back to article Apple and The Notched One: It can't hide the X-sized iPhone let-down

For experienced Apple watchers, the arrival of John Gruber on the scene indicates Apple may have a problem. Perhaps a fire needs to be put out. Now where might that fire be? "There's no other way to explain it than that iPhone X is a hit," Gruber proclaimed last night on his popular blog. Ah, the $999 phone with the very …

  1. Thomas Wolf

    nonsense post

    "...anecdote that the X was the best-selling iPhone throughout March" - he didn't say that. He said, on at least 2 occasions during the call, that the iPhone X was the best selling iPhone every single week this quarter - not just March! And that followed the iPhone X being the best selling iPhone last quarter.

    So, yes, the iPhone X was the primary driver of higher ASPs - your weak analysis not withstanding.

    1. Anonymous Coward
      Anonymous Coward

      Re: nonsense post

      So, yes, the iPhone X was the primary driver of higher ASPs - your weak analysis not withstanding.

      Your conclusion is an invalid as the article's, since none of us can present any official model by model break down, nor the ASP. To say that the X was the biggest selling model doesn't say much, since Apple have now segmented the market such that they've got the SE, 6, 6+, 7, 7+ 8 and 8+. Rightly or wrongly, it seems apparent from market analysis for the last quarter of 2017 that Apple regard the Plus models as entirely separate from the base model. Which means that the X doesn't have to sell in any great volume to be the biggest seller, and that further more, all that needed to happen to make the X the biggest seller was about 10% more buyers considering variants of the 8 opted for the 8+. That wouldn't be the case for substitution between 6 and 6+ or 7 and 7+.

      So what can we infer? Well, I suspect that Cook personally needs the X to succeed, and based on sales data for 4Q17 careful management of incentives between 8 and 8+ (probably through network operators, to disguise it) would have been sufficient to ensure that the claim about the X being the best selling phone was true. A quick look (after making this prediction) at 02 pricing shows that contract handsets have as little as £4 a month difference between 8 and 8+, whereas the 7 and 7+ have a £12 a month difference. Those differences are not consistent with Apple's own sim-free prices, so I think that supports my theory that careful and deliberate sales strategy has ensured that through 1Q18, 8 and 8+ sales were more evenly divided than in 4Q17, and Cook was able to make the statement that he did.

      Doesn't reek of success if you're incentivising prospective buyers of product A to buy product B, simple to ensure that product A sales are reduced to make product C sound more successful.

      1. Thomas Wolf

        Re: nonsense post

        "Your conclusion is an invalid as the article's, since none of us can present any official model by model break down, nor the ASP." I don't see why a model by model breakdown is necessary. The ASP went from $655 to $728. Clearly, the SE, 6, 6+, 7 (at least in base configurations) won't be major drivers behind that increased ASP since their prices don't even reach the old ASP and don't sell in huge volumes. At $669, the 7+ is right around the old ASP. So that leaves the 8, 8+, and X to have raised the ASP. According to Cook, X+ was the best seller each and every week of the quarter. It's also the most expensive phone. So it seems obvious that it contributed the most to the rise in ASP (assuming an equal distribution of base model vs. higher specced versions across the 3 models).

        1. Anonymous Coward
          Anonymous Coward

          Re: nonsense post

          So it seems obvious that it contributed the most to the rise in ASP (assuming an equal distribution of base model vs. higher specced versions across the 3 models).

          You can't rely on list prices, because Actual Selling Price is murky and variable. So (for example) if all else were equal you could increase the average selling price by increasing wholesale prices of cheaper phones to the network operators. And that wouldn't affect the retail pricing seen by the public.

          I'm not suggesting that is the case, merely illustrating that there's other factors, and your claim that it "woz the iPhone X that won it" might even be true, but it certainly can't be deduced from the available data.

          1. Anonymous Coward
            Anonymous Coward

            Re: nonsense post

            Actually with Apple iPhones at least you'll find remarkably little discounting except at model run-out time. So the SE has been discounted of late leading to speculation that a new version of the SE is due for release.

            So the analysis is approximately correct - it almost has to be the sales of the iPhone X driving the results unless the various 8 models are out-performing even more.

