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Apple Profit Falls 22% But iPhone Sales Are Up

Unknown Lamer posted about a year ago | from the everyone-needs-five-iphones dept.

Businesses 251

New submitter marcushoward writes in with news of Apple's quarterly results. From the article: "Apple on Tuesday reported fiscal third-quarter revenues of $35.3 billion and profits of $6.9 billion, or $7.47 per share. The revenue number is basically even with Apple’s results from a year ago, but its profits were off by almost $2 billion. Revenues were mostly in line with Wall Street’s expectations of $35.09 billion and slightly above its earnings per share expectation of around $7.31. Apple itself had predicted revenues between $33.5 billion and $35.5 billion." Compared to this quarter last year, sales of Macs are about even, iPad sales dipped slightly (14.6 million vs 16 million), and iPhone sales are up quite a bit (31 million vs 26 million).

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Cynic...? (1, Flamebait)

Chrisq (894406) | about a year ago | (#44369925)

Apple (headline) profits fall, just as they are being asked to pay tax.

Re:Cynic...? (1)

MrHanky (141717) | about a year ago | (#44369973)

Sales are down, for everything except the iPhone. Not cynic, just stupid.

Re:Cynic...? (0)

Anonymous Coward | about a year ago | (#44370085)

Except none of the drops were close to 20%, and the iPhone is the serious profit driver for Apple and the iPhone was quite a bit higher. Sounds like the problem is weak app sales.

Re:Cynic...? (2, Insightful)

Anonymous Coward | about a year ago | (#44370293)

Yes, you will have things like the weaker app market, however Apple is offering iPhones going back to the iPhone 4 yet which is free on contract. So while Apple still gets paid for that phone the amount they are making from the sales of the iPhone 4 and iPhone 4S to the carriers is likely significantly less than the iPhone 5.

I'd suspect a lot of the increase in iPhone sales likely came on the lower profit margins for the iPhone 4 and 4S which would work to eat in to the overall profit of the company. Still they are making a decent margin and plenty of money, many companies would love either the nearly 20% margin or nearly 7 Billion in profits.

Re:Cynic...? (2, Funny)

cod3r_ (2031620) | about a year ago | (#44370033)

boo hoo.. Only made 6.9 BILLION in PROFIT... the headline should be "HOLY FUCKING SHIT THEY MADE 6.9 BILLION IN PROFIT"

Re:Cynic...? (5, Insightful)

mmcxii (1707574) | about a year ago | (#44370263)

While this article was brought to Slashdot for flame war fodder there is another reason this is news elsewhere. What it comes down to is that businesses, regardless of actual profit, are largely looked on as weak by investors if they're not showing growth.

I'm not one of these people who beat on the idea of capitalism but I do see it as a failing of the perception in that endless growth just isn't possible in the long term. Sadly it's endless growth that drives a majority of today's investors. Most of today's investors don't see their dollars as a building block to better companies with long term goals and good public relations, they see their dollars are something they need to "flip" fast to make it worth their time. That's been a failing of the Wall Street economy for several decades and it only gets worse as time trods on.

Apple will take a hit because of this. It's not because they're technology is weak but because there is enough competition in their field that push investment dollars to the short term gains. And this isn't to say other players in the field aren't really offering anything but their long term outlook is secondary to what they'll offer up in the next quarter or two. Apple hasn't planted itself well enough as a long term solutions company to keep the market interested like IBM, Oracle and Microsoft did. They'll survive and maybe make a bigger comeback some day but they will have to suffer through this lull like every other market leader has to from time to time.

Re:Cynic...? (2)

Xaedalus (1192463) | about a year ago | (#44370317)

This is a very good observation. Wish I had mod points. I've seen the same thing with Tech companies in general: if you're not growing q/q then you're "dying" in the eyes of the investment analysts. So even though your company may be stable and have good market share, and has managed to stay afloat, if you're not growing then they're taking their money elsewhere.

Re:Cynic...? (1)

i_ate_god (899684) | about a year ago | (#44370767)

Why does Apple need their money in the first place? Doesn't it have a problem with having too much cash as it is?

Re:Cynic...? (1)

datavirtue (1104259) | about a year ago | (#44370443)

I agree, for those who have held Apple for a significant period this will trigger profit taking.

Re:Cynic...? (2)

rockout (1039072) | about a year ago | (#44370549)

Yeah, profit takers are going to dump the stock. Apple's up 6% this morning. Hey, can you manage my portfolio? I feel like losing a lot of money day trading, and you sound like the guy to do it for me.

Re:Cynic...? (1)

Time_Ngler (564671) | about a year ago | (#44370765)

The endless growth isn't possible in the long term meme is kind of silly. A company that is growing often does so by cannibalizing sales from other companies, which means its becoming dominant in its space. So while it's growing, other companies are shrinking. A company that is beating its competition, or is about to beat it, is far more valuable than a similar company (in size and profits) that is losing to its competition.

Re:Cynic...? (1)

easyTree (1042254) | about a year ago | (#44370527)

One step closer to a reality where everywhere i look someone isn't attempting to incite me to buy or win an iPad.

Re:Cynic...? (1)

nojayuk (567177) | about a year ago | (#44370751)

Google announced their quarterly figures last Thursday, profits up 19%. Yay! Except the haruspexers in the financial press were expecting more and the share price fell off a cliff, down about 4% on opening Friday morning. Same with MS last week, bottom-line numbers up quarter-on-quarter and year-on-year but the share price tanked although only to about the level that it had been a few months ago.

Re:Cynic...? (0)

Anonymous Coward | about a year ago | (#44370089)

Dopey, profits are evil! Software/Computer people are the greediest as well.

