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Apple's Q2 shows a decline in iPhone and Mac sales as services become the next big growth...

By Humza ยท 13 replies
May 1, 2019
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  1. A stagnating smartphone industry and huge potential and investments going into subscription services seem to be the two major trends in recent tech culture. As fiscal Q2 reports for companies begin to sprout across the web, Apple's services look like its next big bet as iPhone sales continue to slump in the company's latest quarterly results.

    Despite the iPhone's $31 billion revenue, this figure is still down year-over-year as Apple shipped 30% fewer units, according to data from IDC.

    Mac sales also suffered a decline because the company "faced some processor constraints in the March quarter", Tim Cook said in the earnings call, further adding that "we believe our Mac business would have been up last quarter without those constraints."

    Another reason might have to do with the consumer backlash it faced for the Mac's troublesome butterfly keyboard design, an issue that lingered on for years which the company only now appears to take seriously.

    On the plus side, the iPad posted pleasing figures, which Cook remarked in the press release as "our strongest iPad growth in six years." The company's other divisions including wearables, home and accessories, and services all saw gains as well.

    Apple has been focusing more on services recently and is certainly aware of their potential as the next big growth opportunity. It has been making strides with Apple Music and recently launched its News+ subscription service for avid magazine readers. The soon-to-launch Apple TV+ and Apple Arcade are likely going to bolster its subscriber base across a variety of services.

    While streaming services are only going to compete more for our screens and money, Cook expects consumers to have multiple options and said that "We're going to do our best to convince them that the Apple TV+ product should be one of them."

    Apple Arcade and TV+ are poised to launch sometime this fall as part of iOS 13 and macOS 10.15 as the company prepares to reveal more next month in its Worldwide Developers Conference.

    Permalink to story.

  2. Uncle Al

    Uncle Al TS Evangelist Posts: 5,150   +3,574

    Personally, I won't use any of Apple's "subscriptions" because of so much bloatware they sneak in. If I'm going to pay for a subscription I want ONLY what I'm paying for and nothing more. If they want to put their bloatware on my computer let them pay ME.
    Gallifrey2 likes this.
  3. antiproduct

    antiproduct TS Addict Posts: 102   +87

    I really hate how they've turned many apps where you used to pay once and now turned them into monthly subscriptions. I'll never pay for them to boost their profits that way. Maybe that's part of the reason why their market is shrinking, people don't want to pay monthly for their apps.
  4. Lew Zealand

    Lew Zealand TS Guru Posts: 523   +400

    I'm a Mac (and PC) user but not much of an Apple ecosystem user. What are these apps that have turned into monthly subscriptions? If you're talking about News and iTunes, they still have all the (dubious) functionality they had before. The subscription bit is just a moneymaking add-on aimed at rich, lazy people.
  5. antiproduct

    antiproduct TS Addict Posts: 102   +87

    So far I only have two apps that went from pay once/free to a subscription model. I have one game that really tries to push it and it's pretty damn annoying. Anyway, here's some of the headlines for this push:

  6. elementalSG

    elementalSG TS Booster Posts: 90   +65

    My question is, if Apple's hardware keeps declining in sales, yet their subscriptions are tied to owning Apple hardware, how doesn't the declining hardware sales also start hurting the subscriptions sales after a while?
  7. Lew Zealand

    Lew Zealand TS Guru Posts: 523   +400

    Like with computers, people are holding on to their phones longer now as performance of even midrange options are higher than the average user needs. As long as they still have a supported device, then that subscription stream remains intact. Remember that Apple supports their phones for 5+ years with OS and app updates, so even someone with an 'ancient' iPhone 5s is still running the current iOS 12.2.

    Services are where the growth potential is nowadays which is why the stock is through the roof again today.
  8. QuantumPhysics

    QuantumPhysics TS Evangelist Posts: 1,001   +724

    #1 FIOS ($155 a month) Sirius XM ($20 a month) and Xbox Live ($60 a year) are the only services I'm paying for.

    I'm not giving a dime to Netflix, Amazon or anyone else.

    #2 Decline in iPhone sales?

    You crank the price up to $999 - over $1500 and you're surprised their is a decline in sales?
  9. QuantumPhysics

    QuantumPhysics TS Evangelist Posts: 1,001   +724

    This is ultimately the reason Apple is moving to their own credit card. You'll be more likely to purchase extra services if you can defer the payment.

    I personally will get an Apple Credit Card but I'll probably never use it. My Capital One Venture card gives me my travel rewards points.

    I cashed in over $400 to buy my girlfriend a ticket with me to Bangkok this past Spring Break.

    Unless Apple can offer MORE than Capital One - they can forget it.
  10. GregonMaui

    GregonMaui TS Booster Posts: 106   +32

    Please define, sounds a bit disingenuous to arbitrarily make this statement with no background
  11. GregonMaui

    GregonMaui TS Booster Posts: 106   +32

  12. GregonMaui

    GregonMaui TS Booster Posts: 106   +32

    OK, a little bit disingenuous. Most of the decline in sales is industry related (MAC declines in a declining market), Intel not being able to deliver CPUs, and a trade war prompting a strong reaction in China. so, what is your point? We would all like Apple to sell stuff for free, they do overprice SSDs and RAM, but their results (other than in China) are not doing badly (spoiler alert, check stock price, lots of smart people weigh in there)
  13. elementalSG

    elementalSG TS Booster Posts: 90   +65

    First off, not sure why you are so defensive of Apple (unless, of course, you own lots of shares of Apple stock). I've been an iPhone user since the original iPhone in June 2007. I have never owned an Android phone. My point is a purely logical one.

    According to this article, Apple shipped just 36.4 million iphones in 1Q19 vs 52.2 million in 1Q18, a drop of over 30%. Last time I checked, if you keep losing 30% of your hardware sales year-over-year and your software-based subscriptions are tied to your proprietary hardware, your software-based subscriptions will also decline after a period of time just because there aren't enough of your proprietary devices out there anymore. Tell me I am completely wrong. Tell me that 30% declines in proprietary hardware doesn't mean that eventually you can't keep growing your software-based subscriptions that are tied to your proprietary hardware. Tell me my logic makes no sense.
  14. fktech

    fktech TS Maniac Posts: 512   +128

    Services have a limited function on the downside. First thing to cut when the economy goes bad.

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