Apple’s iPhone business shows signs of life

“Back on January 2nd, Apple negatively pre-announced its earnings results for the first quarter of fiscal year 2019, as iPhone sales — particularly in the Greater China region — fell substantially short of expectations and saw a year-over-year sales decline,” Ashraf Eassa writes for The Motley Fool. “That decline continued into the company’s second quarter, with Apple CEO Tim Cook saying on its most recent earnings call that iPhone revenue dropped 17% year over year during that period. Although a 17% decline is pretty awful, there were some potential bright spots for the company’s iPhone business that suggest signs of life. Let’s take a closer look. ”

“According to Cook, the year-over-year declines in the company’s iPhone revenue ‘were significantly smaller in the final weeks of the March quarter,'” Eassa writes. “Later on in the call, Cook went into some more detail on these improvements that helped to shore up iPhone results in China, the region that has been most problematic. One factor that helped to boost the company’s Greater China iPhone performance, per Cook, was that Apple ‘made some price adjustments essentially backing out the weaker currency effect.'”

iPhone XR comes in six new finishes: white, black, blue, yellow, coral and (PRODUCT)RED.
Apple’s A12 Bionic-powered iPhone XR comes in six new finishes: white, black, blue, yellow, coral and (PRODUCT)RED

 
“The executive also explained that the Chinese government initiated some ‘stimulus programs’ such as reducing the value-added tax (VAT) rate from 16% to 13%, ultimately translating into more accessible prices for consumers. Third, Cook said that ‘our trade-in and financing programs that we’ve implemented in our retail stores have been very well received there, and I’m happy with the results to date there,'” Eassa writes. “And finally, he highlighted ‘an improved trade dialog between the US and China’ as something that has ‘affected consumer confidence on the ground there in a positive way.'”

Read more in the full article here.

MacDailyNews Take: Just an FYI:

Apple sold 217.72 million iPhones in 2018, up from 216.76 million in 2017, and up from 211.88 million in 2016.

The replacement cycle is lengthening*, but Apple will still sell some 200 million iPhones per year.

*Until everyone and their mother upgrades with the first 5G iPhone in 2020.

SEE ALSO:
Apple cuts prices on iPhones, iPads, and Macs in China after value-added tax cut – April 1, 2019

6 Comments

  1. “One factor that helped to boost the company’s Greater China iPhone performance, per Cook, was that Apple ‘made some price adjustments essentially backing out the weaker currency effect.”

    And it only took you, what, 10weeks to properly price those products (in line with exchange rates)? Stupid or liar? I’ll take liar.

    You knew damn well the phones were overpriced (vs the true exchange rate) and thought the Apple logo would get Chinese buyers over the hump. It didn’t and now you’ve buckled. So good job on only screwing Chinese iPhone users for 10 out of 12 weeks in the quarter.

  2. I’m not sure how many iPhones Apple can be expected to sell quarter after quarter in such a crowded smartphone market and especially when most consumers aren’t buying flagship-type smartphones. IMHO, I think Apple needs to find alternative revenue streams that can provide greedy big investors with some direction of company growth. There will be nearly no iPhone sales in India and that’s a huge (potential) opportunity lost for Apple.

    If consumers only need to buy a new iPhone every few years, that’s a good thing. I say this even as an Apple shareholder. A product should last years if a consumer has to pay a lot of money for it. I find it hard to believe Apple never saw this day coming where consumers wouldn’t be replacing iPhones every year or so. Apple should have been looking into other businesses years ago. Apple shouldn’t have waited until the Chinese smartphones were eating their lunch with low-cost, decent smartphones.

    I honestly don’t see the Chinese consumer switching back to the iPhone when they can get ‘good enough’ domestic-brand smartphones for less money. I don’t see any compelling reason for them to switch in significant numbers. There’s nothing an iPhone can do that matters to most consumers to get them to switch. Privacy and security will never be a selling point for the iPhone because most people aren’t interested in such intangible things. Facebook has proved that much. The more personal data Facebook steals, the higher the share price goes. Nobody cares, not even the Feds.

    Anyway, I doubt Apple will ever be able to sell many more iPhones than what it already is even if they come out with folding iPhones, 5G or some other features. The only way Apple can sell more iPhones is to reduce prices, even just temporarily, to boost sales.

    I’ve said my piece. I’m surely no expert when it comes to finance and I personally think Apple is doing OK. Maybe they can do better but that’s just my couch-CEO opinion. There have never been many trillion-dollar companies and Apple was one of them, so Apple must be doing something right. I’m living comfortably, thanks to Apple and those increasing dividends.

    1. iPhone may be experiencing something similar to the Sprint commercials about their service compared to Verizon. Will consumers continue to pay Apple’s prices if the feature comparison and TCO with the competition continues to narrow?

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