Apple 2016 iPhone Sales To Fall For The First Time Due To "Lukewarm Demand", Shipments To Drop 8.6%

Tyler Durden's picture

Another day, another warning about slowing demand for Apple products, this time once again out of Japan's Nikkei (which in recent months has been quite vocal in its cautions about a substantial cliff in AAPL growth), which moments ago warned that Apple will see the first annual decline in iPhone shipments this year since the smartphone's debut in 2007 "due to lukewarm demand for a new model, people familiar with the matter told Nikkei Asian Review."

As Nikkei reports citing a person at a major supplier, overall iPhone shipments will total 210 to 220 million this year, falling as much as 8.6% from 2015.

"Hon Hai Precision Industry Chairman Terry Gou has told his staff that the demand for iPhones will remain feeble until at least early next year," a source said. Hon Hai, better known as Foxconn Technology Group, declined to comment. Gou told Chinese Premier Li Keqiang in China in late May that the company's overall orders were falling this year, although Foxconn did receive a sudden rush of orders in April and May. Foxconn makes about 70% of iPhones sold globally.

Foxconn reported that its revenue fell 5.5% year-on-year in the January-May period. Apple also reported its first sales decline in 13 years in the quarter ended in March, and forecast another drop in the current quarter.

Sources said that iPhone 7, the newest, lacked innovation, although the 5.5-inch model would feature dual lens, which offers a more powerful zoom.

Jeff Pu of Yuanta Investment Consulting estimated in a May report that total iPhone production this year would fall 12% year-on-year to 207 million units due to weak sales of iPhone 6s and 6s Plus.

The biggest problem for Apple? The same catalyst that sent the stock soaring in the past few years, only to drag it lower now - China.

Apple's troubles are further exacerbated by growing challenges it faces in the slowing Chinese economy, a key market accounting for about 25% of its sales.

 

Suppliers said that a perceived change of strategy at Apple was also causing them problems. A source at a major supplier said that Apple's current strategy of selling different colored iPhones has led to an inventory build-up for suppliers, compared with simpler color schemes and lower costs previously.

Actually it's not just China - the complete lack of innovation is also troubling: "Apple's resorting to colors instead of pursuing innovative features to boost sales shows that the company now has no way of breaking out of the current doldrums," the source said.

Apple's tendency to place extra orders also hurts suppliers. "Apple is always overbooking its capacity. It works only when demand is strong. However, when demand softens, it leads to inventory correction for all the suppliers," said Lin Chien-nan, president of Wintek, a former major touch module supplier to Apple. WinTek filed for restructuring in late 2014 after expanding aggressively.

"There is no concrete contract between suppliers and Apple. Apple never signs a contract with a fixed price and guaranteed orders," said Lin, "The orders are dynamic and could be adjusted every quarter."

Meanwhile, expect Apple to issue even more bonds and use the proceeds to buyback stock as it is nowjust another, unimaginative, run-off-the-mill company besieged by bankers with ideas of "financial innovation." Expect its multiple to reflect as much.

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Dre4dwolf's picture

https://www.amazon.com/Blackview-Ultra-Plus-Android-Smartphone/dp/B01CJJ...

150$ 

Does the same shit, looks the same.

At some point people will realize 650$ + a cell phone in their pocket > than a 800$ cell phone in your pocket.

COSMOS's picture

They should just call the iPhone the Spy-Phone. Pfuck smartphones

Dre4dwolf's picture

Personally i think Smart phones are great.

You get a calculator, A flashslight, a level/clinometer/gps/compass/web browser. ( i use all that stuff for work, say I go to look at a roof to renovate/patch, I can pull my phone out and get the pitch/slope of the roof in a few sec) go to the office punch everything in and calculate the hip etc throw a quote in the email ASAP etc...

Why bother holding all these tools to measure ^^? all its missing is a surveyors tape lol but you can get that data well enough from sat images.

Its like a swiss army knife for modern life.

 

I still use my Samsung S5 (which I got for free as a beta group for the phone), after the terms were over ( 1 year ) , I wiped it, I have most of the tracking and telemtry data completely blocked, a minor inconvenience since my phone hasn't started living my life for me like other peoples have.

Nowadays if you leave all the tracking data on your phone starts to remind you not to break routine " go pick up your kids from school etc " meanwhile you never even told it you have kids the phone just notices that you park infront of a school over a given amount of trips and assumes you have kids that you need to pick up every Monday at 3

Just too much tracking, a lot of it is innocent and useful and such, but thats how they hook you and turn your brain to jello , if you need a phone to remind you that you have children, it might be time to do some memory training/brain games (preferably not the ones on your smart phone ).

