Bad News for iPhone Sales Just Keeps Piling On

Posted on November 21, 2018 by Paul Thurrott in Apple, iOS with 88 Comments

From space, Apple Park kind of looks like a giant zero.

In what is now a rolling tsunami of bad news for the latest iPhones, Apple’s biggest manufacturer is trimming $3 billion in expenses related to diminished Apple sales.

Foxconn faces “a very difficult and competitive year,” an internal memo obtained by Bloomberg reads. As a result, it will trim almost $3 billion in expenses in 2019 as Apple’s orders continue to fall precipitously. It will also eliminate about 10 percent of its non-technical staff.

Apprised of the Bloomberg report, Foxconn provided the following face-saving statement.

“The review being carried out by our team this year is no different than similar exercises carried out in past years to ensure that we enter into each new year with teams and budgets that are aligned with the current and anticipated needs of our customers, our global operations and the market and economic challenges of the next year or two.”

Of course, there is one difference: In previous years, Foxconn needed to raise or maintain capacity to meet the needs of Apple, its biggest customer. This year, it is making dramatic cuts to meet the reality of Apple’s diminished orders.

Apple’s woes aren’t necessarily unique in the industry: Smartphone sales have slowed dramatically in recent years, and Samsung, the market leader, has also experienced a downturn. But with Apple now expected to sell 30 percent fewer new iPhones than originally expected, it seems that its price-hike strategy, called Apple Jacked, won’t make up the difference.

This shortfall also explains the real reason Apple continues to use Google Search as its default search engine: It needs the $9 billion dollars that Google pays it annually for this situation not to turn into an outright fiasco. Apple CEO Tim Cook falsely claimed this week that Google’s search engine was “the best,” despite the privacy concerns he continually raises publicly.

And Apple is already feeling the pinch: The consumer electronics giant’s market capitalization has fallen by over 20 percent since its October peak, putting Apple firmly in bear market territory. With Goldman Sachs warning of a “material risk” to Apple’s stock price target after three straight downward corrections, it could fall even further.


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Comments (88)

88 responses to “Bad News for iPhone Sales Just Keeps Piling On”

  1. dontbe evil

    finally some people start to understand... but now on apple will not reveal numbers anymore. I know it's just a coincidence LOL

    • nbplopes

      In reply to dontbe_evil:

      yes people have been misguided and have been taken for a ride in the last 10 years or so. Now lets pick up our Windows on ARM and Surface Go and celebrate our walk back into the future.

  2. montyfowler

    The entire tech sector is under immense pressure right now. Everyone just needs to take a deep breath and know that the single greatest tech revolution since the advent of the browser/internet is just around the corner. 5G will dry every tear and create entire new product categories. Apple, Microsoft, Google, and the rest will find new ways to extract $1,000 per device and $20/month out of us again and all will be right with the world.

    • Tony Barrett

      In reply to montyfowler:

      5G will not be the saviour you think it will be. It will take many years to become prevalent, and is really only a bump in technology terms. To the average consumer, it's not likely to be a deciding factor in purchase decisions either. People buy with their eyes, and what they can hold in their hand. Phone tech has been pretty static for the last 3-4 years. A slightly better camera here, faster processor there. Nothing that really 'changes the game'. I think that will be coming over the next couple of years though, with some new, fairly radical changes. The phone UI needs to evolve too. Google *has* been evolving Android slowly, Apple have literally done nothing significant with iOS for about 5 years now.

      Things will change, and 5G will just be a small part of that.

    • red.radar

      In reply to montyfowler:

      I am not certain that 5G will do anything but deliver streaming content faster...... And until there is some sound policy on privacy and the ownership of data most people are not going to sign up to start connecting every little thing in their home.

      Not to mention carriers are not exactly going to give away 5G access. Last think I want is a 10 dollar monthly device charge for my microwave. . . . .

  3. djncanada

    I think this is the beginning of the end of $1000 plus mobile phones, fanboys and fangirls cannot keep this market alive. My iPhone X works well, who gives a crap if the new one is faster (Canadian price) , not $1,800 faster, that's a new Surface Pro 6 territory, a computer, Tim Cook is smoking crack!!!

  4. lvthunder

    "Apple CEO Tim Cook falsely claimed this week that Google’s search engine was “the best,” despite the privacy concerns he continually raises publicly." If that's the case then what is the best search engine?

