The wise John Gruber has written about the last time Apple revised its guidance, as it did on Wednesday. It was some 16 years ago, and it was Steve Jobs delivering the bad news. That time the earnings miss was blamed on a struggling creative industry not buying enough Apple hardware. Back then, a 10% adjustment accounted for $200m revenue. Today, 7% – as Apple has warned – amounts to around $7bn.
Gruber has some unfavourable words about Tim Cook’s long letter to investors. Here’s how he thinks it should have been written:
“We all know the Chinese market is fucked up — half because China is China and half because of you-know-who’s dumbass trade war. This quarter that fucked-upped-ness hit iPhone harder than we expected. But China is the whole problem — everything else is noise. Customers around the world love the iPhone XS, XS Max, and XR, and iPhones account for 90 percent of the profits in the entire handset industry. We expect that to grow as our competitors struggle to differentiate themselves from each other.”
He goes on to say that Cook’s humility – which has been a great strength during 2018’s Great Global Data Awakening – is a handicap on days like this, adding:
Properly delivered, the takeaway should have been that China is crazy but the iPhone is still kicking the shit out of the entire rest of the handset industry and is only pulling further ahead.
Anyway, what’s done is done. When Steve Jobs issued his warning, it was at a time when Apple is just beginning to lay the groundwork for what it has now become. The iPod was into its second generation, but still a Mac-only product at a time when the Mac was the underdog. Soon, iPod would be for everyone – and the iPhone was the next natural step. They’ve done rather well since.
So what happens next this time around? The New York Times’ Daisuke Wakabayashi: