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Apple Profit Falls 22% But iPhone Sales Are Up 251

Posted by Unknown Lamer
from the everyone-needs-five-iphones dept.
New submitter marcushoward writes in with news of Apple's quarterly results. From the article: "Apple on Tuesday reported fiscal third-quarter revenues of $35.3 billion and profits of $6.9 billion, or $7.47 per share. The revenue number is basically even with Apple’s results from a year ago, but its profits were off by almost $2 billion. Revenues were mostly in line with Wall Street’s expectations of $35.09 billion and slightly above its earnings per share expectation of around $7.31. Apple itself had predicted revenues between $33.5 billion and $35.5 billion." Compared to this quarter last year, sales of Macs are about even, iPad sales dipped slightly (14.6 million vs 16 million), and iPhone sales are up quite a bit (31 million vs 26 million).
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Apple Profit Falls 22% But iPhone Sales Are Up

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  • Margin compression (Score:3, Insightful)

    by benjfowler (239527) on Wednesday July 24, 2013 @10:20AM (#44369951)

    The industry analysts and pundits have been predicting this for ages: that while Apple led for ages, and reaped windfall profits as a consequence, there would be a stampede into the smartphone market, and Google would barge in, turn smartphones into a commodity, and crush Apple's margins. This is not a surprise. Happens in markets all the time, and had previously happened in the PC market, where nowadays, it's impossible to make serious money on PC hardware, and the only people selling parts are people happy to sell huge volumes on razor-thin margins.

    What's interesting about this story, at least for me, is that iPad sales have tanked. Maybe that suggests that Android on tablets has matured somewhat from the early days of few, clunky tablet apps, and that tablets are commodities now too.

    • Re: (Score:3, Insightful)

      by earlzdotnet (2788729)

      What's interesting about this story, at least for me, is that iPad sales have tanked. Maybe that suggests that Android on tablets has matured somewhat from the early days of few, clunky tablet apps, and that tablets are commodities now too.

      No, it rather means that people are finally understanding that a tablet is a novelty. The only time I hear someone talking about how great their iPad (or other tablet) is when they are talking about how much their (less than 10 year old) kid enjoys it

      • by poetmatt (793785) on Wednesday July 24, 2013 @10:33AM (#44370061) Journal

        tablet's are a partial novelty, but they do have a specific function; they replace the need for portable computing (notebooks, laptops, etc). To think that it's just some toy people purchase is extremely ignorant of the usage.

        • by Nadaka (224565) on Wednesday July 24, 2013 @10:41AM (#44370139)

          Its not a replacement for portable computing... Its a replacement for portable netflix, web browsing, and stupid little kiddie games/apps.

          • by Anonymous Coward on Wednesday July 24, 2013 @10:57AM (#44370289)

            Its a replacement for portable netflix, web browsing, and stupid little kiddie games/apps.

            That IS portable computing for the majority

            • Its a replacement for portable netflix, web browsing, and stupid little kiddie games/apps.

              That IS portable computing for the majority

              Indeed. Pathetically, the nuisance is missed to most self-proclaimed computing geeks.

          • Tablets are Entertainment Consumption devices. Reading, Music, playing games, surfing the internet, youtube etc etc etc.

            They pretty much suck as content creation devices. You can create using them, but if your business is creation of content, you're not going to be served well by a tablet. iPad with Keyboard and case is 2/3 as expensive as a low end MacBook. Guess which one works better for which?

            iPad $500 + $100 professional style case w/keyboard = $600

            Macbook = $930

            If the price difference for a general co

            • by Sockatume (732728) on Wednesday July 24, 2013 @11:39AM (#44370741)

              That's a bit like arguing that a computer's a terrible content creation tool because it's no good as a woodworking lathe or sewing machine. No, a tablet's no good for doing multi-track video editing. (Most single-display computers aren't any good at it either.) However it's a remarkable tool for gathering, organising and triaging information. (Papers, the science literature tool, is its killer app in my environment.) It's the swiss army knife of desk references. It's an x-windows client I can pass around at a scientific meeting. It's the world's least annoying way to deal with email.

              • by narcc (412956)

                It's the world's least annoying way to deal with email.

                This one true.

                ---
                Send from my iPad

                (Which is why this message is so short.)

              • That's a bit like arguing that a computer's a terrible content creation tool because it's no good as a woodworking lathe or sewing machine

                If you bought a computer to replace a lathe or sewing machine you probably would have that complaint. Fortunately nobody does that because it's a stupid idea (and a pointless analogy). There may be a handful of things a tablet is better at than a computer (I'm unconvinced of any of them) but there are a million things a computer is better at than a tablet. Nobody would genuinely refer to that as a "replacement".

