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  (Source: Goodfon)
Apple's profit is flat due to higher manufacturing costs

While Apple managed to surpass analysts' profit forecasts for the fiscal 2013 first quarter, the company's stock took a tumble as investors worry over Apple's ability to maintain steady growth with new products.

Apple reported a revenue of $54.5 billion for the quarter ended December 29, 2012, compared to $46.33 billion in the year-ago quarter. The tech giant just missed analyst expectations of $54.73 billion.

Apple also earned a net profit of $13.1 billion ($13.81 a share) compared to $13.1 billion ($13.87 a share) a year ago. Profit clearly remained pretty flat, but it exceeded analysts' expectations of $13.44 a share.

The iDevice maker also noted that it had record iPhone sales for the quarter at 47.8 million (compared to 37 million in the year-ago quarter). It also had an uptick in iPad sales, from 15.4 million in the year ago quarter to 22.9 million in the most recent quarter.

“We’re thrilled with record revenue of over $54 billion and sales of over 75 million iOS devices in a single quarter,” said Tim Cook, Apple’s CEO. “We’re very confident in our product pipeline as we continue to focus on innovation and making the best products in the world.”

While Apple did okay for the quarter, investors are concerned with the company's flat profit due to higher manufacturing costs and also worry whether Apple can keep up its momentum with product popularity. Many new devices are hitting the market at lower prices and offer newer, better features. For instance, the iPad's market share was bested by Google's Nexus 7 tablet in Japan mainly due to cost differences.

Apple's stock has lost nearly 25 percent of its value since September 2012 ($170 billion in market value).

In after-hours trading today, Apple's stock fell over 10 percent.

Looking forward to fiscal 2013 second quarter, Apple expects a revenue of between $41 billion and $43 billion.

Earlier this month, it was reported that Apple had cut iPhone screen and component orders by 50 percent for the first quarter of 2013.

Source: Apple


Comments     Threshold


Flat
By ltcommanderdata on 1/23/2013 8:03:24 PM , Rating: 5
quote:
Apple also earned a net profit of $13.1 billion ($13.81 a share) compared to $13.1 billion ($13.87 a share) a year ago. Profit clearly remained pretty flat, but it exceeded analysts' expectations of $13.44 a share.

I believe the previous fiscal year's quarter had 14 weeks while this fiscal year's had 13 weeks. That means Apple's actually generating 8% more profit per week year over year rather than being flat. I guess that's not enough for analysts.




RE: Flat
By Da W on 1/23/2013 8:37:21 PM , Rating: 5
Market is full of dumb who wished Apple could repeat it's 43% growth from a year ago.


RE: Flat
By Mitch101 on 1/23/2013 9:16:53 PM , Rating: 1
So the iPhone 5 and the iPad mini didnt cause explosive growth and profits?

Maybe the Myans were predicting the demise of Apple?

They have to start innovating again instead of resizing the existing tablet and making the iPhone 5 worse. There are so many people I know with iPhone 4's that say the same thing they feel the iPhone 5 is a step down and are waiting for the iPhone 6 or moving to the Galaxy 3 or Nokia 920. Anyone interested in the iPad mini wants it with a retina screen. Im not sure where the regular iPad can go but incremental update either way its rehashing the same stuff and if its incremental update your probably not upgrading if you already have one. I know a few people who abandoned Apple because they feel they break too easy. And while we might mock Microsoft selling 1 million RT tablets its one million people willing to spend as much as an iPad but not wanting an iPad or even the Mini. Pretty soon you have the real surface tablets arriving. Windows Phone is starting to catch on finally its next to impossible to find someone who doesn’t love their Nokia 920. Heck Ive got an HP Touchpad which I rooted to Cyanogen Mod 4.1 and I like it. I don’t believe many people would be disappointed with a Nexus 7 and saved a few bucks.

Reality is the competition is here the competition is good and the one size fits all of Apple isn’t growing the brand. Android and Microsoft phones and tablets are more versatile and come with many more features and are much more open than Apple and use industry standard cables not special one offs so you can use nearly every micro usb charger and hdmi and standard memory and usb item with an Android and Microsoft product but Apple is taking the $30 USB monster cable approach and losing respect.

Three items I haven’t heard a peep on in ages is MacBook Pro, Apple TV, and whatever OSX is coming. It used to be nobody would shut up about Apple but now you can hear the sound of crickets.

Innovate or die. Rim did the same rehash same product until nobody wanted it.


RE: Flat
By Nortel on 1/23/2013 9:52:20 PM , Rating: 1
So selling 47.8 million phones isn't seen as a good thing?

The only thing worse in the iPhone 5 is the vibration alert being louder. Seriously, it has a larger screen, thinner, lighter, faster, LTE, better cameras, lightning connector and now has google maps and youtube apps. Yes people should be laughing at MS's 1 million RT tablet sales because it is 21.9 million less units vs Apple. We're back to cables now seriously? The lightning cable is fantastic, have you even used one?

desktop/laptop sales are slumping across the board compared to tablets, which have everything people want in a device.