        2. Lord Elpuss Silver badge

          Re: nonsense post

          ”I don't see why a model by model breakdown is necessary. The ASP went from $655 to $728. Clearly, the SE, 6, 6+, 7 (at least in base configurations) won't be major drivers behind that increased ASP since their prices don't even reach the old ASP and don't sell in huge volumes. ”

          Only the base models sell for under the quoted ASP. Up the memory to 128/256GB, and it becomes perfectly plausible that 7/7+ and 8/8+ become drivers of higher ASPs.

        3. fuzzie

          Re: nonsense post

          Depends on the definition of "best", i.e. by largest number of units sold or by largest profit margin? The inflated margins of the X should then handily keep it abreast of the pack on the latter meaning.

          1. lglethal Silver badge
            Go

            Re: nonsense post

            @ Fuzzie - Was just thinking the same thing, its not mentioned in the article but what characterises best seller? Quantity of phones sold? or Profit from phones sold?

            Considering that the Iphone X is not that much different to the others, I would guess a lot of carry over, so X should have VERY good profits. Makes it easier to be the best in that regard....

  2. big_D Silver badge

    Grew revenue...

    Unit sales were flat, but they grow revenue by double digits...

    In other words, "bend over and open wide Fanboi!"

    For investors, great news.

    For Apple customers, not so great. They saw you coming.

    1. Dave 126 Silver badge

      Re: Grew revenue...

      I've never quite grokked this concept of people with little expendable income giving financial advice to - or at least judging the spending habits of - people with lots of expendable income.

      1. AMBxx Silver badge
        Unhappy

        Re: Grew revenue...

        When there's an article about Android phones, he probably rants about how crap and insecure the OS is.

        I just miss my Windows phone (don't want walled garden, don't like my current Android, don't seem to have any other options). The market really needs some serious competition, but MS blew it.

        1. Anonymous Coward
          Anonymous Coward

          Re: Grew revenue...

          " (don't want walled garden, don't like my current Android, don't seem to have any other options). "

          SHOCKING REVELATION. NOT ALL ANDROID PHONES ARE THE SAME. whilst iOS and Windows Phone were the same thing over and over, there is A LOT of variation in Android, not just price point , but specs, features, design decisions.

          What you don't like is a particular manufacturers implementation of Android, that is very different from not liking Android.

          Try out a Pixel2 and it's a million miles away from a Samsung S9... (and better IMHO)

          1. JohnFen

            Re: Grew revenue...

            "Try out a Pixel2 and it's a million miles away from a Samsung S9... (and better IMHO)"

            The Pixel 2 is pretty much just Google's version of the X -- seriously overpriced, without offering much value for the premium.

            That said, your point about the large range of choices in the Android world is correct.

          2. fidodogbreath

            Re: Grew revenue...

            SHOCKING REVELATION. NOT ALL ANDROID PHONES ARE THE SAME.

            No, but they all share the common purpose of sending mass quantities of your personal data to Google.

            But yeah, they have various processors, screen sizes, and skins. So, vive la difference.

        2. big_D Silver badge

          Re: Grew revenue...

          @AMBxx no, it is the fact that a lot of Apple customers go on about how well the company is doing, how it is making all the profit in the industry, without seeming to realise that it means they have spent over the odds on their iPhones, Macs or whatever.

          1. Anonymous Coward
            Anonymous Coward

            Re: Grew revenue...

            without seeming to realise that it means they have spent over the odds on their iPhones, Macs or whatever.

            I'm not one of the many then. For me it's actually hard numbers, but some of them do indeed originate in the soft factors such as time wasted f*cking around to get things to work. If I take my hourly rate and apply it to the time Apple gear saved me (various factors, not just security update time waste) I can only conclude it's been worth it, also because I can get what goes for service anywhere in the world.

            That said,

            (a) that selectively applies - you won't catch me buying the iPhone X any time soon (just bought an 8 instead);

            (b) their marketing & design people seem to be on a slide towards Microsoft, abandoning good functionality for crap that doesn't aid the usability that made Apple a good buy in the first place.

            Not all of us are fan club members, sometimes it comes down to good old TCO over 3 years (and a desire to actually get on with work instead of having to fiddle or fighting extra installed crapware).

            1. paulll

              Re: Grew revenue...

              Kubuntu on a commodity laptop (Dell(I was young and naive; Good price on a touchscreen wooed me)). 1/3 of the price of the cheapest macbook, been running around 3 years. Time spent,"fucking around to get things to work," ... well. I seem to recall A2DP was a bit of a faff-but I was fairly drunk and it's hardly a productivity issue either way. And even besides that I can't say zero. But very little. (anecdote for anecdote).