  5. bart

    It will be interesting to see how the likes of Huawei, Xiaomi, etc are doing in terms of sales. Whether the premium market is getting disrupted by cheaper, yet often capable, smartphones.

    • wright_is

      In reply to Bart:

      I thought Hauwei had outsold the iPhone in unit numbers, even without being really present in the US market.

      We seem to have gone Hauwei this year, one daughter bought the Mate 9 Pro last year, I have a Mate 10 Pro (private) and a P20 (business) and my wife has a P-Smart. The eldest daughter has a 2 year old Moto.

    • djncanada

      In reply to Bart:

      What if Huawei had access to US market! I am in Canada, we are getting the new Mate Pro (too much money) our carriers will be selling it.

      Huawei says they will be #1 by 2020

  6. karlinhigh

    Smartphones: The glamour is dying. For those of us who don't want a smartphone to be the greatest thing in our lives, this was long overdue.

    • red.radar

      In reply to karlinhigh:

      Agree. Smartphone is a mature product like laptops. People are in a replacement cycle now. Its no longer a growth sector. Couple that with market pressure and the tarriffs.... its going to get interesting. For everyone.

  7. Yaggs

    This whole market was due for a "correction"... you can't just pump out new phones every few months and expect everyone to get rid of their 8 month old one for a new one... and by now there is a huge after market for iPhone 6s, and 7's... and the most recent offering don't do enough to distance themselves from the previous ones. Pickup and iPhone 7, 8, X, Xs, Xr and they all "feel" pretty much the same... also, this might have been sustainable when new phones were around 700-800$ but when your talking $1100 for a new phone that changes the upgrade conversation.

    I think Apple is jacking up their prices on newer devices because they know they are going to last people longer now... might as well get as much as possible from them if they aren't going to upgrade every year.

  8. waethorn

    I think the clones are killing Apple, again. Their uniqueness no longer qualifies their right to exist.

  9. waethorn

    Looks like a road to nowhere.

  10. randallcorn

    I have users that do NOT like the iPhone 8 or X and do not want a newer phone. They said their 7 is working just fine.

    I think Apple could make more money by taking the price of the $1,000 phone and raising it to $2,000.

    Actually with issue the phones have had and the pricing nobody wants to upgrade until their phone is dead. New emoji is not enough to have them spend $1,000 for a phone except for my niece. New emoji, yay! Take my credit card please!! lol

    • wright_is

      In reply to randallcorn:

      Yes, my wife clung to her 3GS until it died in 2016, then she wasn't willing to pay out for a new iPhone, so I got her a Nexus, the Pixel was too much this time round, so she has a Hauwei P-Smart now and is very happy with it - $250.

  11. sharpsone

    When WP died I was forced to make a decision on which POS would win my time. I opted for Android because it wasn't Apple and offered a wider selection of phones. I'm on my 3rd LG and I couldn't be happier with the hardware. I still dislike Android and the hold Google has on it but I cannot and will not support Apple. It's my choice and probably goes back to my child hood in the 80s... My parents opted for a PC and so my hatred for the alternative blossomed.

  12. matsan

    Not Apple-specific, but I start to see trend of fatigue among my friends. If this because tech has gotten more expensive or people are getting shortchanged I don't know. Friends that used to rush out buy new phones are suddenly happy with their Samsung S6 or iPhone 8. Personally I'm happy with my iPhone SE even with the battery dying slowly. I sure as h**l won't buy an iPhone XS (the 256GB version costs $1600 here in Sweden!)

  13. Jeffsters

    Google actually is the best! I've tried the others, I want to switch, but the others are terrible! Let's bookmark this article, like the many years worth of doom before, and talk again!

  14. CompUser

    "From space, Apple Park kind of looks like a giant zero." Actually, it looks like a big letter "O"; zeroes aren't round. Someone who writes for a living should know the difference. Just sayin'.

  15. El Comment

    From Space, Apple Park kind of looks like Cortana.

  16. Jeffery Commaroto

    Apple would be best served by using this opportunity to buy back an enormous amount of stock and in six months lower prices across the board. Knock $150-$200 off Macs, iPads, phones and $10-$35 off most accessories. That would put them right back in it. Then never speak of this time of price gouging again.