Do I look at the new phone? Samsung S7 or w.e? sure, but then I look at the  600+$ price tag and I am quickly reminded how I would rather buy a 50oz bar of silver than a new phone lol

 

Smart phones are great, but my S5 does the same crap an S7 or an Iphone S6Plussuperduper purple edition would do.

 

NoDebt's picture

Smartphones are like Swiss Army Knives.  They can do a lot of things, none of them well.

Apple is just another gadget maker out of new ideas.  I think it's time for Tim Cook to go buy an overpriced NBA team and ride off into the sunset (riding off ON WHAT, I leave to your imagination).  He's innovation death incarnate.

Theta_Burn's picture

There was an age, long. long, ago.. that Blackberries were the shit..

Dre4dwolf's picture

I had a Blackberry , Pong and Brick Breaker got old pretty fast lol

BUT I have to say, texting on a BlackBerry was what they did right, it was very enjoyable to Text on a BlackBerry (at that time).... also the fact that it showed you in Messenger if the text was received and read was nice, so you could tell if people were ignoring you (it was a different world kinda, now you wana just ignore people lol).

FireBrander's picture

The proof is in my local middle/high schools....for years, you "had" to have an iphone...no more...Galaxy is the new "cool"...and honestly, if you compare the two, the Galaxy is a much better looking phone with an off the charts "cool factor"...iphones are tired and lame.

Dre4dwolf's picture

Android is more "techy".

IOS/Apple has always been the " fisher price " of computer technology, user experience placed above functionality, its a very closed system.

Android is more of a wild west frontier (phone does whatever you want, wherever you want, however you want, for whatever reason you want )

IoS is more of a decadent trendy1984 Hunger Games IOS, you have to do things their way and conform to Steve Jobs view of "what your phone should do and how it should act" and well if you dont like that, buzz off and be shunned by the fanboys lol

Was always too authoritarian of an OS for me.

 

Also my 160$ Asus Windows Tablet (non RT ) does more than an 900$ Ipad could ever do, freaking run autocad on that POS and draft at lunch lol play old school games Doom 1 etc to pass time, (take your bejeweled and shove it )

 

FireBrander's picture

Agree, to sum up my first, and last, iPhone experience....From Apple perspective...your data is our data, and you don't own the phone, we're just allowing you to use it how we see fit...fuck you Apple...I put up with that for about 4 months...and no USB or replaceable battery...forget it.

JRobby's picture

The Sheep Are Broke

Never caught up after buying the last "must have or die" POS

FireBrander's picture

I know a lot of "broke" people; but they, and their kids, still HAVE to have that $700 phone to check thier facebook pages and text nonsense to their "friends".

Dr. Engali's picture

Maybe they should do a little more innovation and a little less financial engineering. Just a thought. 

ZombieHuntclub's picture

Amazing how little traffic or responses ZH gets now. Wonder where everyone went? 

Tyler Durden's picture

ZH has already had 700,000 page views so far today, and over 500 comments, both just shy of all time highs for this time of the day.

Dr. Engali's picture

lol..., facts can be pesky at times.

JRobby's picture

I guess even zombies must be addressed in today's politically correct at all costs world.

Frostfan1's picture

The real world scoreboard is that Zerohedge passes along useful infomation that the rest of the media won't.   

sherryw's picture

I used to like seeing how many page views per article. Can you please resume the practice? And while I am at it, the font is now too small and, because the text stretches the width of the screen I can't enlarge it. It is interfering with my ability to read and I find myself skimping over pieces I am am less interested in because the effort is too much. .......Seven years a reader here............

Infield_Fly's picture

Yes, so you better fuck off and blog TMZ - it will ease your mind asshole!!!

Kromo's picture

blah, blah, blah, what do you expect when most everyone in the world has 2 or 3 cell phones already....ever heard the term market saturation !!!

itchy166's picture

What is an "iPhone"? That's like what your dad use to use right? Ya, like a Blackberry 

Frostfan1's picture

I have a different personal experience.  My wife and  I both got the 5S back in December 2013 and I've been eligible for an upgrade to a new phone for about eight months.  While we both complain about the 16GB storage size on the phone, the phones and the battery still work so no upgrade yet.  The counterargument could be made that the new phones don't sizzle enough for us to make the change and that  is why we're part of Apple's problem.  They expected us to upgrade months ago and we haven't.  People like me delaying their new purchases screw up their timing cycles or projections.   The same for the iPad mini.  We got one four years ago and that also still works.  We didn't need the extra bells and whistles that the newer models have and that battery is still good too.

