iphone xs

Will Apple’s Downturn in iPhone Sales Hurt its Bottom Line?

iphone xs

During its earnings call this week, Apple revealed that their quarterly revenue for Q1 of 2019, was down by 5% compared to that a year ago. Totalling, just over $84 billion. But what lead to this downturn in their revenue? It might have something to do with the fact that people bought fewer iPhones. 15% fewer in fact. Overall this does sound bad, doesn’t it? But it’s also worth noting that Apple made close to $52 billion from selling iPhones last year. So on one hand, a 15% drop is bad, but maybe not that bad. What’s interesting is that we might have reached a saturation point with the iPhones – for now at least. Which leads me to wonder why – does everyone have an iPhone? Are people not updating as often?

Apple recent revealed a very interesting number. One that they have never revealed before. There are 900 million active iPhones in the world. Key word there is active. But maybe we can also attribute the decline in sales with the fact that the newer iPhones will cost you at least $1,000 or more. When I said that maybe people weren’t updating their iPhones as often, this is what I meant. If you’re going to drop $1,000, and then some, how often are you willing to do that? Yearly? Every other year? Or maybe every three to four years? Even with some discount offers from the carriers themselves, you’re looking at well over that $1,000 price point, so it isn’t surprising that people are extending the life of their phones.

https://www.youtube.com/watch?v=uJkOP1-v9B4&index=5&list=PLHFlHpPjgk72x9Mj3sJWOfxKEPiFwQBOB

But it’s not just about the cost. It’s also about the fact that the cost is different depending on the market where you live. For example, the iPhone XS Max, starts at $1,110 for the 64GB model in the United States, but in India, it will cost at least $1,500. Does that sound fair? Not at all. You’re literally getting the same device, but you have to pay more for said device because of where you live. But Apple CEO Tim Cook indicates that this kind of price variation will change. It’s also a bit of a double blow because these currencies are weakened by the fact that the U.S. dollar was getting stronger.

… as we’ve gotten into January and assessed the macroeconomic condition in some of those markets, we’ve decided to go back to more commensurate with what our local prices were a year ago in hopes of helping the sales in those areas.

Tim Cook, Apple CEO

Will this change anything? Well, Apple is in a position where they can sell just as many devices, if not more, at that lower price, because their services sector is booming. In fact, it earned $10.9 billion from channels like Apple Music and the App Store, and they’re currently in the process of launching a streaming video platform with original content. They’re also opening up its services to third-party hardware brands, in an attempt to reach more people.

So maybe Apple doesn’t need you to buy more of their devices, so long as you buy new ones every so often, and use services like Apple Music. Apple will be unveiling new iPhones in September, but what that will look like is anyone’s guess at this point.