iPhone Sales Continue to Drop, But Apple’s Profits Are Up

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iPhone sales are continuing to drop, but you won’t see Tim Cook licking his wounds in the corner. Why is this not more of a concern?

The reason is two-fold. For one, the iPhone isn’t the only smartphone company struggling to sell handsets. For another, Apple’s gamble for the past few years is paying off, as while iPhone sales are slowing, Apple is instead profiting off its multiple services, posting record third-quarter profits.

Apple’s Healthy Q3 Profits

The iPhone was revolutionary, so much so that it kept the company in the black for more than a decade. Okay, so it wasn’t the sole product that showed profits for the company, but it was a key to their success. Knockoffs and other smartphones challenged it in the market, and it was not the top smartphone sold, but it did well with sales.

And in truth, the iPhone is still a best seller for Apple. It brought in an impressive $25.99 billion in revenue for Q3, yet it’s down from one year ago when it brought in $29.47 billion.

So how is the company boasting of record profits if their number one seller made nearly $3.5 billion less? Macs brought in $5.8 billion, iPads brought in $5.02 billion, and the Apple Watch and other wearables grew nearly $2 billion year over year.

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However, Apple’s services are where they’re really hitting it. Overall they earned $11.46 billion this year, more than $1 billion over last year when they earned just $10.17 billion. The services include Apple Music, iCloud, and the news Apple News +.

And Apple’s not even done with its services. Coming this month is the release of the Apple Card, its new virtual credit card, and Apple TV and original programming are on its way as well, along with the gaming service Apple Arcade. The company banked on people paying them for subscriptions, and they are proving they know their customers as well.

Further, they don’t even need to feel too bad about slumping iPhone sales, as it appears other smartphones are struggling with sales as well.

LG reported that sales for their smartphones dropped by 21 percent from the previous year, more so than the iPhone. Sony’s smartphone sales dropped nearly 30 percent. And they don’t even have multiple subscription services to bounce back with as Apple does.

Future of the Smartphone Market

What does this say about the smartphone market? Are people not interested anymore? That certainly doesn’t seem to be the case. People are just holding on to them longer. With sales of smartphones often higher than $1000 now and the elimination of two-year phone contracts that give you free phones, consumers are just holding on to the longer.

Do you believe this is why iPhone sales slumped? What about services? Is this Apple’s future? Jump into the comments below and tell us what you think.

5 comments

  1. Funny… unless you’re in Apple’s ecosystem they have zero impact on a user. I’m mostly on Linux yet companies like Google, Amazon and even Microsoft (github, bing) impact my daily computing.

    There are companies like Facebook, Twitter and even Uber that have a daily influence on users regardless of ecosystem. So while Apple continues to make money (and remake money on their walled services), for many users they simply don’t exist.

    This is to say that their hardware sales continue to be paramount to their success. Their OSes are tightly integrated to their hardware, so it’s not like Dell, HP, Samsung and 100s of other companies can bring them additional influence. Their continued success depends solely on their walled base.

    1. I agree with Franco. Fortunately for Apple, they have a relatively well-off user base who doesn’t really have a choice but to use Apple services, and Apple really is pretty good about providing those services within its closed ecosystem, so Apple users are willing and able to pay for that integrated experience.

      For those of us not part of the Apple ecosystem, it makes for interesting reading, but really doesn’t affect us directly. Apple does have an influence on price points and capabilities throughout industry, so of course there is some effect on all of us.

      1. That’s untrue that the news does not affect those who are not in Apple ecosystem. Apple’s services, at least some of them, are open to other OS. It would be shortsighted of them not to offer that. For instance, Apple Music is offered on all platforms, just as iTunes was. You can even get Apple Music on an Amazon Echo smart speaker.

        Further, as of April, Apple has had more paid subscribers than Spotify. However, Spotify has more subscribers overall, as Apple doesn’t offer a free version. And that’s where their business model is shown. It doesn’t have a closed ecosystem. The reason they are profitable is because their business model does not offer “free,” yet people still opt in, and that’s people who own Apple devices and computers as well as people who don’t.

        1. It is true that Apple Music has more paid subscribers than Spotify in the US (not worldwide), and that many of those Apple Music subscribers are on Android (around 40 million installs on Android; I couldn’t find how many paid Android subscribers).

          It will be interesting to watch as Apple continues to offer services outside its walled garden – it can be a benefit to non-Apple users, and can increase Apple’s services revenue. It can also give users the option of buying less expensive (non-Apple) hardware to get access to Apple services.

          Arguably, one of the best reasons to buy Apple phones is because they do a pretty good job securing the devices, which is easier to do in a restricted environment; it’s a much harder task in the diverse, fragmented market that Android plays in. App security is more readily achievable in a closed environment as well – it will be interesting to see how it all plays out as Apple continues to extend their reach.

  2. iPhones are yesterday’s news for Apple. They have given up the good fight. There are things about Android phones that have just gotten better now: powerful camera, GPS triangulation with Google Maps, 😂I switched in 2017 and won’t be going back.

    Apple is slowly moving on from their smartphone business.

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