Apple is Not Learning From its Mistake: 3 iPhone Models in 2019

Apple could be en route to replicating the same mistakes it made in 2018 which ultimately led to a 10 percent stock price plunge on January 4.

According to a report released by The Wall Street Journal, Apple is planning to release three iPhone models in 2019. The problem is that many loyal customers of Apple are not compelled to upgrade to newer models because of the strong performance and specifications of previous models.

Is Apple in Trouble?

Apple has not officially disclosed its plans to release three new models in 2019. But, if it does pursue the development of new iPhone models, following a lackluster reception of the iPhone XS and XR, it may spell trouble for the already struggling $720 billion giant.

This week, Chinese retailers have started to sell the iPhone XR model with a 17.1 percent discount, slashing its price from $1,036 to $858, due to a lack of demand for newly released iPhone models.

While Tim Cook, the CEO of Apple, attributed the company’s poor performance in the fourth quarter of 2018 to the potential tension between China and the U.S., analysts have said that the trade war and the decline of the Chinese economy had minimal impact on the sales of iPhone.

Rather, local analysts have reported that the demand for cheaper alternatives such as Huawei that match the specifications of the iPhone has started to increase rapidly.

The magic of Apple in previous years was its ability to revolutionize design and technologies in mobile phones to manufacture next-generation smartphones. As the growth curve of the mobile phone sector plateaued, it has become challenging for mobile phone manufacturers to differentiate newer models from previous models and drive consumers.

As a prestigious Japanese institution Waseda University professor Atsushi Osanai said:

What we want from Apple is something that makes us emotional, even unconsciously—say, truly beautiful and sophisticated design that we can’t resist. Beefing up functional value, like expanding camera features, isn’t attractive because everyone else is doing the exact same thing.”

Immediately after the public letter of Tim Cook was released on January 2, The Verge social network columnist Casey Newton also added that as mobile phone companies reach a stalemate in technological development and the level of innovation companies can employ year after year declines, the desire for consumers to purchase new models on a yearly basis will naturally drop.

“This was the first year in five that I didn’t upgrade my iPhone. Two reasons: – iPhone X was really, really good, and battery life is still great – The 2018 models were functionally identical to the iPhone X,” Newton said.

Not Exclusive to Apple

Samsung, LG, and many major mobile phone manufacturers are struggling to deal with the same problem with Apple, and as competition in the likes of Huawei and Oppo continue to emerge by providing better value for money to consumers, key players in the mobile phone market could risk seeing a decline in dominance.

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Author: P.H. Madore 
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Apple Allays iPhone Worries, Adds $100 Billion to Buyback Plans

Smartphone revenue rises 14% as pricier iPhone X offsets slowing growth in shipments

Apple Inc. flexed its financial muscle with a record $100 billion plan to buy back stock from investors, as it reported strong gains in revenue and profit even as growth in the number of iPhones sold remained weak.

The results for Apple’s fiscal second quarter reflect a fundamental transformation reshaping the world’s most valuable company, turning a business centered on how many devices it ships into one built around high-end features and services for those devices.

Apple’s report Tuesday capped a string of strong earnings from U.S. tech giants including Inc., Google parent Alphabet Inc., and Facebook Inc., all of which continued to thrive despite business challenges and rising concern from regulators, politicians and others about the technology industry’s power and practices. On average, the four companies saw their revenue rise 28% in the first three months from a year ago.

Revenue from the iPhone, which still accounts for most of Apple’s sales and profit, rose 14% to $38 billion in the quarter, which ended in March. That came despite a modest 3% increase in the number of iPhones shipped, thanks to higher average prices driven by the $1,000 iPhone X launched last year.

Apple further assuaged concerns about its future with a forecast for total revenue in the current quarter of between $51.5 billion and $53.5 billion, which would represent a healthy increase from a year ago.

Meanwhile, Apple said the number of paid subscriptions for services ranging from HBO to Apple Music rose to 270 million in the period, an increase of 100 million people in a year. Revenue from the services business jumped by nearly a third to $9.19 billion, accelerating from the previous quarter.


