If you judge Apple's performance by what analysts, industry observers and some reporters say, you might think that the company is failing. Of course we know that Apple is more successful than ever and the future remains bright.
How can we say this with confidence, and how can you prove it to be true to your doubting friends?
Here we look at the products that mean the most to Apple right now and assess whether the company is really in trouble (clue, it's not).
iPhone market share
Apple has just reported that it sold 35.2 million (35,203,000) iPhones in the quarter ending 30 June 2014. That's an increase of 3.962 million compared to the same quarter last year (31,241,000), 13% growth and a new third-quarter record. iPhone sales are also quite a revenue spinner for Apple, generating $19.751 billion in revenues in the quarter, compared to $18.154 billion in the same quarter a year ago.
Of course this doesn't stop reports suggesting that iPhone sales are in decline, that Apple is losing market share, and that Apple is too reliant on the cash cow that is the iPhone and failure to innovate in the smartphone space will be detrimental to the company's future.
We all expect that Apple will launch a new iPhone 6 soon, and that the newest iPhone will feature the much called for bigger screen. If the lack of a big screen is the reason why Apple's growth has slowed, then this new iPhone should address the issue. Indeed, there is said to be pent up demand for this larger iPhone, so sales are expected to be high in the run up to Christmas.
Despite this, the latest smartphone data from July 2014 suggests that Apple is still in the lead, regardless of calls for bigger iPhones. Apple's biggest competitor, Samsung, has been missing analyst expectations, and sales of the flagship Galaxy S5 phone are lagging.
In the UK the iPhone 5s is the best selling phone, according to research from Counterpoint. In May, sales of the iPhone 5s accounted for 11.1% while the iPhone 5c sales were 11% while the just-launched Samsung Galaxy S5 saw 9%.
Looking at Counterpoint's worldwide data, the iPhone 5s is still out in front, although the Samsung Galaxy S5 moves into second place above the iPhone 5c. According to ComScore, Apple has a 41.9 percent share of US cellphone users while Samsung has 27.8%. LG is in third place with 6.5% and LG has 6.3% and HTC with 5.1%.
Despite suggestions that the iPhone 5c has been a "flop" it has proven to be a popular alternative to the iPhone 5s and iPhone 4s. Apple revealed that the strategy of selling what is essentially a repackaged iPhone 5 in a new season's colours has been successful, with Apple seeing more sales of the iPhone 5c than it saw of the iPhone 4s last year when that was the alternative to the iPhone 5.
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Mac market share
The most interesting revelation in Apple's financial results for its quarter that ended on 30 June wasn't iPhone sales (Apple sold 35.2 million iPhones, that's 3.962 million more than the same quarter last year. The day that iPhone sales decline year-on-year will be the day that everyone starts to predict Apple's downfall, although that hasn't stopped some observers predicting that…)
No, what was really interesting was the fact that Mac sales are continuing to increase, and that while iPad sales are seen to be declining slightly, compared to the same quarter of 2013, it you clump Mac and iPad sales together, as some analysts do, Apple is the leading vender of PCs, and it still has plenty of room to grow.
I'll start by focusing on Mac sales, which according to Apple, are on the up. Apple said it sold 4.413 million Macs in the quarter just gone, compared to 3.754 million in the year ago quarter.
It was, according to Apple "A record June quarter for Mac sales," amid: "growth of 18% year-over-year in a market that is shrinking by 2% according to IDC's latest estimate."
Speaking in the conference call with analysts that followed the results announcement, Apple's CEO Tim Cook stated that Apple: "Achieved strong double digit Mac growth across many countries, including the US, Canada, Mexico, the UK, Germany, France, Australia, China, India and the Middle-East." Indeed, in China, Mac sales increased 39 percent, according to the company.
Apple's claim that it saw double digit growth for Mac sales in the US, contradicted both IDC and Gartner's figures from earlier that week, which suggested that Mac sales had fallen year-on-year, calling into question the analyst house's methodology.
According to IDC's figures, the top 5 US PC vendors in the second quarter of 2014 (that's the same as Apple's fiscal third quarter) were: HP with 27.3% market share in the US, Dell (25.7%), Lenovo (11.5%), Apple (10%), and Toshiba (6.1%).
IDC states that Apple shipped 1,676,600 Macs in the US during the quarter. On the basis of its figures, IDC claimed that Apple had lost Mac market share compared to the previous year. "In US shipments, Apple slipped to become the No. 4 PC maker, dropping from the No. 3 spot to come in at 10 percent market share, a 1.7 percent decline," claimed IDC.
According to Gartner, the top 5 PC vendors in the same quarter were: HP with 27.7% market share in the US, Dell (25%), Lenovo (11.5%), Apple (10.6%), and Toshiba (6.4%). Gartner says Apple shipped 1,681,600 Macs in the second quarter of 2014 (Apple's third quarter).
There is one thing to bear in mind when looking at these figures (apart from the fact that Apple's own figures suggest that IDC and Gartner's data is wrong): as pointed out by Apple Insider, when calculating their PC market share both IDC and Gartner include netbooks and hybrid 2-in-1devices and Windows tablets (IDC even includes Chromebook web browser devices). Neither firm includes iPad sales in their PC sales figures.
If IDC and Gartner included iPads and other tablets in the figures, Apple would be the largest computer maker by some margin, notes Apple Insider, referring to Canalys' figures, which includes tablet sales in their PC worldwide shipment figures.
According to Canalys, Apple was in first place in the first quarter of this year; indeed, Apple has been in first place since the last quarter of 2011.
Canalys figures showed Apple to be in first place with 20,486,640 unit sales in the first quarter of 2014, compared to 23,443,350 in the same quarter of 2013. In second place was Lenovo with 14,978,320 in Q1 2014, compared to 12,337,550 in the same quarter the previous year; in third was HP with 12,939,750 in 2014 and 12,183,280 in Q1 2013; and Samsung was in fourth with 11,225,800 and 12,572,690 in 2013.
It's interesting to note that both Apple and Samsung saw a decline, year-on-year, while Lenovo and HP saw an increase. These figures are from the first quarter of 2014, rather than the quarter that Apple reported on, in which, according to CEO Tim Cook, Apple saw increased interest in the MacBook Air following the price drop in June.
In the battle for PC market share, including tablet sales, Mac sales seem to be making up for any retraction in iPad sales.
Are iPad sales declining? Amid the increase in Mac sales, there was disappointment that iPad sales were down compared to the same quarter of 2013. Apple shipped 13.276 million iPads during the quarter that ended on 30 June, compared to 14.617 million iPads in the same quarter of 2013.
During the third quarter financial results announcement Cook noted that iPad sales are declining, and admitted that: "iPad sales met our expectations, but we realize they didn't meet many of yours."
He added that: "Our sales were gated in part by a reduction in channel inventory, and in part by market softness in certain parts of the world. For example, IDC's latest estimate indicates a 5 percent overall decline in the US tablet market as well as a decline in the western European tablet market in the June quarter." This contrasts somewhat with the worldwide tablet market, which, according to IDC figures, has grown 11% year-over-year, with worldwide tablet shipments totaling 49.3 million units.
Despite the apparent declines in market share, Apple is still the world's leading vendor of tablets. IDC research suggests that in the second quarter of 2014 (Apple's fiscal third quarter) Apple was in first place with 26.9% of the tablet market, down from 33% in the same quarter last year. Samsung was in second place with 17.2%, compared to 18.8% last year. According to IBC's figures, Apple sold 13.3 million iPads in the quarter (not too far off Apple's figure), down from 14.6 in the same quarter last year, while Samsung sold 8.5 million, up from 8.4 million last year.
This is where it gets interesting. In third place was Lenovo with 2.4 million sales (4.9% of the market) and in forth, Asus with 2.3 million (4.5% market share). Acer sold 1 million tablets for 2% market share. IDC's categorization of tablets includes slates and 2-in-1 tablets, but it isn't clear about the companies it is including in the Other category that saw 21.9 million sales and 44.4% of the market. Another reason to be weary of analyst figures.
