The new business model of Apple to not depend solely on sales of the iPhone

The new business model of Apple to not depend solely on sales of the iPhone

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The iPhone is no longer the hen of Apple’s golden eggs.

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

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

It is the first time that the benefits that the company obtains through its smartphones have been reduced since they were launched in January 2007.

And for a long time cell phones were the goose that lays the golden egg for Apple .

Over the years, the Cupertino, California, company has sold more than a billion units of what would be called “Jesus’ phone.”

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

But the fall in sales of its flagship product has forced the company not only to consider lowering the price of its cell phones – not all of its customers are willing to spend US $ 1,000 for a new phone – but also to reformulate its business model .

Beyond the iPhone

The fall was not unexpected.

Moreover, Apple had already warned its investors earlier this month that it was going to happen, arguing that they could not foresee “the magnitude of the economic slowdown, especially in China”, in the words of its executive director, Tim Cook.

 

Apple and graphic showing its fall
Copyright of the GETTY IMAGES image
Image caption iPhone sales fell … but not all is bad news for Apple.

 

But Cook also said that his business management is long-term business and that “the strength of the business is deep and broad.”

It was not a random comment.

“Investors (from Apple) were well prepared for the fall of iPhone sales ,” explains Dave Lee, BBC’s North American technology correspondent.

“That bad news was offset – and maybe even canceled – by the good news about the services, ” says Lee.

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

The service sector of the company covers very diverse areas, from cloud storage, iCloud , to applications such as Apple Music and iTunes , to listen to music online, or Apple Pay , the mobile payment system that allows purchases with the iPhone similar to contactless payment cards.

In fact, Apple Pay had 1.8 billion transactions based on Apple’s results, more than double the same period of the previous year. In the case of iCloud, revenues grew more than 40%.

 

Apple Pay
Copyright of the image JUSTIN SULLIVAN / GETTY IMAGESImage caption Apple Pay allows you to make contactless payments through your cell phone.

 

In addition to services, Apple earns money with other products (apart from iPhones), such as iPad tablets and its famous Mac computers . Cook said Tuesday that he has special confidence in these two devices.

And it also sells Airpods (headphones), speakers , televisions ( Apple TV ), iWatch smart watches and all kinds of accessories for your electronic devices.

“The new segment of wearables [devices and electronic devices that are incorporated in some part of our body] and other applications have become Apple’s main growth path,” reads a report published Wednesday on the AppleSfera digital platform. , dedicated to fans of the technology firm.

Specifically, in the case of China, wearable technology revenues in the Asian country have grown more than 50%, according to Apple’s latest quarterly results.

“Streaming”

“Apple is making, little by little, a transition to a different type of company that is less dependent on hardware,” said Lee.

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

One of those options could be his immersion in the world of streaming series , a market that until now dominates Netflix. In fact, the company that created the iPhone recently announced that it will co-produce its first feature film.

 

Netlix on a Mac
Copyright of the GETTY IMAGES imageImage caption Apple recently revealed that it wants to compete with Netflix.

 

But there is more.

The company will launch soon – some estimate that by mid-2019 – its own platform to watch videos: Apple Video .

The company has already signed contracts with actors, directors and artists to create exclusive content. The idea is that through this lucrative business can overcome the hole that is the drop in sales of iPhones.

Morgan Stanley, the US investment fund company, expects Apple Video to generate profits of some US $ 500 million and exceed US $ 4,400 by 2025 .

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