Apple: Services, wearables, and iPad are solid, but iPhone and Mac not so much
Apple has reported its second quarter financial results, and the summary of it all is that iPhone sales continue to drop, while services keep growing.
It posted a quarterly revenue of $58 billion – down 5 per cent from a year ago – and earnings per share of $2.46. The company’s iPhone revenue, specifically, slumped to $31.05 billion, but it still makes up over half of Apple’s entire revenue. Mac sales were notably down, while the iPad, Apple Watch, AirPods, and other accessories all grew. The most interesting gain, however, concerned services.
That area hit an all-time high of $11.5 billion in revenue.
“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,” said CEO Tim Cook said in a press release. Keep in mind Apple recently launched new models of the AirPods, iPad Air, iPad Mini, and the iMac desktop. The company’s Beats brand will also soon launch new Powerbeats Pro wireless earbuds.
Still, in regards to the Mac business, which has been sinking year after year, Cook admitted during Apple’s earnings call that it’s “faced some processor constraints in the March quarter”. He added, “We believe our Mac business would have been up last quarter without those constraints.” The CEO also explained that Apple accepted four-times the volume of trade-ins this quarter compared to last year.
Let’s also not forget that Apple’s first quarter was another bleak one for the company. Cook even published a letter ahead of time to warn investors that iPhone sales would fall. Revenue ended up dropping 15 per cent from the year prior, and Cook blamed it on Apple’s battery replacement program, the ending of carrier subsidies, trade tensions with China, and a myriad of other excuses.
Although Apple’s stock has added $300 billion in market value since the January quarter, Apple still has many hurdles to face. In China, for instance, the iPhone competes with cheaper phones from brands like Huawei. But Apple did report sales of $10.2 billion in China for Q2.
So, with iPhone sales effectively stagnating in the US, and not doing so hot in places like China where it should be, Apple has been putting all its energy into growing services. Last month, it announced several ones, including News Plus, Apple Arcade, and Apple TV Plus. Although some of those have yet to launch, it might be enough to appease investors and consumers in the meantime.