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Apple's new business model does not depend on iPhone sales



January 31, 2019
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Last Updated on January 31, 2019 at 16:15

Apple has presented the worst results of its Christmas season this decade this week.

Data for the last quarter of 2018, from October to December, show that revenue from iPhones fell by 15% compared to last year.

This is the first time that the benefits that the company achieves through its smart phones have been reduced since launching in January 2007.

For a long time cell phones were the goose that put a golden egg for Apple.

Over the years, the Cupertino company in California sold more than a billion units of what would be called "Jesus' phone".

The iPhone helped Apple become the most respected company in the world and become the first public company in the United States. in August 2018 to reach a value of $ 1 billion.

But the drop in sales of the leading product forced the company not only to think about lowering its mobile phone prices – not all of its customers are willing to spend $ 1,000 for a new phone – but also to reformulate their business model. .

Behind the iPhone

The fall was not unexpected.

Moreover, Apple has warned investors early this month that it will happen, arguing they can not predict "the magnitude of economic slowdown, especially in China," according to its executive director, Tim Cook.

IPhone sales fell ... but not all is bad news for Apple. Photo: GETTY IMAGES

IPhone sales fell … but not all is bad news for Apple. Photo: GETTY IMAGES

But Cook also said that his business was long-term and that "company strength was profound and broad."

This is not a random comment.

"Investors (from Apple) were well prepared to sell the iPhone," explains Dave Lee, BBC's correspondent from North America.

"These bad news were neutralized – and perhaps even canceled – good news on services," says Lee.

Indeed, there was a large increase (19%) of revenues generated by services compared to last year. The gross margin was 62.8%.

The service sector covers a wide range of areas, from cloud storage, iCloud, to apps like Apple Music and iTunes, to listen to music online, or Apple Pay, a mobile payment system that allows you to buy a iPhone similar to contactless payment cards.

In fact, Apple Pay had 1.8 billion transactions based on Apple's results, which is more than twice that of the same period last year. In the case of iCloud, revenue has risen by more than 40%.

Apple Pay allows you to make contactless payments via cell phone. Photo: JUSTIN SULLIVAN / GETTY IMAGES

Apple Pay allows you to make contactless payments via cell phone. Photo: JUSTIN SULLIVAN / GETTY IMAGES

In addition to services, Apple makes money with other products (other than iPhones), such as iPad tablets and renowned Mac computers, and Cook said on Tuesday special trust in these two devices.

It also sells Airpods (headphones), speakers, TVs (Apple TV), iWatch smart clocks and all kinds of accessories for your electronic devices.

"A new segment of consumables [aparatos y dispositivos electrónicos que se incorporan en alguna parte de nuestro cuerpo] and other applications have become the main growth paths of Apple, "said a report released on Wednesday at AppleSphere's digital platform dedicated to fans of a technology company.

Namely, in the case of China, mobile technology revenue in the Asian country grew by more than 50%, according to the latest Apple quarterly results.

"Streaming"

"Apple does, bit by bit, switch to a second-tier company that is less dependent on hardware," Lee said.

"With $ 245,000,000 of available cash (as the economic results show), you can afford to throw your house out of the window and make your investors happier with a big deal – or two – in the entertainment area."

One of these options could be its immersion into the world of the streaming series, the market that has so far dominated Netflix. In fact, the company that created the iPhone recently announced that it will co-produce its first feature film.

Apple has recently discovered that it wants to compete with Netflix. Photo: GETTY IMAGES

Apple has recently discovered that it wants to compete with Netflix. Photo: GETTY IMAGES

But there is more.

The company will soon be launched – some are estimated by mid-2019 – their own video viewing platform: Apple Video.

The company has already signed contracts with actors, directors and artists to create exclusive content. The idea is that through this lucrative job can overcome the gap that is the decline in the sale of iPhones.

Morgan Stanley, the US investment funds company, expects Apple Video to generate $ 500 million profit and exceed US $ 4,400 by 2025.


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