There has been a lot of analysis going around surrounding Apple's Guidance announcement. For starters Apple did the right thing by making the announcement, something any Investor Relations counselor would agree. They also did a lot more and three articles really demonstrate just how Apple is using the media to message the market.
What Apple did was:
- Addressed their issues surrounding product declines and communicated why they have to move full bore in to services.
- Admitted without mentioning the competition from the likes of Xiaomi and Huawei that hardware battles in China are never going to be won by Apple any longer.
- That with services moving at the rate they are, there's less need to upgrade hardware as often as in the past
I would contend that Apple's strategy has been known internally all along. They have been hiring more and more for core service technologists for the past three or four years. This speaks to their direction, even if they have been slow to launch anything of any major notoriety. But why should they? After years of being first with everything they did, they grew and grew market cap and market size on the back of the iPhone, just as they built market share from miniscule to massive with the Macs. But even with the PC market share growth, Apple is largely a west coast dominator for Macs vs. Windows, and with the Google Chromebook coming online and growth in that sector plus the cloud early Mac adopters have moved on to the less expensive Pixlebooks which offer people like me all I did on the Mac Book Pro or Mac Book Air for less money.
The battle in China is not Apple's alone. Qualcomm went through this a few years ago and is now playing cozy with the Chinese. Apple's announcement skirted the licensing battle but reading between the lines, Apple was referring to it. You just need to read the Tim Cook dropped tea leaves.
The hardware sales decline in their third largest market is really fortelling. You can't beat the Chinese in China when they can produce look alike devices for 1/3rd the price and sell them on home turf. It's like trying to beat the team that has the home court advantage.
Wall Street is also reacting to the wrong metrics. Sure sales is one indicator, but hiring growth, investment in real estate, establishing new offices in more places is about Apple lowering the costs of rent and people, and those moves are all cloud and chip tech based.
Apple has a plan-you just have to look past the sales numbers and sales accounting to see it.
It's all about Services, something Google and Microsoft got a head start in, but Apple is Apple, and I would never count them out.