Apple iPhone sales in record fall
iPhone no longer core?
Sales of iPhones, which account for over 50% of Apple’s revenue, are down 17% but there’s better news from wearables and services for the Cupertino giant.Second quarter financial figures recently released show the steepest ever drop in iPhone sales in the three months up to the end of March 2019, affecting profits which fell from $37.5 billion to $31 billion. However, market nerves were steadied by an improved outlook in the next quarter and growing iPhone sales in China, which have been boosted by price cuts.
This is good news for Apple who had actually predicted a slowing of sales in China, a notoriously challenging market for Apple’s flagship device where a whole raft of homegrown, rival smartphones from Huawei and Xiaomi are proving popular. However, a series of favourable market conditions including progress in US-China trade discussions and lower Chinese taxes on the iPhone turned sales around toward the end of the quarter.
In an interview with the Apple Chief Executive, Tim Cook told Reuters that iPhone sales had started to strengthen during the last few weeks of the fiscal second quarter, including in China. “These, along with the continued success with wearables and so forth, give us some confidence that things are getting a bit better.”
Overall revenue for the three months up to the end of March was reported as $58 billion, down $3 billion from Q2 2018 but still slightly ahead of analyst predictions.
Accompanying an uptick in sales of wearables and accessories which were up from $3.9 billion to $5.1 billion, services, such as Apple Music, bought in a record $11.5 billion and it appears consumers are remaining loyal to the Apple brand, opting to buy into other areas as they postpone their iPhone upgrades for the time being.
As their service provision becomes increasingly important, the success of Apple’s rollout of upcoming subscription services; which include the gaming platform Arcade plus, News Plus and Apple TV Plus, will be watched closely. It will certainly give an indication whether Apple’s move towards a service based business model will bear fruit going forward, as demand for its iPhones slows. But with so many consumers already committed to the Apple ecosystem, courtesy of the iPhone, it could be argued that the world’s first smartphone has done its job in laying the groundwork for the company’s next moves.
Additionally, iPad sales jumped 22%, mainly from discounted iPad Pro models, representing the strongest iPad sales in six years.
“We delivered our strongest iPad growth in six years, and we are as excited as ever about our pipeline of innovative hardware, software and services,” CEO Tim Cook said in the accompanying press release. “We’re looking forward to sharing more with developers and customers at Apple’s 30th annual Worldwide Developers Conference in June.”
Apple and Qualcomm’s recently settled legal tussle and their newly signed deal for Qualcomm to supply components to Apple won’t have had a direct effect on the earnings report but it will have helped smooth any market jitters that lingered.
Source: www.trustedreviews.com, www.reuters.com
Image Source: marketingland.com, bbc.com
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