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Home / Technology / Apple's guidance correction in China would be good news from Samsung

Apple's guidance correction in China would be good news from Samsung



While Apple's critics are frightening to portray their guidance of guidance as a kind of proof of "lack of innovation" or "pricing too high", the reality is that there is only evidence that President Trump's tariff war on China has harmed one. important Apple market. Apple has never been better positioned, and the competition is now so poor that some of them would love to be in Apple's shoes.

  Trump

U.S .. President Trump has praised Apple for investing in America, but his tariff war with China damages Apple's business there

Unfortunately for Apple's competitors, they are no Apple. Today, the iPhone manufacturer is grabbing almost all of the world's profits, even though the global economy is slipping into a recession. Those who will be most devastated by global trade turmoil will be low margin manufacturers of Android goods.

Apple has net $ 1

23 billion in cash to survive a downturn. That's not the case for Samsung, Pixel, Surface, and the various low-margin commodity products in China that need to show some potential for returns to continue using their shareholders' cash reserves on hardware experiments.

So far, all Android or Windows hardware manufacturers – including Google and Microsoft – have shown that they are completely immature to make money selling hardware, even under an economic boom. It's not going to be easier in a recession! Apple has proven that it can succeed in making money no matter what conditions it is exposed to, which means it can invest its boom resources to build on a global withdrawal.

We know this is the case because it happened a decade ago. Back in 2008, while technological media were intimidating Apple as poorly positioned as a luxury consumer producer among negative "global macroeconomic indicators", no one noticed that the hardest hit were actually Apple's former competitors: Motorola, Palm, Nokia, Blackberry and other companies that once sold tons of cheap phones; HP, Dell and other PC manufacturers; and Sony and other consumer electronics manufacturers affected by disaster, as their low-volume, high-volume sales models were blindsided by a decline in demand.

However, Apple continued to sell premium-priced iPod and iPhone, and it continued to earn while rivals-thin margin competitors died off. It also continued to invest: in custom silicon, in new unit form factors such as the iPad, and in new software and services, including the new App Store for iOS and liberal investments in annual new OS software updates. Apple was victorious and stronger.

The only other phone manufacturer that also survived was Samsung, which based its entire success by copying Apple's brand and products so closely that it seemed to be budget, saving brand equivalents. But that copy was fragile. When Samsung began to follow its own muse, the smartphone industry began to collapse, and its efforts to match Apple's efforts in silicon, tablets, music, apps, Siri, Apple Pay and other sites were all failed. Today, Samsung's telephone business is an anchor that reduces the performance of the rest of the company.

If you want to bet on Apple when analysts freak out in 2008, you would be up 1200% even with today's dive

As you can see from the mapping of Apple's stock price, this panic is repeated at the end of 2012 (fear of Apple's ability to "innovate" and again in 2014 (panic involving Apple's ability to sell phones in China). Today, the logic is that between six and ten percent decline in expected revenue will crush Apple's stock by more than 30 percent as it already had the valuation of a company that will never grow in the future.

It's not a reality, it's an opportunity. And remember that Apple has $ 71 billion already allocated to buy back its stock, now available with massive discounts thanks to unintentional manipulative financial reporting that has only intensified on Thursday morning.

In the midst of the bloodshed in a tariff crisis, Apple's revenue correction is a small blip

Trump's tariffs have raised a formidable wall for global trade. His administration has listed trade barriers, pulled the US out of trade pacts, and has destroyed domestic industries that rely on China as a customer.

American soybean farmers appear to have lost their critical Chinese market altogether, and exports are now falling to zero. American producers of finished products such as cheese and cooked meat also see their foreign markets dry up. But Apple, which depends on China for nearly 20 percent of its iPhone sales, reports the slightest effect of a full-fledged trade war.

Apple's conversion guidance dropped the revenue outlook for the December quarter by 5.6 to 9.7 percent from the level it had previously given. Apple's global revenue is so large that even a drop of [$ $ 5 to $ 9 billion is a single-digit percentage, and will occur without doubling Apple's profit margins. Due to its inherent profitability from tight operational expertise and strategic share buybacks, Apple noted that "we expect to report a new all-time record for Apple's earnings per share" despite the decline in expected revenues.

There is a marked difference from other major smartphone manufacturers, who have seen their revenue breakdown as buyers shift downmarket to lower end models, and delete profits altogether. Apple is still the best high-end seller in China – and globally – delivering the vast majority of demand for high-end smartphones and removing almost all profits earned across the industry.

When profits collapse, it becomes almost impossible to rebuild a business in a competitive market. Samsung's Galaxy IM Mobile segment has shrunk in failures globally and pulled the rest of its relatively successful businesses, including Display Panels and other components. Instead of seeing a small single-digit withdrawal in demand in China, Samsung has been imploding from being the country's largest producer to be an eighth place, also driven, with little hope of regaining territory from the new domestic low-end. leaders.

