Today, Apple reported its fiscal Q1 2019 results, and they were disappointing for the company to say the least. CEO Tim Cook recently revealed Apple would be lowering its guidance for investors due to lower than expected iPhone sales, and that’s exactly what we’re seeing here.
According to Cook, Apple has pulled in $84.3 billion in revenue this quarter, down from the company’s projected $89 to $93 billion. On the plus side, analysts expected revenue of $83.97 billion, so at least Apple exceeded expectations to some extent. Regardless, the company is seeing a five percent decrease in revenue YOY, with iPhone revenue down 15 percent.
This is mainly due to a few different factors. For one, China’s economy has been pretty terrible lately due to trade tensions between the U.S. and China, and with a bad economy comes people who don’t want to spend $1,000 on a new phone. There’s also the fact Apple was charging $29 to get a new battery for your iPhone which, if paid for, would restore top performance on your device, convincing potential customers they don’t need to upgrade to something newer. Finally, Apple’s iPhone XS and XR simply aren’t as interesting as the company played them up as, leading to general disinterest among enthusiasts.
It’s a rarity for Apple to report such a drop in revenue when it comes to the iPhone. It’s been Apple’s main line of business for years at this point, and it helped the company reach a trillion-dollar milestone. But right now, things aren’t so hot.
Tim Cook said in an interview with Reuters Apple plans to lower the price of iPhones in certain markets, potentially helping sales increase for next quarter. Of course, though, we’ll have to see if this helps at all given the circumstances that saw the company’s drop in smartphone revenue this quarter.
This quarter’s earnings are falling in line with Apple’s reliance on services, however. As the company depends more and more on services as a big part of their business, Apple is reporting a 19 percent increase in revenue from services YOY to $10.9 billion. In addition, Apple’s Mac division saw a 9 percent increase, while the company’s weird Wearables, Home, and Accessories division is up 33 percent. The iPhone even saw a bump in revenue by 17 percent.
According to Cook, Apple now has an active install base of 1.4 billion across its devices, reaching an all-time high. “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 Cook in a statement. “Our active installed base of devices reached an all-time high of 1.4 billion in the first quarter, growing in each of our geographic segments. That’s a great testament to the satisfaction and loyalty of our customers, and it’s driving our Services business to new records thanks to our large and fast-growing ecosystem.”
With an install base of 1.4 billion, it’s the perfect time to capitalize. That’s likely why Apple is reported to be launching its video streaming service in mid-April which will live in the company’s TV app that’s available on iOS, macOS, and tvOS. With a reach like this, there’s a good chance a ton of people are gonna at least try Apple’s alternative to Netflix, and we expect to see that heading into spring.
Moving past this quarter’s earnings, Apple will likely begin pushing the iPhone as much as it can in hopes of selling more inventory. The company is projecting between $55 billion and $59 billion in revenue for next quarter, so we’ll have to see how much effort they put into marketing its newest smartphones compared to their efforts now.