‘Wall Street has gotten its underwear turned around’ on Apple

In Wednesday’s CML Pro, Ophir Gottleib looks for reason in the Apple-is-doomed narrative.

From Apple is Not Dead, Logic Has Departed:

The argument goes that if iPhone until sales growth slows, or even worse, shrinks, then the Services business too will shrink, since those users are mostly iPhone owners.

Now stop for a second and see if you can spot the illogical conclusion.

See it? Here it is…

Apple’s unit sales growth is slowing because people are upgrading their phones much less often. So, let’s say Apple sells 200 million iPhone phones this year, perhaps next year it sells just 170 million — that would be shrinkage, right?

No, not right. That would be shrinkage in growth. If Apple sells 170 million iPhones next year, irrespective of how many the company sold last year, that is 170 million more phones.

That is, some will be Apple users upgrading to newer phones, and some, obviously, will be Android switchers. While the growth in units will shrink, the user base will almost certainly grow — and grow substantially.

Wall Street has gotten its underwear turned around and drawn an equivalency between slowing growth and losing users. That is not the case.

My take: Amazing how many Apple doomsayers get this wrong.

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