  17. nanovak

    Paul do you see Apple responding to sluggish sales by aggressively moving on prices to increase unit volume, or are they just focused on the price/unit and overall revenue metrics and see the reduced sales volumes as justification for their price increases? I guess I'm wondering how tone deaf they might be to user sentiment versus market analyst expectations.

  18. jwillis84

    Apple.. add One feature .. and I'm yours... Block spam calls. Hunt them down, target them with laser focus and brand them with Google Cookies on their mechnical robotic vox phone foreheads. .. there fixed.. market soars. Sometimes it isn't the innovation or novelty that's needed.. just addressing the problem staring seven billion people in the face. Honestly.. wouldn't you pay $1000 through the nose for a phone that.. you know.. actually works?

    • Jeffsters

      In reply to jwillis84:

      Get an iPhone, on AT&T and download the AT&T anti-spam crowd sourced app. I get literally no more calls.

    • chaad_losan

      In reply to jwillis84:

      You do know that most carriers will do that now at the switch level, you just have to ask them to turn it on, it's free. Apps like Mr. Numbers will do that on both iOS and android and will automatically hang up on spam calls for you and let you report spam calls, and block new numbers as they come up.

    • Daekar

      In reply to jwillis84:

      Most people I know rarely talk on their phones, and simply let voicemail pick up if they don't know the number.

  19. Chris Payne

    Wow, so much hate here for Apple. Funny how so many people wish the downfall of Apple when Google is the real one fleecing them like sheep, underneath their noses.

    Also funny how foxconn’s hiring/lay-off pattern is entirely cyclical and can be easily researched, yet it always spells the latest doom for Apple.

    Also, the stock market overall is down, following the rest of the FAANG stocks. Apple isn’t suffering stock-price-wise because of their own woes. The entire industry is suffering the same.

    I really can’t believe how much vitriol Paul writes about Apple. Show me on the doll where Steve Jobs touched you Paul.

    Apple didnt gain cult status because of some voodoo power. They gained it because they make great products that many many people love. Apple haters will hound on that like it’s some kind of bad thing, yet the whole time have their identities seeping through their hands down the google drain.

    • NT6.1

      In reply to unkinected:

      "They gained it because they make great products that many many people love."

      That's a lie. They know how to sell their stuff. They even sell LCD phones in 2018 when a cheap Samsung phone comes with OLED.

    • Bob Shutts

      In reply to unkinected: I use a variety of devices, most of them a bit old, so I don’t have a dog in this fight. My feeling is that Paul targets Apple because it generates clicks on this site. Just look how many comments this article is creating. Clicks=$.
      Go over to BoyGenius and they do they same thing. They troll the Android crowd and get loads of views.
  20. gvan

    Face ID + Ugly Notch is the problem at Apple. Most people consider it a downgrade from Touch ID phones so they are not buying the new models.

    • KingPCGeek

      In reply to gvan:

      Totally disagree on the Face ID. I have an iPhone X and a Touch ID iPad. The iPad seem archaic with its Touch ID.

      The one negative to Face ID is that it has essentially made Apple Pay useless. If I don't have my Apple Watch I don't use Apple Pay anymore.

  21. dsharp75

    It took longer than expected, but finally the market has caught up to the true lack of innovation that Apple fails to materialize post Steve Jobs. Apple had branding and marketing while riding on the backs of others. Now, since there's no one to steal from, they are exposed for what I knew they were all along - the clock radio company of the world. But stick a high price tag on it and people call it premium. Not it's not, it's highway robbery aka Apple Jacked. Its been going on for years, but now even the Apple glazed sheep have started to see it.

    Now before the fan boys jump in, just remember the hamburgers to pc/mac analogy. A plain hamburger for $10 or one with the works for $6. Anyone with sense would pick the one with more options (software) and choices over the plain, simple, overpriced burger. For those that missed it, a burger with the works is a PC, the plain one is a mac. Stick a premium sign in front of it, give it a flashy display and use expressive words like bold, succulent, etc on the plain burger to entice the sheep to buy it. Yes, it MAY be Angus beef and yes it MAY be made with the wheat bread of the pure rye of the Netherlands, but is that my preference or even choice? Nope. Choice is good, branding is supposed to mean something and premium is supposed stand for excellence. Do the "new" Mac books/ mac book pros, iPads/ iPad "pros" (that's funny) really define excellence or are they just overpriced, underpowered, yawn inspiring hardware that took too long to refresh for essentially not even a 'S' year product line?