Re:Cynic...? (5, Informative)

sribe (304414) | about a year ago | (#44370111)

Apple (headline) profits fall, just as they are being asked to pay tax.

During the depths of the recession they were able to negotiate really sweet deals on their huge purchases of components. Those contracts expired, and they're now having to pay more, but they certainly can't raise prices. Of course they explained all this and warned investors of the coming drop in margins about a year ago, but much easier for the irrational Apple-haters to ignore the perfectly sensible explanation from Apple itself, and start looking for strange conspiracies instead...

Re:Cynic...? (4, Funny)

the_B0fh (208483) | about a year ago | (#44370125)

It's more like this:

Everyone else is losing money. Apple makes $6.9 billion. Die, Apple, Die!

Re:Cynic...? (1)

TWiTfan (2887093) | about a year ago | (#44370215)

I'm pretty sure Samsung made a few bucks too.

Re:Cynic...? (4, Insightful)

Anubis IV (1279820) | about a year ago | (#44370525)

In addition to that, their product lineup has changed since a year ago. The iPhone 5 has significantly lower margins due to the higher cost of manufacturing than the iPhone 4S that it replaced, and the iPad mini, which they introduced to fend off competing small form factor tablets, has lower margins than its big brother. As you said, they've been advising investors right from the start that this would be happening.

On top of that, the retina iPads were still recent in the year-ago quarter, so it's actually pretty astounding that sales were even as good as they were this quarter, considering that they haven't had a major product releases in any of their product lines (other than MacBook Air) for a number of months now. Typically they space product releases throughout the year, but they've acknowledged that they're going to have a packed autumn this year, which could work out for them since they'll likely have a number of new product releases going into the holiday season.

Margin compression (3, Insightful)

benjfowler (239527) | about a year ago | (#44369951)

The industry analysts and pundits have been predicting this for ages: that while Apple led for ages, and reaped windfall profits as a consequence, there would be a stampede into the smartphone market, and Google would barge in, turn smartphones into a commodity, and crush Apple's margins. This is not a surprise. Happens in markets all the time, and had previously happened in the PC market, where nowadays, it's impossible to make serious money on PC hardware, and the only people selling parts are people happy to sell huge volumes on razor-thin margins.

What's interesting about this story, at least for me, is that iPad sales have tanked. Maybe that suggests that Android on tablets has matured somewhat from the early days of few, clunky tablet apps, and that tablets are commodities now too.

Re:Margin compression (0)

Anonymous Coward | about a year ago | (#44369997)

What's interesting about this story, at least for me, is that iPad sales have tanked. Maybe that suggests that Android on tablets has matured somewhat from the early days of few, clunky tablet apps, and that tablets are commodities now too.

What it says to me is that Apple's most innovative tablet was the Retina Ipad, and that is over a year old so anyone who wants one has one. Since then, they haven't innovated (just like the Iphone 5 was barely distinguishable from the iPhone 4). This is what happens when you take a year off. Across the industry, smartphone sales are ballooning (and Apples share is shrinking) and tablet sales are leveling off, meaning anyone selling a product that's a year old is not going to do well at all.

Re:Margin compression (2, Funny)

the computer guy nex (916959) | about a year ago | (#44370119)

What plane do you live on? The iPhone 5 was barely distinguishable from the 4? It had a larger screen, replace glass with an aluminum unibody shell, removed the metal band around the edges, and introduced a 2-toned color look to the back. Only a buffoon can't spot these differences a mile away.

Re:Margin compression (0)

Anonymous Coward | about a year ago | (#44370245)

What plane do you live on? The iPhone 5 was barely distinguishable from the 4? It had a larger screen, replace glass with an aluminum unibody shell, removed the metal band around the edges, and introduced a 2-toned color look to the back. Only a buffoon can't spot these differences a mile away.

Yet, Samsung phones look like both of them.

Re:Margin compression (0)

Anonymous Coward | about a year ago | (#44370309)

What plane do you live on? The iPhone 5 was barely distinguishable from the 4? It had a larger screen, replace glass with an aluminum unibody shell, removed the metal band around the edges, and introduced a 2-toned color look to the back. Only a buffoon can't spot these differences a mile away.

Golf clap. You are either a very clever troll or a complete apple shill, and you are so subtle about it that I can't tell which.

In case you are being serious, the screen is the one "innovation" that might matter to users, and they changed it by making it about a third of an inch bigger in _one_ direction while other handset makers are offering a range of sizes to suit any need. Its really no wonder they are being outsold 2:1 in the market that "apple invented".

Re:Margin compression (1)

Arrepiadd (688829) | about a year ago | (#44370353)

What plane do you live on? The iPhone 5 was barely distinguishable from the 4? (...) Only a buffoon can't spot these differences a mile away.

Not the AC that wrote the text, but I want to contribute anyway. I'm by no means an ignorant when it comes to phones and stuff, but I'm not following the checking all the pics and following all the news on new phones. I guess I would call myself average on this field.

With that said until you described the differences (which I may now use to recognize it), the only way I knew to distinguish both was based on the connector. Small on the 5, big on everything else.

Re:Margin compression (1)

Arrepiadd (688829) | about a year ago | (#44370477)

Replying to myself... always nice! At least it's for a clarification about the state of the world when it comes to iPhones.

I knew, unlike what my previous comment indicates, the differences in the size of the screen. But, quite frankly, they seem minute enough that I can't distinguish them unless they are next to each other. Individually, I can't spot the screen differences (once again, I haven't had enough time with either to figure that out).

Re:Margin compression (1)

Anonymous Coward | about a year ago | (#44370537)

And yet people buy them hand over fist. More than any previous iphone model, just like with all previous releases.

