We’ve been hearing for a while that iPhone sales are slowing – but that might not be as much of a concern for Apple as you might think.
In the latest report, Apple confirmed that – for the last three months – the iPhone has made up less than half of the net sales from its product portfolio. The last nine months paint a slightly different picture, with the iPhone the most prominent product, but the overall trend suggests that it’s slowly being caught by other devices and services.
Services is actually the big winner here, bringing in over 20% of the total net sales for Apple in the last quarter, showing that Apple Music, Apple Pay and other platforms its offering are really becoming cash generators for the brand.
The Apple Watch is also flying – as part of the ‘wearables, home and accessories’ sector, the whole lot together has grown nearly 50% in the last year, likely due to the successful Watch 3 and the upgraded Watch 4 now on the market.
Given the Apple Watch is clearly the underlying success story in that category, you have to wonder when Apple will break it out into its own segment – perhaps if and when the HomePod becomes a bigger seller?
Isn’t Apple worried about the iPhone?
Of course, the dropping sales of the iPhone are a worrying trend for the Cupertino brand – it’s still by far the biggest-selling part of its business, over double the net sales of Services.
But while by an incredibly modest amount, overall net sales are up year on year, and the mix is becoming a little more balanced – any business owner will tell you that a diverse success story in the product portfolio is more appealing and hardy.
In fact, with the iPad and Mac both selling well this year and improving from the same point in 2018, the picture isn’t as bad as the headline stat of the slowing iPhone might be showing. That’s even before any revenue increases the new Apple Card, Apple News Plus and Apple TV Plus bring.
“This was our biggest June quarter ever — driven by all-time record revenue from Services, accelerating growth from Wearables, strong performance from iPad and Mac and significant improvement in iPhone trends,” said Apple CEO Tim Cook, before going on to hint at an (expected) range of new launches later this year.
“These results are promising across all our geographic segments, and we’re confident about what’s ahead. The balance of calendar 2019 will be an exciting period, with major launches on all of our platforms, new services and several new products.”
Those ‘geographic segments’ paint an interesting picture: while all territories show pretty level net sales year on year, the overall net sales for the last nine months offer a different story.
In the last three quarters, net sales in China slumped the hardest, falling nearly 20% in a market that’s becoming saturated by many low-cost, high-power devices. European net sales fell slightly, where the Americas slightly rose.
Will it get better?
This financial report really sets up an interesting tail of the year. While a more diverse mix of product revenue is good for Apple, for the short term it still needs a thriving iPhone ecosystem to help cement growth for the brand.
With the overall smartphone market slowing, according to Gartner, Apple could do with a big-hitting iPhone this year to attract new users. However, the signs are pointing to a fairly modest update with the iPhone 11, and no 5G on board yet, which could lead to another year of tough sales before 2020’s iPhone brings the expected big changes to the design.
Does that mean Apple has a surprise up its sleeve for the new iPhone launch this year? Something that pushes the iPhone 11R into new territory? A hint at the flexible iPhone? Or will it just be a slight upgrade to the camera? We’ll know more in September – but it could be a real turning point in Apple’s history.