The combination drove total revenue up 16% to $61.14 billion in the latest period, Apple said. Profit rose 25% to $13.82 billion, its highest level for a March quarter.

“With the services that we have now and others that we are working on, I think that this is just a huge opportunity for us and feel very good about the track that we’re on,” Chief Executive Tim Cook said during a call with analysts.

Apple’s $100 billion share-repurchase plan is the largest ever announced by a U.S. company, according to data from research firm Birinyi Associates. Apple said its board also approved a 16% increase in its quarterly dividend. That put it on track to spend $14.82 billion a year in dividends, making it the largest dividend payer, according to S&P Dow Jones Indices.

Apple already had paid out $275 billion to shareholders through March since it resumed returning capital to them in 2012, including $200 billion in share repurchases.

The increase in Apple’s capital return comes after it announced in January it would bring the majority of its $269 billion in overseas cash holdings back to the U.S. That followed the major U.S. tax overhaul President Donald Trump signed into law late last year, which requires companies to pay a one-time tax of 15.5% on overseas profits held in cash.

Apple didn’t give a timetable for implementing the new buybacks. Luca Maestri, Apple’s chief financial officer, said in an interview that given the size of the planned buybacks “it’s going to take us some time to execute,” but “our plan is to do it at a fast pace.”

Total Return on Investment since May 2003:

Sluggish growth in the number of iPhones shipped over the past six months has fueled investor concerns about the outlook for Apple’s marquee business, as people hold on to smartphones longer and competition from homegrown rivals intensifies in China, once its fastest-growing market.

Apple’s stock has stalled this year, after investors sent its share price up 45% last year on hopes that the feature-rich X model would help recharge growth. The device’s price tag has damped demand, say analysts, who now expect another year of low, single-digit growth in the number of iPhones Apple ships.

Apple shares closed at $169.10 on Tuesday ahead of the earnings report, even as shares in other tech giants including Amazon Inc. have continued to rise. The shares rose more than 3% in after-hours trading.

“The high end of the smartphone market where Apple is dominant is very mature,” said Arif Karim, a senior investment analyst at Ensemble Capital Management, a Burlingame, Calif., wealth manager that counts Apple among its largest holdings. He said the huge shipment increases the iPhone once enjoyed are “dead.”

The price tag for the iPhone X, though, has counteracted that.

Apple’s revenue forecast of between $51.5 billion and $53.5 billion for the current quarter is on track with analysts’ recent consensus estimate of $51.9 billion, a number that has fallen in recent weeks as Apple suppliers such as Broadcom Inc. and Taiwan Semiconductor Manufacturing Co. warned of slowing smartphone sales world-wide.

Growth in China, which cratered in 2016 after soaring the year before, continued to accelerate. Sales in Greater China, which includes Hong Kong and Taiwan, rose 21% to $13 billion.

Mr. Cook played down concerns about recent trade tensions between the U.S. and China, saying he was optimistic that the U.S. and China can find a way that both can win economically and grow the global pie, “not just allocate it differently.”

The services business has become one of Apple’s biggest growth engines, with revenue in its last fiscal year rising 23% to $30 billion. Apple aims to lift that number to $50 billion by 2020.

The company has 1.3 billion iPhones and other devices in active use and earns an estimated $30 per device on music subscriptions, app store purchases and other services, according to Morgan Stanley, which expects services to account for about 60% of Apple’s revenue growth over the next five years.

The division that includes Apple’s smartwatches and AirPods wireless earbuds also posted another period of strong gains, with sales rising 38% to $3.95 billion in the period.

“They are reinventing the growth story,” said Daniel Morgan, vice president at Synovus Trust Company, which has $14 billion under management and counts Apple among its largest holdings. “They see the iPhone numbers like everyone else does and know they have to grow other aspects of their business.”


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Author: Tripp Mickle
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