The Most Successful Business in the World is Doomed, Again?

It seems like a pretty regular thing these days that the second a quarter closes and the quiet period begins, a class of writers come out of the woodwork to talk about how doomed Apple is going into earnings. Because of course this year was supposed to be different, this year they were supposed to radically reshape a category that they invented, and have at the very least set the pace for over the last decade.

Today's example For Apple's iPhone X, is it time for 'full panic mode'?

As of today, Apple is worth $817 billion, with an earnings per share of $10.22. More than doubling the EPS of Amazon who did a great job this quarter and is currently up about 4%.

I don't have any real insight on how the iPhone X, or iPhone 8 are selling. I do however see quite a lot of them on the subway to work every morning in NYC. It's a delightful product to hold and use. It's not being recalled, bent, micro-abraded. You don't have to hold it in some magic vulcan grip to make it work. Face ID works like a champ, touch ID works great too. This year's iPhone lineup feels like a nice upgrade from the 6/6s line, I never owned a 7, so I can't help you there.

What we all have insight into, after a decade of iPhones, is that Apple is a very well run company. Their supply chain works well at a scale mere mortals can barely comprehend. I've worked in semi-conductor forecasting, and the complexity we are talking about here is non-trivial. They make it work.

It's probably time to stop treating them like amateurs here. Six hyperbolic paragraphs before you say:

The company will report its fiscal second-quarter results Tuesday, either alleviating or confirming fears the iPhone's huge growth days may be behind it.

Apple has already told us everything we need to know. The iPhone has a price range from $349 - $999 (SE -> X), every year there will be a new iPhone for you to buy, and the phone you buy will probably be better, last longer, and do more than the one you bought previously. The software will update frequently bringing new features and designs to your phone for a pretty good window.

Examples of shocking bombshells would be:

  • Apple says no new iPhone for 2018
  • Apple to make iPhones free if you subscribe to Apple service
  • Apple announces that it will be a wireless carrier

Everything in earnings announcements and sales records is about the past. Real growth in a market where you already control 90% of the revenue is about how the decisions and investments Apple is making now manifest in the 2019 and 2020 iPhones. WWDC will give us a glimpse of some of the software changes coming, but Apple does a great job of making sure no one is deeply surprised by the core business.