FireBrander's picture

Unlocked Galaxy phone and Cricket wireless...you'll have a great phone with a great plan...Cricket is the ATT network...I get 4G LTE even out in the sticks...blows T-mobile away. 

Picked up a Firephone for $50...sub $100 is easy to do...great phone, things to complain about, but at $50 I have no room to complain.

TheABaum's picture

Tim Cook isn't Steve Jobs. 

 

Chauncey Gardener's picture

Nails it. Short on innovation and vision. Too focused on the new digs, the iFlop (Apple Watch), and public image. Where are the NEW products? The Apple car--seriously?

hestroy's picture

I think there is already too many gays in the management of Apple. They inovate with rainbow colours.

KimAsa's picture

Fuck Apple and fuck iPhone. They tried to rip me off. My display screen cracked and they said no way, no way it can't be fixed and got me to buy a new one. I took it (the broken one) to another Apple Store and scoped me out a newbie looking employee. She took it back and voila, they fixed. I then RETURNED the new one the other guy conned me into buying. Then I sent Apple a nasty gram.

FireBrander's picture

Whatever you do kim, don't rent a car...that anger you feel at Apple, will be 10X worse towards the rental company...my last experience with Hertz was exactly that...MY LAST...never again will I rent from Hertz....they view customers as sheep to be sheered to the point of bleeding...and they do it with a smile...

restelle's picture

My phone is a 1970's Western Electric with pushbuttons that light up and it will NOT break if dropped. 

Those came in several colors as well.

It still works great and it has NO GPS, NO CAMERAS, no "APPS", and I love it. 

It also dosen't emit microwave RF.

FireBrander's picture

Recently walked through a store that sells "old", "retro", "Cool stuff"...and sitting on a display desk was a black ATT rotary phone from the 70's....price, $150...it was the exact same phone I have in my garage...it's been in the garage for 25 years...still works great.

bluskyes's picture

Apple is the new Microsoft.

restelle's picture

Remember "Microshaft Windblows"? It was a parody that came out after WFWG 3.11 if memory serves me correctly.

Heck, I used to have Geoworks and then I went to IBM OS/2.  I always disliked Microsoft.  Today, it's Linux that I use.

edifice's picture

The first versions of OS/2 were jointly developed by IBM and Microsoft.  :\

wobblie's picture

I thought sales would be sky-high forever.

Now what other little gadget can you get idiots to pay too much money for?

https://therulingclassobserver.wordpress.com/2016/06/08/ego-and-the-ruli...

FireBrander's picture

How about $52,000 for a pickup truck that get's 10MPG so they can arrive at work in a "Cool Truck"?

Seven year, no (or low) interest, loans make it all possible...

Looked at a used car recently...~$20K new....it's 2 years old, 25k miles, the book is at $11,000...off the lot depreciation beating for sure...at trade in, the dealer probably gave them $8000...so $12,000 drop in 2 YEARS!...$500 per month just in depreciation cost!...and people complain about "being broke"...you're not broke, you're fucking stupid.

Arnold's picture

Yup, waiting for the stripper HiLux.
Middle East driven, Middle East proved.

I sometimes wonder how Bob's Plumbing truck is making out with no local dealership, for the trouble code reader, parts and repairs.
-
http://www.dailymail.co.uk/news/article-2876735/How-plumber-s-truck-Texa...

SMC's picture

All that "there is no inflation" BS aside, increased costs such as Obummercare, etc... force families to choose between gadgets and essentials.

No doubt the FSA will get free iPhone 7's as long as Apple plays ball with government back doors.

Hubbs's picture

I was to going to tell you why sales of iPhones are declining, (but at the end of this rant, you see why I am wrong):

The black market for stolen phones is so high that there are fewer legitimate sales these day. Why? For example I was in Food Lion last week, was wearing just exercise shorts with no pockets , and left my cell phone on the cart for about one minute, and poof! It was gone. Like a dumbass I had not entered a password to keep a thief from quickly unlocking the phone, and the locator was not on (but  could have been deactivated easily by the thief if there was no password protection).

