Smartphone Booms as Watch Woes Continue for Apple

The WSJ (Wall Street Journal) today reported Apple is getting the lion’s share (a whopping 92%) of all profits in the booming smartphone industry.

Apple profits2

The chart on the right shows global operating profits in Q1-15 of the world’s top eight smartphones including rivals Samsung (now at 15%), and money losers in the space Microsoft (formerly Nokia), Lenovo (formerly Motorola), China based HTC and Blackberry, according to research from investment firm, Canaccord Genuity. Remarkably, you read those numbers right, industry profits between Apple and Samsung are beyond 100% and being subsidized by the money losing ventures of rival devices, according to Canaccord.

These results are not new for Apple; Canaccord analyst, Mike Walkely, made the same conclusion in February 2015 when he reported that, by his estimate, Apple garnered 93% of the profit in handsets during the holiday quarter of Q4-2014. At that time Samsung was losing ground to Apple, which began shipping its larger screen version iPhone 6 and 6 Plus models in September 19, early into the holiday shopping quarter. The expectation then was that growth in Apple device popularity would come at the expense of Samsung, and the numbers today confirm that trend.

But not all that is Apple turns to gold, as the Apple Watch sales have plummeted some 90% since April from a high of 200K units per day to some 20K, according to estimates from Slice Intelligence. The numbers are “rough” according to some analysts and based on e-receipt data it received from its panel of 2.5 million online shoppers in the US, according to a Business Insider article. The data does echo the comments of noted financial analysts, like Andy Hargreaves (Pacific Crest) who notes trends in store visits, Google search volume and other third-party data, “falling sharply from initial levels”, according to Hargreaves. Even Apple admittedly stated through its Sr. Operations VP, Jeff Williams at a recent Re/code event that “not enough” Apple watches have been sold, indicating the company is missing its sales targets.

Apple watch salesBy one firm’s reckoning, Apple watch sales are in the tank and headed for more trouble as the company looks for its raison d’etre, Source: Slice Intelligence

Credit: Andrew Terry (Twitter)

Now its watch is facing a fresh round of unforeseen consequences, this time, some composite metals seem to be affecting the skin of some of its wearers and that news has gone viral on some social media outlets including Twitter and FaceBook. Images of red colored skin and even indentations on the wrist prompted a story in Digital Trends, BUBBLING BURNS AND ANNOYING RASHES PLAGUE SOME APPLE WATCH USERS plus such graphic social media headlines as “wtf? My Apple Watch has burnt a hole in my wrist!!” Apple’s website states: “A small number of people will experience reactions to certain materials. This can be due to allergies, environmental factors, extended exposure to irritants like soap or sweat, and other causes”.

So welcome to the Apple-dominated world of smartphones where the company is actively working to achieve the next great thing. The Apple Watch was introduced with some record breaking initial sales, that seem to have plateaued as the company, and wearers, seek to find the use model that makes for a “must-have” experience. Meanwhile, those nifty high tech alloy’s may just be coming back to bite Apple as the company learns (the hard way) the unintended consequences of moving into the wearable space, where all day, every day skin-touch may be just a bit too close for comfort, even for its Fan-boy, Fan-girl base. – Steve Sechrist