Apple earnings show company going beyond iPhone


The Apple iPhone is an amazing money making machine. In the first three months of 2019, Apple sold $ 31 billion in iPhones.

At the same time, the iPhone is becoming less important to Apple's overall sales, as the smartphone industry stands globally.

IPhone revenue accounted for 53.5 percent of Apple's revenue in the company's fiscal second quarter, released on Tuesday. Last year, in the same quarter, iPhones sales accounted for 61.4% of sales, and in the most recent quarter ended December, it accounted for 61.7% of Apple's total sales.

The smallest slice of iPhone revenue indicates that Apple is becoming more adept at selling other hardware and software products to its installed base of 900 million iPhone users.

Part of the slightest importance of the iPhone in Apple's balance sheet can be attributed to shrinking sales. IPhone revenue also dropped 17.33 percent year over year.

But part of this can be attributed to growth in other categories.

Apple CEO Tim Cook also highlighted two large, growing companies during a call to analysts: Apple Services revenue, which includes subscriptions such as Apple Music and iCloud, and the Apple Wearables business, which includes hardware products such as AirPods and Apple Watch.

"It was our best quarter of services, with revenue reaching $ 11.5 billion," Cook said. Service revenue rose 16% from $ 9.19 billion in sales in the same period last year. Apple has emphasized its service business as iPhone sales, and held an event in March to launch four new services, including two new video services and a credit card.

Wedbush analyst Dan Ives estimated that Apple's streaming services can enroll up to 100 million customers over the next three years.

Apple also had success with what it calls "wearables" business, which includes the AirPods, Apple Watch and Beats headphones.

Although Apple does not release that number by itself – it has a similar category that includes other accessories like cables and HomePod – Cook said on Tuesday that wearables grew at close to 50% during the quarter. AirPods and Apple Watch are the two most important new hardware lines for Apple, and are selling well.

Apple may increasingly sell additional devices and software to its installed base of 900 million active iPhones. As Apple executives said, now is a critical number to understand the company – think of it as the statistic closest to Apple's user base.

Apple did not provide a new base installed from its latest 1.4 billion device upgrade, but Cook said he hit the all-time all-time record in the last quarter in all categories in an interview with CNBC's Josh Lipton.

The message is clear: Apple still gets most of the money from iPhones, and that will not change soon, but there are many different ways to get Apple customers to open their wallets, and these companies are booming the iPhone business shrinks. This dynamic puts Apple in a great position compared to other smartphone manufacturers that are facing the same slowdown across the industry.

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