      2. el kabong

        People with "lots of" expendable income DO NOT fly cattle class

        Someone spends heavily on apple's shit but then flies cattle class in the cheapest crappiest airline that Orbitz, Kayak, Google, or siri can find them.

        High expendable income my ass, they are mere pitiful wannabes. Laughable wannabes.

        Carrying a stupid phone everyone you go and being proud of it does not make you rich, it only makes you stupid. So, Dave 126, take the financial advice, you really need it.

      3. Sam Haine

        Re: Grew revenue...

        The Fake Steve Jobs blog used often to portray Jobs making fun of people less financially successful than him telling him how to run Apple.

        1. el kabong

          The fake one might do that but not the real one

          The fake high expendable income fanbois we see everywhere, they believe the expensive apple shit they carry with them everywhere makes it look like they are rich when in fact it only makes them look like the stupid wannabes they really are.

          1. JohnFen

            Re: The fake one might do that but not the real one

            There's more than a little truth to that. I've known a number of seriously wealthy people in my lifetime, and there's a few things they have in common. Two of which are -- they are frugal and don't go in for showy things (unless they're putting on a show for business purposes).

            As one of them told me -- you don't get rich by having a large income. You get rich by keeping your expenses well below whatever your income is.

            1. 0laf

              Re: The fake one might do that but not the real one

              I can echo. The most wealthy people I've ever known were also the tightest and would fight tooth and nail over coppers.

              The most profligate were often the poorest because they had no real concept of money.

          2. Lord Elpuss Silver badge

            Re: The fake one might do that but not the real one

            @ el kabong

            Gee, somebody’s pissed they can’t afford an iPhone.

            Ask your mum - maybe she’ll let you borrow hers.

      4. JLV
        Happy

        Re: Grew revenue...

        >people with lots of expendable income.

        or debt.

        Face it, the demographic of iPhone buyers ain't quite as exclusive as you think. You're sharing the limelight with lotsa barristas and twenty-somethings on fairly menial jobs. True with top end Samsung/Pixel gear too.

    2. fidodogbreath

      Re: Grew revenue...

      In other words, "bend over and open wide Fanboi!"

      market economy n. An economy that operates by voluntary exchange in a free market and is not planned or controlled by a central authority; a capitalistic economy. Free Dictionary

      Apple sells a product that people want, for a price that they are willing to pay. In so doing, they make a shit-ton of money.

      Those do not agree with their value proposition are free to choose from numerous competing products.

      These are features of capitalism, not bugs...

  3. macjules

    Watch out .. there's a Gruber about

    When Gruber's about, Apple probably has a problem of some kind

    Nothing like using a Fanboi to shout down any dissent about the figures. Gruber also goes on to say,

    Starting to sound like iPhone X sales really are falling short of expectations. You often can’t judge iPhone sales from the perspective of a component maker, because Apple could have switched to another company for the same component. But these flexible OLED displays only come from Samsung. Apple reports earnings for the first calendar quarter on Tuesday.

    But the whole point with Tim Cook's method is that you CAN judge iPhone sales from the perspective of a component maker, If you are not warehousing stock or components and if you are buying flexible OLED panels from Samsung then it stands to reason that Apple's sales are reflected, albeit in part, in Samsung's sales figures.

    1. Anonymous Coward
      Anonymous Coward

      Re: Watch out .. there's a Gruber about

      You might also like to note that lack of sales of OLED screens did NOT drive Samsung's announced profit drop for that sector. Whether or not it can be trusted may be an issue, but Samsung themselves say that numbers were great but additional competition from other manufacturers and other technologies was the underlying issue.

      You may be generalizing from a data point that has already been plausibly shown to have been wrong. If Samsung's OLED sales volume isn't down, what other evidence other than the inventory build (which is not necessarily inventory of iPhone X's though it could be) do you have that the iPhone X is not selling well ?

  4. Stuart Halliday

    It's got two choices open to it to keep it's shareholders happy.

    Increase prices again, or launch a new product that it can sell.

    First option seems to be popular with them.

    1. Anonymous Coward
      Anonymous Coward

      They now have a third option, they are funneling tax cuts into buybacks and dividends (as everybody knew they would have done). The smarter ones are those who bought Apple shares, not the iPhone X....

