Apple has just released its quarterly earnings for its fiscal 2019 first quarter and the numbers are not encouraging Cupertino. The biggest news to come from the report is the iPhone revenue which dropped by 15% and percentage never seen before.
Overall revenue also dropped from $88 billion to $84 billion, a decline of 5% from the year-ago quarter that will have Tim Cook and the board sit up for the rest of the year. But the fact that iPhone is seeing such a large drop in sales despite the pricing for the device was at a premium, shows the management team at Apple got their strategy all wrong. Analyst together with observers warned the pricing out of potential customers when iPhone X and iPhone Xr were announced.
“While it was disappointing to miss our revenue guidance, we manage Apple for the long term, and this quarter’s results demonstrate that the underlying strength of our business runs deep and wide,” said Tim Cook, Apple’s CEO. The company’s strength will be tested in 2019 with the looming trade war between China and US, the report shows revenue from Greater China dropped significantly in the past three months, a country that contributes 20% of its overall sales.
More than 60% of Apple’s revenue comes from iPhone sales with services like iTunes and AppStore contributing about 12%, obviously the weight of the company lies solely on its smartphone business and getting strategies wrong will not be acceptable especially when the risk is this high. Apple also knows users who drop from using iOS and move to Android are very unlikely to return. Older iPhone users who cant afford to upgrade to newer version will opt for the plethora of Android phones in the market that has similar or better features but cost 30-50% cheaper.