RE: Flat
By retrospooty on 1/23/2013 10:07:42 PM , Rating: 3
Its a good sales # but people see the tide is turning. Apple is getting left behind in the "cool new phone" category. Simply put, there are better phones out there and the dull masses are starting to catch on to the fact.


RE: Flat
By TakinYourPoints on 1/24/2013 1:49:39 AM , Rating: 3
Everything you mention has nothing to do with sales figures.

I could mention things like the iPhone 5 having fastest hardware, best displays, best battery life, best apps, but it doesn't matter.

All that matters is that Apple made the same net profit on hugely increased gross revenue from the prior year, that's it. Their gross margins took a massive hit because the iPhone 5 costs so much more to produce than the iPhone 4S. It happens with most new products, it happened with the iPhone 4 and it'll happen with the iPhone 6. The "S" models are where Apple historically makes their profit.

The iPad though is a different story. iPad Mini sales are cannibalizing iPad sales, and improving margins won't help since they'll throw a retina display in there as soon as they can. Average profit might have taken a permanent hit on the tablet side.


RE: Flat
By EasyC on 1/24/2013 7:34:03 AM , Rating: 2
quote:
I could mention things like the iPhone 5 having fastest hardware, best displays, best battery life, best apps, but it doesn't matter.


You could, but you'd be wrong...


RE: Flat
By retrospooty on 1/24/2013 7:46:08 AM , Rating: 2
Never in his mind... Never. LOL.

Ill give him fastest GPU and best apps by a small margin. It's all the other things its missing entirely that I was referring to.


RE: Flat
By maugrimtr on 1/24/2013 11:24:35 AM , Rating: 2
He lost me at the lightening cable. It's non-standard, expensive to buy, requires adapters to keep using docks and other peripherals (incl. in-car support and other non-replaceables), and the specification is so tightly held that most of the reliant market missed out on Holiday season sales of new products


RE: Flat
By TakinYourPoints on 1/24/2013 3:49:33 PM , Rating: 2
http://www.anandtech.com/show/6330/the-iphone-5-re... http://www.anandtech.com/show/6330/the-iphone-5-re...
http://www.anandtech.com/show/6330/the-iphone-5-re...
http://images.anandtech.com/graphs/graph6330/50475...

Mmmhmm

In any case, it still doesn't matter, they released a phone during their holiday quarter with drastically reduced profit margins than the prior one. The last time they made a major revision to the iPhone it was released during the summer quarter.


RE: Flat
By Cheesew1z69 on 1/24/2013 8:23:49 AM , Rating: 2
=
quote:
I could mention things like the iPhone 5 having fastest hardware, best displays, best battery life, best apps, but it doesn't matter
You do, almost every post...

SQUAWK SQUAWK! POLLY WANT A CRACKER! SQUAWK SQUAWK!


RE: Flat
By maugrimtr on 1/24/2013 11:28:42 AM , Rating: 3
Started laughing when he mentioned the S version of phones being historically the profit makers. You mean the history of one other phone, the 4s? One data point, a trend does not make.


RE: Flat
By retrospooty on 1/24/2013 11:58:14 AM , Rating: 2
LOL... Ya, he's kind of lost in this iMentality, where he needs to prove its the best. Logic and reason seem to go out the window in favor of trying to prove a point at all costs. I think it makes him feel better about his purchases... I dunno. Whatever.


RE: Flat
By Cheesew1z69 on 1/24/2013 3:42:46 PM , Rating: 2
"not an ifan"

but sure defends like one...


RE: Flat
By TakinYourPoints on 1/24/2013 3:44:29 PM , Rating: 2
Its true though. The move to the iPhone 4 was reflected in a drop in profit margins due to new manufacturing process while margins improved with the iPhone 4S. Same happens with any of their other new products.

Hell, the same happens in all sorts of industries, tech in particular, just look at chip fabs when they go to a new process. This isn't rocket science.


RE: Flat
By Nortel on 1/24/2013 4:53:35 PM , Rating: 2
Lol, who was the guy who gave you a vote? There have only been a handful of iPhones and you forgot about the "iPhone 3s".


RE: Flat
By ritualm on 1/23/2013 10:11:12 PM , Rating: 2
Selling 47.8 million phones isn't enough. You must beat the results of the previous quarter or your stock price gets flogged. Apple used to do just that even during a general downturn.

Oh how the mighty has fallen.


RE: Flat
By TakinYourPoints on 1/24/2013 1:37:47 AM , Rating: 1
They thing they didn't "beat" was making newer devices for the same cost as the old one. iPhone sales have been blowing everything out of the water. The old iPhone 4S sold more than the Samsung GS2, GS3, and GN2 combined, and the iPhone 5 is selling even faster. They can't make them fast enough.

