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With its latest financial results, Apple shows that it can go beyond the iPhone with gadgets and services that can help the Californian technology giant to survive in the declining smartphone market.
In the quarter just ended, Apple has absorbed less than half of its revenue from the iPhone, the cash engine and long-standing profits of the company, representing a important step for society.
Apple managed to increase its overall revenues, albeit modestly by 1%, to $ 53.8 billion, even as iPhone earnings had dropped nearly 12% between April and June.
The company has seen strong growth in digital content and services, such as Apply Pay and Apple Music, as well as mobile devices and accessories such as Apple Watch and Air Pods.
Apple is preparing to launch its branded credit card in August linked to its digital wallet, as well as its own streaming TV service to compete with Netflix and other companies, with at least a billion dollars invested in original content.
The results show that Apple is reducing its dependence on the iPhone, according to badysts.
"As the smartphone market evolves, Apple can no longer rely solely on the iPhone to advance the business," said Avi Greengart of Techsponential consulting firm.
"Apple has been signaling for some time that its plan is to diversify into services and we have seen from the latest results that this strategy worked quite well."
– Apple's roadmap –
The Apple update should dispel the concern of investors who fear that the company's growth will be dampened by a rocking smartphone market, said a research note by Gene Munster and Will Thompson of the investment company Wolf Ventures.
"We believe that the street systematically underestimates Apple's ecosystem by focusing on hardware sales rather than revenue and profit growth, but also on the optional feature," wrote Munster and Thompson.
"We are confident that the results of this quarter and the roadmap for the next two years will be a turning point for investors who want to start evaluating Apple with a more appropriate multiple."
– Challenges ahead –
Some badysts warn though that Apple still faces challenges as its competitors attack the smartphone market, where the iPhone share is less than 12%.
Daniel Newman of Futurum Research said it was "an impressively impressive quarterly little" for Apple, underscored by the weak sales of the iPhone.
"I think the success of the iPhone is a double-edged sword for Apple because it has become such an addiction for the company to reach its growth targets, but the market is clearly showing a demand being stabilized or even down, "said Newman in a Note study.
Newman said that Apple did not have any other product as lucrative as the iPhone, which experienced problems in China and failed to gain ground in low-income countries. returned.
"I think Apple beats a little more than people want to believe," said Newman.
"The company's strategy seems to lack vision." Apple's growth comes from accessories and services, rather than iPhone and iPad, and while diversification is a step forward, the company will need more resources and quickly. "
Richard Windsor, of the Free Mobile Radio research firm, said that Apple "remained a single product company" because its ecosystem revolves around the iPhone.
"I still think that ending its dependence on the iPhone is a very distant dream, which means that Apple will continue to live and die with the success of this product," said Windsor in a blog post.
While Apple is showing gains in these new services, Windsor said Apple's trajectory remained somewhat murky.
"If Apple's iPhone suddenly loses its mojo, then these companies dressed as independent iPhone's also likely to crater."
Greengart said the fears were exacerbated, pointing out that Apple had an important and loyal base of iPhone users, which allowed it to sell more accessories and services.
"They keep their existing customers and it's even harder to switch from one iPhone to another than the iPhone," he said.
Greengart said Apple has the potential to become a leader in health and wellness services for augmented and virtual reality on mobile, thanks to its smartwatch, which dominated this segment.
"Satisfaction with the Apple Watch is very high," said the badyst.
"If you want a smart watch and you have an iPhone, the Apple Watch is convincing, and once you have it, you will not be able to switch to Android."
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