Wall Street analyst worries iPhone is facing '2nd recession' after 2019 annus horribilis

Apple is now staring down the barrel of a "second recession of the iPhone era" with handset shipments in China calculated to have fallen off a cliff due to country-specific demand and production issues caused by the coronavirus. Or so says Wall Street analyst Bernstein, which noted the unfortunate timing of epidemic following …

[Anonymous Coward]

At least

they are still making money unlike say Boeing, Airbus, GM, Ford, 'big oil' and a host of other big companies.

This crystal ball/sooth sayer should spend his time looking at the prospects of those companies rather than Apple who could shut up shop tomorrow and still keep in business with everyone being paid for over 2 years.

but as with everything in the media these days, slagging off a successful company seems to get more hits and therefore more Ad revenue for the company posting the slagging.

In the slagging off league, Apple comes a close second to Tesla. Read into that what you will.

[Flocke Kroes]

Re: unlike Boeing, Airbus, GM, Ford, 'big oil' ...

Boeing are making money: They are getting the bulk of the Artemis program budget and are working hard on excuses for not delivering by 2024. 'Big oil' have received substantial direct subsidies and have been working hard on tax cuts, interest free loans and eliminating royalties for oil taken from federal land. Unlike Boeing, 'big oil' are showing strong progress on all these activities and more. I am not familiar with Airbus, GM and Ford but I very much doubt they are slacking off spending tax payers' money on lobbying for more tax payers' money to anything like the extent of Apple.

[NeilPost]

Re: At least

Exactly. A great time to double down and launch the iPhone SE/2 to keep the wheels turning. It will also sell very big into corporate against cheaper Android handsets that many have settled on when they can’t/won’t pay for a ‘full on’ Smartphone like an iPhone 11/Galaxy S20 etc for all but execs. Corporate cheese-Parer’swill love it. It’s a great value phone for kids too. I’d predict it to become the biggest selling iPhone ever.

LG, HTC, Sony, Nokia night as well not bother re-opening.

I can’t see past Apple, Samsung and the Chinese value manufacturers surviving.

[Anonymous Coward]

Too bl**dy expensive now to upgrade every 2yrs

Right up until the iPhone 8, I could stick £20-£25 per month into a savings-pot, and know I'd have enough in that pot to buy a new iPhone every couple of years. This worked fine for the 3GS, 4S, 5S, 6S, 8, paired with a well-negotiated SIM only deal @ £10-£15 per month.

Then the iPhone X came along @ almost 2x the cost of all the flagship models which came before it. That was way too much of a price jump for most folks to simply absorb, so the result is that most folks now just upgrade less often. I'm now aiming at once every 4 years instead of once every 2 years.

The good news is that iPhones do now seem to comfortably perform well for 4+ years if kept up to date and not abused too harshly, and Apple do seem to commit to 5+ years of iOS updates from when it was first released.

Probably not a bad thing from an environmental perspective either.

Not so good for Apple's figures though, if others are now halving the number of iPhones they purchase over a 4 year period!

[Peter2]

Re: Too bl**dy expensive now to upgrade every 2yrs

Having just put a new remote access system at work in that required a smartphone app for authentication, I needed for the first time to have a smartphone. I picked up a Huawei Mate 10 for the cost of one monthly payment on a Iphone.

My impression using it for half an hour is that it has 90% of the featureset of an iPhone for maybe 5% of the price, and that Apple is probably screwed when it comes to making smartphones.

And that I still don't like smartphones and am keeping my featurephone. I haven't even stuck a sim card in the thing; it works perfectly well for doing what I want it to do via wifi.

[steviebuk]

Re: Too bl**dy expensive now to upgrade every 2yrs

"Probably not a bad thing from an environmental perspective either."

Not sure about that as they are against right to repair. But right to repair will allow independent repairs shops to fix old iPhones saving them from the shit heap.

[Arthur 1]

Re: Too bl**dy expensive now to upgrade every 2yrs

This is one thing that didn't even seem to register with them. I guess they assume everyone is on plans with two year cycles and will just eat the added monthly cost of the next phone being double price. There's also very much less reason to upgrade than there used to be, several years old phones still run fine these days.

Another thing they don't seem to consider is that a lot of people might be upgrading their phones to kit that's not Apple made. The statement in the article just assumed that anyone who hasn't bought a new iPhone hasn't upgraded. Bit of a leap on their part.

[David Lawton]

Re: Too bl**dy expensive now to upgrade every 2yrs

You do know Apple released the iPhone SE last week? Its £419 which fits in your budget only needing £17.45 a month put in a pot over 2 years. It is basically an iPhone 8 design but with newer internals.

