time brought iPhone and iPad. Since then, Watch is it and while it may be a chunk of Apple’s future of wearable devices, for now it’s little more than a fashionable accessory.
Now is the time for Tim Cook to show what he can do with Apple and Jobs’ legacy other than another chapter of same old, same old.