You say "barely distinguishable" like it's a bad thing. Perhaps a lot of people LIKE that the iphone 5 is mostly like the 4, only better.

All of your apps carry over. All of your music. Settings. Email accounts. Messages. Everything. All of that built in, by design. The UI isn't radically different, and works the same way it did on your old phone.

None of the above can be said for android. UI's aren't even consistent between devices in a single manufacturer.

That said, I don't hate andriod. I own several android devices (Two tablets, pc on a stick.) But I don't think I'm going to move away from the iphone simply because it's the one device I don't have to fuck with constantly. It just works. All the time. At work, in my car, at home, on the road (cycling). And you know what? When I upgrade from this 4 to the soon-to-be-released 5s, that will work too. I won't have to do a fucking thing other than log in and let my cloud backup synch to my new phone.

Re:Margin compression (2, Insightful)

earlzdotnet (2788729) | about a year ago | (#44370011)

What's interesting about this story, at least for me, is that iPad sales have tanked. Maybe that suggests that Android on tablets has matured somewhat from the early days of few, clunky tablet apps, and that tablets are commodities now too.

No, it rather means that people are finally understanding that a tablet is a novelty. The only time I hear someone talking about how great their iPad (or other tablet) is when they are talking about how much their (less than 10 year old) kid enjoys it

Re:Margin compression (3, Insightful)

poetmatt (793785) | about a year ago | (#44370061)

tablet's are a partial novelty, but they do have a specific function; they replace the need for portable computing (notebooks, laptops, etc). To think that it's just some toy people purchase is extremely ignorant of the usage.

Re:Margin compression (3, Insightful)

Nadaka (224565) | about a year ago | (#44370139)

Its not a replacement for portable computing... Its a replacement for portable netflix, web browsing, and stupid little kiddie games/apps.

Re:Margin compression (4, Interesting)

Anonymous Coward | about a year ago | (#44370289)

Its a replacement for portable netflix, web browsing, and stupid little kiddie games/apps.

That IS portable computing for the majority

Re:Margin compression (2)

Archangel Michael (180766) | about a year ago | (#44370379)

Tablets are Entertainment Consumption devices. Reading, Music, playing games, surfing the internet, youtube etc etc etc.

They pretty much suck as content creation devices. You can create using them, but if your business is creation of content, you're not going to be served well by a tablet. iPad with Keyboard and case is 2/3 as expensive as a low end MacBook. Guess which one works better for which?

iPad $500 + $100 professional style case w/keyboard = $600

Macbook = $930

If the price difference for a general computing device isn't worth $300, then chances are you aren't creating content.

Re:Margin compression (5, Insightful)

Sockatume (732728) | about a year ago | (#44370741)

That's a bit like arguing that a computer's a terrible content creation tool because it's no good as a woodworking lathe or sewing machine. No, a tablet's no good for doing multi-track video editing. (Most single-display computers aren't any good at it either.) However it's a remarkable tool for gathering, organising and triaging information. (Papers, the science literature tool, is its killer app in my environment.) It's the swiss army knife of desk references. It's an x-windows client I can pass around at a scientific meeting. It's the world's least annoying way to deal with email.

Re:Margin compression (1)

Sockatume (732728) | about a year ago | (#44370533)

What do you think most people use computers for? There's a reason computer use exploded around the time the web went mainstream.

Re:Margin compression (1)

serviscope_minor (664417) | about a year ago | (#44370161)

they replace the need for portable computing (notebooks, laptops, etc).

Well, that all depends on what you do on the road really.

Re:Margin compression (2)

erp_consultant (2614861) | about a year ago | (#44370247)

These days I'm using my laptop more like a desktop and my tablet more like a laptop. I barely ever use my laptop unless it's plugged in and connected to an external monitor. Heck, the battery could die on it and I might not even know. And yes, I still use my desktop computer. It performs the same function it always has - high powered workstation with huge monitors for serious work.

Re:Margin compression (1)

Holi (250190) | about a year ago | (#44370255)

If all you do with your laptop is read email, browse the web and watch video then yes it is a replacement. If you do any content creation on your laptop then the iPad is a piss poor substitute.

Re:Margin compression (1)

Alomex (148003) | about a year ago | (#44370299)

But if all you do with your tablet is read email and watch video then a smartphone or phablet is even better.

Re:Margin compression (1)

Type44Q (1233630) | about a year ago | (#44370447)

If all you do with your laptop is read email

Reading email? Sure. Writing email? I don't know about the rest of you but I certainly have no desire to type out my emails on a virtual keyboard...

Re:Margin compression (1)

Sockatume (732728) | about a year ago | (#44370631)

You'd be surprised. I could touch-type with my thumbs within a month, and I'm not exactly an avid texter. I imagine hunt-and-peck people might have a problem with the lack of feedback though.

Re:Margin compression (1)

datavirtue (1104259) | about a year ago | (#44370573)

They can be used for taking notes but they are best for accessing information quickly. People who take notes on them are distracted. I love tablets for accessing information in meetings but fooling around in note apps is just too much. I can jot notes on a paper notebook without thinking or paying attention to the tools (pen and paper). You can scan or capture the notes later with your tablet if you like.

 

Re:Margin compression (2)

AlreadyStarted (523251) | about a year ago | (#44370095)

Aaaaand not even that. After adjusting for channel inventory reduction (in order to increase retail efficiency or prep for new product cycle) the actual sales are pretty flat (down 3%). Here's the statement from Wells Fargo analyst Maynard Um, as quoted by AppleInsider.

"As for the iPad, shipments were down 14 percent year over year, but when adjusting for reductions in channel inventory, the true drop-off was just 3 percent. Um believes iPad sales were likely soft in the U.S. and Europe, as Apple highlighted double-digit growth in China, Japan, Canada, Russia, Latin America, the Middle East, and India."

