Bloomberg: No smartphone slowdown for Apple this year

From Debby Wu's "Apple Expects to Sustain iPhone Sales in 2022 as Market Slows" posted Thursday:

Apple has asked suppliers to build at least as many of its next-generation iPhones this year a  s in 2021, counting on an affluent clientele and dwindling competition to weather a global electronics downturn.

The tech giant is telling its assemblers to make 90 million of its newest devices, on par with last year, despite deteriorating projections for the smartphone market, according to people with knowledge of the matter. The Cupertino, California-based company still expects to assemble roughly 220 million iPhones in total for 2022, also about level with last year, according to one of the people.

Apple’s projections, a closely guarded secret, suggest it’s confident about weathering a slump in spending on smartphones and other devices. Mobile device makers have begun freezing orders, China’s largest chipmaker warned on Friday. The global handset market, which slid 9% in the June quarter, is expected to shrink 3.5% in 2022, IDC has forecast.

My take: Once again, it's Apple and the rest. Nice place to be.

13 Comments

  1. Alan Birnbaum said:
    The same Debbie Wu (Fortune) who wrote in May:

    Apple to Keep iPhone Production Flat as Market Grows Tougher

    2
    August 12, 2022
    • Rodney Avilla said:
      I prefer the commenter who changes their tune to match the music, then one who digs in and insists on digging themselves in a hole.

      1
      August 12, 2022
  2. Gregg Thurman said:
    Without a new use case smartphone sales were bound to plateau, then shrink, as there are no compelling upgrades being offered.

    Since Apple swapped out my 10S last month I have decided to forego upgrading to the 14. The performance boost I got with the replacement 10S was incredible. I hadn’t realized that, over time, it’s performance had been deteriorating, until it just locked up and couldn’t be repaired.

    When I do finally upgrade I won’t be getting the top model.

    2
    August 12, 2022
    • John Konopka said:
      @Gregg: This is the part of the iPhone iceberg the media ignores. The media focuses on sales of the newest and greatest iPhone. But there are many, many other people who are very happy with other iPhones. People buy the Pro models, the regular models, refurbished models. Others are very happy to receive hand-me-downs from family members. These people are not suffering, they have very good devices that are supported with the latest iOS and services.

      4
      August 12, 2022
  3. Michael Goldfeder said:
    @Gregg: You do realize that now you have given substantial traction to a story by Mark Gurman establishing that “many consumers” will not be upgrading to the new iPhone 14. Sigh.

    1
    August 12, 2022
    • Rodney Avilla said:
      He also has “given substantial traction to the story” as to why the Apple iPhone base is growing every year. His iPhone is a 4 year old model, and still performs so well that Gregg described it as “incredible”.

      3
      August 12, 2022
    • Gregg Thurman said:
      With an iPhone base of about 1 Billion, only about 20% will upgrade each year, so yes “many” will not upgrade this year, or the next, or the next….

      Of the new iPhones that are sold each year, a significant number are Android switchers. These buyers and first time smartphone buyers (to a much lesser degree) is where growth in iPhone’s installed base is.being derived.

      In a saturated market, a market we are now in, growth is derived from stealing customers from the competition. iPhone is doing this despite being priced (ASP) over twice as much as it’s only other competitor – Android.

      That’s the strength metric analysts, pro and amateur alike, should be focused on. Unfortunately, even here, they are not.

      1
      August 12, 2022
  4. Bart Yee said:
    Whether or not Gregg upgrades is partly due to age of device, perceived performance differences, and need or desire to upgrade. For Gregg, at 3.5-4 years, it’s relatively low, same for performance and need. He has an iPhone XS with an A12, same with the XR and XS Max.

    But for those iPhones below the XS, namely the X, 8, 7, 6S and 6, the performance, display, and overall improvement differences will be immense, plus iPhones 4+ years old will be needing batteries, maintenance, and wear and tear replacement. Oh for sure, many of them still work fine for many people’s needs, but I dare say anyone who got it as a hand-me-down is likely itching for a new one, and those who were younger, now are older (like going to college or first jobs?) and maybe have saved up for an upgrade. Given that each year 250-300M iPhone owners around the world fall into this category easily, it’s not hard to see why Apple feels confident about upgrades PLUS new users and Android switchers.

    I see no reason why Apple doesn’t hit, if not exceed its target of 220M-225M iPhone sold in FY2023 and for iPhone revenues to keep growing, even if not at double digit levels. FY2021 total iphone revenue was $192B. Q3 2022 cumulative 9 month iphone revenue was $162.9B, YOY 2021 was $153.1B, a 6.4% gain already. If iPhones hold to ~ that level, FY2022 total iPhone revenue will exceed $203B. And now Apple believes it can sell at least that many for FY2023. This is the kind of guidance Apple backs up with its actual numbers. Even a 4-5% growth would put FY2023 iphone revenue at $211-213B.

    That’s $20+B growth in two years time! It’s seems so “small” % wise but a little here and a little there of a really big number eventually adds up to some real money!!

    5
    August 12, 2022
    • Gregg Thurman said:
      Great comment Bart.

      Apple was correct to stop reporting iPhone units sold. The best units sold number ever (232,000,000) was for the iPhone 6. Apple has shifted iPhone focus to where it should be – revenue, and iPhone revenue is growing like a weed even as units have plateaued around 225,000,000

      The data interpretation skills of analysts, and especially the media, means that if given unit numbers they would report Apple as a no growth company.

      Apple correctly reports installed base numbers (growing) because they reflect switcher activity, while iPhone upgraders may actually be in decline (longer upgrade cycles). This speaks to the quality of iPhone hardware/build, and software (iOS and Apps).

      1
      August 12, 2022
    • Robert Douglass said:
      “… but a little here and a little there of a really big number eventually adds up to some real money!!”
      Yep. A great paraphrase from those of us old enough to remember Senator Everett Dirksen

      0
      August 12, 2022
  5. Bart Yee said:
    And a very nice finish to the week near the high at $172.10, a gain of $6.75 or 4.1% for the week, and +26.2 or 18% for the month.

    $175 – 178 would be a nice flex for next week.

    2
    August 12, 2022
  6. Jerry Doyle said:
    “Full Steam Ahead!” A good article and good news, but.

    Media emphasis still targeted at Apple’s iPhone business and until media emphasis targets Services than Apple consciously remains an iPhone company in the eyes of WS and the media. I look forward to the day when iPhone sales don’t drive the topic du jour on WS and in the media. Until then, Apple remains an iPhone company to the Sacconaghi(s) on WS and the talking heads (Gurman) in the media.

    0
    August 13, 2022

Leave a Reply