                Can we stop with this pointless defense bogging down every discussion that involves tablets?

            • by tlhIngan (30335)

              Tablets are Entertainment Consumption devices. Reading, Music, playing games, surfing the internet, youtube etc etc etc.

              They pretty much suck as content creation devices. You can create using them, but if your business is creation of content, you're not going to be served well by a tablet. iPad with Keyboard and case is 2/3 as expensive as a low end MacBook. Guess which one works better for which?

              iPad $500 + $100 professional style case w/keyboard = $600

              Macbook = $930

              If the price difference for a general co

          • by Sockatume (732728)

            What do you think most people use computers for? There's a reason computer use exploded around the time the web went mainstream.

          • by Belial6 (794905)
            I find my Nexus 7 to be awesome for VPNing into my server and doing a screen share so that I can fix problems while out and about. No, I am not a full time administrator for a fortune 500 company, so carrying a full laptop around with me to type a few commands or reboot a server is massive overkill. Yes, using the on-screen keyboard is less convenient than having a full keyboard, but carrying a laptop around is WAY less convenient than using the on-screen keyboard.

            Besides, web browsing is how a huge nu
        • they replace the need for portable computing (notebooks, laptops, etc).

          Well, that all depends on what you do on the road really.

        • These days I'm using my laptop more like a desktop and my tablet more like a laptop. I barely ever use my laptop unless it's plugged in and connected to an external monitor. Heck, the battery could die on it and I might not even know. And yes, I still use my desktop computer. It performs the same function it always has - high powered workstation with huge monitors for serious work.

        • by Holi (250190)

          If all you do with your laptop is read email, browse the web and watch video then yes it is a replacement. If you do any content creation on your laptop then the iPad is a piss poor substitute.

          • by Alomex (148003)

            But if all you do with your tablet is read email and watch video then a smartphone or phablet is even better.

          • by Type44Q (1233630)

            If all you do with your laptop is read email

            Reading email? Sure. Writing email? I don't know about the rest of you but I certainly have no desire to type out my emails on a virtual keyboard...

            • by Sockatume (732728)

              You'd be surprised. I could touch-type with my thumbs within a month, and I'm not exactly an avid texter. I imagine hunt-and-peck people might have a problem with the lack of feedback though.

              • I could touch-type with my thumbs within a month

                At at most a fifth of the speed and probably a lot slower. I use all ten of my fingers and not just two of them when typing emails on a keyboard. I imagine someone who couldn't type at all might not notice a different though.

          • by Belial6 (794905)
            That is a myth. Huge numbers of corporate applications don't require paragraphs of text to submit content. In fact, the need for huge amounts of typing is often the sign of a poorly made application. Sure, writing a budget proposal is going to suck on a tablet, but there are huge amounts of content that is created without the need for that much writing. Think about the UPS guys. They create huge amounts of content without a laptop. I know that a lot of restaurants are starting to use tablets as order
        • They can be used for taking notes but they are best for accessing information quickly. People who take notes on them are distracted. I love tablets for accessing information in meetings but fooling around in note apps is just too much. I can jot notes on a paper notebook without thinking or paying attention to the tools (pen and paper). You can scan or capture the notes later with your tablet if you like.

           

      • Aaaaand not even that. After adjusting for channel inventory reduction (in order to increase retail efficiency or prep for new product cycle) the actual sales are pretty flat (down 3%). Here's the statement from Wells Fargo analyst Maynard Um, as quoted by AppleInsider.

        "As for the iPad, shipments were down 14 percent year over year, but when adjusting for reductions in channel inventory, the true drop-off was just 3 percent. Um believes iPad sales were likely soft in the U.S. and Europe, as Apple high
      • by Alomex (148003)

        No, it rather means that people are finally understanding that a tablet is a novelty.

        Precisely. SmartPhones are useful and as soon as alternatives were available the market for those grew rapidly, as people find the concept useful and they'll buy it from any supplier so long as quality is comparable.

        Now think of the iFad: one rarely sees Android tablets out there, even though they are as good as iPads. In fact, most people seem to prefer Phablets.

        Why? because fads are tied to one supplier, e.g. any of the trendy labels in fashion on a given year, and it is not about the shirt, but about own

      • More likely market saturation rather than competition. Basically at this point most people who want a tablet have one. And unlike phones, people don't seem to be as in a rush to replace them with the latest and greatest. I know a lot of people who bought iPads as attempted laptop replacements and found that it almost worked. I know I went out and got a new laptop.

        Ironically I'm on my iPad at the moment waiting for people to arrive and get a meeting started. The presenation and everything is on the iPad

        • More likely market saturation rather than competition. Basically at this point most people who want a tablet have one.