Re:Margin compression (1)

datavirtue (1104259) | about a year ago | (#44370599)

AppleInsider. Is that like Dickens Cider? Sorta?

Re:Margin compression (1)

Alomex (148003) | about a year ago | (#44370113)

No, it rather means that people are finally understanding that a tablet is a novelty.

Precisely. SmartPhones are useful and as soon as alternatives were available the market for those grew rapidly, as people find the concept useful and they'll buy it from any supplier so long as quality is comparable.

Now think of the iFad: one rarely sees Android tablets out there, even though they are as good as iPads. In fact, most people seem to prefer Phablets.

Why? because fads are tied to one supplier, e.g. any of the trendy labels in fashion on a given year, and it is not about the shirt, but about owning the Desigual shirt or the Super Dry shirt.

Re:Margin compression (1)

BasilBrush (643681) | about a year ago | (#44370739)

Now think of the iFad: one rarely sees Android tablets out there, even though they are as good as iPads. In fact, most people seem to prefer Phablets.

The Android tablets that are sold, especially the "phablets" as sold because they are cheap. And cheap mostly means terrible. They end up unused, and THAT'S why you don't see them out there.

http://www.news.com.au/technology/usage-study-shows-ipad-proves-to-be-the-one-tablet-to-rule-them-all/story-e6frfro0-1226684205587 [news.com.au]

Re:Margin compression (0)

Anonymous Coward | about a year ago | (#44370199)

Then listen closely - I, who am not a 10 year old kid and haven't been for over 30 years, absolutely love my iPad and use it on a regular, daily basis for everything from work-related tasks to leisurely enjoyment.

Re:Margin compression (1)

Holi (250190) | about a year ago | (#44370301)

Then listen closely, I am basically the same age as you. and try as I might, I have not found a compelling use for a tablet, They are too expensive for their limited ability.

  Though you can use them for some work functions they are not work machines. The are content consumption devices and that is how they were designed from the ground up. The problem with android and windows tablets is that they try to be more.

Re:Margin compression (1)

Sockatume (732728) | about a year ago | (#44370577)

For $229 you can buy a computer the size of a small book that connects wirelessly to the internet. If you can't find interesting things to do with something like that I worry for your imagination. I'd already dreamt up a dozen uses for something like that when I was a teenager and it was a ridiculous space-age fantasy.

Re:Margin compression (1)

datavirtue (1104259) | about a year ago | (#44370623)

The problem with android and windows tablets is that they try to be more.

Insightful.

Re:Margin compression (1)

ducomputergeek (595742) | about a year ago | (#44370303)

More likely market saturation rather than competition. Basically at this point most people who want a tablet have one. And unlike phones, people don't seem to be as in a rush to replace them with the latest and greatest. I know a lot of people who bought iPads as attempted laptop replacements and found that it almost worked. I know I went out and got a new laptop.

Ironically I'm on my iPad at the moment waiting for people to arrive and get a meeting started. The presenation and everything is on the iPad. I left the laptop at the office yesterday and felt no need to drive downtown to get it for this meetin this morning. The iPad will work just fine.

Re:Margin compression (1)

BasilBrush (643681) | about a year ago | (#44370627)

More likely market saturation rather than competition. Basically at this point most people who want a tablet have one.

In 3 years? Don't think so. The truth is that the year ago quarter was boosted by the new Retina iPad 3. And the 6 month ago quarter was boosted by the iPad Mini. This last quarter didn't have a new iPad, so of course it isn't one of the peak sales quarters.

The next iPad will come out this quarter or next, with iOS 7, and once again it'll be a record quarter for iPads.

Re:Margin compression (1)

Sockatume (732728) | about a year ago | (#44370515)

Maybe people don't talk about them because they stopped being novelties and started being an unremarkable part of the computing landscale? I don't talk about how amazing computer mice are any more, but that doesn't mean that they're a novelty that's destined for the bin.

Re:Margin compression (1)

nine-times (778537) | about a year ago | (#44370559)

Well either way, it may just indicate market saturation. When you introduce a new product, nobody has one, and everyone who wants one buys one. After a few years, many of the people who want one already have one, so you sell fewer of them.

Even if they're a novelty that are only used by 10 year-olds, that's still a market, and lots of people were buying them and happy with their purchase.

Re:Margin compression (0)

Anonymous Coward | about a year ago | (#44370053)

iPad sales haven't tanked. They are selling fewer because it's been 24 months since a legitimate upgrade and you can only sell so many to a full market. How can 3.6 million iPads a month be considered a failure. Only to 'industry experts' who only consider 30% growth every quarter a success.

Android tablets continue to suck.

Re:Margin compression (1)

goombah99 (560566) | about a year ago | (#44370057)

Not margin compression. Bussiness cylces, dividends, and investment in facilities (they are making some macs in the US now, they are building a new campus, they are gearing up for a new product line)
One biggy is that apple took out a loan to pay their dividends. 3% of their stock prices is about 15% of their margins! so it might be the whole 22% of profits.

Apple doesn't seem to be discounting much and the cost of production is going down mostly. I think maybe people are substituting some cheaper devices for more expansive ones (ipad mini for ipad) but those will also likely turn over at a higher rate (people buy newer ones sooner if they are cheap).

Re:Margin compression (1)

datavirtue (1104259) | about a year ago | (#44370705)

(people buy newer ones sooner if they are cheap).

[citation needed]

Re:Margin compression (1)

the computer guy nex (916959) | about a year ago | (#44370073)

The iPad hasn't "tanked". They broke the constant upgrade cycle with the iPad 4th gen last fall. That means this quarter doesn't have the benefit of a brand new iPad 3 (like last year) and the channel inventory is much lower due to an impending iPad 5.

