Q3 2018: Really low Mac sales while PC sales remained constant


(David Silbey) #21

So, if it’s not Apple’s actual Q3 or it’s actual Q4, what is it basing things on?

Ah – estimates. How reliable? Well, not so much (from the article):

“It’s important to note that data from Gartner and IDC is preliminary and the numbers can shift, sometimes dramatically and sometimes less so. Last year, for example, Gartner said that Apple shipped 4.6 million Macs worldwide during the third quarter of 2017 when the actual number was significantly higher at 5.4 million.”

Why are we taking this seriously as a point of discussion? 10 days and we’ll know the actual figures.


(Simon) #22

Because Apple has been neglecting the Mac and it’s starting to show despite all the usual marketing BS perhaps?


(David Silbey) #23

An estimate of a mislabeled quarter that’s been badly wrong in the past hardly seems to show much of anything at all. 10 days and we’ll have the real numbers.


(Simon) #24

We’ll only have Apple’s numbers, with as little detail as they usually provide. But the entire point of that article was the comparison with PCs. The fact that PC sales have been up while Mac sales dropped. Previously, when Mac sales were flat the koolaiders tried to spin that into some kind of success since the overall computer market was supposedly in decline. This article shows that’s a bunch of baloney.


(Adam Engst) #25

I vote we table this discussion until Apple’s next financials call on November 1st. And at that point we’ll also have had a chance to see what Mac hardware Apple announces on October 30th.


#26

Simon

    October 22

We’ll only have Apple’s numbers, with as little detail as they usually provide.

Apple is required by law to report the results of independent audits. Ernst & Young is their auditing firm:

https://big4accountingfirms.com/the-blog/who-audits-apple/

But the entire point of that article was the comparison with PCs. The fact that PC sales have been up while Mac sales dropped.

This is the last time I will say this. PC sales have been down for five consecutive years, for a total of 20 bad quarters. Most of those 20 bad quarters were terribly, horribly bad quarters. Mac had one quarter that was neither terrible or horrible, and one quarter out of twenty does not necessarily indicate a long or short term trend. A year of bad quarters is iffy, two are less iffy, three is dog poop, more is deep dog poop. One quarter of slightly more sales than in twenty doesn’t mean you can even see a few strands of hair sticking out of the big pile of dog poop.

What makes the article even less credible is that it doesn’t take into account that PCs cost less than Macs and are more than usually sold at heavily discounted prices; a significant portion of PC sales are considered to be barely, if at all, profitable. Not only were no new Macs introduced in the quarter, no new Apple products or services were introduced at all, and the quarter was a huge success for Apple.

Previously, when Mac sales were flat the koolaiders tried to spin that into some kind of success since the overall computer market was supposedly in decline. This article shows that’s a bunch of baloney.

What it actually shows is that the authors of the article are full of baloney and have no clue about basic principles of analysis.


(David Silbey) #27

_ We’ll only have Apple’s numbers, with as little detail as they usually provide_

Uh, they’ll give exactly the type of numbers that the article gives – unit sales of Apple products. And, better than the article, they’ll be the actual sales, rather than the estimated, unreliable numbers of Gartner.

I vote we table this discussion until Apple’s next financials call on November 1st

Absolutely – As I’ve been in this thread, I’m always in favor of real numbers, rather than imaginary ones.


(Simon) #28

Again, not the point. QFE:


(David Silbey) #29

The comparison only works if the numbers aren’t estimated and unreliable.


(David Silbey) #30

Hey, Simon, real numbers are out. Want to comment?


(Simon) #31

Not really. Nothing really new. Apple’s numbers were 5.3M vs. the 4.9M estimate. In other words they shipped 1.6% LESS than the year ago quarter. Meanwhile several PC makers had really good quarters, Lenovo actually had double-digit growth in the very same period. To me not really a surprise (and all already mentioned in the very first post). Apple has neglected the Mac, while PC manufacturers kept improving their notebooks. So yeah, nothing really new.

News will be when we see Apple give the Mac and macOS more attention, on a regular basis, i.e. not just letting a product line sit there for four years. And maybe more importantly, let’s hope the new Mac Pro actually materializes.


(Simon) #32

By the way, it appears in the future these estimates are all we’re going to see since Apple is no longer willing to inform about units sold.

I guess stagnating or declining sales is hard to spin. Better to just not mention it and point to good revenue instead. Of course that’s a tough strategy to follow if for the iPad even revenue just keeps going down (or remains flat at best). Maybe tablets are after all not the future of computing.