  Samsung 2018

Samsung's DS component business is up, while IM product sales are down

And while Huawei, Xiaomi and other domestic brands are continuing to fluctuate with the largest number of phones in China, no one is doing anything real money, making them a step away from being replaced by one of the five other brands that build phones without creating loyal users and without generating profits that can sustain them through a downturn. That commodity market shrinks, while premium phones are "powered by new iPhones", according to Counterpoint Research Market Monitor.

Apple grows over several businesses from its iPhone-based base

While iPhone revenue hits from The tariff-induced economic downturn occurs in China, iPhone sales are still expanding Apple's installed base. In fact, Apple's note to investors stated that "our installed base of active devices beat a new full-time growth with more than 100 million units in 12 months. There are more Apple devices used than ever before, and it is a testament to ongoing loyalty , the satisfaction and commitment of our customers. "

And while much of Apple's business comes from the iPhone segment, which is detrimental to the financial tariff queue in China, the rest of Apple's sales continue to grow significantly. Services sold to the large installed base of iPhone users, along with Macs, iPads, Wearables and other accessories, totaled 19 percent higher than the previous year.

All in all, "Services generated over $ 10.8 billion in revenue in the quarter, grows into a new quarterly record in each geographic segment, and we're on our way to achieving our goal of doubling the size of this business from 2016 to 2020, Apple says.

The company also noted that "Wearables grew by almost 50 percent year-on-year, when Apple Watch and AirPods were popular among retailers, launches of MacBook Air and Mac mini drives Mac for the year-end growth and launch of the new iPad Pro, iPad ran for year-to-year double-digit revenue growth. "

Samsung would love to sell its old smartphone buyers Galaxy Gear watches, tablets, PCs, apps and cloud subscriptions, but it is not. Outside of Galaxy phones, Samsung's IM Mobile division (which offers a device portfolio is very similar to Apple's) engaged in slightly more than busy work, producing nominal volumes of products for which it cannot sell for profit, when telephone sales go down, profits merely go together and there is no peripheral growth to fall back on.

It The same is true for China's Android manufacturers, who cannot even make money selling a large number of phones. Outside of phones, they do almost nothing about selling various PCs, tablets, watches, other wearables, Internet services, and other ventures. Telephone sales were apparently positioned as a way to create a base of users to sell services, but it never materialized, and now the firm is stuck to build rice heaters and other basic appliances.

Apple has a unique success in selling new products to its installed base

The prospect of "Peak iPhone" – the idea that Apple is running out of people to sell its signature iPhones two has been bandied about for years. At one point, it was clear that the company had to expand beyond merely selling iPhones if it wanted to continue increasing its revenue and profits.

Apple now takes almost all of the industry's available profits, mainly by creating a new ultra-premium class of iPhones and effectively selling it to buyers. At this time, the options include selling these users new products and services. And that's something Apple has said to do even when its apparent competitors fall over itself, despite desperate efforts to copy the surface of what Apple does.

The future of smartphones is not just cheaper smartphones. Instead, it moves voice and video communication, text messaging, music, apps, and other computing services into new form factors that are better in some ways than a handheld, handheld mobile device. Devices like the iPad, which Apple made about $ 20 billion a year, or Apple Watch, which continues to grow rapidly despite the fact that smartwatches were almost nothing just a few years ago.

Instead of cannibalizing their iPhone business to deliver "the next thing", Apple has expanded its primary business with growth in tablets and wear, creating an ecosystem that spans various form factors and sews them all together. Continuity functions.

Apple also innovates in discouraging wireless audio with AirPods – the perfect pairing with Apple Watch. It also creates new reasons why people want to buy and buy a conventional Mac notebook or desk – a technology platform dating back to the 1990s and even earlier, but remaining healthy as a way to develop interactive digital content for today's mass market. mobile users on iPhone, iPads, Macs and other development goals.

Apple not only challenges the marketing of new and old hardware devices. It has created a huge market for selling apps and software as a subscription, and takes a sustained cut that has turned the App Store from a basic software listing to a rich directory of curated titles. It results in a huge market for iOS software that generates billions of dollars in development that spans not only iPhone consumers, but more importantly business customers making a permanent investment in IOS development and hardware: IBM, Salesforce, SAP, Deloitte, Cisco and many others.

Apple's latest effort is working to customize its vast portfolio of IOS software to also work with Macs starting this summer, and expanding the use of the conventional Mac platform and linking its iOS and macOS platforms closer together for users.