Re:Margin compression (1)

Anonymous Coward | about a year ago | (#44370105)

What's interesting about this story, at least for me, is that iPad sales have tanked. Maybe that suggests that Android on tablets has matured somewhat...

Tanked? No. Slowed down. They stated that the drop is primarily changes in channel inventory (stores recognizing that they shouldn't be loading up on stock when a new iPad is around the corner - see below). Sell-through only declined 3% which is hardly in the realm of "tanked" (and can also easily be attributed to consumer awareness that a new iPad is around the corner - again, see below).

And that suggests that maybe Android tablets have matured? Given the usage numbers than just recently came out (iPads account for 7 of 8 tablets in use) what it more likely suggests is a slowdown in sales as people put off purchasing a tablet in anticipation of the soon-to-be-announced iPad 5th gen. Many people have figured out Apple's release schedule is typically on an annual cycle and we're getting awfully close to the point that Apple's going to announce their new iPad so why buy one now when you can wait a couple months and get the latest-and-greatest.

Most of their numbers make absolutely perfect sense if you apply a hint of logic.

Re:Margin compression (0)

the_B0fh (208483) | about a year ago | (#44370165)

Come on, you're not being a fashionable ihaternista by trying to apply a hint of logic to this. The fandroids and ihaters won't recognize logic even if you side load it into them.

Re:Margin compression (0)

alen (225700) | about a year ago | (#44370127)

no, android still sucks

i have an ipad 2 with broken glass and still very happy with it. i might fix the glass and use it for another 2-3 years. games work OK, email works and you don't need a quad core with the latest GPU to read a book on it

Re:Margin compression (1)

AmiMoJo (196126) | about a year ago | (#44370133)

The other side of the story is that the iPhone is getting cheaper. It was released last year and wasn't cutting edge at the time. At this stage it gets sold cheap with bundles, much like similar age phones like the Galaxy S3.

It shows that there is demand for a cheap but current iPhone, even if it is significantly less powerful spec wise than the competition. I expect Apple will launch such a phone that is basically an iPhone 5 when the iPhone 5S is released.

Re:Margin compression (0)

Anonymous Coward | about a year ago | (#44370145)

You should actually read the report - Morningstar is a good source for transcripts. Apple's gross margins are 36-37%. IPad sales of 14 million may be slightly down, but not significantly. iPad accounted for 84.3% share of tablet web usage by customers in the U.S. and Canada its highest level this year.

Re:Margin compression (1)

MightyYar (622222) | about a year ago | (#44370249)

Tanked? It was a 10% drop...

WTF? (5, Insightful)

Udo Schmitz (738216) | about a year ago | (#44370283)

The industry analysts and pundits have been predicting this for ages

Ages huh? 15 years ago Apple was “beleaguered”

that while Apple led for ages

The iPhone went to market only in 2007. *Six* years ago, Apple was late to that game. It was only that the other players were caught with their pants down.

reaped windfall profits as a consequence

Their insane margins were more a testament of Tim Cooks logistics expertise, the reason Steve Jobs hired him.

Google would barge in, turn smartphones into a commodity, and crush Apple's margins

Maybe in bizarro land. Apples only competitor is Samsung. The rest of Android phones replace the feature phones of old.

the PC market, where nowadays, it's impossible to make serious money on PC hardware

Uhm, except for Apple?

What's interesting about this story, at least for me, is that iPad sales have tanked.

Tanked. Yeah, right. Yoy 16 to 14.6 million. With FQ3/12 being the quarter with the brand new retina iPad.

Wish /.mods would cut back on dope.

Re:WTF? (1)

jkflying (2190798) | about a year ago | (#44370595)

Sorry, but HTC hasn't been able to keep up with demand for the One, so I'd say that HTC is back in the running. Just because they didn't go insane-advertising-huge-prestock doesn't mean they aren't selling like crazy.

Re:Margin compression (1)

beltsbear (2489652) | about a year ago | (#44370409)

"The industry analysts and pundits have been predicting this for ages: that while Apple led for ages, and reaped windfall profits as a consequence, there would be a stampede into the smartphone market, and Google would barge in, turn smartphones into a commodity, and crush Apple's margins."

Wake me up when this happens. So far it has not. Apple sold MORE phones this quarter than before with a 36%+ profit margin. Apple makes more profit in smart phones then all other players combined. Sure, it is time for Apple to come out with something new, but it will be a long time before the IOS/iPhone platform is not hugely profitable. If Apple introduces a new iPhone in time for sales this quarter they will continue to GAIN market share in the USA and in many other countries.

Re:Margin compression (1)

Sockatume (732728) | about a year ago | (#44370479)

Is that where we are now? Every new tech product goes from profitable business to lost cause in five years because Google wants more eyeballs to serve ads to?

Re: Margin compression (1)

samkass (174571) | about a year ago | (#44370523)

In this quarter last year the retina iPad was released. In this past quarter there was some inventory draw-down in anticipation of future models, and no new models. Actual iPad sales appear to be pretty steady, and there's certainly little evidence of overwhelming moves to Android. If anything, the worry would be the tablet market saturating earlier than some expected.

Re:Margin compression (1)

Anubis IV (1279820) | about a year ago | (#44370743)

Two points:
1) iPad sales didn't tank. They were down, but that's to be expected considering they had a major product release (the 3rd gen iPad which introduced the retina display) that helped to drive sales in the year-ago quarter, but no corresponding release this quarter to drive sales similarly. If anything, I found it astounding that sales were only down about 10%, given that they're working with a nearly 9 month old product (the 4th gen iPad was released late last year), rather than a brand new one with a marquee feature.

