Apple's sales start slowing down
It's earnings season again, so all the companies are busy reporting how much cash they raked in. Apple's earnings were always going to be an interesting one, given it's the quarter before the holiday season... but the results this time around paint an interesting picture of a trend that may continue.
Essentially, sales were flat. Apple didn't sell any more iPhone units than the same quarter last year, about 46.8 million devices, and even sold far fewer iPads than last year, at 9.6 million. Despite this, the company made more money overall because it's pushing the margin on the high-end iPhones higher every year: the average sale price for an iPhone is now $793, up drastically from $618 in the same quarter last year.
And that's where the other piece of news comes into play: Apple is now going to stop disclosing the per-device unit sales as soon as next quarter. It's a tradition that's rare in the smartphone industry, but was an Apple staple, used to push the industry into following the ever-increasing numbers each quarter. As unit sales are trending downward, it's a good time to bury the metric before it starts looking bad.
Tim Cook's argument about why the unit sales are going away is simple: "A unit of sale is less relevant today than it was in our past" and that they are "not representative of underlying strength of our business." That's true, in a sense, because Apple is driving revenue up per sale today, hiding a longer-term problem: phone sales probably won't ever start growing again.
The change flies in the face of Steve Jobs' philosophy on reporting unit sales at Apple, with him telling The New York Times in in 2009 that Amazon's lack of unit sales for Kindle was for a reason: "Usually, if they sell a lot of something, you want to tell everybody."
It's also notable that the change in reporting coming in before what's usually Apple's biggest sale season, so that we aren't able to decode how diversification in iPhone models is affecting the overall bottom line in the most important three months. That matters because Tim Cook also said today that he expects the holiday season to perform worse than usual this year, due to weak demand in emerging markets and that iPhones launched sooner than normal this year.
As Tom Warren at The Verge pointed out, the big question is what's next for the company, given how much of that cash comes from the iPhone:
"It’s a good time to start burying sales data. iPad and Mac consistently down this year, and iPhone has peaked. Questions over Apple’s next trick remain, as it continues to squeeze iPhone services revenue for years. Wall St only cares about $$$, and [average selling price] will soar due [to] price hikes"
To be clear, everything is great right now! Apple actually made 20 percent more in revenue last year over the same quarter, showing that its strategy of driving prices up across the board is working, but what's incredibly clear is that that's not sustainable forever. The services business (iCloud and Music) are up to $10 billion per quarter, a promising bright spot, but a splash in the pool that is iPhone revenue.
The next big revolution is a huge question, and right now nobody knows what it is... even the world's most valuable company.
What you need to know: Apple made more money than ever, but it's starting to be unable to hide that overall devices sold is falling, even if it's making more money from each one.
Why it matters: Smartphone growth couldn't be up forever, but Apple is especially exposed to a slowing industry given that the majority of its revenue comes from the iPhone alone. It's an incredibly valuable one-trick pony!
Thousands of Google employees walk out around the world, here are their demands
Fantastic list of demands on a day with huge impact: employees essentially ground Google to a halt to protest the company's systematic coverups of sexual harassment, and the scale of this action will likely start a serious conversation internally about how to fix a toxic culture.
Flickr will end free photo storage, delete free users' photos in January
I had forgotten that Yahoo sold Flickr to Smugmug, and there's a big change coming: it can't possibly afford to offer so much free storage to everyone, so it's planning to delete photos for millions of users if they don't upgrade to a paid plan by January.
OpenAI taught machine learning how to play Mario
Incredible paper from OpenAI, which taught a computer intelligence algorithm how to play Mario, but did it by encouraging it to avoid boredom.