I was tempted to buy, but I'm happy with my 8 still though and have no complaints, still nippy on iOS 13 and battery is still great almost 3 years on so i really could not justify it. The new SE is surprisingly well priced i think, at least by Apple standards.

[Anonymous Coward]

Re: Too bl**dy expensive now to upgrade every 2yrs

Anyone who (effectively) buys a phone on hire-purchase can't afford the phone in the first place.

[LucreLout]

Re: Too bl**dy expensive now to upgrade every 2yrs

Then the iPhone X came along @ almost 2x the cost of all the flagship models which came before it. That was way too much of a price jump for most folks to simply absorb, so the result is that most folks now just upgrade less often.

My intern still upgrades his phone every year, spending north of £1200 on the latest model, and then decries not being able to afford to buy a house or flat anywhere. Well, that's more than a months mortgage payment on the loan needed to buy my house gone up in smoke every year when a £100 "landfill android" would work just as well.

Even assuming a discount on new price for the return of his old phone still yields more than I'm currently paying for a month of the mortgage, though I freely admit that is on a LTV less than 50% and the property has risen by 50% of my purchase price in the interim. Still more than enough for a flat near me though....

[IGotOut]

Re: Too bl**dy expensive now to upgrade every 2yrs

I presume your intern also sells the old one for about 80% of the cost.

Yes that may be one month's mortgage, but what about the 10% deposit + moving costs + fees + furniture?

Many buy stuff like this, or eat at fancy restaurants, because even if they saved every spare penny they had, they would NEVER be able to afford to buy.

Then you finally get your 40 year mortgage and you end up giving it to the local council when you, despite paying taxes all your life, go into a home and have to hand the keys over.

[Robert Grant]

Re: Too bl**dy expensive now to upgrade every 2yrs

80% seems optimistic, even assuming the phone's kept in really good nick.

[ThomH]

Re: Too bl**dy expensive now to upgrade every 2yrs

Yeah, a quick fact check: Apple's own trade-in pricing will offer "up to" $420 for an iPhone XS (i.e. last year's model) and lists this year's equivalent, the iPhone 11, as _starting at_ $699. So that's presumably 60% if you wanted to exchange a mint condition example of last year's phone* for the entry level this year.

* though some non-Apple companies have slightly higher headline figures; you might be able to get as high as 69% value back assuming you never took the thing out of the box.

[LucreLout]

Re: Too bl**dy expensive now to upgrade every 2yrs

Yes that may be one month's mortgage, but what about the 10% deposit + moving costs + fees + furniture?

He could save those by doing away with the served breakfast and coffee every day and making his own.

Many buy stuff like this, or eat at fancy restaurants, because even if they saved every spare penny they had, they would NEVER be able to afford to buy.

And yet I've demonstrated n this forum time and again that literally anyone can buy a starter home - even on full time minimum wage. You won't be able to buy the home you grew up in, but then neither could your parents the first time they bought - its known as the housing ladder for a reason.

Then you finally get your 40 year mortgage and you end up giving it to the local council when you, despite paying taxes all your life, go into a home and have to hand the keys over.

Only a fiscally retarded idiot would buy a 40 year mortgage - just take the normal 25 year one that you can easily afford, even on minimum wage.

And yes, when you need nursing care the state takes your home - why would my kids pay for your care via taxes that you can afford to pay by selling a home you'll never need again, just so your kids can inherit it? If any tax were ever going to be fair, it would be inheritance tax - you literally have no further use for the money.

[NeilPost]

Re: Too bl**dy expensive now to upgrade every 2yrs

The iPhone SE/2 has just reset that for you.

[Anonymous Coward]

Not if you think about it in terms of cost per hour of usage

How many hours a day do you use your phone? Screen Time tells me I'm averaging about 2 1/2 hours a day, or 1825 hours over two years. The cost of the 11 Pro Max I bought last fall comes out to about 30-35 cents an hour after trade in. How much does an evening at a bar or restaurant (back when we were able to do things like that) cost you per hour? How about going to the movies/theatre? Let alone expensive hobbies like owning a boat, or going on a vacation.

Sure if your phone is still working great then you might decide to get an extra year out of it before replacement, but when measured against the time you use it a phone is one of the cheaper activities/hobbies even if you buy the modern $1000+ flagships.

[A Non e-mouse]

Saturated Market

I think the market is fairly saturated and there are far fewer reasons (i.e. New gimmicks) to replace a smart phone before it dies. I'm probably going to keep my current phone until devices supporting 5G come out at a reasonable price point (and battery life!)

[B83]

Re: Saturated Market

Yeah the market is saturated and there is little buzz about a new phone being brought out. Its time for something really innovating that works and has durability.