2) Regarding the PC market and making money, Apple's low-volume/high-margin approach has allowed them to capture about 45% of the profit in the PC market [forbes.com] (a plurality), despite their slim market share. To say the least, their share of the pie [cnn.com] rather conclusively disproves your notion that the only way to survive in the space is with high-volume/low-margins.

I do agree that the analysts have been predicting that their margins would be compressed quite a bit, but Apple has been acknowledging that for quite awhile as well, ever since they introduced the iPhone 5, which has a rather high manufacturing cost, as well as the iPad mini, which has significantly lower margins so that it can compete more easily with other tablets in that space. Even so, their margins have remained relatively stable since the introduction of those products last year, and their sales have remained in line with or above what one would expect when you look at what products were actually released (i.e. few to none). Considering they've already acknowledged that they'll be having a rather full fall quarter in terms of product releases since they haven't been spreading them throughout the year as they typically do, it's not particularly surprising that they were down this quarter.

I don't get it (-1, Troll)

slashmydots (2189826) | about a year ago | (#44369963)

The Samsung Galaxy phone is better and any tablet in the world is better than the iPad. As soon as people realize it has no HDMI, no micro-SD port, and no USB port for flash drives, they can go spend 5x less on a tablet that can or get the vastly superior Galaxy tablet for the same price. My long time Apple fanatic roommate just dumped is iPhone 4 for a Samsung Galaxy and admitted it was far better. Plus, his 4's soldered-in battery just failed so I think there was a valuable lesson there too. So how could their device sales possibly be going up? And with Windows 8 out, how could their desktop sales be going down?

Re:I don't get it (1)

goombah99 (560566) | about a year ago | (#44369995)

You are correct, you don't get it. Lame.

Re:I don't get it (0)

Anonymous Coward | about a year ago | (#44370491)

Didn't you hear? Apple fanboys aren't allowed on slashdot.

Re:I don't get it (0)

Anonymous Coward | about a year ago | (#44370001)

iPhone batteries are not soldered in. If you're so confident that Samsung phones are better why make stuff up?

Re:I don't get it (0)

Anonymous Coward | about a year ago | (#44370035)

The Samsung Galaxy phone is better and any tablet in the world is better than the iPad. As soon as people realize it has no HDMI, no micro-SD port, and no USB port for flash drives, they can go spend 5x less on a tablet that can or get the vastly superior Galaxy tablet for the same price. My long time Apple fanatic roommate just dumped is iPhone 4 for a Samsung Galaxy and admitted it was far better. Plus, his 4's soldered-in battery just failed so I think there was a valuable lesson there too. So how could their device sales possibly be going up? And with Windows 8 out, how could their desktop sales be going down?

For the millionth goddamn time in one of these Apple threads, the sales bear out that Joe Bagodonutz doesn't give a crap. Some other people perceive value differently than you do. What's not to "get"?

Re: I don't get it (0)

Anonymous Coward | about a year ago | (#44370043)

You wrote:

"...vastly superior Galaxy tablet..."

The PC industry has proven that geeky might sell to geeks, but usability sells to the masses. I don't know any non-geek buying Windows PCs anymore. Everyone now wants a Mac desktop or laptop based upon superior usability.

The same thing will happen with phones. Google has no clue when it comes to design, usability and customer needs assessment vs " fill it with geek features the average person won't use."

Re: I don't get it (2)

danbob999 (2490674) | about a year ago | (#44370287)

. I don't know any non-geek buying Windows PCs anymore. Everyone now wants a Mac desktop or laptop based upon superior usability.

Last time I checked Macs had about 10 or 15% market share worldwide. So either the world is 85-90% geek, or you need to get out of your basement more often.

Re: I don't get it (0)

Anonymous Coward | about a year ago | (#44370517)

He's so far in arrogant Apple fantasy land, it's not even worth going to get him at this point.

Re: I don't get it (1)

Virtucon (127420) | about a year ago | (#44370329)

Google has no clue when it comes to design, usability and customer needs assessment vs " fill it with geek features the average person won't use."

Uhm, that's why they license to third parties. They may not know about rounded corners and sleek looks but that's what other manufacturers are for. I've bought 7 Android devices in the past year. Most for developing software and personal use. In our house we have one iPhone 5 and that's getting traded out here shortly because my son hates the Apple "way." He hates the new App Store, iTunes is constantly giving him grief, me? I just download my mp3s from Amazon.. NO problem. I don't see apple cutting prices but Microsoft has floundered in the phone/tablet space and unless they right the ship, they'll be left with the Server O/S tier and Desktops which are fading. Laptops will still use Windows but fundamentally Microsoft shouldn't be building its own products, much like Google. They don't know what it takes to build a killer design in terms of look/feel.

Also for all those "Geek" features, my wife uses a Galaxy Note 2 and loves the multi-window, she's not a CS grad either but she likes to be able to easily see and do two things at once. Oh yeah, multitasking, another missing link in the iOS evolutionary path.

Re:I don't get it (0)

the_B0fh (208483) | about a year ago | (#44370065)

iPhone 4 is nearly 3 years old. Comparing it against a S3 or a S4 is weak sauce. One would hope that Samsung can at least create a phone that can beat a 3 year old phone. Also interesting how android forums is full of how the galaxy's are still jittery and have laggy gui.

And soldered in battery? Really? Is it really that difficult to remove 3 screws and swap a battery that's dead? No, you can't change batteries on a daily basis, not easily, but the battery also doesn't die in 4 hours like the Galaxy.

http://www.ifixit.com/Guide/Installing+iPhone+4+Battery/3141/1 [ifixit.com]

Re:I don't get it (0)

Anonymous Coward | about a year ago | (#44370069)

Must suck to live in a world where EVERYONE is an idiot except you. If only everyone would WAKE UP and stop being so stupid. Thank god you saved your roommate from the follies of buying Apple.