It isn't a matter of the market rejecting the iPhone 5, the what happened is that can't make them as cheap as the old iPhone 4S.

New devices, especially ones that are difficult to manufacture = lower profit margins. Simple.

quote:
Apple used to do just that even during a general downturn.


Nope, they've been hit by lower gross margins on new products before. The important difference is that the last time it happened with the iPhone 4 their annual revenue is now what they make in a single quarter.


RE: Flat
By retrospooty on 1/24/2013 7:29:54 AM , Rating: 2
You are also forgetting who buys the phones. Most of them arent sold to users, they are sold to ATT, VZW and Sprint (and many others worldwide). Apple made itself sweetheart deals with the major carriers as it was the best thing around. Deals that keep Sprint 6 years away from being profitable. So the end user gets the phone for the same price, but the carriers were eating the cost. Those sweetheart deals wont be made anymore as the competition has surpassed Apple and the zeitgeist fades.


RE: Flat
By Nortel on 1/24/2013 7:54:19 AM , Rating: 2
Last time I checked, last years quarter they sold 37 million so what are you going on about? Also there was one less week in this quarter. This is all negative spin, eps was fantastic.


RE: Flat
By clayshooter on 1/24/2013 9:17:57 AM , Rating: 2
I know, thats exactly what all the people who reviewed the iPhone 5 on Jimmy Kimmel said about it too. Oh wait, they were actually looking at the 4s.

Sorry, but the game of releasing the same product with a different sticker again and again is catching up to them. Now their idea of innovation is to change the size and call it the "Mini".

Also, you can't compare the Surface sales to iPad sales as RT has only been on the market for 3 months, and Pro is yet to be released...AND.... MS actually allows other manufacturers to make Windows tablets, so all of those sales will need to be tallied some day as well.


RE: Flat
By pixelslave on 1/24/2013 1:09:39 AM , Rating: 3
quote:
Market is full of dumb who wished Apple could repeat it's 43% growth from a year ago.


Sorry, you need to changed "is" to "was". The market WAS full of dumb who wished Apple could repeat it's 43%. Since Apple couldn't, those dumbs are now selling. We need to understand that the reason why Apple's stock went so high was because people expected it to do magic.


RE: Flat
By Mint on 1/24/2013 4:25:45 AM , Rating: 2
That kins of growth was probably expected when people were buying its stock at $700+/share, but at $500/share the lack of huge growth was accepted as reality.

I think this latest drop is due to the drop in margins. That's the whole reason that Apple is worth many times as much as companies who produce similar volumes. Unless you have a huge edge in IP or technology that is difficult to copy, it's very hard to sustain such high margins.

I'm just angry that I set my price to short APPL at $730. At $700 I was looking at put options and thought I'd wait just a little longer, since everyone was talking about $1000/share and I was sure it would get there. I even made my intentions to short APPL clear here on DT. Unfortunately I didn't act...


RE: Flat
By Cheesew1z69 on 1/24/2013 8:29:43 AM , Rating: 2
quote:
since everyone was talking about $1000/share and I was sure it would get there.
Who exactly was talking about this besides a few morons on here?


RE: Flat
By tayb on 1/24/2013 8:43:42 AM , Rating: 3
17% revenue growth.
30% increase in iPhone sales.
48% increase in iPad sales.

I'll watch the market and wait for all the morons to sell and then I'll buy. Those are fantastic numbers that any company should be extremely proud of.


RE: Flat
By FITCamaro on 1/24/2013 8:07:32 AM , Rating: 3
I also fail to see how a company that made over $13 BILLION dollars is somehow weak. This idea that companies must make consistently higher profit year after year needs to stop. That's not how honest business works. You can only increase your profits so much for so long. Eventually everyone that wants your product has one and you're not getting new adopters, just repeat customers.


RE: Flat
By Motoman on 1/24/2013 11:01:28 AM , Rating: 2
quote:
That's not how honest business works.


Irrelevant. We're talking about Apple here.


RE: Flat
By bsd228 on 1/24/2013 5:13:13 PM , Rating: 2
> I also fail to see how a company that made over $13 BILLION dollars is somehow weak.

There's a world of difference between weak and overvalued. Apple is (still) the most highly valued company on earth. 6 months ago it was the most highly valued by over 40% over the next placed (Exxon). This valuation was based on an expectation that they could somehow continue to grow its revenues for years to come. This quarter confirmed long standing criticism that Apple's margins were not sustainable, at least not outside the courtroom.

OTOH, they may rebound well next quarter with these current expenses removed, and get back to profit growth, restarting the debate.


RE: Flat
By Chadder007 on 1/24/2013 9:18:11 AM , Rating: 2
A business can't make money hand over fist forever.


IMHO
By mugiebahar on 1/23/13, Rating: 0
RE: IMHO
By xti on 1/23/2013 9:25:04 PM , Rating: 4
do none of your phones let you make paragraphs!?!?


