Written by Nick Heer.

Assorted Additional Thoughts on Apple’s Earnings Warning

It was illuminating to read John Gruber’s take on the last time this happened:

But man, delivering bad news was one area where Steve Jobs really shined in a way that Tim Cook just can’t. Look at the tight construction of that message from Apple in 2002. First paragraph: put out the numbers. Second paragraph: it’s an industry-wide problem, but Apple has “amazing new products” coming. And then the kicker, the dagger: “As one of the few companies currently making a profit in the PC business…”.

We’ve got some short term bad news but don’t worry, we have this.” And… out. Short and sweet. Rip off the bad news Band-Aid, express quiet confidence that Apple is in great shape, and that’s it. Message over.

Times — and shareholders’ expectations — change, but this is the thing that absolutely stood out to me when I read Cook’s statement yesterday. If Cook wanted to provide a fuller context, I think that’s fine, but I wish it were attached as a supplement to a more succinct and direct statement.

Ryan Jones on Twitter:

The whole “most of our revenue shortfall occurred in Greater China” seems to be getting lost. By me too.

Other companies’ China reports will be telling, if something is brewing on a global scale.

And Ina Fried in Axios:

Apple will report full results at the end of the month and will likely go into greater detail.

Meanwhile, we will also hear from other smartphone makers as well as others with big business in China.

That should help show how much of Apple’s experience was universal and how much it was uniquely its own.

Given Apple’s positioning, I’m curious about the effect China’s economic situation may have, if any, on other aspirationally-branded companies. That may be more helpful guidance than looking at its effect on other smartphone makers.

MG Siegler:

The iPhone has simply been too good of a business. And it’s hard to see what tops it. Certainly in the near term. If Services is to carry Apple in the future, it will likely be only after years of relatively stagnant iPhone revenue growth mixed with a rising overall market. In other words, time and the broader world will have to catch up. And then Apple can have their “Microsoft Moment” — a services-based resurrection of growth.

This is a great piece.

A memo from Tim Cook to Apple employees:

External forces may push us around a bit, but we are not going to use them as an excuse. Nor will we just wait around until they get better. This moment gives us an opportunity to learn and to take action, to focus on our strengths and on Apple’s mission — delivering the best products on earth for our customers and providing them with an unmatched level of service. We manage Apple for the long term, and in challenging times we have always come out stronger.

Cook’s letter to investors specifically mentioned that one of those actions is “making it simple to trade in a phone in our stores, finance the purchase over time, and get help transferring data from the current to the new phone”. Communicating easier upgrades might help users who are worried, but I’m not sure it will substantially increase sales. How many users hang onto their existing phone because they think upgrading is hard, rather than because they aren’t compelled to upgrade — for whatever reason? I’m curious about other ways that they might respond which would be more in line with the company mission that Cook cites.