Re:I don't get it (0)

alen (225700) | about a year ago | (#44370147)

i just got a galaxy s3
it sucks. laggy turd compared to my ipad 2 and iphone 5

Better depends on use case (5, Informative)

sjbe (173966) | about a year ago | (#44370157)

The Samsung Galaxy phone is better and any tablet in the world is better than the iPad.

Nothing against the Galaxy but "better" is a pretty ill defined term. For my Grandmother, who mostly wants to play solitaire and facetime with her grandkids, the Galaxy is a demonstrably worse choice. For your needs or mine it might be the better choice. "Better" depends on what you are doing with it.

As soon as people realize it has no HDMI, no micro-SD port, and no USB port for flash drives, they can go spend 5x less on a tablet that can or get the vastly superior Galaxy tablet for the same price.

There is a market for tablets with those connectors but it is, for better or worse, a minority. My several of my family members have iPads. Most of them would never use any of those ports and in fact most of them don't even know what an HDMI or micro-SD port is. That's not to imply that a tablet with those ports would be pointless. For someone like me they might actually be an attractive feature but I have no illusions that most iPad buyers would need or want them. Furthermore those extra ports add cost, complexity and opportunities for hardware failure. Furthermore there are other ways to accomplish things like file transfer, video display, etc without those ports so it is unclear why they would be necessary in most cases. You don't need HDMI to display video. You don't need USB to store or transfer files. I'm sure some people appreciate those ports but I'd wager a tidy sum that most of the time they go completely unused.

Re:I don't get it (0)

Anonymous Coward | about a year ago | (#44370223)

Their device sales are up, because a lot of people like iDevices just as much as you like Samsung. Desktop sales are down, because that's the industry trend.

Re:I don't get it (1)

dc29A (636871) | about a year ago | (#44370253)

As soon as people realize it has no HDMI, no micro-SD port, and no USB port for flash drives, they can go spend 5x less on a tablet that can or get the vastly superior Galaxy tablet for the same price.

Vastly superior? If by that you mean pixelated screen and lower battery life then yes, you are right. Try reading books on Galaxy Tab vs iPad and tell us with a straight face that there is no difference or that the Galaxy Tab is superior.

Six of one; Half dozen of the other (1)

fuzznutz (789413) | about a year ago | (#44370319)

Which is better, iPhone or Android?

It depends on what your needs are. Apples mail client and calendar app are VASTLY superior to Android. You have to go all the way back to IOS ver 2 to have a worse mail client than Android 4.22. However, Firefox (and plugins) rock on Android. And Swype is a killer app.

For me, the decision to abandon my investment in IOS apps was easy when I went to a prepay phone. My Nexus 4 was half the cost of a new iPhone. The iPhone certainly is not twice as good.

Re:I don't get it (5, Insightful)

ericloewe (2129490) | about a year ago | (#44370365)

As much as I dislike Apple's products and philosophy, I absolutely hate Samsung's philosophy. In my experience, it's either copying (much more than would be reasonable) successful products or throwing tons of crap at the wall to see what sticks (the galaxy cameras come to mind). Either way, their products are designed to what seem to be very poor standards with atrocious quality control.

Out of 11 Samsung products:

Two were dead on arrival (Ativ Smart PC Pro, a camcorder whose model I don't recall) - they did turn on, but were not in a condition anyone would call useful (dead touchscreen and autofocus, random stability issues, not to mention the fact that the tablet's replacement, like all other units I've seen, had plastic covering one of the keyboard dock's pins and a misaligned speaker grille).

One (40" LCD) developed some unusual dark areas on the screen.

One (Refrigerator) suffers from an ice dispenser button that gets stuck if operated with a single finger, its shelves' plastic is cracking and there's rust developing on some parts of the outside finish.

One (Monitor, Syncmaster 940BW) has a driver issue (seriously. Google it and wonder how it's possible...) under Windows 7 where a driver is automatically installed that includes a bad color profile that causes White to be displayed as Yellow in color-corrected applications, unless a different profile is manually chosen.

One (Dual-SIM phone with crappy resistive touchscreen) was never a decent phone, but its touchscreen decided to crap out one day, for no apparent reason, making it impossible to use.

Another phone (Wave I think it was called... ) was a phone whose hardware showed potential but was running Bada or whatever that OS was called. Not pleasant to use.

Only 4 / 11 Samsung products never gave any reason for complaint (besides limitations that were obvious when buying it - like a screen that is at a fixed height - those were knwon and expected, so there's no reason to blame Samsung): Two 830 SSDs (one 128GB and one 256GB), another monitor (Syncmaster BX2450) and a Blu-Ray drive.

I'm sure someone can give me a comparable amount of Apple horror stories, but I'd bet that most of them are actually limitations that one knows they're buying - like support for newer versions of OS X / iOS being a gamble. The products themselves don't tend to start failing in unpredictable ways, most failures are predictable, in my experience.

tl;dr I won't be buying Samsung again anytime soon (and I wouldn't buy Apple anyway, so don't bother with that angle)

This is a good troll post, please mod up (1)

Xaedalus (1192463) | about a year ago | (#44370395)

This is excellent trolling, please mod up.

Re:I don't get it (5, Informative)

wzinc (612701) | about a year ago | (#44370439)

HDMI == AirPlay
SD-slot / USB == iCloud

That's how Apple handles those issues.

Also, I don't believe any iOS battery is soldered; they all have detachable connectors.