RE: IMHO
By seamonkey79 on 1/23/2013 9:48:48 PM , Rating: 2
Never mind that what you listed, like having all your media linked together without having to physically be somewhere and having a book downloaded, are platform independent if you use the right tools, it hardly makes iOS anything special. I bought a Nook Color, rooted, installed CM7, and buy books and music from Amazon, books from B&N;, music from Microsoft, watch movies on Netflix, etc. I moved to a new device, to another new device, and now I'm on the third, fourth or fifth (I can't keep track) device and everything is still there just like it was for the Nook. Amazon let's me control where they send the book from the website as well as from each device.

The interconnection being limited to an iOS device would be tied to buying everything through iTunes, not the devices themselves.


RE: IMHO
By jimbojimbo on 1/23/2013 10:33:23 PM , Rating: 2
You can do the same thing with the Kindle app on any of the platforms. What's so special again?


RE: IMHO
By Xplorer4x4 on 1/24/2013 12:33:18 AM , Rating: 2
quote:
rather its just easy to have a single system and everything is interconnected. Music, movies, reading, contacts, games and learning apps for my daughter.

How are things not connected in Android?

quote:
I can buy a book for her while im @ work and have it download on her iPad mini without having to be there.

I can do the same thing with my girlfriends kindle through the play store website. So again how does this make iOS your preference?


Key:
By Wererat on 1/23/2013 11:57:08 PM , Rating: 4
"iPad's market share was bested by Google's Nexus 7 tablet in Japan mainly due to cost differences."

Not long ago, iStuff earned its cost premium (and I'm *not* an Apple fan, at least not since Apple ][ days) with better designs, higher rez, and a superior app base.

I don't think Apple faltered so much as everyone else caught up. Once there's feature parity, Apple can't command a luxury price. They need something nobody else has again, and that's probably not hardware so much as what Apple's always excelled at, namely a new slick way of doing something everyone takes for granted doing the old way.

IMO the next big hurdle is the device itself. We've got great little touch computers in our hands, but now that means we have to spend hours heads-down in a minute screen. Whomever lets me do all that stuff seamlessly while not interrupting real life (and not making me shout at the air like some acid casualty) will own the next wave.




RE: Key:
By Tony Swash on 1/24/2013 11:52:46 AM , Rating: 1
quote:
I don't think Apple faltered so much as everyone else caught up. Once there's feature parity, Apple can't command a luxury price.


That's a common , and no doubt for some reassuring, myth. Read this article from Asymco published today.

http://www.asymco.com/2013/01/24/the-job-the-iphon...

In it Horace Dediu explains that in the latest quarterly report Apple changed how it reports product revenues. In previous quarters the iPhone and iPad were reported including accessory revenues while iPod accessories were reported under “Music” revenues. Because that accessory revenue was not counted in iPhone revenues in this quarter it appeared that revenue per unit went down. The iPhone obtained about $642 revenue/unit in the just reported quarter, that compares slightly lower with last year’s $659/unit. However, the latest quarter is on the new basis. On a re-stated basis, without the extra revenue from accessories, the iPhone “ASP” (Average Selling Price) from a year ago becomes $646 which is almost exactly the same as the current quarter. The iPhone “ASP erosion” therefore goes from 2.6% to only 0.7%.

If you look at the adjusted historical ASP charts adjusted for the accounting change you can see that the iPhone ASP has been essentially flat and the same since 2008.

It appears there is no price erosion of the iPhone.

What has happened is that Apple invested heavily in capital expenditure, almost certainly to retool in the supply chain for the new and demanding manufacturing techniques required when it refreshed 80% of it's product line with new models in the last few months. This growth of capital expenditure by Apple has been tracked and heavily analysed by Horace Dediu for many months over several articles which are well worth reading and which you can find on his site.


RE: Key:
By Wererat on 1/24/2013 12:16:51 PM , Rating: 2
I'm not saying Apple has changed its selling price; it's just that the other guys now have feature parity (with quibbling, and I'm not interested in the quibbling) at an equal or better price. Basically, "roughly rectangular phone thing with apps you press a touchscreen to use, a high-dpi screen, and a variety of sensors" is ubiquitous.

This puts them in a position to either offer something new or drop prices. They haven't yet, but they must. $642, $659, whatever; they're now competing against a $299 Nexus phone (that nobody can buy, admittedly).

Personally I'm off the map on this one; I'm already bored with the whole "app" universe and everyone bipping away at tiny screens. Get on with the direct ocular interface already.


RE: Key:
By retrospooty on 1/24/2013 2:25:19 PM , Rating: 2
Beyond feature parity, there is another thing to note...

http://beta.fool.com/sajkarsan/2013/01/24/apple-ne...

"Apple is now officially growing slower than its market"

In a growing market, Apple is growing slower than the market. RIM's #'s were growing until 2011 as well years past the point where they were "aced"... It takes mainstream consumers time to catch on, but they do... Mac sales are down 21% as well while PC is down 6%.

http://www.theverge.com/2013/1/24/3908926/apples-m...