  5. IGnatius T Foobar

    Commoditization is not going to be Apple's friend.

    When a $250 midrange phone works just as well as an iPhone X, and doesn't have an obvious design flaw (the notch) masquerading as a feature, it doesn't bode well for Apple. Fanboism used to be a multiplier for Apple's sales, but at this point it's pretty much the only thing driving their sales at all. Smartphones are now a commodity item; you can buy them at lower prices and they still last 3-5 years.

    1. Anonymous Coward
      Anonymous Coward

      Re: Commoditization is not going to be Apple's friend.

      Smartphones are now a commodity item; you can buy them at lower prices and they still last 3-5 years.

      For you and me, yes. But Apple operate a walled garden, design their own hardware and software, and maintain a tight grip on distribution and pricing, and an iron grip on branding. Fanbois LIKE that, and "brand" can be an enduring way of justifying a higher price in a commodity market for many decades. There's plenty of examples, perhaps the best commodity example is Fairy washing up liquid.

      I don't buy Apple products, but I think the future of Apple is healthily assured for a good few decades - their real problem is not commoditisation as such, but the challenges of continuing growth.

      1. I ain't Spartacus Gold badge

        Re: Commoditization is not going to be Apple's friend.

        I buy iPads. Because I think they're the same price as the premium Android tablets and premium ones are better than cheap ones. If I couldn't afford £400, then I'm sure I could easily live with a £150-£200 ones, but my experience of anything cheaper than that is not good.

        iPhones are way too expensive for me though. Even though the company is paying. I don't particularly like iOS as a phone OS anyway, as my phone is both work and personal. And it doesn't handle that split of 2 email accounts and 2 lots of addresses terribly smoothly. It's surprisingly crap for such a premium product, and no I don't want an integrated mailbox thankyou.

        Top-end Android phones are also over-priced given what you can get for £200. I don't understand why a top end tablet is so much cheaper than a top-end phone. Well I do, it's because they can. But I don't see that situation lasting for long.

        1. doublelayer Silver badge

          Re: Commoditization is not going to be Apple's friend.

          It's worth considering how many iPhones from old generations are still out there being used. The availability of updates results in some people keeping their iPhones longer than they did androids, and I know far more people using iPhones in the 6, 6s, and 7 ranges than I know people using the 8 or x. I can see that being a problem for apple if they keep it up with the expensive high-ends that don't really have a big selling point. Then again, I would expect the same to hold and even stronger with android phones that cost a similarly high amount, because there is now no lock-in reason to keep the people off the $200 phones with similar features. Yet, companies still make them and people must be buying, so what do I know anyway.

  6. Charlie Clark Silver badge

    Currency effects

    The dollar is down enough on major currencies over the last year for this to flatter sales outside the US.

    Still, even if things aren't perfect who wouldn't like to be in their position?

    I still maintain that while Apple still makes fantastic products, it is losing its image as a technological innovator. Time will tell as to how this matters to the markets.

    1. iron Silver badge

      Re: Currency effects

      "technological innovator"

      Hahahahahahahahaha BONK!

      Damn! Laughed my arse off again!

  7. fandom

    So what?

    Let's suppose for a second the iphone X is a flop.

    Really, so what?

    They can afford a vanity project from time to time, and they still sold 52 million phones in a quarter.

  8. Joe Gurman

    Sorry

    Lost you at Hickey’s “profit up ‘just’ 10%” for the quarter line. Are you seriously suggesting there’s bad news in that?

    Let’s even suppose that the totally speculative — Apple would never discuss things like that — numbers for iPhone X sales were wildly overoptimistic. Somehow, no doubt by mistake, by this writer’s thinking, Apple managed to up its net income by 10% in a traditionally slow quarter. Wonder if that has anything to do with its shares opening up when the market as a whole is slumping?

  9. Salestard

    Is that perspective I see vanishing into the distance?

    I don't really like Apple, and regard their products that I use somewhere between unremarkable and really unremarkable (iPhone 6S, iPad Air, and occasionally MacBook Air, all for work porpoises). I get the fanboi thing, I get the ecosystem argument, and hey - nobody forces anyone to buy their electronic tat over and above anyone else's.

