When an iPad Pro Is Enough: A Computer's Conundrum


Added on  2019-09-16

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Today’s Top Supply Chain and Logistics News From WSJThe era of perpetual growth for companies in Apple Inc.’s supply chain may be over. The electronics giant’sfalling sales are reverberating across Asia, with iPhone component makers reporting weak earnings and issuing cautious forecasts amid a broader downturn in the smartphone business, the WSJ’s Eva Dou reports. Among the big suppliers, iPhone assembler Foxconn Technology Group reported a 9.2% drop in first-quarter net profit and another assembler, Taiwan-based Pegatron Corp., showed a 35.1% plunge in profit. Others, including screen providers and sensor makers, also are reporting steep declines. The bigger concern is the future: market research firm IDC says global smartphone sales will grow only 5.7% this year, far below recent norms. Supply chains will contract to meet the smaller market growth, cutting into the movement of goods from components to the distribution of finished products.AppleInc.’s weak smartphone sales are starting to squeezeretailers and suppliers.Best BuyCo.reported a hit to holiday sales as consumers purchased fewer mobile phonesand accessories, reports the WSJ’s Drew Fitzgerald. The components makers that produce chips and other parts for theiPhone alsowarn their revenues will decline sharply as a result of soft demandfor high-end smartphones, writes the WSJ’s Eva Dou.Victims includeTaiwan Semiconductor ManufacturingCo., which relies on Apple for 20% of its sales and says first-quarter revenue will drop up to 10.8%from last year. Camera module manufacturerLargan PrecisionCo. andCatcher TechnologyCo., which makes smartphone casings, also predict weak results.Suppliers hope to get a boost later this year when Apple releases its latest iPhone.But the turbulence exposes how quickly shifts in consumer demand can work their way through a global supply chain.What do we know now in fall2016 about demand for smartphones?
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"China Is Generating Most If Not All Of Apple’s Revenue And Operating Income GrowthFeb. 1, 2016 1:55 PM ETDisclosure:(Author)I am/we are long AAPLSummaryChina has significantly increased its operating margins and contribution to Apple over the past two years.The country has generated more revenue and operating income dollars than the rest of Apple for four quarters.Kantar has Apple's Urban China smartphone market share increasing from 21.5% a year ago to 27.1% in the December 2015 quarter.Strategy Analytics has it increasing from 10.9% to 13.1%.The trend is more important than the numbers.As all Apple (NASDAQ:AAPL) investors know, China is a very important market for the company. Apple generated $18.4 billion in revenue in Greater China, 24% of its total revenue (27% of its operating income) and an increase of 14% year over year. Without China's revenue, the rest of the company would have reported a 1.6% decrease year over year versus a 1.7% increase."SourceAppleApple(NASDAQ:AAPL) CEO TimCook is heading to China to meetwith top government officials.Thereis much to discuss. iPhone sales aresoftening. To add insult to injury, Applejust lost a trademark to the iPhone in
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China. Xintong Tiandi is now free to use its "IPHONE" trademark for leather products.Apple will battle the case to the Chinese Supreme People's Court at a time when iPhone sales are down by 13% and Chinese sales are down by 26%. The government appears to be cracking down on Apple. They shut down services for iBooks and iTunes last quarter, requiring that any content shown in China gets stored on servers located in the country. Carl Icahn andIcahn Enterprises(NASDAQ:IEP) sold out of the stock explicitly due to concerns withtheir business in China.Apple's newest Chinese headache? Tsinghua may be gearing up for a biddingwar against Apple forImagination Technologies. Apple currently owns 8% of the British chip designer and wants to own the rest. Apple (AAPL) has underperformed the S&P 500 (SPY) by over 10% since we last discussed it here:Is Apple Rotting?The Chromebook category is fast gaining traction in schools in the United States.CreditGabriella Demczuk forThe New York TimesChromebooks Reported Gaining on Apple - and Microsoft - in Classrooms (August 2015)As school districts across the country increasingly invest in technology for their students, the volume of personal computers in the classroom is surging.And it is Chromebook – notebook computers that run on Google’s Chrome operating system – an upstart in a sector dominated by Apple and Microsoft, that is largely responsible for the growth trend in schools, according to a new report from IDC, a market research firm.Last year, the market for desktop, laptop, tablets and two-in-one computers shipped to kindergarten-through-12th-grade schools and institutions of higher education in the United States amounted to $7 billion, according to estimates from IDC.In all, the company said, about 13.2 million systems were shipped in 2014 – about 33 percent more than the year before.With its line-up of iPads, MacBooks and other higher-priced products, Apple reaped the greatest revenue in the sector last year, accounting for nearly half of the total dollars spent on personal computers in education, the report said.
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In terms of the sheer numbers of devices sold, however, Microsoft remained in the lead. In 2014, about 4.9 million Windows devices, including notebooks and desktops, shipped to schools, giving Microsoft a roughly 38 percent market share in unit sales, IDC said.Apple, meanwhile, shipped about 4.2 million devices for schools, including desktops, notebook computersand tablets, accounting for about 32 percent of the education market, according to the report.But the Chromebook category is fast gaining traction in the United States.Last year, about 3.9 million Chromebooks were shipped in the education sector, an increase in unit sales of more than 310 percent compared with the previous year, IDC said. By contrast, iPad unit sales for education fell last year to 2.7 million devices, compared to 2.9 million in 2013, according to IDC data.“Even if Microsoft is No. 1 in volume and Apple is No. 1 in revenue, from the growth perspective, nobody can beat Chromebook,” said Rajani Singh, a senior research analyst at IDC who tracks the personal computer market and is the author of the report.Opinion: Apple's Smartphone Future (March 2016)SummaryFor the first time ever Apple sold fewer iPhones y/y in Q414. It also lost market share to the tune of 3%.I do not think this is related to Apple's upgrade cycle. The high end smartphone segment is saturated, and Apple controls almost all of it.And while I do not think the rumored iPhone SE will do much to solve this problem, its trade-in program coupled with selling used iPhones to India will.According toGartner, Apple (NASDAQ:AAPL) sold 71.5 million smartphones in Q415 vs. 74.8 million smartphones in Q414.
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