So in a growing market, Apple is being out-grown, and in a shrinking market Apple is shrinking faster than the market.

As it is now, Apple keeps bumping up the speed, but not really giving anything new as far as features. The last major innovation was the initial iPhone in 2007, and IOS is stagnating... As mentioned, the competition was way behind from 2007 to 2011. Now Android not only caught up, but surpassed Apple in most measures looked at when phone shopping. It is outselling IOS 5 to 1 (and climbing) on phones and is gaining ground on tablets as well. Apple is fine, and Apple will remain highly profitable, but the insane growth period in over... Unless they come out with something new. Regurgitating the old has hit its limit.


Apple disappoints: 2
By Tony Swash on 1/24/13, Rating: 0
RE: Apple disappoints: 2
By Wererat on 1/24/2013 11:05:46 AM , Rating: 3
I think you misunderstand stock. Stock is priced based on prospective valuation; not "how well did you do" but "how well do I think you'll do."

An analogy is sports bets. If I bet that the Lions will lose by 14 or less, and they lose by 10, I win. The Lions still lost, but I get paid. (Ex. I bought some AMD before their earnings call and have made about 14% on that as of this writing in a day and a half, even though they're bleeding money).

Conversely if I think the Ravens will win by 21 or more, and they win by 14, they all get to celebrate and I'm crying in my beer.

Here, people bet (paid for stock) thinking Apple would perform at a certain level; they did less than that, so their stock value drops to match the reality.

Doesn't mean Apple is bad, doomed, or obsolete; but they do need to recognize that the things that made them premium are now offered by everyone, and create something new (or get run over by lower prices).


RE: Apple disappoints: 2
By retrospooty on 1/24/2013 11:20:36 AM , Rating: 4
He doesnt understand anything that doesn't make Apple look like a glowing beacon of the universe. It simply doesnt make sense to him. Either that or it doesnt serve his agenda. ;)


FU(K TONY SWASH
By Crazyeyeskillah on 1/24/2013 9:04:10 AM , Rating: 1
A complete scumbag, I have fun with all your apple stock you prick.




RE: FU(K TONY SWASH
By Tony Swash on 1/24/2013 11:33:14 AM , Rating: 3
quote:
A complete scumbag, I have fun with all your apple stock you prick.


Take a deep breath and calm down. We merely have different opinions about how companies which we don't own, and how products we can choose to buy or not buy, compare and perform. That's all. You are investing way too much emotionally in all this. Why?

BTW here is a hint. If you want to defeat an argument or counter a point made by someone you disagree with it's probably best not to just spout insults like a child and much better to offer a coherently argued counter point. Rational debate with people you disagree with can actually be quite good fun. Give it a try.


RE: FU(K TONY SWASH
By Cheesew1z69 on 1/24/2013 3:44:12 PM , Rating: 2
You and rational, don't go together. Not one iota.


By nangryo on 1/23/2013 9:01:08 PM , Rating: 2
I think those billion dollar spent on lawyer could make the share holder happy.

:)




Really?!
By robinthakur on 1/24/2013 7:22:58 AM , Rating: 2
So...Apple gets flack for using Chinese workforce to produce product cheaply which spooks investors, moves some of its productions to US. When the cost of producing the product goes up, (including several new products with new manufacturing techniques required e.g iPhone5 and iMac) this means slightly less profitability and this also spooks investors. Seriously, with growth numbers like that, the problem here is the weight of expectation. For Apple to be growing its iPhone sales by such an amount is surprising to me given the weight of negativity given to Apple by some elements of the media in the west.




Is Google the New 'Think Different'?
By Chaser on 1/24/2013 2:46:58 AM , Rating: 1
http://www.forbes.com/sites/darcytravlos/2013/01/2...
quote:
Android smartphones are slick. Google Play is a response to iTunes. Chromebooks are ultra-affordable. Apple created the smartphone craze almost six years ago with a look and feel that has remained true to its original design. Although the form factor has evolved, it still sports the same touch screen, rounded-edge square apps, and home button. Have we become so accustomed to the iPhone that, today, Android smartphones, tablets and laptops answer our quest to “Think Different”?




By jpeyton on 1/23/2013 7:48:46 PM , Rating: 3
Actually out of all your scenarios (A) is the most likely. Kantar Worldpanel just released figures that put Android at 75% global smartphone marketshare in Q4. Apple actually had slight declines in their two strongest markets in Q4: USA and UK (but they grew in China to make up for it).

There is one overriding factor that everyone seems to overlook: nobody can compete with Android as long as Google continues to give it away for free (along with a host of other free services). This article sums it up: http://gizmodo.com/5785983/android-may-be-the-grea...


