After literally years of analysts claiming that we’ve reached ‘peak iPhone’ – that Apple’s year-on-year growth had gone as far as it could go – that day has finally arrived. iPhone sales last quarter were essentially flat (up just 0.4% year-on-year), and the company yesterday forecast that this quarter will see its first ever year-on-year decline in revenue since 2003.

If Apple hits the midpoint of its projected revenue for the current quarter, it will suffer a year-on-year fall in income of 11%. For the first time in 13 years, the ‘Apple is doomed’ merchants can cite real-life numbers as support for their position.

The reality, of course, is far more nuanced. There are some very specific reasons why the current quarter will be such a tough one, and why ‘peak iPhone’ is likely to be temporary, and I’ll get to those in a moment. But there’s also a bigger picture that suggests that Apple may also have to be willing to think the unthinkable when it comes to the huge margins it has been able to enjoy to date …

Let’s begin with the reasons Apple expects this quarter to be so tough. To avoid confusion, I’m going to refer to calendar quarters rather than Apple’s fiscal quarters, which begin in October.

First, Apple had supply issues when it launched the iPhone 6/Plus, meaning that it wasn’t able to satisfy all of the demand that existed in the holiday quarter. A chunk of the sales that would normally have accrued in calendar Q4 2014 instead rolled over into calendar Q1 2015. It didn’t have the same issues this time, so there’s an artificially high target to beat this year.

Second, the global economic environment is challenging, notably in China, Apple’s second largest market after the USA. As Cook put it in yesterday’s earnings call:

We’re seeing extreme conditions, unlike anything we’ve experienced before, just about everywhere we look.

Targeting the wealthiest tier of the population, Apple is better placed than most companies to prosper even in a stagnating economy, and did continue to grow its business in China by 14% – but that’s a long way short of the 84% growth it achieved the previous quarter.

Third, Apple generates two-thirds of its income outside the USA, and the strong dollar has hit the export market hard. In some markets, Apple has increased prices to protect its margins, which inevitably hurts demand. In others, it has taken the hit and earned less money from the same number of sales. The total impact of the shift in currency rates was $5B in the previous quarter alone.

To put that figure in perspective, the amount Apple lost in currency exchange was roughly the same as Facebook’s entire quarterly income. Or, as Apple’s CFO Luca Maestri put it yesterday:

If you take $100 of the business that we did outside of the U.S. in September 2014, when we launched the iPhone 6 and 6 Plus, the same level of business today translates to only $85.

Apple is also in it for the long haul. As Cook said yesterday, the company does not live or die on a quarter-by-quarter basis. In particular, it is growing its increasingly important services business – launching Apple Music last year, and likely a streaming TV service this year. With a billion active iOS devices, it has a vast potential market for these.

Especially during periods of economic uncertainty, it’s important to appreciate that a significant portion of Apple’s revenue occurs over time.

Apple’s underlying position, then, is not as bad as it appears on the surface. While iPhone sales may have temporarily peaked, it’s likely that growth will resume in one or two quarters’ time as the economy picks up.

But this does not mean the company can afford to be complacent. While factors like the Chinese economy and strong dollar rate are outside of Apple’s control, they represent the real world, and Apple needs to respond.

To date, Apple has been able to shrug off falling iPhone market share by pointing out that while other companies take home the bulk of smartphone revenue, its high margins mean it grabs almost all of the profit. It has been able to happily watch Android manufacturers compete for the bulk of the market while it skims the cream from the top.

But the market is changing. One big change is the ending of ‘subsidized’ pricing. It used to be that carriers sold you an iPhone for $1-200 upfront in return for a 1-2 year contract, hiding the rest of the purchase price in the monthly plan. You and I weren’t fooled by this, but it’s amazing how many people thought they really were paying only $200 for their brand new iPhone rather than the true all-in price of $650 and up.

The competitive environment is also changing. Once upon a time, if you wanted to opt for Android, you had a choice of only two or three flagship handsets at prices close to those of an iPhone for a device with a horrible manufacturer overlay on top of the stock Android OS. The rest of the Android market was cheap-and-nasty. These days, the Nexus 6P is a very solid piece of aluminum hardware with good specs and pure Android 6.0, free from bloatware. Performance-wise, it’s comparable with an iPhone, and comes in at $499 – not spectacularly cheaper than an iPhone, but enough to catch the attention of some.