(David Silbey) #33

_ Apple’s numbers were 5.3M vs. the 4.9M estimate. In other words they shipped 1.6% LESS than the year ago quarter_

Yes, the Gartner estimates were – as noted – unreliable.

And Mac revenues were up 3%. So, pretty stable overall, and certainly not the “wither[ing]” you postulated.

And this is in the context of a “stagnant” PC market (quote from the article you cited at the top of the thread).


(Simon) #34

The Gartner estimates were within 8%. Not bad for an estimate, especially because the conclusion was right: Mac units dropped.The fact that it is an estimate and later gets corrected is by the way something the originally quoted article actually spells out very clearly. The same uncertainty BTW pertains to their estimate for Lenovo’s numbers for example. Lenovo, who in the same quarter had GROWTH of 11% I might remind you. Or HP’s growth at 6% — that would be 4 times in growth what Apple suffered in loss. All in the very same quarter.

But these estimate, well, get used to it. Apple just told us they won’t show units anymore. All you’ll get is revenue. Which might be good enough for shareholders, but to me as a Mac user and buyer totally irrelevant. Actually, falling units and rising revenue just means Apple has gotten fewer people to give them more money. I might take that as sign for their great marketing, but definitely not as a good sign for macOS or Mac.

Apple always liked to brag about how they sold more while the PC market was stagnant. Well this “stagnant” PC market just produced 11% growth for Lenovo and 6% for HP, while Apple shipped fewer in Macs in the very same quarter. This is the whole point of my thread. You don’t get to pick and chose arguments just so you can shill for one side or the other. The metric stands. Apple left many Mac lines to wither (Mac Pro almost 5 years now and still waiting, Mac mini 4 years, MB and iMac nothing for over 17 months and also still waiting, etc.) and IMHO that came back to hit them over the head this quarter.

Lets just hope they learned from this and re-develop commitment to Mac and macOS. I also note Mac is now making them about twice as much money as iPad. So if you have to neglect something… :wink:


#35

Simon

    November 2

Not really. Nothing really new. Apple’s numbers were 5.3M vs. the 4.9M estimate.

This is outrageously successful in a market where just about every other manufacturer is cutting prices because of price competition.

In other words they shipped 1.6% LESS than the year ago quarter. Meanwhile several PC makers had really good quarters, Lenovo actually had double-digit growth in the very same period.

This sounded totally off the mark from what I’ve been reading for years. So I did a quick search and found a more realistic analysis of a set of numbers from Gartner last year.

Lenovo Falls To No. 4 In U.S. PC Market Behind Apple

Lenovo’s U.S. PC shipments fell more than 25 percent in the third quarter, the steepest year-over-year decline since its 2005 acquisition of IBM’s PC business.

“Lenovo’s decline not only benefitted HP Inc. and Dell, but it also allowed Apple to overtake it as the third-largest PC firm in the U.S. market. Moreover, while all of the top manufacturers saw shipment declines in the quarter, none were nearly as deep as Lenovo’s, and HP Inc., Dell and Apple all registered at least nominal share gains while Lenovo lost share, according to Gartner.”

Best Buy is selling brand new Lenovo laptops in the $150.00 range, and even their most expensive models aren’t raking in the profits of MacBooks and Pros:

https://www.bestbuy.com/site/lenovo/lenovo-laptops/pcmcat230600050001.c?id=pcmcat230600050001&sp=%2Bcurrentprice%20skuidsaas

Keep in mind that Apple products are available in fewer countries than Lenovo, which also affects sales and shipments. The entire article is well worth reading, and it is focused on hard numbers rather than estimates.

To me not really a surprise (and all already mentioned in the very first post). Apple has neglected the Mac, while PC manufacturers kept improving their notebooks. So yeah, nothing really new.

No matter how much PC manufacturers keep improving their hardware, they are still running Windows or Android software and are locked into a price war with literally hundreds of thousands, if not millions, of models of other PCs that are extremely less profitable than Macs. You want to use Mac OS for any reason, you gotta buy a Mac.


#36

Simon

    November 2

The Gartner estimates were within 8%. Not bad for an estimate, especially because the conclusion was right: Mac units dropped.