    Maybe at the next Apple event, instead of almost self congratulating themselves, talking about how much they've achieved and sold (oops, can't do that anymore without numbers...), they should take a hard look about being relevant to customers instead of themselves (i know, bold concept, but wait for it...) and actually lower prices. Lowering prices to get entry and lid level customers is a great way to increase numbers, sales, etc. But the dirty little secret is that, but starting with a lower price point, you can actually get people to upgrade unintentionally. Don't believe me? I'm a Surface Pro owner. The entry point for the Surface Go was enticing and if it started at $550, I would have passed it by. But it didn't. It started at $399, with (wait for it) better configurations for a bit more. Subsequently, almost everyone I know, except for people who just replaced their aging Surface 3, all have the 128/8GB version, not the 64/4GB version.

    Heck, I'm waiting on Best Buy to deliver my LTE version right now,

    • MikeGalos

      In reply to dsharp75:

      Think back. How many of the last dozen "major Apple events" have really been reviewed as "OK, it's a millimeter and a half thinner and 2 grams lighter and they bumped the speeds and feeds. Guess the next event is when they'll do something interesting."

    • nbplopes

      In reply to dsharp75:

      You guys can’t stand the fact that got your arses lighten up from your mono cultural bench’s 10 years ago or so.

      What bunch of nonsense.

      Raincheck, MS delivered 3 million units across the entire Surface line in 2017, as far as I read. ... oh yes this year with the Surface Go, the pinnacle of accessible innovation will be the year of revelation. That is applying all the juicy and succulent ... tricks ... up to the heart of caftmanship of Panos Panay father.

      Now, Apple n 2017 they have delivered 47 millions iPads. That is more than Lenovo or HP delivered PCs. Heck, they deliver more iPads in two years than either Microsoft or Sony deliver gaming consoles in 7 years.

      And no, they are not allowed to be happy or excited about that? Why?

      Yet, Windows Insiders should be excited by Dona Sakar crystal balls into the future? Why?

      This article is simply celebrating the yet unconfirmed down fall of Apple sales this year. Pretending to be something else it’s an insult to anyone’s intelligence.

      Give me a break.

    • William Clark

      In reply to dsharp75:

      I don't think "under-powered" is a term applied to Apple. Overpriced? I'll give you that one and it's certainly causing me to delay my phone upgrade this year. But lack of power has never been a real problem for me with my iPhone.

      In some ways Apple has delivered down-market products. The new iPad with 128G is selling for just over $300 (black Friday sales). The new iPad Pros, on the other hand, are quite expensive and that's a problem. Hopefully Apple will realize this and offer up some sales in the new year. Or maybe they have that high price to move more regular iPads? Who knows?

    • Stooks

      In reply to dsharp75:

      "the true lack of innovation that Apple fails to materialize post Steve Jobs."a

      There has been NO true innovation in at least 3 years from any smartphone maker. They ALL copy each other at this point. Just look at the NOTCH that all the Apple haters complained about. Or the lack of a headphone copied by all pretty much.

      Apple did a few things right, basically created the app store concept and still today has the best app store from a point of selection and security, provided guaranteed updates and a focus on privacy. The privacy stance fell into their laps because they are a hardware maker and so they do not need to gather info like Google/Android does.

      Smartphones are like microwave ovens in 2018. Everyone has one and everyone uses them for a certain set of tasks. They days of discovering cool new apps and pushing the platform/form factor further has peaked for most. It still provides a great source for tech blogger's but the average consumer does not know anything about how this year's camera might be better than the one from last year and does not care for the pictures they take. Or what you can or cant do with the so called digital assistants that I would argue most do not even use. People are shopping more and more for the bargain priced smartphone and Apple with a $449 iPhone 7 has an option if you do not want to pay $999.

      A new form factor needs to emerge before the excitement and innovation really come back. We need serious advancements in battery tech to give us way better battery life. 5G whatever that will be needs to be widely rolled out as well.

