Apple CEO Tim Cook’s letter to shareholders leaves one or two key questions unanswered

“By the end of October 2018, Apple was on its way to a decent quarter. Sixty days later, $7B in revenue is missing,” Jean-Louis Gassée writes for Monday Note. “Tim Cook writes to his shareholders but leaves one or two key questions unanswered.”
“In layperson’s language, there seem to be two explanations for the $7B miss: China and the ‘S Factor,'” Gassée writes. “The S model isn’t different or exciting enough to move mountains of upgrades… We see the phenomenon again in 2017. The iPhone X is a breakthrough, a visibly, neatly functional innovation. A year later, the XS iteration is seen as just that, an iteration that stretches the formula without a striking difference. (Here, I’ll insert a saying from the auto industry: When a car maker starts throwing extra words onto a model designation — the Jalopy 16S Special Sport — it’s not a good message. The product is getting old, it’s sprouting wattles and dewlaps. The analogy isn’t entirely apt for iPhones, of course, but one wonders: Would shorter model names convey a better message? iPhone 11 vs iPhone XS Max?)”
MacDailyNews Take: Yup.
There are plenty of numbers in the universe. Infinite, actually. Don’t worry, Apple, you won’t run out. – MacDailyNews, October 4, 2011
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It’s as if Apple is naming iPhone models solely for their own internal inventory purposes, just so they can keep track of which model is which, with no regard for how the iPhones are perceived by the rest of the world – the media, the customers, etc. – outside One Infinite Loop.
The “S” doesn’t stand for “Speed,” it stands for “Stupid.” Yes, we know it’s the same case design; we know the “S” version is the one you make the big margins on; we get it. Call it the “S” internally if you must, but don’t be so engineer-ish that you insist on calling it that on the box, too!
It’s not about sales figures or the model’s success (as long as “iPhone” is in the name, it will be a success), it’s about setting a tone. In this case, with the “S,” Apple sets a tone that they are just making an incremental update… Why gift the naysayers with the opportunity, Apple? — MacDailyNews Take, April 5, 2013
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Apple, enough with the stupid iPhone ‘S’ naming already.
iPhone “S” years usher in hugely significant features, such as oleophobic displays, significant GPU improvements, world phone capability, Siri personal assistant, video stabilization, panorama photos, 64-bit processors, TD-LTE support, Touch ID, and 3D Touch, among other improvements and additions. Each year’s iPhone deserves its own number. By not doing so, Apple is shooting itself in the foot; handicapping iPhones with an “S” every other year. Why Tim Cook or Phil Schiller haven’t put an end to this stupid – yes, stupid – “S” naming is inexplicable. Why don’t you just name it “iPhone No Big Deal This Year,” Tim and Phil?
Here’s what you say onstage and in the press release when there’s no “iPhone 7s” and you jump directly from iPhone 7 to iPhone 8: “The improvements are such that the new iPhone deserves its own number.” Period. Done. Mission accomplished. It’s your naming convention, Apple, and you can correct your stupid mistake at any time. — MacDailyNews, September 16, 2015
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“S” year iPhones were not “slight upgrades,” but that horrid mischaracterization is exactly why we advised Apple to drop the the stupid “S of Death” naming scheme many years ago. – MacDailyNews, September 13, 2017
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And, just when you thought it was impossible, stupid iPhone naming gets even stupider. Turns out Apple’s stupid naming scheme isn’t a scheme at all, it’s just whatever random gibberish happened to strike Phil’s fancy that year. Finally, it all makes perfect sense!
We can’t wait for next year’s iPhone X sR Super Extra LMNOp Quattro Turbo and the iPhone X sR Super Extra LMNOp Quattro Turbo Max! — MacDailyNews, October 22, 2018
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Apple’s latest iPhones were named as idiotically as they are, because Apple SVP Phil Schiller says, “I love cars and things that go fast, and R and S are both letters used to denote sports cars that are really extra special.” Unbelievably, that’s the rationale for naming the most important product of, at the time, the most valuable company in the world? No, that’s the rationale of a six-year-old child. Maybe five. The stupidity is sharp enough to hurt. The level of compensation awarded for such idiocy is criminal. — MacDailyNews, January 2, 2019
“Between these two explanations, China and the S Factor, we could have enough to account for the $7B miss. Still, a few questions remain,” Gassée writes. “I have a hard time believing that the $29 limited time offer had a significant impact on Apple’s numbers. Did Apple replace hundreds of thousands of batteries? I doubt it. At 100 replacements per Apple Store times 500 stores, that’s 50K happy customers and only $50M in missed new iPhone revenues. I’d have to be off by a factor of 10 — half a million iPhone battery upgrades, one thousand repairs per Apple Store — to approach a mere $500M in missed revenue.”
“A more serious issue is Apple’s blind spot regarding China. I distinctly recall Cook telling analysts during a quarterly earnings call that, having studied the country for 30 years, he knew China,” Gassée writes. “How could Apple, which is more embedded than most Western companies, not see a Chinese economy slowdown that started well before the 2018 Holiday quarter? More specifically, what did Apple know and not know when they issued a guardedly optimistic Q1 revenue guidance in the $89B to $93B range on November 1st? What did they learn in the following 60 days, how much, how fast? (Unsurprisingly corporate ambulance chasers have already filed Class Action suits.)”
Read more in the full article here.
MacDailyNews Take: We look forward to hearing some of these questions answered by Apple management at the company’s 2019 Annual Meeting of Shareholders on February 6th.
SEE ALSO:
Apple’s 2019 Annual Meeting of Shareholders takes place on February 6 in Apple Park’s Steve Jobs Theater – January 9, 2019
Investors’ rights law firm investigates Apple’s earnings cut for ‘potential securities fraud’ – January 3, 2019
Open thread: Does Apple need new leadership? – January 2, 2019
Apple’s inexplicably awful iPhone naming schemes – September 26, 2018