For many years, the iPhone has been Apple’s most popular product, and it has helped the corporation become the first to reach the trillion-dollar mark. However, near the end of 2018, Apple said that it would no longer break out unit sales of the iPhone and other devices in its earnings call.
This shift occurred as it’s iPhone sales remained practically steady for the past two years, peaking in the Christmas quarter of 2016, signifying the company’s first acknowledgment of the smartphone market’s slowing growth.
Maestri was correct; as the average selling price of it’s gadget climbed, unit sales became less important, and they didn’t want to draw attention to the fact that they were no longer rising. But it was about so much more than the iPhone.
Services:
Apple’s “services” income was around $10 billion at the time, or around $37 billion in previous years. The App Stores, iTunes Store, Apple Music, iCloud, Apple Pay, and AppleCare, as well as the money Google pays Apple to be the default search engine on its operating systems, bring in nearly as much money as the Mac and iPad combined, accounting for 16 percent of Apple’s sales. Apple would rank about 80-85 in the Fortune 500 based only on its business.
It’s multiple revenue streams are increasing at a breakneck pace, and the company has sown the seeds for future growth. Apple Music subscriptions have more than compensated for the dramatic reduction in music download sales, and the company’s upcoming video service will almost certainly be a moneymaker as well.
Many services are subscription-based, which means they don’t rely on customers updating their devices or making spontaneous purchases, but rather on monthly payments. This is true for Apple Music subscriptions and iCloud storage (though you can subscribe for 12 months at a time). In the face of declining iPhone sales in China and India, as well as flat sales globally, services growth helped to hold up the company, even though it didn’t replace decreasing iPhone revenue.
A single membership?
This has prompted some experts to propose a “Apple Prime” subscription service, which would provide access to all of it’s services through a single fee (perhaps including AppleCare). Apple has already made steps to reduce the rising cost of iPhones by introducing the iPhone upgrade programme, which allows you to buy an iPhone with AppleCare and upgrade after a year for a monthly fee.
There are no longer any limiting carrier plans, no longer any concerns about the exorbitant cost of the phone outright, and no longer any concerns about selling a used phone when you want a new one.
Except for its Music, which can be used on Android, most its services rely on platform lock-in. As a result, it’s easy to find customers. Consider a single monthly subscription that includes its Music, it’s video service, more iCloud storage, and possibly other bonuses.
If the price was appropriate, this would be an easy sell, as consumers are more willing to pay for a package of services than for individual services. It would also alleviate the pain of iCloud storage nickel-and-diming (you only get 5 GB of storage for free, and you must pay $1 or more per month to save all of your data in the cloud, regardless of how many devices you have).
With all of this in mind, it appears like it increasingly became a media/services firm that also produces iPhones, iPads, Macs, and other gadgets. Yes, there are 100 million Mac customers, and the company planned not to ditch them anytime soon, but now they are planning ahead. Yes, its Watch is the market leader in its category, but then it was a young and untested one. The smartphone had been commoditized, and it’s client base is transitioning toward high-end consumers who were willing to pay a monthly price for a package of services.
An Apple Prime subscription would help:
The company strengthen its user base while also increasing income in an area where the company’s potential for development is limitless. It’s ability to manage the hardware, software, and services aspects of its ecosystem distinguishes it from other smartphone manufacturers, and it appears to be a perfect foundation for the future.
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