Perhaps more worryingly for Apple is the fact that we’ve seen the emergence of really strong mid-market smartphones. For example, the Moto X Pure/Style, which allows you to choose your materials (including metal, wood and leather) and delivers a solid spec for $400. Add a few bucks to throw in a 128GB MicroSD card and you can match the storage capacity of an iPhone 6s costing twice as much.

You can even pick up an attractive and solid Android smartphone for just $250 in the form of the OnePlus X. You’re making one or two sacrifices for the price, but surprisingly few. Many mass-market consumers will be perfectly happy with this.

I’m not, of course, suggesting for a moment that Apple would ever need to compete with a $250 price point. I’ve also made the point before that the ‘Apple tax’ is lower than it appears due to high resale factors, something echoed only yesterday in a WSJ piece suggesting this was a significant factor in Apple’s success in China.

Apple’s innovations like 3D Touch and Live Photos give it an edge, but never for long.

There is also the famed Apple ecosystem. To be honest, when friends ask me what to buy, this is probably my primary reason for pointing them toward Apple rather than Android: you’re buying into a tightly-integrated system in which you can work pretty seamlessly between devices. That ecosystem is a large part of Apple’s success; if you have an iPhone and are in the market for a tablet, laptop or smartwatch, it makes a lot more sense to buy another Apple product than to mix-and-match systems.

But Android and Chrome are catching up fast. A Chromebook, pure Android smartphone, Android Gear smartwatch and Google Apps get you about 75% of the way toward Apple-style integration. Apple definitely still leads the way, but Google has significantly closed the gap.

So what do I think Apple needs to do to protect its position, and ensure that ‘peak iPhone’ is a temporary state of affairs rather than a permanent one?

The first and most important thing, it’s already doing: continuing to invest in growth markets. It hasn’t let the difficult Chinese economy slow its rapid rollout of retail stores in the country, and it is investing in future growth markets like India. China will soon be a bigger market than the U.S., and while India represents a tiny percentage of sales today, it will one day be huge, and Apple will by that time be extremely well-established in the country. The four-inch iPhone will also likely help, especially if it sticks around long enough to get $100 sliced off the initial price next year.

But Apple cannot afford to have anything resembling a sense of entitlement when it comes to customers at the premium end of the market. Leaving aside geeks who have their own technical or philosophical reasons for favoring Android, it’s largely been the case to date that anyone who can afford to buy an iPhone does so almost automatically. That fact is testament to Apple’s extraordinary marketing prowess.

But players like Google, Huawei, Xiaomi, Lenovo and OnePlus are learning fast. (Xiaomi has learned rather too literally, with blatant ripoffs of both Apple products and Apple marketing, but it will mature beyond that stage at some point.) So while Apple’s current dominance of the premium end of the market gives it a massive head-start, it can’t count on forever remaining the automatic choice. It will need to learn to compete on a slightly more level playing field as its competitors continue to up their game.

I’ve argued before that when Apple is selling premium products, it needs to deliver on that promise. It needs to be less stingy when it comes to things like RAM and flash storage.

But I think it will also need to learn to be a little more flexible when it comes to its profit margins, especially in growth markets. That ~40% markup has served it well for a great many years, but I don’t think it can necessarily expect to maintain it indefinitely. When a non-techy customer (which is most of them) is exposed to decent marketing for attractive and well-specced smartphones in the $250-400 range, each of them backed by a competitive ecosystem, Apple may need to be a little less ambitious in its margins.

Again, I stress that I’m in no way arguing that Apple needs to compete at the $250 level, or even the $400 one, but I am suggesting that there will come a time when it will no longer be able to reach quite as high as $950 at the upper end. That even a company pitched firmly at the premium end of the market will have to be willing to accept a slight redefinition of what that term translates to in dollar and margin terms once the U.S. becomes a minority market and growth economies come even further to the fore.

Do you agree? Or do you see Apple maintaining its 40% margins forever, even at the cost of seeing its market shrink? Please take our poll, and share your thoughts in the comments.

Filed under: iOS Devices, Opinion Tagged: AAPL, Apple Inc, china, iPhone, Opinion, peak iPhone

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Natalie Kerris, former senior director of Worldwide Corporate Communications at Apple, is rumored to be in line to head Twitter’s communications department. Re/code reports that Twitter has been courting her to help turn around perceptions that the company has been lacking in innovation.