  WWDC 2018

At WWDC 2018, Apple introduced expanded plans to drive Mac development via IOS

In addition to hardware and software, Apple has also invested in custom silicone design, starting with mobile CPUs and branching into graphics, neural network machine learning logic, custom storage controllers and advanced imaging, all of which are radically expensive and difficult for competitors to continue.

Google has invested huge sums in ISP silicon, making the Pixel phone a great camera, but it can't fit Apple's ISP in video recording, and doesn't sell enough Pixel devices to fund the next generations of image silicone advancements . Apple sells cameras – it's now the most popular and advanced camera provider on the planet, a fact that few have even noticed.

Qualcomm is still ahead of Apple in modem technology, but that benefit is becoming increasingly worthless, as consumers can't see any real difference between gigabit chips and 1.2 gigabit chips when the fastest mobile networks run at real-world speeds well below 100 megabits. Everywhere, Qualcomm is once comfortably positioned as a leader in mobile chips – now more than a year behind Apple in the CPU and graphics and imaging and machine learning, and is also growing increasingly by component buyers of their premium chips for high-end phones at -iOS platforms, simply because there is little demand for advanced Androids.

Huawei and other Android makers are now working to develop their own internal chips, but these are also significantly behind Apple's efforts to promote the state of the art. And the main reason is that Apple has sold almost all the advanced devices that make money and create a demand for even faster chips in the future. Not only smartphones, but also critical high-end tablets, a market that Apple has owned effectively since it launched the iPad ten years ago.

Just a few years ago, the technical media applauded Google's incredibly cheap $ 150 Nexus 7 tablet. Today, these tablets do not even run the latest Android. Google has now apparently dropped out of the Android tablet, and there is no money to run new generations of executive Android tablets because there is no one interested in paying anything for them.

Absolutely not business customers – who have invested in iOS tablets while tech media scribbled up their fascination with cheap Google netbooks being dumped at K12 schools, a financial miracle about as effective as giving everyone a cheap fish.

Overall, the entire global tablet market is led by Apple "unabated" as IDC was recently forced to observe. Apple's sales of tablets grow as the overall tablet market continues to collapse.

When the global tablet industry collapses, Apple's ~ 10 million iPads have delivered quarterly balloons from quarter to over a third of all IDC estimates for tablet shipments

The Innovation Problem

Despite Apple's broad and deep success that has only Reduced by a global attack on commerce and a complete wage war between the two largest markets – and an explicit explanation that clarifies exactly why Apple has reworked its revenue for the quarter's quarterly forecast, seems to be completely confused about what's happening.

Apple CEO Tim Cook made lower revenue expectations directly on the slower demand for new iPhones in China, but Kara Swisher from Recode told CNBC that beyond that, she thought Apple's problem was also an "innovation problem."

"The innovation cycle has slowed down on Apple," Swisher said. "Where is their exciting new product, and where are their exciting new entrepreneurs in that company?"

This "where's the steak?" The routine gets very old

Cook himself addressed this and noted that Apple sees significant growth across its products and services outside of iPhones. In fact, his note to investors stated that one of Apple's problems was not a media discovery of lack of consumer interest or lack of "innovative" hits, but rather Apple's inability to follow up on demand. In fact, Cook made the "exciting new product" as Swisher marveled at a key point in his investor note.

"We knew we had an unprecedented number of new products in the quarter and predicted that delivery restrictions would end our products in the first quarter," he said. "Also, this also largely played in line with our expectations. The sale of the Apple Watch Series 4 and iPad Pro was limited much or the entire quarter. AirPods and MacBook Air were also limited."

Apple just bought a theater to happen feed tech media's latest innovations, including a watch that can perform an ECG and a whole new series of both iPad Pros and MacBook Airs. Three months ago! How often does Apple have to sing and dance for these grumbling curmudgeons who claim to never be impressed?

As a side note, Swisher said she was impressed by Amazon without saying whether it was Alexas defaulting to earn his stated goal as a developer of online sales, the innovation of buying a grocery store, or Jeff Bezos & # 39; Incredible innovations in bamboo, such as mapping data without any actual measurements.

Clearly, Cook said the cause of Apple's forecast revenue fall was not a mystery that media members needed to interpret and expand on, but it certainly will not stop them.

"Lower than expected iPhone revenue, mainly in Great China, stands for all our income-related shortage of our guidance and for much more than our entire annual revenue decline, Cook says unequivocally

. [19659058] And while many want to use Apple's revenue adjustment as a data point that supports their personal theory that prices are too high and consumers can't afford to buy them, Cook also explained that "we also expect to put in all-time Revenue items in several developed countries, including the United States, Canada, Germany, Italy, Spain, the Netherlands and Korea, "as well as some emerging markets," including Mexico, Poland, Malaysia and Vietnam. "


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