          In 3 years? Don't think so. The truth is that the year ago quarter was boosted by the new Retina iPad 3. And the 6 month ago quarter was boosted by the iPad Mini. This last quarter didn't have a new iPad, so of course it isn't one of the peak sales quarters.

          The next iPad will come out this quarter or next, with iOS 7, and once again it'll be a record quarter for iPads.

      • by Sockatume (732728)

        Maybe people don't talk about them because they stopped being novelties and started being an unremarkable part of the computing landscale? I don't talk about how amazing computer mice are any more, but that doesn't mean that they're a novelty that's destined for the bin.

      • Well either way, it may just indicate market saturation. When you introduce a new product, nobody has one, and everyone who wants one buys one. After a few years, many of the people who want one already have one, so you sell fewer of them.

        Even if they're a novelty that are only used by 10 year-olds, that's still a market, and lots of people were buying them and happy with their purchase.

      • No, it rather means that people are finally understanding that a tablet is a novelty. The only time I hear someone talking about how great their iPad (or other tablet) is when they are talking about how much their (less than 10 year old) kid enjoys it

        I use my Nexus 7 daily. Some of the things I use it for:

        - Kindle
        - Web browsing / youtube out on the deck
        - Advanced planning / 2nd head ship navigation while sailing (Navionics)
        - Advanced route planning while in the backcountry (Locus Pro)
        - Movies in be

      • I used mine for college to take notes on and read textbooks via Kindle. Now, YOU might not see a use for them (and I was that guy 2 years ago), but that doesn't mean they're just for games.

    • by goombah99 (560566)

      Not margin compression. Bussiness cylces, dividends, and investment in facilities (they are making some macs in the US now, they are building a new campus, they are gearing up for a new product line)
      One biggy is that apple took out a loan to pay their dividends. 3% of their stock prices is about 15% of their margins! so it might be the whole 22% of profits.

      Apple doesn't seem to be discounting much and the cost of production is going down mostly. I think maybe people are substituting some cheaper devices

    • The iPad hasn't "tanked". They broke the constant upgrade cycle with the iPad 4th gen last fall. That means this quarter doesn't have the benefit of a brand new iPad 3 (like last year) and the channel inventory is much lower due to an impending iPad 5.
    • by AmiMoJo (196126) *

      The other side of the story is that the iPhone is getting cheaper. It was released last year and wasn't cutting edge at the time. At this stage it gets sold cheap with bundles, much like similar age phones like the Galaxy S3.

      It shows that there is demand for a cheap but current iPhone, even if it is significantly less powerful spec wise than the competition. I expect Apple will launch such a phone that is basically an iPhone 5 when the iPhone 5S is released.

    • by MightyYar (622222)

      Tanked? It was a 10% drop...

    • WTF? (Score:5, Insightful)

      by Udo Schmitz (738216) on Wednesday July 24, 2013 @10:57AM (#44370283) Journal

      The industry analysts and pundits have been predicting this for ages

      Ages huh? 15 years ago Apple was “beleaguered”

      that while Apple led for ages

      The iPhone went to market only in 2007. *Six* years ago, Apple was late to that game. It was only that the other players were caught with their pants down.

      reaped windfall profits as a consequence

      Their insane margins were more a testament of Tim Cooks logistics expertise, the reason Steve Jobs hired him.

      Google would barge in, turn smartphones into a commodity, and crush Apple's margins

      Maybe in bizarro land. Apples only competitor is Samsung. The rest of Android phones replace the feature phones of old.

      the PC market, where nowadays, it's impossible to make serious money on PC hardware

      Uhm, except for Apple?

      What's interesting about this story, at least for me, is that iPad sales have tanked.

      Tanked. Yeah, right. Yoy 16 to 14.6 million. With FQ3/12 being the quarter with the brand new retina iPad.

      Wish /.mods would cut back on dope.

      • by jkflying (2190798)

        Sorry, but HTC hasn't been able to keep up with demand for the One, so I'd say that HTC is back in the running. Just because they didn't go insane-advertising-huge-prestock doesn't mean they aren't selling like crazy.

        • by Sockatume (732728)

          They haven't been able to keep up with demand for the One because their component suppliers looked at their past performance gave them a low priority, so they literally couldn't make them.

          http://www.theverge.com/2013/3/19/4122798/htc-one-delayed-because-of-component-shortage [theverge.com]

        • Re:WTF? (Score:4, Insightful)

          by Anubis IV (1279820) on Wednesday July 24, 2013 @11:51AM (#44370853)

          Sorry, but HTC hasn't been able to keep up with demand for the One

          Sorry, but that's because they had manufacturing issues with the camera, not because demand is insanely high. In fact, sales [bloomberg.com] were below expectations [dailytech.com], causing them to lose a rank or two in the smartphone market, and the One's sales are actually expected to drop off sharply in the next quarter [gsmarena.com], which would lead to an even greater decline. The One had a lot of promise, but has failed to deliver on it.