By txDrum on 1/23/2013 8:01:33 PM , Rating: 2
I don't know what causes people to underrate Windows Phone so much. It's a solid OS (coming from android), that brings things to the table that neither of the other two do. I don't think it's perfect, but the argument of being "too late to the party" is silly. RIM and win mobile were as firmly entrenched into the market that the iphone stumbled into as android and iOS are now that WP8 has come into it. I don't think WP8 will have 80% market share in 4 years or anything, but it's a solid, competent competitor.

Also, you're completely missing the point of the article (I believe).

If I sell 100 lollipops at a dollar each, and it takes a dime to make them, I make 90 dollars.

If next year, I sell 115 lollipops at a dollar each, but it takes 20 cents to make them, I'm only making 92 dollars. I've experienced growth (15%), but I'm hardly making any more money. Growth is great for market share, but it means nothing for profits if manufacturing costs offset it.


By TakinYourPoints on 1/23/2013 8:25:24 PM , Rating: 2
quote:
If I sell 100 lollipops at a dollar each, and it takes a dime to make them, I make 90 dollars.

If next year, I sell 115 lollipops at a dollar each, but it takes 20 cents to make them, I'm only making 92 dollars. I've experienced growth (15%), but I'm hardly making any more money. Growth is great for market share, but it means nothing for profits if manufacturing costs offset it.


Ding ding, nailed it.

iPhones cost more to make than the previous model, offsetting how increasingly popular they are. The popularity of the lower profit iPad Mini eating into regular iPad sales is also to blame here. I don't think that'll go away either, not when iPad Minis will eventually double display resolution, keeping its profit margins low.

A massive increase in revenue ($55BN, wtf) with a reduction in margins resulting in the same profits as the prior year is a negative thing.

Looks like they won't be reaping the rewards of the iPhone until the 5S comes out. The exact same thing happened between the iPhone 4 (reduced profits on new hardware) and the iPhone 4S (increased profit on mature product).


By Rukkian on 1/24/2013 11:21:31 AM , Rating: 2
I know I am not alone in my sentiment about Win Phone, and that is that it may well be a very good OS, but it is taking some of the things I hate most about IOS (locking it down, not allowing other app stores, etc) taking about my choice. I don't want somebody to tell me what I can install, from where. I want to be able to do what i want with my device when I want to do it. Due to that, I would probably go to an idevice before MS since they at least have a good app library.


By tayb on 1/23/2013 9:01:11 PM , Rating: 2
quote:
There is one overriding factor that everyone seems to overlook: nobody can compete with Android as long as Google continues to give it away for free (along with a host of other free services).


Rubbish.

First off Android really isn't "free." Each and every Android phone producer writes a check for every Android handset they sell. That's not free.

Secondly, the price of an OS in the smartphone market is beyond irrelevant. All smartphones are the same price at launch and the price is based on the hardware not the software. Neither Apple, RIM, nor Google technically "sell" an OS. In fact the only player out there selling an OS is Microsoft. Are WP8 devices more expensive than Android devices because of that? Nope.

Third, nobody can compete? Apple is competing pretty damn well and if Microsoft didn't have an absolutely moronic mobile strategy they would be competing just fine too. This market is in its infant stage right now. No one has won.


By Mitch101 on 1/23/2013 9:30:05 PM , Rating: 2
A lot of people are going to be quite surprised by how well the Windows Phone especially the Nokia 920/Windows Phone is doing globally despite there being two other established eco systems from Apple and Google.


By Tony Swash on 1/24/2013 11:26:53 AM , Rating: 2
quote:
here is one overriding factor that everyone seems to overlook: nobody can compete with Android as long as Google continues to give it away for free (along with a host of other free services).


I guess that must be why all the Android OEMs bar Samsung don't make any profits and why Apple just delivered in the last year the best annual profit earnings of any company in the history of capitalism.

What's actually so astonishing is that even with Android being given away free, and hence almost all OS development costs removed from their bottom line, the inept and blundering Android OEMs can't even scratch a profit. Only Samsung is a worthy competitor of Apple and even they can't seem to match Apple's performance.


By Dorkyman on 1/23/2013 8:37:21 PM , Rating: 2
But what happens when Apple gets stigmatized as having meh technology? When someone whips out an iPhone5 at lunch and the others at the table think to themselves, "Oh, that's so 2010."

The problem with a faith-based following is that they can turn so quickly. I can remember a time years ago when I worked for Apple and we had great technology yet our stock was trading at 15.


By retrospooty on 1/23/2013 9:05:12 PM , Rating: 2
Bingo... The Zeitgeist apple has had over the past 5 years is fading fast as their products fall further and further behind the competition.


By xype on 1/24/2013 2:29:10 AM , Rating: 2
Where is the iPhone "falling behind the competition", if you care to enlighten me?

CPU/GPU performance? Build quality? Weight? Thickness? Display quality? Software ecosystem?

Or will you pull out screen size and complain that Apple doesn't make a 6.5" iPhone?


