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iPhone, no more a cash cow for Apple; Q4 2019 report

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Apple posted its 4th quarter earning a result that shows the US-based company is making more money from its services and accessories’ division than iPhones.

Apple recorded $64.04 billion worth of sales in the fourth quarter, better than $63 billion estimated figure by analysts. The revenue is even 2% higher against the last year’s figure of $62.9 billion in the same period.

The US-based company saw a decline in iPhone sales that fell by 9% in this quarter from $36.8 billion it made last year to $33.6 billion this year.

Once considered the cash cow for the company iPhone sale is on the consistent decline ever since iPhone X launched. Consumers are willing to spend more time with their old iPhones on account of the high price for the new ones.

Tim Cook, the CEO of Apple, however, believes the iPhone 11 performing better than the previous year’s model.

The latest revenue figure does not fully reflect the revenue of iPhone 11 since it was launched in September this year.

For Apple, the services’ segment remained a major contributor that includes games, music, apps’ subscriptions, and Apple Pay fee. And when people are holding their iPhones for a longer time, it is vital for Apple to generate revenues from elsewhere. 

The services’ division made $12.5 billion in this 4th quarter, a 26% higher in volume than $9.9 billion it earned last year. However, the 2nd and 3rd quarter combined generated $11.5 billion of revenue in 2019 from the same category.

Analysts believe the first quarter of the next financial year for Apple could be more interesting as it will also include the impact of Apple TV+ that launches on November 1st. 

Although there have been mixed reviews on the content, it could be easier for Apple to sell its product to nearly 1.5 billion iOS users. Apple has also announced a one-year free service for anyone who buys a new iOS device.

Sales from ‘wearable, home and accessories’ division also surged by 55% this fourth quarter to reach $6.52 billion. Although, it does not include the recently launched Air Pods Pro the second generation, Air Pods, Apple Watch and Beats headphones may have contributed reasonably well.

Apple also saw a 17% growth in its iPad business that reached to $4.6 billion in the latest quarter.

Apple witnessed a 2% dip in its business in China that could generate $11.1 billion where Huawei technology has primarily gained due to an anti-US sentiment. Huawei grabbed a 42% market share in the third quarter of 2019 that ended on September 30th.

The iPhone maker is pretty hopeful for the 1st quarter of 2020 that starts on November 1st. As the holiday season approaches, which usually brings good fortunes for the tech industry, Apple forecasts revenue between $85.5 billion to $89.5 billion. And if things go Apple’s way, it could be the highest-earning single quarter for the company.

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Written by Mudassar Jehangir

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