The financial report also showed that Apple's revenue growth has been slow, how does Apple achieve rapid growth in revenue. From the financial report, the reason for the surge in revenue this quarter is mainly due to the launch of iPhone X and the substantial growth of service business. related.
iPhone 'high price strategy'
In the second quarter, Apple’s revenue was $53.26 billion, up 17% from $45.41 billion in the same period last year. The iPhone is still Apple’s most profitable core business, with shipments of 41.3 million units. The year-on-year growth was only 1%, less than expected, but its revenue increased by 20%.
In fact, since the launch of the iPhone X, the iPhone's revenue has increased significantly in the past three quarters, which is not unrelated to the iPhone X's higher average selling price (ASP). Apple sells mobile phones. The money-making model has changed from 'sell more' to 'sell more expensive'.
Generally speaking, the second quarter lacking new products is the off-season of iPhone sales. The new machine will be released in the fall. The old models are facing discounts on sales. ASP is usually lower, but this year ASP has reached $724, which is higher than $699. Expectations, basically can be judged mainly by the iPhone X.
Although Apple did not announce the sales of specific models, but Cook mentioned in the conference call after the earnings report that iPhone X is the most popular model of the season.
It is worth noting that, in the case of slow iPhone sales growth, how long can the high revenue growth be achieved by relying on the 'high price iPhone'?
'I think it can last until the end of this year.' Yan Zhanmeng, director of research at Counterpoint, the market research agency, told Epoch Times, how long the growth of the more expensive iPhone can last depends on the product, more important than the price, and more importantly, product innovation. How high. Under normal circumstances, innovative products can continue to sell for a year or two, but now many Chinese mobile phone brands are gradually catching up.
According to the latest report from IDC, the location of the second mobile phone manufacturer in the second quarter of this year has been replaced by Huawei. According to statistics, Huawei shipped 54.2 million units in the second quarter, with a market share of 15.8%, a record high. This is also Apple. For the first time in eight years, it was surpassed by Huawei.
It can be seen that nowadays Huawei, Xiaomi, OPPO and other manufacturers not only occupy most of the market share in China, but also accelerate their overseas expansion plans. In the future, if the iPhone cannot have a significant increase in sales, or launch more expensive and more innovative. The iPhone, then Apple's follow-up or performance pressure.
As for the next quarter, Apple is also boldly expecting revenues to be between $60 billion and $62 billion.
Soft and hard combination
In the context of the waning smartphone market, in addition to hardware sales, Apple has been seeking other growth methods in the past two years to reduce its dependence on the iPhone business. Among them, the service business has become Apple's biggest growth driver in the past two years.
According to the financial report, Apple's service revenue in the last quarter reached a record high of US$9.548 billion, an increase of 31% compared with US$7.266 billion in the same period last year. Apple's service business mainly includes App Store, Music Video, Cloud Storage Service. iCloud, Apple Pay, AppleCare, etc.
Cook said in a earnings conference call that Apple and third-party services currently have more than 300 million subscriptions, including paid subscriptions in the App Store, up 60% year-on-year. Apple Music's revenue is up 50% from last year; Apple Pay The transaction volume exceeded 1 billion, three times more than a year ago; Apple Care revenue hit its highest level in 15 quarters; cloud services grew 15% annually.
Apple set a goal for itself in 2017, and its service business revenue will double by 2020 to reach $14 billion per quarter. Apple is moving toward this goal at a set speed.
Service business revenue is getting higher and higher
Earlier this year, Morgan Stanley analyst Katy Huberty predicted that in the next five years, the service business revenue will contribute more than half of Apple's total revenue, and the service revenue per device can reach 30 US dollars. For many mobile phone manufacturers In fact, it is hard to imagine that each device can get $30 in service revenue in addition to hardware profits. This is a bonus that only Apple hardware can bring.
Compared with hardware business such as iPhone, Wall Street is paying more and more attention to Apple's service business.
'The hardware business is relatively small, and the software business has a larger profit margin.' Yan Zhanmeng believes that Wall Street is looking at the higher profit margin of the service business, and the service is long-term, and the hardware will fluctuate. It may not last.