My own stupid fault, but at the time of the purchase a few months ago was trying to respond to interviews quickly and did not want to be hassled, and was generally very watchful of my phone. Not watchful enough.

 

My 12 year old daughter warned me to put a passward and activate locator. She did not tell me that I could answer the phone without having to enter a password. So I am still a little pissed at her for not watching out for old fashioned   naive stupid Dad.

Maybe just as well not, because with my temper if I had located the perp, he/she would be left with some mangled hands--not as bad as punishment in the Middle East where they would simply amputate your hand if caught stealing although the punishment for me would have been assault and a lawsuit, because I am WASP.

In the meantime, law enforcement /Apple could easily ping the phone and locate the thief, but they won't. Apple representitive said they don't do that, and the only thing I could do is report the theft to law enforcement-of course they sent a patrol car to my house, but that was all there was to it. I might as well have been talking to a secretary, who recorded the serial number and  assured me that if it is ever sold, it will turn up at the pawn shop (You actually think the thief is going to take it to a pawn shop or a pawn shop would report it?-He'll/She'll sell it person to person-if they don't keep it for themselves!) and I doubt Verizon, ATT and the other carriers care whether or not the phone is stolen, they just want to sell you the service. Same for Apple. the more phones stolen, the more replacements Apple/phone companies get to sell.

 

Interesting about 2-3 months ago in Vidalia, LA the police were easily able to pick up an escapee from prison when he went to charge his cellphone. They had his number, but couldn't trace it until he charged the phone. So I know it can be done.

 

It is appalling how little law enforcement does for the average citizen these days. Yet if I am driving along the highway, the DHS can locate me and even query my cell phone through the Stingray false cell phone tower system. In my case, it  would take law enforecement just a few minutes to locate the phone, but cell phone theft, like illegal immigration,  has become a de facto untouchable for law enforcement.

 

If reports of stolen phones were acted upon (and it doesn't take a very lot of detective work) and police cars showed up at the thiefs' location /residence and theft prosecuted, we probably wouldn't have as much of it. The police could have as easily driven to the theif's location as to my residence.

 

But I guess it could be worse. In Oklahoma, they can now  swipe your credit card and raid your bank account on site  at a traffic stop, with no charges, due to a new device they are sporting. Civil asset forfeiture on the interstate, at least in OK, has become literally highway robbery.

FireBrander's picture

Local thief steals womans' credit card...SWAT team shows up at thiefs house in body armor and with heavy weapons, break down the door, terrorize everyone inside including his elderly mother...thief isn't even home..this is all caught on the homes security camera system...cops breaking the law over and over...kicking in the door before knocking, destroying property inside without reason...

 

why so agressive for one stolen credit card? The womens husband was a friend of the police chief...whole lot of fast talking to explain that video..of course all the cops kept their jobs with no punishment. 

 

The mother was thankful her son wasn't home...he had a license to legally carry and probably, thinking a home invasion was in progress, would have appeared before the cops with a gun in his hand...we all know what would have happened next.

 

It's not too big of a stretch to assume the cops knew he LEGALLY owned a gun...and purposely busted their way in there hoping to kill him in "self defense"; all over 1 stolen credit card....

silverer's picture

All I wanted was just a phone. You can't buy one at any price. It's way, way over people's heads to have just a phone, and beyond the capability of phone manufacturers to build one.

reader2010's picture

You still get dumb clamshell phones new for under $30.

JailBanksters's picture

Obviously there in-built obsolescence is too long and they need to halve it to about 6 months.

 

Raffie's picture

So China will start laying off their slave labor to comp for the loss?

reader2010's picture

I think Apple,  like Samsung,  has faced lots of Android phone competitions everywhere and particularly in China. For example,  the Chinese brands such as Xiaomi, Huawei,  OnePlus and on and on have taken tons of market share away. Both Apple and Samsung can't compete with those Chinese brands for the performance/price ratio. For slightly under $200 you can get premium quality hardware Android phones and that's something Apple and Samsung can't compete.

humptyhump's picture

I go down to Metro PCS and they have the $50 phone and the $650 phone. Which one do I want? They look exactly the same. They both can make phone calls. HMMMM.... it's so hard to decide.

cbxer55's picture

Never owned a "smart phone" myself. Never will. Despite my phone company constantly trying to get me to "upgrade" to one. I prefer my old Samsung Rugby II to any "smart phone". Who cares if sales tank?

My phone is like 8 years old, still has the original battery. Only have to charge it once a week. ;-)