If you're an apple fan they Yeah there is always a buzz but for Jo public its just another phone. Its the cost as well, one of my mates spends £70 a month for an Iphone. I've no problem with that its their choice but that is very, very expensive.

Im the same for 5G, just wait until my old phone dies then get the new 5G phone and fry my brain (if you believe the fear scaremongers.......Ickey* baby I believe you!)

*David Icke

[LucreLout]

Re: Saturated Market

Im the same for 5G, just wait until my old phone dies then get the new 5G phone and fry my brain (if you believe the fear scaremongers.......Ickey* baby I believe you!)

*David Icke

You utter b'stard.... I now have Icke Icke Baby - to the tune of Vanilla Ice's ICe Ice Baby - stuck in my head. So thanks for that......

[jelabarre59]

Re: Saturated Market

You utter b'stard.... I now have Icke Icke Baby - to the tune of Vanilla Ice's ICe Ice Baby - stuck in my head. So thanks for that......

Ah, fortunate then that Clean Tears' "Desperate" has been playing through my head all morning (which is interesting as I've been listening to a lot of Alstroemeria Records product as of late).

[gnasher729]

Re: Saturated Market

How do you spend £70 a month on an iPhone? An iPhone pro should last for three years / 36 months so that is £2,520?

Or could it be most of the money is for bandwidth for downloading movies when he’s on the road? Between iPlayer, Netflix and iTunes I can download everything without paying for excessive bandwidth by doing it at home or at work (until recently).

[Wild Elk]

Re: Saturated Market

Nice of you to assume he’s on a 3 year contract when it’s most likely 2 years

[Anonymous Coward]

Re: Saturated Market

"I think the market is fairly saturated and there are far fewer reasons (i.e. New gimmicks) to replace a smart phone before it dies. I'm probably going to keep my current phone until devices supporting 5G come out at a reasonable price point (and battery life!)"

It is, and it's definitely not a bad thing. I realised, 3 weeks ago, when my smartphone apparently died (actually, it bugged out, leaving me with 3 days with no smartphone), I was totally out of business without it ...

No bank account authentication, no way to pay invoices, even no way to order a new phone via amazon !

Turned out, I could obtain a re-furnished Nokia 7.1 for 126 E ! The days of iphones at 1200 E are totally over.

[circusmole]

After 3 years my iPhone...

... started to die, the battery lasted less and less time, the device would start behaving strangely and just hanging. I looked at replacing it with another iPhone but the prices seem crazy to me. So, I got an el-cheapo Android device. I would rate it subjectively as 80% as 'good' as an iPhone at 30% of the cost. Several family members and colleagues have taken the same route. I think this is a big problem for Apple as well as the pandemic effects.

[Semtex451]

Re: After 3 years my iPhone...

Agreed. If Apple had released a proper replacement for the SE last year that could have spared them the slump (outside of china). Instead this year they simply put a newer chip in an iPhone7/8, call it SE and expect the cash to roll in. Not from 7/8 owners it won't, it offers them very little indeed.

[Anonymous Coward]

Re: After 3 years my iPhone...

I hung on for a new SE to replace a 5S, but it didn’t materialise so I bought an 8 last year. Doubt I’ll be replacing that for at least another 3 years.

[johnnyblaze]

The 2020SE may be Apple's 'answer', but they're only doing the rinse/repeat cycle they always use. Even the 'new' SE is a 5 year old design, probably with re-used internals with a upgraded CPU to make it feel faster. Apple don't really have an answer - they've milked their market as much as they possibly can, and now it's drying up.

[Pascal Monett]

"the global pandemic derailed Apple and the rest of the industry"

Exactly. Everyone is impacted. Apple has more money than most, it will weather this storm without problem. The shareholders might not get dividends, but they're the only ones who care about that.

"Apple is now facing the second recession of the iPhone era. Everyone knows that fiscal Q2 results will not be good"

Boo hoo and cry me a river. There already have been hundreds of companies to bite the bullet. More than 20 million people have lost their job in the USA alone and you're "worried" that Apple will not make its usual billions ?

Wall Street is overrated.

[LucreLout]

Re: "the global pandemic derailed Apple and the rest of the industry"

Wall Street is overrated.

I dunno, it's still the best finance film of all time - beats the hell out of boiler room, wolf of wall street (except for that scene), money never sleeps etc etc

[bombastic bob]

Re: "the global pandemic derailed Apple and the rest of the industry"

Maybe it is time for "the entire industry" to look at "other than China" for manufacturing. SERIOUSLY look. And Mexico looks pretty good. "Hecho en Mexico" - sounds good to me!

When you look at how they treated the rest of the world with respect to masks and gloves, i.e. "we're keeping them here, you can't have them" at a time when it MATTERED, you can't trust them NOT to do this AGAIN with ANYTHING from rare earths and raw materials to specific finished goods that _SOMEHOW_ ended up "all being made in China" [by dssign? corner the market so you can CONTROL?]