Extra costs? (0)

Anonymous Coward | about a year ago | (#44369981)

So, where did the extra costs come from?
Does it take so much more power to run the RDF after Jobs death?

cyclic (2)

goombah99 (560566) | about a year ago | (#44369991)

Apple's cyclic not a steady force. I'm looking forward to the Liquid Metal Iwatch. I worry a bit about the smaller iphones. On the one hand they boost new sales in foreign markets (pity Nokia) and probably spike sales everywhere. But they will canibalise some new sales of the older higher margin phones. Or will they? perhaps they will have higher margins. Or perhaps people who save money on the smaller one will pick up an ipad. Or perhaps sales of the full sized iphone are saturated anyhow so there's little to canibalize. All I know is that they won't lose money!

Re:cyclic (1)

Sockatume (732728) | about a year ago | (#44370413)

Apple doesn't have a choice: cheap Android and Windows Phone devices are becoming highly competitive on price, both with less demanding, mainstream users and more technically proficient, hack-seeking buyers. So those sales are going away. The only question is whether they're going to go to rivals, or to Apple's own cheaper product. It's just another part of the product cycle; I recall that Apple made more money on the iPod Mini/Nano than they ever did on the classic iPod, although it was exactly the same kind of self-cannibalising move.

Re:cyclic (0)

Anonymous Coward | about a year ago | (#44370509)

Apple's cyclic not a steady force. I'm looking forward to the Liquid Metal Iwatch. I worry a bit about the smaller iphones. On the one hand they boost new sales in foreign markets (pity Nokia) and probably spike sales everywhere. But they will canibalise some new sales of the older higher margin phones. Or will they? perhaps they will have higher margins. Or perhaps people who save money on the smaller one will pick up an ipad. Or perhaps sales of the full sized iphone are saturated anyhow so there's little to canibalize. All I know is that they won't lose money!

LOL@ "full size iphone". What are they going to do, shrink the battery life so it goes from 3/4 of a day to 1/4 of a day? Or maybe shrink the screen since it was so easy to read things on that 4" version before.

NSA Prism (0)

Anonymous Coward | about a year ago | (#44370009)

Apple joined PRISM in October 2012. If you buy an iPad/iPhone it spies on you for the NSA.

If you really believe the NSA is tracking 800,000 suspect terrorists (and growing) and not 800,000 mostly innocent people wrongly accused by an out of control General then good luck to you with that Apple kit. Perhaps you'll be lucky. Perhaps your particular Apple kit won't be used against you. Or perhaps you'll say something bad on Slashdot and be among the 800,000.

Let me predict the future.

A bill will be introduced that required remote turn on of the microphone and camera, perhaps as a 911 requirement. What if you are injured and managed to dial the number but not speak into the phone? Or some such ridiculous idea. You will have to watch what you say around your phone, in case the microphone is turned on, or the camera is watching you.

Why not just call the next Apple product an iTelescreen?

STUPID Appstore changes Sept 2012 (0)

Anonymous Coward | about a year ago | (#44370081)

Apple changed the Appstore from a simple list view where users could scroll through hundreds of apps, ie buying choices to a STUPID SINGLE PAGE left and right where most users only ever scroll through about 5 apps most of which they have already bought.

I mean what absolutely stupid muppet thought this was a good idea????

Knocked more than 30% off of all app sales over night.

There's their problem in a nutshell.

Sheer genius!

rgds

Re:STUPID Appstore changes Sept 2012 (0)

Anonymous Coward | about a year ago | (#44370149)

Not surprising. Tim Cook is a vision-less, clueless, bean-counting moron who rules with kid gloves. He let out the leash a bit and now that slack is going to manifest. Jobs and his iron fist would never have allowed that to happen.

*Gasp* Maybe they are spending money on R&D! (0)

Anonymous Coward | about a year ago | (#44370129)

Ooops. Apple is in deep shit now! They've committed the sin of actually investing in their company!
Wall street is going to break out the pitchforks! Shareholder lawsuits incoming! Better fire 20% of your workforce to keep those investors happy!

What's that? New iphone imminent? One that will be sold out for 6 months after it's release, just like all the previous iphones?
Nevermind. This is a hatchet piece designed to drive stocks down before the inevitable boom that comes post product release.

Or maybe (0)

Virtucon (127420) | about a year ago | (#44370261)

People are waking up and buying products from other manufacturers. Samsung's profits were up in the current reported quarter about $8.5B, guess at who's expense and the fact that Apple isn't doing well in China doesn't bode well for them.

Yeah, I think unless Apple comes out with a line of adult sex toys, it'll see profits fall. iVibrator anyone? What it'll have rounded edges!

Plus, it's lost the recent price fixing case in books, yet they'll appeal so I'd rate Apple as underperform.

Re:Or maybe (0)

Anonymous Coward | about a year ago | (#44370431)

People are waking up and buying products from other manufacturers

Yea wake up and support ad network Google and friendly state sponsored competitor Samsung! Wake up sheeple! /s

Two things stand out... (1)

erp_consultant (2614861) | about a year ago | (#44370567)

1) 31.2 million iPhones sold...well ahead of estimates.
2) 14.6 million iPads sold...well below expectations.

Here's my theory on the iPhone sales. I think that many people had earlier models of the iPhone and when it came time to upgrade they decided to try Android phones, were unsatisfied, and switched back to an iPhone on the next upgrade cycle. Android has a lot of nifty features but I have to admit that the iPhone is a lot slicker and easier to use. For a lot of people, ease of use wins out.

I suspect we might see the same thing occur with the iPads in the near future. There are a lot of cheap Android tablets out there and most of them are crap. The exception being the Samsung Galaxy, which is very nicely done. I think that a lot of people that really wanted an iPad settled for a cheap Android tablet and are discovering that you get what you pay for.

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