    • Mike Widrick

      In reply to dsharp75:

      It's a bad analogy though. Burgers are here today, gone tomorrow. And the laptops are a completely different situation. If you want to buy a phone today that is still working 4 years from, and still secure, you HAVE to buy an iphone. Maybe even a used iphone. These are gov't issue now.

      This is more like Toyota vs Detroit in the 90s, because longevity and safety matter here and people spend so much time with their devices. This isn't a burger.

  22. Mike Widrick

    I used Microsoft Launcher for a while on my Galaxy, and I'm sorry, Google search still is very much the best. And I say that as someone that put in the effort of consciously switching from Google.

    I don't doubt that Apple raised prices too much to maintain unit shipments, but it's a little more understandable when you recall Trump's tariffs (which will happen because the GOP are spineless) and their OSs running on old hardware. It's definitely a transition and so the outcome is up in the air, but they're saying and doing the right things as a business - keeping old hardware usable and making money on services on that hardware. I think they should sell more affordable hardware, but their used stuff is still very usable thanks to their software work. Work that Google and Quallcomm don't put in, by the way.

    If this is such a bad move, then the competition needs to punish them for it. So far, that hasn't happened. And I don't think Samsung's two new SKUs will change the game - and I own a galaxy.

    Fwiw, I didn't think MS Launcher was a night and day difference from Samsung. Thinking of Samsung's software reputation, that is probably a problem?

    • Daekar

      In reply to solomonrex:

      I have found little to no meaningful difference between text search results on Bing and Google (I can always find what I want on both without trouble), and a HUGE advantage in image and video search going to Bing.

      The MS Launcher is more or less like all the other whack-a-mole icon grids that Paul has written about, it just has some integrations with your Microsoft account with a layer of AI icing. Try switching to SquareHome 2. It's like the Windows Phone UI except better, and with all the benefits of Android.

      • Pbike908

        In reply to Daekar:

        I have been using Duck Duck Go as my search engine on my Laptop and I have been VERY happy with it. I use firefox browser and Duck Duck Gos Privacy essentials which does a pretty good job of blocking trackers and OFFENSIVE ads without having to whitelist many sites nor does DDG Privacy essentials interfere much with functionality of web sites. I do prefer the Chrome browser, however, Google's creepiness keeps me from using it. I will probably go back to Chrome once support for blocking Autoplay HTML 5 is released.

        On my Galaxy S8 I use Google as my primary search along with Samsungs Browser and an add blocker. I would switch to Bing (or Duck Duck Go) except that I use Nova Launcer and I can map Google Search to a button and the the "keyboard" automatically pops up when I want to search.

        If Bing or Duck Duck Go would automatically pop up a keyboard on Android, then I would probably switch from Google on Mobile as well.

        I have disabled Google from saving anything to my account. I have also disabled personalized ads. I do know that Google still tracks the hell out of me in MANY ways primarily through a unique Browser ID, location on my Android device, etc. which I think in some respects is BS but then again that's how it works if one chooses to use Tech.

      • Mike Widrick

        In reply to Daekar:

        Well, I don't doubt that you're right about Bing's strengths. I use Google a lot for technical queries and map related queries, and on those they were nowhere near each other. I do switch back and forth a bit, and tend to stick with Bing for images.

        But that's the sort of thing most people are doing on their phone, ie related to the Apple search deal. So I ended up switching back without really wanting to. Voice queries of local place names is essential to hands free navigation, so say nothing of the place information in google maps.

  23. Stooks

    Something I read in the last few days talked about how over 16 million people have gotten a $29 battery upgrade this year, making their current iPhones better and putting off a new phone purchase.

    I also read that Apple has so much money in the bank that they are pushing the prices up to see how they hold and can take a loss in sales for one or two quarters to find that spot where they need to be.

    At the same time they keep moving more and more of the hardware under them to get even better margins. They will be making their own screens and modems in the next few years which will further increase their profit margins. Tim Cook is a master at supply chain management.

    • William Clark

      In reply to Stooks:

      Count me in on that battery upgrade. I have a 6s+ and to go to the XR would be a downgrade in some ways (lower screen rez, no fingerprint reader). A new battery and I'm good for at least another year.

  24. eschekman

    Don't make from a marketing problem a quality problem. Apple tested the borders of pricing. Now they know them.

    • MikeGalos

      In reply to eschekman:

      True. They've had quality problems that, until recently, marketing has made "go away" from brand perception. Now they have both quality problems AND marketing problems.

