Overlooking Apple’s Success

March 9th, 2017

The arguments continue without letup. Apple has lost its ability to innovate. Steve Jobs can never be replaced, and there’s nobody at Apple that can manage the company as well. So the problems are mounting: Apple has slowed the pace of upgrading Macs. iPhone refreshes are modest and not terribly compelling for customers. The iPad? Well, sales have been dropping since 2014, so is the end near?

But facts sometimes get in the way.

So while it’s true Apple is late in upgrading Mac desktops, sales of the MacBook Pro with Touch Bar appear to have fueled a rise in sales during the December 2016 quarter, after a period of flat or somewhat falling revenues. What is forgotten is that PC sales have been declining for several years. Despite all the claims that Microsoft is on to something with its Surface tablets and PCs, the fact is that their sales dropped slightly in the last quarter. Well, revenue dropped; Microsoft doesn’t actually reveal unit sales, but it’s fair to say they are a fraction of Apple’s.

It’s true that Apple is not free of issues in growing sales. They used to dominate the educational market, but more and more school systems have opted for Chromebooks instead of Macs, iPads, and Windows PCs. It’s not that Google’s slim client platform is necessarily better for students. But it’s a whole lot cheaper, and budgets are real tight. This may be one of those areas where good enough beats best when it comes to paying the bills. Apple may have to rethink this market, because it’s hardly likely the situation will change anytime soon, particularly in the U.S.

Now when it comes to the slowdown in Mac updates, it’s also true that Intel has been slower to market with CPU upgrades. If the chips aren’t there, or offer very modest improvements, Apple is constrained. Indeed, the Late 2016 MacBook Pro might have been regarded as a very minor refresh were it not for the revised form factor and the Touch Bar.

When it comes to desktop Macs, some are skeptical. Despite Tim Cook’s assurance about positive things in Apple’s roadmap for desktops, and that they love pros, mere words don’t translate into real products. At least not yet. But a positive statement about Mac professionals can only mean that a Mac Pro refresh is in the offing. Will it consist of minor changes in the internal components, or a different form factor to address the main complaint in the trash can design, that there’s no room to expand the workstation internally.

There is also an “X” factor, the extent to which Apple’s mobile processors will be used to supplement Mac functions. An ARM-based system-on-a-chip is already present to operate the Touch Bar. The rumors suggest Power Nap is next. But that’s well short of a wholesale switch to Apple’s A-series silicon, and there are issues that might make a move from Intel a less-compelling choice.

Another chip possibility is AMD’s Ryzen, which supposedly offers equal or better performance than the high-end Intel Core chips at roughly half the cost. Early benchmarks appear to confirm such benchmarks, except for reports of problems with some games at 1080p resolution. AMD claims the problem will be solved with motherboard patches and efforts to work with game developers to optimize their apps for the new platform.

If Apple went with AMD on an iMac, the graphics issues probably wouldn’t matter, at least for the 27-inch version, since it uses a discrete graphics chip. Imagine offering an iMac with an 8-core processor for several hundred dollars less than current quad-core versions.

Of course, there aren’t any rumors yet about a possible switch to AMD as an alternative to Intel. But few doubt that Apple is already testing different chips and exploring the possibilities. At the very least, the possibility of such a move might force Intel to do some severe discounting.

Now about the iPhone.

After several quarters of falling sales, Apple returned to positive territory in the December quarter, with record sales. While Samsung sells more units, Apple continues to dominate in high-end smartphones. Just as important, a recent report from Strategy Analytics claims that Apple grabbed 79.2% of the profits in 2016. That’s down from over 90% the previous year, but it’s still an amazing number. So it’s reported that the global smartphone industry had operating profits of an estimated $53.7 billion, and Apple’s share was $44.9 billion. Samsung’s operating profits were $8.3 billion.

The iPad?

Well, if all those online and TV ads mean something, Apple is making a renewed effort to boost sales. There are published reports of stock-outs for some iPads, perhaps signifying that new models are in the offing. But rumors of a forthcoming media event to roll out the new lineup have migrated from March to early April.

Will that make a difference in sales of new iPads? What about all those alleged postponed upgrades, from people who have been hanging onto their iPads longer than expected?

And does Apple have some unsuspected new products in the pipeline? Isn’t it about time? But even if it occurred, the skeptics will no doubt find excuses to explain why it’s destined to fail.

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