Horace Dediu

Yep, it’s that time of the quarter again, when we start hearing analyst predictions for Apple’s quarterly earnings. Asymco analyst Horace Dediu has just tweeted his, forecasting that Apple will hit $38.62B revenue, above the company’s guidance of $36-38M. Wells Fargo’s Maynard Um recently predicted $38.2B … 
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Declining iTunes sales highlighted by Morgan Stanley’s Katy Huberty and reported by Fortune appear to underline the need for Apple to move beyond sales of music downloads and into the subscription music business. iTunes sales are down 24 percent year-on-year.

While the slack is being picked up by app sales – a trend previously noted by Asymco’s Horace Dediu – that falling blue line reflects the wider shift in consumer behaviour from purchasing downloads to subscribing to streaming services noted last year by Billboard magazine … 
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As highlighted by Fortune, analysts’ consensus on iPad sales for last quarter suggest that iPad sales will actually decline year-over-year by about 0.7%. Although the expected decline is small, this would represent a big shift in iPad momentum, especially since Apple saw a strong increase in sales for the holiday quarter, going from 22.9M units in the previous year to 26M this year.

If iPad sales have fallen, it wouldn’t be because of different market conditions to last year. Apple introduced the iPad Air at the end of 2014 around a year from the introduction of the iPad 4 at the end of 2012. Last year, Apple dropped the price of the iPad Mini a modest $30 while also introducing the highly anticipated retina iPad Mini. In 2012, it introduced the iPad mini. The product cycles are similar, so the decline isn’t due to any artificial inflation of sales last year.

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PC manufacturers seem to be dropping like flies at present. Shortly after Sony confirmed it was selling its PC business and Vaio brand, LG is rumored to be planning its own exit from traditional PCs, to focus on smartphones, tablets and ‘convertible’ PCs (touchscreen Windows tablets that flip round into a laptop).

Other manufacturers are witnessing falling sales, prices and profits – with The Guardian calculating that the average profit per PC in the third quarter of 2013 fell to just £14.87 ($24.09). One manufacturer of conventional-format PCs, however, has remained almost immune to the trend: Apple … 
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When Apple reports its quarterly earnings later today, the news will be good, according to the consensus view of 47 Apple analysts compiled by Fortune.

Analysts are expecting the company to report earnings of $58.1B for the final quarter of last year (Apple’s fiscal quarter 1), representing 4 percent earnings growth over the same quarter last year. This would be right at the top end of Apple’s guidance of $55-58B, and the first time in a year that Apple would have reported year-on-year growth … 
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The total number of Apple devices sold will equal the number of Windows PCs by some point this year, predicts Asymco’s Horace Dediu in an interesting piece of analysis.

The dark shaded area compares all Apple hardware – Mac plus iPad plus iPhone – with Windows PCs, and shows that by last year there were only 1.18 more Windows PCs than Apple devices. It’s of course a somewhat artificial comparison, as Dediu is including iPhones while excluding Windows Phones and tablets, but given the very limited success of Windows mobile devices to date, correcting that wouldn’t change the patterns too much.

What’s particularly interesting here, as John Gruber notes, is that the dramatic reversal kicked in well before the launch of the iPhone. Dediu and Gruber between them put forward a number of theories for this, and of these I think three are likely key …

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We noted at the end of last year that iTunes music downloads appeared to be on the decline for the first time, a shift that was confirmed this month. The operating assumption has so far been that music streaming services are taking over, and that a growing number of consumers are now content to simply have on-demand access to music, rather than to own it.

Asymco’s Horace Dediu, an analyst who often has interesting things to say, has suggested an alternative explanation: that we’re actually listening to less music … 
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Smartphones will reach saturation point in the U.S. by 2017, and by that time two-thirds of all Americans will own an iPhone – the conclusions Asymco’s Horace Dediu reaches through a series of calculations.

Dediu bases his calculation on three factors. First, that the rate of growth seen in the smartphone market so far will continue at the same pace. Second, saturation point for smartphones will be 90 percent (no technology ever achieves 100 percent). Third, that Apple’s market share will remain roughly constant, Dediu pointing out that iPhone growth has pretty much exactly mirrored the smartphone market as a whole … 
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Asymco’s Horace Dediu has put together a couple of charts showing that while the number of visitors to Apple’s retail stores continues to climb, the rate of growth is flattening off.

The underlying reason appears to be a slow-down in the rate at which Apple is opening new stores, as the average number of visitors per store has remained stable for the past three years … 
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