Kerris has recently spent a lot of time talking to top Twitter execs and is the leading candidate for the job. If hired, she will report to general counsel Vijaya Gadde and not, interestingly, to newly named CMO Leslie Berland. Gadde conducted the search, which has been taking place for months. She would replace Gabriel Stricker, who left Twitter and is now working back at Google on its fiber effort.

Kerris held the senior PR role at Apple for 14 years, playing a key role in the launches of products ranging from the iPod and iPhone through to Apple Pay and the Apple Watch. It was thought that she made the decision to leave the company after failing to win the vice-president role vacated by Katie Cotton …

The top role was instead given to fellow PR director Steve Dowling.

Re/code does not cite a source for its report, but indicates that it was not Kerris. A Twitter spokesman declined to comment.

Filed under: AAPL Company Tagged: Apple Inc, Katie Cotton, Natalie Kerris

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Reliable Apple analyst KGI securities is today reporting that they believe the iPhone 7 Plus will come with a dual-camera system. By using two distinct lenses, Apple can use the additional image data to create substantially better quality photos. Dual camera iPhones have been rumored for a long time. KGI also floats the possibility that the Plus will feature an optical zoom, with 2-3x magnification.

The KGI report makes it plain that not all iPhone 7 models will feature the radically new camera. It appears the 4.7 inch iPhone 7 will not feature the technology. It will be reserved for the 5.5 inch iPhone 7 Plus …

KGI goes on to say that it might not even be available on all iPhone 7 Plus models. Apple may make a distinction at the high end to create a ‘premium’ SKU that includes the advanced camera system. The report claims one of the cameras will support optical image stabilization and a wide field of view, whereas the other is a telephoto lens with a significantly narrower field of view.

Rumors about dual camera designs started before the iPhone 6s launched, as Apple bought the Linx camera tech firm around that time. It’s worth noting the top image is just a mockup of a two-camera system, Apple will undoubtedly incorporate the lens system into the iPhone chassis with more elegance.

The dual-camera setup would take independent photos from both camera holes and use ‘Linx Imaging’ algorithms to combine the photo data into final images for users to see. KGI expects about 30% of iPhone 7 shipments to be equipped with dual-camera system. This would be a marked change for Apple’s iPhone range, where the 4.7 inch and 5.5 inch models have been practically equivalent aside from the screen size difference. It sounds like Apple will further distinguish the products with the iPhone 7, making the ‘Plus’ a more premium option.

The iPhone 7 and iPhone 7 Plus is expected later in the year, around fall. Apple is expected to launch a new iPhone soon however … the 4 inch ‘iPhone 5se‘ is rumored to launch around March.

Filed under: AAPL Company, iOS, iOS Devices Tagged: dual camera, iOS, iPhone, iPhone 6s, iPhone 7

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A strange bug is affecting many Safari users today, causing crashes on iPhone, iPad and Mac. For many users, simply tapping in the URL bar will cause the browser app to crash completely.  The exact issue causing the crashing has not been locked down, but it appears to be related to Apple’s Safari Suggestions service.

When you type a URL, Apple sends what you type to its servers, returning a response with autocomplete search queries, Top Sites and other info. There appears to be a bug in this server request that is causing Safari to randomly crash. Users are discovering some potential workarounds until Apple fixes the problem properly …

Disabling Safari Suggestions seems to be helping resolve the bug for many people on iOS. On your iPhone or iPad, go into Settings, tap Safari, and toggle off the ‘Safari Suggestions’ switch. This will fix the crashing, obviously its only a temporary fix until Apple sorts its servers out as it will disable the Safari Suggestions functionality.

Another option is to enter Private Browsing mode. In private browsing, by design Safari does not contact the suggestions server for intelligent completion options, so the server is never contacted and the crash never arises.

The bug is affecting users in many countries, but not all. It also depends on the state of your Safari, whether it has certain data cached already. It is pretty crazy flaw that is affecting so many people this morning, with many reports across European iOS customers.

We have contacted Apple about the issue for clarification, but it’s such a serious functional flaw that we expect a fix very shortly. Please note: this is an unrelated incident to the prank site CrashSafari.com.