    But let's put the X thing into perspective;

    1) it's a phone, product cycle life max 2 years

    2) it's a phone, just a phone... one phone only, Mishter Vashily

    3) Apple were, are, and will remain Effing Big, even if they write-down the entire X inventory

    4) Is it, cosmically speaking, really important that they didn't sell as much as they thought they would?

    Truly, nothing to see here, move along please

    1. Lord Elpuss Silver badge

      Re: Is that perspective I see vanishing into the distance?

      ^ This.

  10. Anonymous Coward
    Anonymous Coward

    Missing S

    "There's no other way to explain it than that iPhone X is a hit,"

    In all seriousness, I have seen with my own eyes the mothballed production lines that were scheduled for production rampup that never happened, and I know first hand how stuffed retail is, just to make the really really bad figures look only bad..

    Nobody asking for clarification on if numbers are sell or sellthru....

  11. Frank N. Stein

    Looking forward to seeing Apple's products for this year and if they will make higher profits based on higher price or selling more iPhones. We'll just have to wait and see.

  12. Dropper

    Sales reflect reality

    First of all I have an iPhone X, because I wanted one.

    But I fully understand why most people don't want one.

    In terms of flaws, I don't really count the "notch" as one of them. It doesn't affect the way I use the phone. I don't watch videos or movies on a 5" screen.

    The first deal-breaking flaw of this phone is its breakability. Dropping glass on the floor usually has one result. I've seen some awesomely expensive cases fully protected by their shatter-prone phones. The cases came through drop tests without a scratch. Unfortunately the same could not be said for their contents. Bottom line, don't drop an iPhone X. You might get away with one or two drops, I even seen it survive drops case-less, but all you're doing is weakening the phone to point where it will shatter.

    The second deal-breaking flaw is that it's overpriced by about $300-$400. No phone should cost more than $600-$700. Carriers offering interest-free loans is just code for the re-introduction of contracts.

    Finally that battery. A good battery will degrade to about 80% efficiency after two years - if you avoid unnecessary re-charging. Conventional wisdom says that it takes about 500 charge cycles for your average battery to reach 80% efficiency. The problem with the iPhone X and phones like it is they can make use of wireless charging, which is harmful to battery life. Unlike wired charging (modern cables place an almost negligible load on a battery at 100% charge), wireless charges continuously hit the phone's battery with charge cycles, speeding up its end of life.

    So to fix problem 1, I won't drop it. Much. To fix problem 2, I got a discount then paid the rest in full. Saving up for a thing you want works. To fix problem 3.. well you can't, but avoiding wireless charging will lengthen the time I need to visit an Apple store to pay for an $80 battery.

    1. Anonymous Coward
      Anonymous Coward

      breakages of glass iPhones

      always protected my phones with (the British company) Tech21 non-newtonian putty based cases, I find that I have never damaged a device. Could be a random data-point?, also quite cheaply priced.

      you could make your own out of custard powder/maize-starch!

    2. Baldrickk

      Conventional wisdom says...

      wrong according to the latest advice.

      Apparently it's best to keep your phone topped up to within 60-80% charge - taking it off when you get to 80% and charging again before it drops below 60%.

      If you do need to charge it fully, then do so, at which point there is no benefit unplugging the charger, so you can just leave it plugged in until you need it.

      Personally though, my phone goes on charge overnight, and then is carried around with me all day, because that's an actually useful use case, as opposed to one that maximises the battery.

  13. Jason Hindle

    I'm not sure what Apple expected from iPhone X sales

    At its price point, it's something of a niche/luxury product. Most people who buy into iOS are going to buy something cheaper. I almost bought one*, because I like to flip/flop between Android and iOS when it comes to my phone. I like both, and the resale value of iPhones is generally better than for Android phones (something always bearing in mind if, like me, you watch your TCO).

    * Got curious and bought a Huawei instead (complete with a set of Bose headphones for pre-ordering, which mitigates the fact the phone will be worth thruppence this time next year).

  14. PaulR79
    Stop

    Faulty memory? No, this never happened

    "Remember the nasty, plasticky "budget" iPhone that burned a $549 hole in your pocket?"

    I don't remember that happening at all. I remember the phone. I remember still being an Android user and buying an Android phone. I also don't remember changing to use dollars in the UK.

    A lot of assumptions from such a short sentence.

  15. I&I

    The “horned one”, surely ?

    i.e. the other way round

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Other stories you might like