Apple's earnings call: iPhone price cuts and services help stem declining sales

iPhone sales continue to sharply decline, according to Apple's earnings statement for its second fiscal quarter, though its stock and services business are up today.

Apple's all-important iPhone revenue was down another 17% for the quarter ending on March 30, amounting to $31.05 billion. A year ago we saw iPhone revenue at $37.56 billion.

You can chalk up people's continued upgrade aversion to newer, more expensive iPhones. The iPhone XS Max is Apple's most expensive phone ever, the 'budget' iPhone XR is still quite pricey, and the iPhone XS didn't change very much from the iPhone X.

New iPhone 11 rumors point to a triple-lens camera upgrade and the capability to wirelessly charge other devices (handy for the new AirPods 2019), but Apple's handset isn't expected to get a groundbreaking smartphone redesign, unlike its competition.

How it's stemming iPhone bloodletting

Apple noted that price drops in certain countries did help it see some recovery, so its declines were "significantly smaller later in the quarter," according to CEO Tim Cook during today's Apple earnings call. 

Sadly, Apple no longer releases numbers for how many iPhone units it sells. Its Mac sales saw a minor dip (Apple blamed on "processor constraints on certain models"), while iPad sales were up (Apple highlighted the new iPad Air and iPad mini). The company's catch-all Wearables, Home and Accessories category saw a nice bump.

Services are what Apple has been talking up the most recently, and today's earnings call was no different. It's up to $11.45 billion from $9.85, which Apple touts as breaking new records for Apple Music, the App Store and Apple Pay.

The company just launched Apple News Plus and the forthcoming Apple TV Plus, and Apple Arcade are coming later in 2019. They'll join Apple Music in driving new subscription-based revenue.

"Service account for 20% of our March quarter revenue and one third of its gross profit dollars," according to Apple CFO Luca Maestri during the Apple earnings call.

Of course, Apple's iPhone revenue is still 2.8 times larger than its growing services category and it's becoming a perilous business to be in. Netflix has spent $15 billion on original content, HBO has shows that are household names like Game of Thrones, and Disney Plus launches on November 12 with a Disney, Marvel and Star Wars-packed back catalogue.

• Next-level VR: Oculus Quest review

May 01, 2019 at 05:06AM
Matt Swider