Filed under: iOS Devices

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It’s only been a few short months since the 4th generation Apple TV with Siri remote was released, but it’s already available in refurbished condition from Apple’s online store. The discounts are slight, but they are definitely better than paying full-price: 32GB is $129 (Reg. $149) and 64GB is $169 (Reg. $199). Apple’s refurbished products include a full one-year warranty and generally come in great condition. Just last week Apple began offering refurbished 12-inch MacBooks for the first time ever.

We’ve seen a handful of deals for Apple’s latest streaming media player during the holiday season with prices dropping as low as $100 for the 32GB model and $150 for the higher-end 64GB variant. If you’d prefer to stay away from a refurb and are looking to save a few bucks, RadioShack currently has it bundled with an HDMI cable for $126 shipped.

(1) What are Apple Certified Refurbished Products?

Apple Certified Refurbished Products are pre-owned Apple products that undergo Apple’s stringent refurbishment process prior to being offered for sale. While only some units are returned due to technical issues, all units undergo Apple’s stringent quality refurbishment process.

Each Apple Certified Refurbished Product:

• is fully tested (including full burn-in testing).
• is refurbished with replacement parts for any defective modules identified in testing.
• is put through a thorough cleaning process and inspection.
• is repackaged (including appropriate manuals, cables, new boxes, etc.).
• includes either the Mac OS originally shipped with the unit or, in some cases, a more recent version*.
• is given a new refurbished part number and serial number.
• is placed into a Final QA inspection prior to being added to sellable refurbished stock.

via Apple

Filed under: iOS Devices Tagged: 4th generation Apple TV with Siri remote, Apple TV, Apple TV 4th gen, Refurbished

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Apple just released its Q1 2016 earnings, reporting “record” results of $75.9 billion in revenue and $18.4 billion in profit. In addition to its normal data, however, Apple has shared a new figure relating to the number of active devices it has in the wild. Apple says that it now has an active installed base of 1 billion devices, including iPhone, iPad, Mac, iPod touch, Apple TV, and Apple Watch. Apple says it gathered this data by tracking the devices that have been engaged with its services within the last 90 days.

“The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of one billion active devices,” Tim Cook said regarding the growth of the company’s active installed base.

During its Q1 2015 earnings report last year, Apple announced that it had sold its 1 billionth iOS device, so for it to now have over 1 billion active devices is a huge milestone for the company. During the company’s earnings call, Apple CFO Luca Maestri said that Apple has seen year over year growth of “over 25 percent” for its active installed base. Speaking to Financial Times, Maestri explained that he believes Apple’s services business is not valued correctly in the grand scheme of things, especially with 1 billion active devices having immediate access to things like the App Store and iTunes:

Filed under: AAPL Company Tagged: Apple, Apple watch, Data, earnings, iOS, Mac

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Apple just posted its official Q1 2016 earnings report and we’ve broken down how that compares to previous quarters. Next up on the schedule is Apple’s quarterly conference call with analysts where CEO Tim Cook and CFO Luca Maestri typically recap the numbers and field questions about Apple’s financial situation.

To recap the big numbers from today’s report, Apple counted $75.9b in revenue, $18.4b in profit, 74.7m iPhones sold, 16.1m iPads sold, and 5.3m Macs sold during the final three months of last year. Apple Watch numbers aren’t broken out at this point and instead included in the Other category with iPods, Apple TVs, and other accessories.

We’ll be tuned in to the call as it plays out, and update this post with up-to-the-minute details while highlighting major updates. The call is scheduled to kick off at 2 pm PT/5 pm ET so stick around.

• Earnings report is live!
• You can listen along at home here.
• 10 minutes to lift off!
• No joke, I’m noticing a genre change in the conference call hold music: “High Hopes” by Onra featuring Reggie B is currently playing.

Filed under: AAPL Company, iOS Devices

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It’s earnings day for Apple and the company has just reported their official numbers for revenue, profit, and products sold during the holiday quarter. Remember that this quarter includes the bulk of iPhone 6s and 6s Plus sales, all iPad Pro and related accessory sales, Apple TV 4 sales, plus traffic from the busy holiday shopping season.

With that in mind, Apple reported $75.9b in revenue, $18.4b in profit, 74.7m iPhones sold, 16.1m iPads sold, and 5.3m Macs sold. Although the October through December period was probably a stacked quarter for Apple Watches sales, the company doesn’t break out category sales for that product for “competitive” reasons.

