Apple's Q2 2019 results show that the iPhone is losing momentum, but services are growing at a rapid pace

Everyone has a theory: maybe iPhones are too expensive. It may be that Apple's quality control seems weaker, or they have alienated consumers by removing user-friendly features like the headphone jack. This may be because iPhones are becoming more expensive at a time when consumers realize that the high price is not worth it in the era of excellent midrange phones, or that consumers are less updated. Maybe that's all, or something else.

Whatever your theory, Apple's second quarter 2019 financial report is another bad performance of the iPhone brand. A 2019 second quarter report released on Tuesday indicated that the company's quarterly business figure was $ 58 billion, down 5% from the same period of the year. last. Technica.

However, other Apple units performed rather well: iPad sales increased from $ 4 billion in the second quarter of 2018 to $ 4.8 billion in the second quarter of 2019, while its clothing, home and accessories increased from $ 3.9 billion to $ 5.1 billion. For example, the company recorded an "absolute record" of approximately $ 11.5 billion from its Services division. Overall, Apple reached the peak of its projection of $ 55 billion to $ 59 billion for the quarter, a significant improvement over its disappointing first quarter 2019 results.

Apple also reported strong results in its refurbished takeover and financing programs, according to Ars Technica, the company claiming "a volume of recovery four times higher than it had in March 2018" after the launch of new programs in the United States, Spain, Italy, United Kingdom, China and Australia. However, his real focus was on the number of existing Apple customers that can generate revenue, rather than the volume of hardware sales:

At the end of last year, Apple had explained that it would not report unit sales of iPhone per quarter, a decision that has frustrated some people but makes sense for the bottom line of Apple. Instead, the company announced in its 2014 first quarter earnings call that its global installation base includes 900 million iPhones – and today's results report indicates that the installation base of the company includes 1.4 billion devices. Rather than focusing on the number of new iPhones sold, Apple now wants to focus on the number of iPhones in the world to show the breadth of its service activities.

According to the Wall Street Journal:

Sales of the iPhone, which has long been the main driver of its business, dropped by 17%, to stand at around $ 31 billion – an accelerated decline for a product long hindered by the smart phone owners and by competition from Chinese rivals offering lower prices, feature-rich handsets.

IPhone sales fell from about 61% of Apple's quarterly revenues in the second quarter of 2018 to 54% in the second quarter of 2019. In Greater China, where the company had difficulty pushing the phones (largely because of cheaper competitors like Huawei), Apple generated $ 10.2 billion in sales, down from the second quarter total of 2018, which stood at $ 13 billion . Chief Executive Officer Tim Cook Cook, however, said that Apple had "improved its performance from one year to the next. [in China] in the last weeks of the quarter. "

However, Apple also posted a strong global performance in the apparel division (including products such as Apple Watch and AirPods), whose CNBC channel grew by almost 50% over the previous year. last year. The Mac division has reached $ 5.5 billion, or less than $ 5.85 billion, but Cook said it was a temporary problem due to "constraints "that do not indicate expected decline in long-term revenue, according to Ars Technica.

As TechCrunch notes, the calculation shows that Apple accounts for 16.1% of its revenue for the second quarter of 2018 in the services category, but nearly 20% in the second quarter of 2019, claiming that the company is slowly but surely turning its historical dependence on the iPhone line. Apple's chief financial officer, Luca Maestri, said the company is now drawing about a third of its net profit from services, TechCrunch writes, while Cook said Apple has 390 million subscribers for all of its services (30 million more than the previous quarter). Apple also estimated that it would exceed half a billion subscribers by 2020, likely based on its forecast for its upcoming video streaming and gaming services.

Apple's 2019 Worldwide Developers Conference is also scheduled for June, where it will have the opportunity to try to reinvest consumers in the iPhone, revitalize its Mac family and further promote its business. clothing and accessories.

According to CNBC, investors seemed largely satisfied with the report as equities rose more than 4% and the company regained $ 1 trillion in extended trading.

[Apple]