Apple's problem? No new products

First profit fall in a decade.

Apple's results are out, and although the company posted its first profit fall in a decade it still beat analyst expectations - boosting its share buyback programme by $50bn and making $9.5bn over the quarter.

Here's Business Insider's breakdown of results vs expectations:

  • Revenue: $43.6 billion billion versus $42.3 billion analysts' estimate
  • EPS: $10.09 versus $9.98 analysts' estimate
  • Gross margin: 37.5% versus 38.5% analysts' estimate
  • iPhone: 37.4 million versus 36.5 million analysts' estimate
  • iPad: 19.5 million versus 18.3 million analysts' estimate
  • Mac: Just under 4 million million versus 4.1 million analysts' estimate
  • iPod: 5.6 million versus 6.25 million analysts' estimate
  • June quarter revenue: $33.5-$35.5 billion versus $38.6 billion analysts' estimate
  • June quarter gross margin: 36%-37% versus 38.6% analysts' estimate
  • Cash balance of $145 billion

But why the profit fall? Several theories are being tossed around. These are:

1. Apple Maps. The fiasco (bridges collapsed, a park in Ireland became an airport, normally land-bound cities ended up in the sea). The awfulness of the maps was fairly damaging to the company, particuarly as it had been given such a high-profile release.

2. John Browett's approach to Apple Stores. Apple's new recruit, brought in under Tim Cook, decided to save money on staff in these important showrooms. It was not a success and he was quickly fired.

3. iCloud problems. The storage feature is more expensive than Google's version, and has created way more problems for users - audiobooks, for example, cannot be replaced if accidently deleted.

4. A lack of "buzz". When you get down to it, Apple's problems are mostly to do with lack of new products. It has been six months since Apple released anything new, and there is as yet no sign of the rumoured Apple "iWatch", the super-TV set, or even the iPhone with the larger screen, that would be able to compete with Samsung's 5in Note.

There's an edited transcript of what Tim Cook had to say about the results here.

Photograph: Getty Images
Photo: Getty Images
Show Hide image

I'm far from convinced by Cameron's plans for Syria

The Prime Minister has a plan for when the bombs drop. But what about after?

In the House of Commons today, the Prime Minister set out a powerful case for Britain to join air strikes against Isil in Syria.  Isil, he argued, poses a direct threat to Britain and its people, and Britain should not be in the business of “outsourcing our security to our allies”. And while he conceded that further airstrikes alone would not be sufficient to beat Isil, he made the case for an “Isil first” strategy – attacking Isil now, while continuing to do what we can diplomatically to help secure a lasting settlement for Syria in which Assad (eventually) plays no part.

I agreed with much of David Cameron’s analysis. And no-one should doubt either the murderous barbarism of Isil in the region, or the barbarism they foment and inspire in others across the world.  But at the end of his lengthy Q&A session with MPs, I remained unconvinced that UK involvement in airstrikes in Syria was the right option. Because the case for action has to be a case for action that has a chance of succeeding.  And David Cameron’s case contained neither a plan for winning the war, nor a plan for winning the peace.

The Prime Minister, along with military experts and analysts across the world, concedes that air strikes alone will not defeat Isil, and that (as in Iraq) ground forces are essential if we want to rid Syria of Isil. But what is the plan to assemble these ground forces so necessary for a successful mission?  David Cameron’s answer today was more a hope than a plan. He referred to “70,000 Syrian opposition fighters - principally the Free Syrian Army (FSA) – with whom we can co-ordinate attacks on Isil”.

But it is an illusion to think that these fighters can provide the ground forces needed to complement aerial bombardment of Isil.  Many commentators have begun to doubt whether the FSA continues to exist as a coherent operational entity over the past few months. Coralling the myriad rebel groups into a disciplined force capable of fighting and occupying Isil territory is a heroic ambition, not a plan. And previous efforts to mobilize the rebels against Isil have been utter failures. Last month the Americans abandoned a $500m programme to train and turn 5,400 rebel fighters into a disciplined force to fight Isil. They succeeded in training just 60 fighters. And there have been incidents of American-trained fighters giving some of their US-provided equipment to the Nusra Front, an affiliate of Al Qaeda.

Why has it proven so hard to co-opt rebel forces in the fight against Isil? Because most of the various rebel groups are fighting a war against Assad, not against Isil.  Syria’s civil war is gruesome and complex, but it is fundamentally a Civil War between Assad’s forces and a variety of opponents of Assad’s regime. It would be a mistake for Britain to base a case for military action against Isil on the hope that thousands of disparate rebel forces can be persuaded to change their enemy – especially when the evidence so far is that they won’t.

This is a plan for military action that, at present, looks highly unlikely to succeed.  But what of the plan for peace? David Cameron today argued for the separation of the immediate task at hand - to strike against Isil in Syria – from the longer-term ambition of achieving a settlement in Syria and removing Assad.  But for Isil to be beaten, the two cannot be separated. Because it is only by making progress in developing a credible and internationally-backed plan for a post-Assad Syria that we will persuade Syrian Sunnis that fighting Isil will not end up helping Assad win the Civil War.  If we want not only to rely on rebel Sunnis to provide ground troops against Isil, but also provide stable governance in Isil-occupied areas when the bombing stops, progress on a settlement to Syria’s Civil War is more not less urgent.  Without it, the reluctance of Syrian Sunnis to think that our fight is their fight will undermine the chances of military efforts to beat Isil and bring basic order to the regions they control. 

This points us towards doubling down on the progress that has already been made in Vienna: working with the USA, France, Syria’s neighbours and the Gulf states, as well as Russia and Iran. We need not just a combined approach to ending the conflict, but the prospect of a post-war Syria that offers a place for those whose cooperation we seek to defeat Isil. No doubt this will strike some as insufficient in the face of the horrors perpetrated by Isil. But I fear that if we want not just to take action against Isil but to defeat them and prevent their return, it offers a better chance of succeeding than David Cameron’s proposal today. 

Stewart Wood is a former Shadow Cabinet minister and adviser to Ed Miliband. He tweets as @StewartWood.