That compares to $51.5 billion in revenue, $11.1 billion in profit, 48m iPhones, 9.8m iPads, and 5.7m Macs reported in the previous quarter. During the same holiday quarter a year prior, Apple reported $74.6b in revenue, $18 billion in profit, 74.4m iPhones, 21.4m iPads, and 5.5m Macs for comparison. Analysts were predicting around $76.6b in revenue, 75m iPhones, 17.3m iPads, and 5.8m Macs.

Tim Cook had this to say:

“Our team delivered Apple’s biggest quarter ever, thanks to the world’s most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV,” said Tim Cook, Apple’s CEO. “The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of one billion active devices.”

Full press release after the break, and stick around for our earnings call live blog at the top of the hour:

AAPL before earnings hit:

And shortly after the earnings report hit:

Filed under: iOS Devices Tagged: AAPL, Apple watch, earnings, iPad, iPhone, luca maestri, Mac, Tim Cook

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Microsoft today released News Pro, a news delivery service with “hyper-relevant news for your work.”  The application utilizes either your Facebook or LinkedIn account for log in and then aggregates news topics and articles around your work-based interests. The idea is similar to Apple’s own News app, and Flipboard, but with a focus on articles and topics related to your day-to-day career. The project seems to be coming out from the Microsoft Garage team, whom have been specializing in experimental projects.

The iOS app itself is focuses on bringing articles based on topics you may already be interested in. After logging in with my LinkedIn account, where I have multiple connections in computer software, I was placed into the Highlights view where I was presented with multiple stories from different software companies. When reading an article, you’re able to read it in a Speedy view, which looks to mimic Safari’s Reader View.

This Explore view was the most interesting to note because of the way it broke down categories of topics to follow. News Pro really excels in getting granularly focused in potential new topics to read. For example, under the Explore view I saw Javascript, C++, and C# under a Skills subcategory. Under the Industries subcategory I saw Hospital & Health Care, and Education Management. This area is really where the app shines. Instead of laying out pages of potential topics to search through, the subcategories made it easier to find something I would like.

It’s quite a coincidence that Microsoft launches News Pro today with the recent rumors that Apple will be developing support for paid content in their own News app. News Pro is available for free in the App Store and on the web.

(via microsoft-news.com)

Filed under: Apps, iOS Tagged: Apps, Flipboard, iOS, Microsoft, Microsoft Garage, News, News Pro

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Apple reportedly has plans to work with publishers to support viewing subscription content in its Apple News app, according to Reuters which cites two anonymous sources. Currently, the Apple News app does not support authenticating subscriber log-ins. That means content can’t be behind a pay wall and can only be monetized by web advertising when readers follow through to the publisher’s website or by using iAds. Apple’s iAd network is noticeably going through a shuffle at the moment with the company recently announcing the end of its App Network where developers advertise their apps.

The move would allow publishers like The New York Times and The Wall Street Journal, which are already Apple News partners, to bring over their pay wall setup and potentially require readers to actively subscribe before viewing a certain number of articles within a given period of time.

The move will likely satisfy publishers which are increasingly looking for ways to diversity content, but placing content behind a pay wall with an iOS app that’s built-in to iPhones and iPads likely won’t come without criticism.

As it stands now, it’s questionable how many active readers are engaging with Apple’s News app, which debuted with iOS 9 in September, although Apple said it had 40 million users three months ago shortly after it’s launch. Since then, Apple has shared that it has actually been undercounting how many users are reading the News app due to a bug that is being addressed.

In a recent 9to5Mac poll of our readers, just over half of those who responded answered positively to sometimes or regularly using the Apple News app.

The new report highlights that publishers are still dissatisfied with the information about readers within the News app that Apple is relaying back to them. The report lacks specifics about when Apple could implement the feature as well as how the feature might work and if Apple would require a revenue split between it and the publishers.

At any rate, be prepared to see a pay wall possibly in the not-so-distant future when browsing Apple’s News app. For comparison, iOS apps from publishers mentioned above already support subscription log ins and pay walled content as does the web. Newsstand, which Apple’s News app replaces, similarly supported app log ins to monetize content.

Filed under: AAPL Company, Apps, iOS Tagged: Apple, apple news, News, pay wall, subscription

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