Bad News for iPhone Sales Just Keeps Piling On
- Paul Thurrott
- Nov 21, 2018
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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.
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“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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Conversation 88 comments
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dontbe evil
<p>finally some people start to understand… but now on apple will not reveal numbers anymore. I know it's just a coincidence LOL</p>
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skane2600
<blockquote><em><a href="#370596">In reply to solomonrex:</a></em></blockquote><p>Complete nonsense. I have a Windows Phone that is going on 4 years and it still works. If you have solid evidence that the failure rate of other brands is significantly higher than iPhones feel free to present it. </p>
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skane2600
<blockquote><em><a href="#371079">In reply to Greg Green:</a></em></blockquote><p>In the general case, updates are neither necessary nor sufficient to guarantee security. solomonrex didn't provide any evidence that even a phone 4 years old that had never been updated was less secure than a currently updated iPhone. It was just an assumption. </p>
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Stooks
<blockquote><em><a href="#370590">In reply to dsharp75:</a></em></blockquote><p>"the true lack of innovation that Apple fails to materialize post Steve Jobs."a</p><p><br></p><p>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 jack…..now copied by all pretty much.</p><p><br></p><p>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.</p><p><br></p><p>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.</p><p><br></p><p>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.</p><p><br></p><p><br></p>
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Stooks
<p>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.</p><p><br></p><p>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.</p><p><br></p><p>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.</p>