It is worth noting that the iPad's drop was not Samsung's gain. Apple sold 1.3 fewer iPads in the quarter than it did at the same time last year, but Samsung only sold 100,000 units more than last year. Both Apple and Samsung lost market share. The biggest gainer was Levano who shipped 2.4 million units, compared to 1.5 million last year. Lenovo's Android, Windows and 2-in-1 convertible PCs are being counted in this category, suggesting again that the distinction between tablet and PC differs depending on the manufacturer (and perhaps the clients that the analyst house is representing.
During the conference call with analysts Cook addressed concerns about slowing iPad sales, noting that Apple is seeing increasing growth internationally. Cook noted that the market for iPads is: "Bifurcated" or divided. He noted that there has been growth in "emerging countries" especially BRIC (Brazil, Russia, India and China).
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Who is buying/isn't buying iPads?
If Cook is correct then these emerging countries are responsible for much of the current growth – although price may be a factor against Apple in these markets. Indeed, if this is where the growth is coming from then cheaper tablets are likely to mop up most of the market share here.
Luckily, while it looks like sales may have plateaued in western markets including the US and UK, this appears to be because people aren't purchasing new iPads every other year in the way they would a smartphone. If that is true then as the early adopter's iPads reach four years old, it is likely that they will be looking to update. Even those with a pre-retina iPad model may be looking to update to the next iPad, especially if the new unit brings features such as the Touch ID fingerprint scanner.
Of course not everyone owns an iPad yet, and according to Cook, 50% of the iPads being sold are to first time buyers.
Another factor slowing sales of iPads is the high numbers of low cost tablets available, some of which are being given away to entice people to sign up for various services. It may also be the case that while a smartphone is very much a personal device, a tablet can be shared by a whole family. This not only means fewer units sold, but if a second tablet is bought, it may be a cheaper version for the kids, and that's where the cheaper tablets come in. Apple is unlikely to address this market with a low-cost iPad.
The other factor slowing tablet sales is the rise in large-screen smartphones. Some of the bigger phablet style smartphones are on a par with the iPad mini and it looks like some consumers are opting for a phablet rather than a tablet. Should the rumours prove true and Apple launches a bigger iPhone, there will be even less reason to buy an iPad mini. It will be interesting to see how Apple markets the two devices.
iPad Halo effect
Rather than worrying about whether sales of a larger iPhone will cannibalise sales of the iPad, we'll get back to wondering whether iPad sales will slow down Mac sales, or if the opposite is true.
It seems likely that the two may complement each other; with a purchase of a Mac following a purchase of an iPad, and vice versa. The launch of Yosemite and iOS 8 with the Continuity features will serve to amplify this.
Equally, iPads are becoming increasingly popular in the enterprise, where they are being used to run custom apps, and these enterprises are buying Macs as a platform on which to develop these apps.
Expect to see even more demand from the enterprise in the next quarter, following the Apple and IBM partnership. In the call with analysts, Cook noted that Apple's partnership with IBM should help Apple grow iPad penetration into big business and corporate market, through which Apple will win back market share. Apple and IBM announced in July that they have struck a deal to jointly sell the iPhone and iPad to big businesses. This appears to be Apple's strategy for winning back market share.
One last thing: We often focus on the number of units sold but there is an interesting story in the revenue generated by the sales. From those 4.41 million Macs sold in Apple's fiscal third quarter of 2014, Apple saw $5.5 billion in revenue. That's close to the $5.9 billion in revenue from the 13.3 million iPads sold in the same quarter. Steve Jobs may have predicted the demise if the PC, but in this post-Steve Jobs world there is still plenty of money to be made from Mac sales.
Apple is selling more tablets and with higher margins than anyone else.
Still, according to Cook the tablet is "in its infancy" and Apple intends to bring "significant innovation" to the category. It may be a product in its infancy, but Apple has sold 225 million iPads since it launched in 2010, that's not far off the number of iPhones Apple sold in the first five years after the iPhone launched (250 million).