Apple CEO Tim Cook outlined the company’s plans to sustain growth in its Services segment, as iPhone revenue hit a milestone in its downward spiral.
During an earnings call, Cook said the Services segment posted double digit revenue growth across all five of Apple’s geographic segments in fiscal Q3 (which ended 29 June), ultimately growing 13 per cent year-on-year to $11.45 billion.
He added Apple is on track to double fiscal 2016 Services revenue (which came in around $24.3 billion) and surpass half a billion paid subscriptions in 2020.
CFO Luca Maestri said the upcoming rollout of new products in the Services unit including Apple Card in August, and Apple Arcade and Apple TV Plus later in the year, will “help us carry on with the momentum we have in Services”.
Maestri conceded generating revenue from the new features “will take some time”, but noted all will add to Apple’s customer base.
The comments came as revenue from Apple’s iPhone dropped 12 per cent year-on-year from $29.5 billion to $26 billion.
Cook noted the rate of decline was slower than a 17 per cent drop the previous quarter, but The Verge pointed out it was the first time since 2012 that the iPhone segment accounted for less than half of Apple’s overall revenue.
The segment was the only one of Apple’s business lines not to grow: Mac sales increased from $5.3 billion to $5.8 billion; iPad revenue crossed the $5 billion mark; and revenue in the Wearables, Home and Accessories segment jumped from $3.7 billion to $5.5 billion.
Cook said excluding iPhone, revenue across the company’s other product and services segments grew 17 per cent, helping drive a return to overall revenue growth after two consecutive quarters of decline.
Total revenue of $53.8 billion crept up 1 per cent year on year from $53.3 billion, though profit continued to fall, from $11.5 billion in fiscal Q3 2018 to $10 billion.
However, iPhone revenue could get a boost in the current quarter thanks to the expected release of updates to its iPhone XS, XS Max and XR line-up.
Cook was tight lipped about how the company’s $1 billion acquisition of Intel’s smartphone modem business might be reflected in future iPhone releases and supplier negotiations, saying only it would further the company’s strategy of “owning and controlling the primary technologies behind the products we make”.Subscribe to our daily newsletter Back