  25. HellcatM

    This is good news! :) Hopefully this is the downfall of apple and not just a short down tick. As fordable phones come out and better hardware from other manufacturers and apple keeps screwing up on their hardware, hopefully more and more people turn away from them. They can go back to making stuff for the 2% of their die hard fans. At least thats my hope.

    • puggsly

      In reply to HellcatM:

      Dream on!

      They still have hundreds of billions of dollars in the bank and nobody is saying that they will not add 10's of billions of dollars to that total through out the year. This is a question of wether they continue to grow as quickly. Not one of are they going to die!

      We are talking about a company that controls the #2 operating system in both desktop and mobile and one of the most profitable companies in the world. They make the #1 wearable product and the best mobile processor period.

      I'm not saying Apple might not someday become less powerful, but be realistic about what you are asking for. You should hope for them to fall to number 2 or 3. Not become an also ran. Not for decades.

      • MikeGalos

        In reply to puggsly:

        It always amazes me when people brag about the cash reserves or profits of companies they're defending. All that says is "Look at how much money they took out of my pocket and kept rather than putting it into innovations for the next product."

        • Jeffsters

          In reply to MikeGalos:

          Who exactly is innovating Mike?

        • JHancox

          In reply to MikeGalos:

          There's a big difference between "defending" a company and accepting reality. I haven't owned a single iPhone, but that doesn't mean that I think Apple is on the verge of imploding.

          Apple is still going to turn a big profit, they still control the gates to the world's most lucrative mobile software platform, and they still have enormous piles of money in the bank. It's going to be a long time before they shrink back to an almost ran.

          • MikeGalos

            In reply to JHancox:

            There's a difference between defending reality and literally praising a company for how much profit they made off you.

            It's a bit like how every release of a new iPhone gets statements from Apple users about how beautiful the industrial design is followed by comments about the case they're going to hide it inside.

  26. beckerrt

    Is it wrong of me to enjoy all this negative Apple news as much as I am?

  27. irfaanwahid

    I really hope this will force Apple to innovate again and not milk on its 2-3 year cycle like what we saw with iPhone 6, 6S, 7 and 8.

    Secondly, as much as I like Apple products there price hike right from iPhone X to Xs & Max is just not justifiable no matter what.

    It can be premium, it can be all the stuff Apple makes us believe but $1000 + iPhones.. no ways.

    And Apple expects each year its users to keep upgrading.

    I guess reality has hit Apple.

    Time for Microsoft to strike again - *darth vader sound plays*.

    • Tony Barrett

      In reply to irfaanwahid:

      I doubt MS are ready to 'strike again'. They've struck out so many times now I'm surprised they still have a team. They also have their own issues with Win10, which itself is turning into somewhat of a farce.

  28. Tony Barrett

    Apple have rode the Jobs wave for a number of years now, milking their customers who believed, yes *believed* they were getting premium products that were better than everyone elses. Customers lined up to pay whatever Apple asked every year for products that were, infact, often 1-2 generations behind everyone else on hardware, and with an OS that is now looking very, very tired, with more bugs creeping in, hardware that breaks if you look at it wrong, and ongoing reliability issues. Apple haven't offered anything really new, or groundbreaking for a number of years now, and have just relied on their name and logo to carry them through. It worked, amazingly, for a long time, but it finally appears that that ever loyal, blinkered Apple customer may now just be taking a long hard look at their latest products and prices, and saying 'enough'.

    • lvthunder

      In reply to ghostrider:

      Apple's chips are the best around according to all the benchmarks so I'm not buying your they are 1-2 generations behind. Also it's not just Apple slipping it's everyone. The innovation in smart phones is almost complete. There's not much more to do. People (not just Apple customers) are realizing they don't need a new phone every year.

      • Tony Barrett

        In reply to lvthunder:

        I don't think Apple's hardware is anything that special, but I agree, because they control all aspects of design, they optimise their software very well to eek out all performance from the SoC. They're taking pretty much all hardware design in house now, which will give them even more control - and secrecy. Apple are having real quality problems at the moment though, which don't seem to be going away.

  29. roastedwookie

    Google search is the best, actually. What do you expected them to use? Junk Bing? Apple is not MS to be US centric