By TakinYourPoints on 1/24/2013 4:20:23 AM , Rating: 2
He'll also pull out SD cards and replaceable batteries, things that cannot fit in small chassis, as other "high end" features it is missing.

You know, "high end" features you can get on giveaway trash featurephones at Boost Mobile. ;)


By retrospooty on 1/24/2013 7:15:32 AM , Rating: 3
"Where is the iPhone "falling behind the competition"

- Larger Screens
- Higher resolution screens
- Better Edge to Edge display (no giant Bezel)
- Better OS
- Better UI
- Prettier OS
- Better Notifications
- NFC
- Better Mapping software
- Plays HD content
- Greater than 5x4 icons
- Faster Voice search
- Photo Spere
- Mini HDMI port
- Multi user support (for tablets)
- Multi Window support
- Plug and play as a flash drive to copy files
- Flexibility in OS (Tons of Custom ROM's, etc)
- Flexibility in hardware
- Micro SD card
- Micro USB

Is that enough for you?

@Takin, you are dreaming, if you think these are cheap gimmicks. Maybe a few of them but that is a HUGE list of things missing on a supposed high end phone.


By TakinYourPoints on 1/24/2013 4:01:47 PM , Rating: 2
Some of those are gimmicks, others are simply untrue. Google Maps and Google Voice Search on iOS are actually better than what is on JB right now, but that will obviously close up once those apps eventually get ported over. Other things are BS, things like "plays HD content" (video scalers, do you now understand how they work?). Other things like Photo Sphere have been in iOS apps long before it was on Android, and things like mounting as a flash drive has been available via apps for years.

Most of these features tie into larger chassis, and that is purely personal preference. For every person who likes big phones, there is someone who thinks they are impractical for a portable device. That comes down to personal choice, not objective advantage.

Notice how the Nexus 4 doesn't have replaceable batteries or SD cards, despite being a really good piece of hardware? This isn't a "feature" issue, lots of trash phones can do those things. This is an engineering issue, there simply isn't the room for the mounting for those things. The iPhone is a much smaller device, barely enough room for RAM that is soldered in. Of course a giant phone can continue to have swappable memory or batteries, that's what happens when size isn't a practical constraint and you don't care about portability.

The single thing you're correct on are multi-user support for tablets, that's something iOS has needed for a long time now.


By retrospooty on 1/24/2013 4:14:54 PM , Rating: 2
"The single thing you're correct on are multi-user support for tablets, that's something iOS has needed for a long time now."

You know, I am getting tired of this. You are so full of crap its not even funny anymore. Some of what you said about gimmicks from a certain perspective is true. Let me pair this down to undeniable things your little toy phone is missing. There isnt a damn thing you can say aboout this list, and dont give me any crap about how your little 4 inch scren is better quality than some of the modern 1080p screens with 440+PPI.

- Larger Screens
- Higher resolution screens with better DPI
- Better Edge to Edge display (no giant iBezel)
- Micro SD card
- Removable batteries
- NFC
- Mini HDMI port
- Better Notifications
- Widgets
- Live wallpaper
- Multi user support
- Multi Window support
- Flexibility in OS (Tons of Custom ROM's, etc)
- Flexibility in hardware (qwerty models, waterproof models, removable batteries, larger models, smaller models, high end models, mid range models, cheap models)
- Micro USB (Like every other phone made by every other manufacturer on planet Earth for the past four years, except of course, Apple)


By TakinYourPoints on 1/24/2013 4:26:18 PM , Rating: 2
quote:
You know, I am getting tired of this.


Good.

quote:
Snip from retro's copypasta txt file


Still a bunch of gimmicks and things you only get from big phones, and not everyone wants a big phone. The Nexus 4 is missing user replaceable parts because of its size and people still love it. Hell, my KINDLE dropped user replaceable parts years ago and was improved by it. Other things like mini-HDMI, whatever, that's what Miracast and AirPlay are for. Get with the times!

For someone who talks a lot about "choice" you certainly seem to think that "comically huge" is the only way people should go.

I always frame it like "if you want a big device and are fine with the negatives they come with (slower hardware, inferior third party apps, inferior support), there are some good ones out there and you should go buy them". I don't care for the GS3 at all, the screen sucks, but the Droid DNA is a super nice piece of kit. I wouldn't hesitate for a moment to recommend it to someone who wants a big Android phone.

You seem to think there is only one way to go, and it doesn't revolve around applications, battery life, or performance, just chassis size.

Get out of that mentality, not everyone wants the same thing. Its all about choices, right?


By retrospooty on 1/24/2013 4:32:44 PM , Rating: 2
I agree its about choices. Its just that there are alot better choices available on android these days. And no its not all about size, its also better res, higher DPI etc. I can say the same right back at you. the few things the iPhone does well arent all that matters to everyone... Choices.


