“Apple Inc.’s results confirmed that, while the days of double-digit smartphone industry growth are over, Chief Executive Officer Tim Cook has a plan to withstand the slowdown,” Mark Gurman reports for Bloomberg. “The shares gained after the company reported iPhone sales in line with analysts’ expectations, gave a bullish revenue forecast and highlighted a surging services business.”
“The numbers show that Cook’s strategy of selling a growing array of services through a base of more than 1.3 billion Apple devices is working,” Gurman reports. “The smartphone sector saw shipments fall 2 percent in the past year, according to Strategy Analytics, so the company must evolve beyond its reliance on a device that still accounts for more than 60 percent of revenue.”
“‘Slowly but surely, [Apple] is morphing into more than just an iPhone story and is displaying ability to sustain revenue growth irrespective of iPhone trajectory,’ Amit Daryanani, an analyst at RBC Capital Markets, wrote in a research note,” Gurman reports. “‘Growth in the near-term will come from higher iPhone X pricing, a lower-cost iPhone SE update, selling more services like Pay to its premium subscribers, and increasing output of its surprisingly popular Watch portfolio,’ said Neil Mawston, an analyst at Strategy Analytics.”
“Revenue from services surged 31 percent to a record $9.2 billion in the quarter. The App Store, Apple Music, iCloud storage and Apple Pay all generated record sales, Cook said. The company is expanding these offerings with original videos and a news subscription service,” Gurman reports. “As long as Apple continues to sell around the same number of devices each year — 217 million iPhones, more than 40 million iPads, and almost 20 million Macs in fiscal 2017 — it can sell users of these devices a growing list of services that integrate tightly with the hardware.”
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