First came the PC, and on top of the PC the Internet. Then, mobile, but what will rule mobile?
The combination of a slowing iPhone upgrade rate and declining number of growth catalysts for expanding the iPhone’s addressable market will make it very difficult for management to report unit sales growth going forward given its current strategy. In addition, the iPhone SE highlights how any strategy to fix some of these issues will likely end up jeopardizing iPhone ASP and margin trends.
Structural reforms are needed to bolster growth but their upfront costs further strengthen opponents of change
Of course, Apple is still making dimes. Hundreds of billions of them each quarter, in fact. More than any other company on this planet, perhaps aside from Saudi Aramco. Or these days, maybe even more than Saudi Aramco.¹
The real issue, of course, is that Apple is no longer growing. But all the bluster and freaking out today ignores the very real and very obvious fact that this was always inevitable. It’s not only hard to grow forever, it’s impossible. And while that may sound like hyperbole, when you’re at the scale at which Apple currently operates, it’s not.
In the segments of the markets where Apple is focused, they’re running out of people to sell to. And the slowing of Moore’s Law is making yearly upgrades less of a sure thing. “Good enough” is becoming the new norm.
Source: Pray, The Sequel — 500ish Words
[…] with $10.5 billion in profit, Apple earned more in the quarter than Alphabet ($4.2B), Facebook ($1.5B), and Microsoft ($3.8B) combined.
[…] If sales don’t improve with the iPhone 7, I’ll be willing to believe we’ve reached “peak iPhone.” Until then, the only problem I see is that the iPhone 6 was too successful.
Apple ended its incredible 13-year growth streak last night. It is still an incredibly profitable company but it is no longer growing. At least for now.
I think incremental growth can still be achieved in the near future through incremental products (iPhone 7, 8… Apple Watch 2, 3… etc) but growth that really moves the needle (and the stock price) will come only after a long Christmas Eve period.