Apple Revises Q1 Guidance →

Tim Cook has published a letter to Apple investors1 announcing that the company has revised its guidance for Q1 2019. I generally find this side of Apple’s business far less interesting than its products, but this is worth reading.

In short, the company has announced its revenue will be less than it predicted, due to a bunch of factors, including on-going struggles in China, “foreign exchange headwinds” and multiple constrained products, including the Apple Watch Series 4, iPad Pro, AirPods and the MacBook Air.

Here’s the part that is going to jump out to most people, though:

While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be. While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements.

This is pretty serious ammunition for those who believe that the iPhone is too expensive:

That’s pretty hard to argue with, and while it’s not the whole story behind this letter, it will be the part most people — including me — resonate with the most.

Jason Snell mentioned how unusual this is:

I can’t remember Apple doing this recently. It means Apple is missing its previous revenue guidance of between $89 and $93 billion—down to $84 billion, which is a miss that’s $5 billion below the lowest end of its previous guidance. That’s a big miss. It means Apple will be down $4 billion from the year-ago holiday quarter.

The quarter isn’t going to be all bad news, as Cook writes:

Our installed base of active devices hit a new all-time high—growing by more than 100 million units in 12 months. There are more Apple devices being used than ever before, and it’s a testament to the ongoing loyalty, satisfaction and engagement of our customers.

He calls out that Apple’s revenue outside of the iPhone business has grown by almost 19 percent year-over-year, and that the Services business continues to blossom.

All in all, this will be Apple’s second-largest quarter ever. There’s plenty of gas in the tank:


  1. For the record, I am not a shareholder, and haven’t been since I quit my job as a Mac Genius in 2008.