8% is off the mark. It is not as bad as 10%, but it’s certainly not at all good. And for the last time, for real, Shipments are nothing resembling profitability. Revenues and average selling prices are. There are other factors to consider down the road. Amazon, who is the largest seller of PCs in the US, is doing extremely well with their house brand Fire tablets and TV sticks:

https://www.theverge.com/2018/2/6/16981504/amazon-tablet-fire-2017-black-friday-cyber-monday

Rumors have been floating around for quite a while that they could be getting into convertible laptops and possibly monitors. This could really drive down PC prices even more. Because Amazon’s ad sales network is growing exponentially (they are #3 behind Facebook and Google), this makes a lot of sense. They won’t even have to make much, if any, profit off of hardware sales to rake in the billions.

The fact that it is an estimate and later gets corrected is by the way something the originally quoted article actually spells out very clearly. The same uncertainty BTW pertains to their estimate for Lenovo’s numbers for example. Lenovo, who in the same quarter had GROWTH of 11% I might remind you. Or HP’s growth at 6% — that would be 4 times in growth what Apple suffered in loss. All in the very same quarter.

For the 4th quarter, Apple had the best revenue growth and average selling price. Growth of whatever shipments is not a relevant comparison as it is possible that few, or even none of the unit sales were profitable.

But these estimate, well, get used to it. Apple just told us they won’t show units anymore. All you’ll get is revenue.

Mestri explained what every analyst knows and acknowledges:

“Unit sales are not necessarily representative of underlying strength of our business. Revenue and net income, stock price, etc, over past 3 years, no correlation to unit sales in any given period… As you know well, our product ranges for all the major product categories have become wider over time… therefore, a unit of sale is less relevant for us at this point compared to the past because we have a much wider lineup… as I know that you’re aware, our top competitors in smartphones and tablets and computers do not provide quarterly unit sales either… nevertheless, we know this is something of interest, and we believe when providing qualitative commentary is necessary, we will.”


#37

One more thing…Lenovo was $126.78 million in the red in their fiscal 2017/18, “as costs are higher than revenue growth.” and “the company’s PC and smart devices business posted a 2 percent drop in profit for the year despite an 8 percent growth in revenue.”

https://www.firstpost.com/tech/news-analysis/lenovo-is-suffering-its-biggest-annual-loss-since-2009-as-costs-are-higher-than-revenue-growth-4481071.html

Their annual results over the past 13 years are so far out of Apple’s ballpark they might as well be on Pluto:

https://www.statista.com/statistics/233038/net-profit-of-lenovo/


(Simon) #38

Josh posted a very nice video detailing the difficulty the Mac faces over in this thread.


#39

My thoughts on this are more in line with this article fromTheStreet:

Why Apple’s Smart To Not Report iPhone Sales Any More

As the smartphone and tablet markets contend with declining sales, Apple seems eager to signal that its growth strategy is no longer tied to unit shipments.

"As its just-announced iPad/Mac refresh demonstrates, the iPhone is by no means the only product line for which Apple is pursuing an ASP growth strategy. Apple’s latest iPad Pros, MacBook Air and Mac Mini all feature meaningfully higher starting prices than their predecessors. Even the company’s latest Apple Pencil stylus (it’s magnetic and supports wireless charging and gesture controls) comes with a price bump.

Meanwhile, as Apple’s iPhone revenue grew 22% over the last two fiscal years, its Services segment revenue grew 53% to $37.2 billion. The fact that the iPhone installed base has been (in spite of limited unit sales growth) growing at a double-digit clip has helped, and so has the momentum for services revenue streams such as the App Store, Apple Music, Apple Pay and iCloud Storage, as well as ad revenue-sharing payments from Alphabet/Google (GOOGL - Get Report) .

Apple’s “Other Products” segment, which covers a slew of products for which unit sales haven’t been shared, has also been doing well. Its revenue has risen 57% over the last two fiscal years to $17.4 billion, thanks in large part to Apple Watch and AirPods demand.

For all of these reasons, there’s some truth to CFO Luca Maestri’s assertion (made on Apple’s Thursday earnings call) that the company’s quarterly unit sales numbers don’t necessarily reflect the underlying strength of Apple’s business. And the divergence could be even greater in the future, should Services and Other Products revenue keep growing strongly. Or if – as some speculate the company will eventually do – Apple rolls out subscription services that bundle scheduled hardware upgrades with services such as Apple Music, iCloud storage and AppleCare support."

The whole article is a worthwhile read:

https://www.thestreet.com/technology/apple-s-disclosure-plans-make-more-sense-after-looking-at-industry-stats-14768020


(Simon) #40

Apple can’t wait to shout from the rooftops when things are “fastest selling iPhone ever” but when the sales are flat, let’s hide all the numbers I guess.

Talking about unit sales is no longer easy for Apple, so it will stop. What will be too tough for the company to disclose to its investors next?