        • by Belial6 (794905)
          I have really liked HTC phones. I have owned 3. The myTouch. It ran mostly well, but was a bit klunky when pushed. The reason was that the hardware was just a bit to low for the OS it was trying to run. I knew that when I bought it, but felt that what Android offered over iOS was worth the bit of klunk. The second was the Nexus One. That phone was awsome. It ran Android great and was sleek. We still use the Nexus One as music player, even though I have upgraded my phone twice since I got it. The o
    • "The industry analysts and pundits have been predicting this for ages: that while Apple led for ages, and reaped windfall profits as a consequence, there would be a stampede into the smartphone market, and Google would barge in, turn smartphones into a commodity, and crush Apple's margins."

      Wake me up when this happens. So far it has not. Apple sold MORE phones this quarter than before with a 36%+ profit margin. Apple makes more profit in smart phones then all other players combined. Sure, it is time for

    • by Sockatume (732728)

      Is that where we are now? Every new tech product goes from profitable business to lost cause in five years because Google wants more eyeballs to serve ads to?

    • In this quarter last year the retina iPad was released. In this past quarter there was some inventory draw-down in anticipation of future models, and no new models. Actual iPad sales appear to be pretty steady, and there's certainly little evidence of overwhelming moves to Android. If anything, the worry would be the tablet market saturating earlier than some expected.

    • Two points:
      1) iPad sales didn't tank. They were down, but that's to be expected considering they had a major product release (the 3rd gen iPad which introduced the retina display) that helped to drive sales in the year-ago quarter, but no corresponding release this quarter to drive sales similarly. If anything, I found it astounding that sales were only down about 10%, given that they're working with a nearly 9 month old product (the 4th gen iPad was released late last year), rather than a brand new one wit

    • by berj (754323)

      What's interesting about this story, at least for me, is that iPad sales have tanked.

      It's really too early to be able to proclaim that. The drop in sales could be attributed to the fact that there was no new iPad model released this quarter whereas there was one last year. Sales always spike when there's a product launch and languish when one is expected in the near future (presumably this fall).

    • I rather prefer my Android tablet to my brother's iPad. What bugs me with iPads (apart from price,I/O) is the totally inconsistent UI: Android has a menu key and a back key, and that's where stuff gets done. iOS doesn't, so there's buttons all over the place, sometimes even off-screen. Shades of single-button vs 2-button+wheel mice ...
  • by goombah99 (560566) on Wednesday July 24, 2013 @10:24AM (#44369991)

    Apple's cyclic not a steady force. I'm looking forward to the Liquid Metal Iwatch. I worry a bit about the smaller iphones. On the one hand they boost new sales in foreign markets (pity Nokia) and probably spike sales everywhere. But they will canibalise some new sales of the older higher margin phones. Or will they? perhaps they will have higher margins. Or perhaps people who save money on the smaller one will pick up an ipad. Or perhaps sales of the full sized iphone are saturated anyhow so there's little to canibalize. All I know is that they won't lose money!

    • by Sockatume (732728)

      Apple doesn't have a choice: cheap Android and Windows Phone devices are becoming highly competitive on price, both with less demanding, mainstream users and more technically proficient, hack-seeking buyers. So those sales are going away. The only question is whether they're going to go to rivals, or to Apple's own cheaper product. It's just another part of the product cycle; I recall that Apple made more money on the iPod Mini/Nano than they ever did on the classic iPod, although it was exactly the same ki

  • by Andy_R (114137) on Wednesday July 24, 2013 @11:48AM (#44370827) Homepage Journal

    I wonder how many people are in the same situation as I am? I'm a self confessed Apple fanboy, but there just wasn't much reason for me to give Apple any money last quarter.

    I won't replace my iPhone 4 just now because there is bound to be a new model along soon. I can't replace my 2008 MacPro because they don't sell them in Europe any more, and even if they did, it would be foolish to invest in another cheesegrater when the black bin has already been pre-announced. I like the idea of a tablet, but I'm waiting on the inevitable retina iPad mini. For me Apple isn't tanking, they are just deferring revenue.

    • using anything other than MacOS on the desktop/laptop right now, but as Jobs himself once said, the post-PC era is upon us, and weirdly, that's where Apple is struggling a bit. After a burst of market innovation during the second half of the '00s, they've basically said "pass" the last several product cycles.

      My first iPhone absolutely floored me and there was nothing else like it on the market. Same with my first iPad. But early this year I replaced my iPhone 4 with a Samsung Galaxy Note simply for features

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