By TakinYourPoints on 1/24/2013 4:49:25 PM , Rating: 2
Higher DPI once you get past 300 (250 really) is a questionable improvement. You already cannot distinguish individual pixels in those cases, except now with 440 PPI you're putting an even bigger strain on the GPU hardware to render things smoothly. That's something 4.1 still has issues with compared to iOS and WP7/8. Increasing pixel count for no practical gain is not an advantage.

And again, I've said repeatedly that the things the iPhone does well (performance, apps, polish, support, battery life) aren't for everyone. If you want bigger screens, keyboards, removable batteries, sideloading, and tinkering with your homescreen, then Android is clearly the choice for you. I've never said otherwise.

Hell, I've recommended Windows Phone for years, long before it became "cool" to do so with the newer Nokia devices. I think in many ways it has the best mobile UI out there, and the only thing holding back applications are the number of users it has. Its SDK is better than anything else out there.


By menting on 1/24/2013 8:23:24 AM , Rating: 2
everything you that you mentioned except for the GPU portion, the iPhone is falling behind the competition.


By retrospooty on 1/24/2013 9:24:05 AM , Rating: 2
Yup... It does have the best GPU in the industry... Too bad it does no good on anything but games, and phones/tablets absolutely suck for gaming.

Overall, I do say this about the iPhone, it has a very impressive speed/size/battery ratio. For a device that fast and that thin, the battery life is fantastic... Slightly better app support as well. Unfortunately it lacks everywhere else.


By TakinYourPoints on 1/24/2013 1:42:17 AM , Rating: 2
But it hasn't really turned, they sell more than ever as quickly as they can make them. It costs a hell of a lot more to make an iPhone 5 than it does an iPhone 4S, that's the real difference here. Their quarterly revenue exceeds what they made in an entire year just three years ago, but when margins on new process then obviously net profits are going to be hit.

Similar things happen when Intel or AMD switch over to a new process, it is inevitable, and the "tock" revision is where they reap the benefits. Same thing happened between the iPhone 4 and the 4S.


By retrospooty on 1/23/2013 9:09:17 PM , Rating: 2
Feel better now? You got your spin out. Did you have it pre typed out or did you just type it out after the news broke?

LOL... You are so transparent.


By RobW74 on 1/24/2013 1:59:32 AM , Rating: 2
Blah, blah, ridiculous spin, blah, blah, more boring stuff, blah, blah.

Tell us what we really want to know. How does it feel now that 34% of your paper wealth in this company has evaporated in about 4 months?

That _was_ you bragging about buying this stock for a few bucks back in the 90's wasn't it? If you enjoyed crowing about your profits these past 4 years, please do update us on your position these past 4 months.

And please spare us your usual smug deflections, e.g. "Don't know what you're talking about--I'm still up >100x since June 1997. --sent from my iPad in bed, while rolling in 34% less Benjamins."


By beefgyorki on 1/24/2013 2:44:54 PM , Rating: 1
Without a shadow of a doubt it will be A, unless Apple is able to make some radical tech advances over the next couple of years.

Apple won't be able to command the prices they do if they continue to lag behind feature wise and they sure as hell cant expect to capture much of the emerging markets with such a high price. So either they are going to be satisfied with a 10-15% market share or they are going to have to have deep cuts into margins in order to compete. Either way continued growth on the phone side is doubtful.

Tablets are another story, the question that will get answered over the next couple of years is if Tablets truly can become PC replacements or if Hybrid Laptop/Tablets will supplant them instead. To me that's too early to call and definitely too early to rule Microsoft out.


Apple disappoints
By Tony Swash on 1/24/13, Rating: -1
RE: Apple disappoints
By retrospooty on 1/24/2013 7:22:02 AM , Rating: 2
Wow. 4 separate threads you started in this one article. You must really be upset to put your spin engine into overdrive like this.

Meanwhile back on Earth, Apple is fine. THey made plenty money are are insanely profitable. The only difference is the growth curve is over. The competition has batter products out and smart buyers are starting to relize that.

There is more than plenty of time for Apple to go back and innovate and come out with better phones, they just need to DO it.


RE: Apple disappoints
By Dorkyman on 1/24/2013 2:47:08 PM , Rating: 1
"largest in human history..."

Bullpucky. Why not take off the rainbow glasses for a minute and think about what you said. Consider that one dollar today is worth far less than one dollar a hundred years ago.

That's right, there's something called "inflation." Comparing historical numbers without considering inflation is a worthless exercise.

Top of my head, I'd say the Dutch East India company from a couple of centuries ago was BY FAR the most powerful, most profitable company (in inflation-adjusted currency) than any company today. Probably by at least one order of magnitude.


Hey DT, how about some non-AAPL coverage?
By DukeN on 1/24/13, Rating: -1
"Game reviewers fought each other to write the most glowing coverage possible for the powerhouse Sony, MS systems. Reviewers flipped coins to see who would review the Nintendo Wii. The losers got stuck with the job." -- Andy Marken











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