Apple limps ahead as iPhone revenue plummets - Mobile World Live

Apple limps ahead as iPhone revenue plummets

30 JAN 2019

A double-digit slide in iPhone revenue weighed heavily on Apple’s fiscal Q1, dragging overall revenue down 5 per cent year-on-year to $84.3 billion as gains in all of its other segments failed to offset the drop.

Revenue from iPhone plummeted 15 per cent year-on-year to $52 billion in the three months to 29 December, 2018.

Declines in Greater China were primarily responsible for the drop. But, during an earnings call, Apple CEO Tim Cook also blamed a lack of operator device subsidies and foreign exchange rates for sluggish upgrade rates.

Cook noted subsidies in developed market such as the US and Japan have become less prevalent, shifting the cost burden of buying a new device to consumers. In Japan, he said less than half of iPhones sold in Apple’s fiscal Q1 were subsidised, compared with around 75 per cent in fiscal Q1 2018.

He added the relative strength of the US dollar also made Apple products more expensive abroad, and said the company this month took steps to lower local prices in some markets to where they were a year ago.

CFO Luca Maestri said headwinds are expected to continue into Apple’s fiscal Q2 and forecast overall revenue of between $55 billion and $59 billion for that period.

Other financials
Apple’s other segments, however, thrived.

Wearables, Home and Accessories revenue surged 33 per cent from $5.5 billion in fiscal Q1 2018 to $7.3 billion in the recent quarter, while Services revenue climbed 19 per cent to $10.9 billion. Revenue from iPad grew 17 per cent to $6.7 billion and Mac revenue increased 9 per cent to $7.4 billion.

Cook noted the former was the highest iPad growth rate in nearly six years.

Still, Apple’s profit fell slightly from $20.1 billion in fiscal Q1 2018 to just under $20 billion in the recent period.

Missing metrics
The report marked Apple’s first set of results without a breakout of hardware shipment figures, after the company announced in November it would stop including the metric.

However, Maestri said Apple’s active installed base across all of its devices hit 1.4 billion by the end of 2018, up from 1.3 billion. He added more than 900 million iPhones were in use at end-December, 75 million more than at end-2017. This base, he said, is driving growth in Apple’s Services business.

While there was no official count from the vendor, analyst company Canalys estimated Apple shipped 71.7 million iPhones in the quarter. If correct, the figure would be down 7.3 per cent from Apple’s reported 77.3 million shipments in fiscal Q1 2018.

As global smartphone shipments slow, Canalys suggested “Apple may need to launch a cheaper iPhone, or at least become more flexible with channel discounting, to safeguard the same installed base it has bet its future on.”

Back

Author

Diana Goovaerts

Diana joins Mobile World Live as its new US Editor, reporting on infrastructure and spectrum rollouts, regulatory issues, and other carrier news from the US market. Diana comes to GSMA from her former role as Editor of Wireless Week and...

Read more

Related

Tags