They have betrayed our trust, outstayed their welcome, and demonstrated that they can't be trusted to stop a virus that started spreading inside THEIR country, from going international: While they were simultaneously restricting travel WITHIN THEIR COUNTRY in the early stages of the viral breakout, international travel to/from Wuhan was "business as usual" for around 2 months without a WORD of caution.

"Cheap Labor" - with extra hidden costs thrown in, not so "cheap" any more...

[Dr_N]

Re: "the global pandemic derailed Apple and the rest of the industry"

bombastic bob> SERIOUSLY look. And Mexico looks pretty good. "Hecho en Mexico" - sounds good to me!

But they've not paid for your wall yet.

[RyokuMas]

Re: "the global pandemic derailed Apple and the rest of the industry"

"... look at how they treated the rest of the world with respect to masks and gloves..."

Kinda like Trump did to Canada?

People who live in glass houses shouldn't throw stones...

[hoola]

Re: "the global pandemic derailed Apple and the rest of the industry"

The West chose to do business with China in the pursuit of higher profits and cheaper goods. It is nothing about "Trust", just a purely commercial arrangement where none of the companies making use of cheap labour and lower (non existent) H&S/Environmental regulation did anything to assess the implications of offshoring everything.

The reason the likes of Apple and others did this is profit. This takes you full circle, the fault of the current supply problems are the responsibility of Apple etc.

As far as the virus is concerned there is the US view (Chinese virus) and everyone else's view, COVID19. Whatever the source (most likely abysmal hygiene practices allowing cross-species infection) we have been living on borrowed time for years. SARS and MERS should have been a wakeup call but it was ignored as most of the problem went away before it reached the West. We are now all paying the price for the insane amount of travel (globally and within each country) allowing COVID19 to spread as quickly as it has and the offshoring of so much manufacturing.

[Marcus Fil]

@hoola

Pint of beer for you. Pint of disinfectant* for the "slow to learns" who believe in the misdirection and lies.

*Despite the rambling musings of the bigly orange panda neither drink nor inject disinfectant - ever.

[Paper]

Poor quality

Last year I ditched iPhone for Android. No regrets. Apple need to refocus on quality, because recently a lot of their products have more issues than their competitors.

It's 2020 and iPhone still can't do a basic file transfer, you either have to sync, bluetooth or email files to yourself, or some other contrived method.

Only because it's Apple do we still buy laptops with keyboards whos buttons are known to break. If it happened for any other brand we'd buy an alternative and just use Linux.

[Sp0ck]

I'm an Android user, the wife and child are both Apple. They're great devices and now they don't need to replaced every 2 years, a 3-4 year cycle is more the norm. If you could get an IOS device from someone other than Apple I'd go for it. I don't like the SE/8 the bezels are huge and all the others they do are far too expensive. So Android is where I'm staying, luckily for Apple my wife is more than happy after upgrading her 5s to an 11 Pro Max!

[bombastic bob]

"my wife is more than happy after upgrading her 5s to an 11 Pro Max!"

(from the ragtime bar song "My Gal's a Corker")

"Yeah boys, that's where my money GO-o-OES!"

(I suppose I could try to add a verse about iPhones)

[martinusher]

It may not jsut be the coronavirus

China was a big market for Apple products because of the bling factor -- its a way of showing off that you can afford a fancy American phone rather than the cheaper local models.The persistent attacks on the Chinese by the Americna government won't do much for the image of American products; instead of being seen as smart and leading edge they're now a little behind and not very good value for money -- you can buy Huawei, save money and show your patriotism all in one go.

(So much for "Making America Great Again")

[Anonymous Coward]

Re: It may not jsut be the coronavirus

They may lose both ways as Westerners boycott Apple for making the phone in china.

[fredesmite]

I am too cheap

To buy a $1000 phone

That no one will ever call me on

[Anonymous Coward]

I expect 5g will give them good sales this year

There only real chance of good sales from people who held off buying in last few months

[Peter 39]

It's amazing that it's 2020 and we still have the same-old same-old whinging about iPhones.

These folks have been proven wrong for over a decade and still they blather. I guess they just can't read the financial reports. Lots of people have voted with their wallets. Many have bought some variety of Android phone, fewer but still a goodly number bought iPhones. And Apple has cornered almost all the profit in that business (about 80% last time I looked).

With the current massive unemployment in the US, all the companies will have an annus horribilis. The wonderful-Wall-Street-analyst isn't telling us anything that was not already bleedin' obvious. Anything to get clicks, I guess. Put "Apple" in the headline and get more - that's all it is. Just blather.