Apple Finds Ways to Recoup As Sales Plummet
In the third quarter of 2019, Apple saw the sales of the iPhone take a dive. The flagship phone bought in 48% of the overall revenue. It translates to a 12% year-on-year drop. The tech giant experiences low sales if the fiscal third quarter as demand for its devices falls during this period. However, this quarter had the lowest sales that the iPhone has seen since 2012. In 2018, the device contributed 70% of the revenue. According to the company’s chief of finance, the decreased sales are an indication that the Silicon Valley enterprise is broadening.
Thriving in the East
Despite the drop in iPhone sales, the brand enjoyed good business in China. The wearable category, which includes watches and AirPods, were the big earners in the Chinese market that offset the disappointing performance of the iPhone. The tech enterprise did better in China than critics expected, helping raise the quarterly revenue 1% year-on-year. All the other categories, including the iPhone, did well, and it is that resilience that continues to keep the tech firm at the top.
The good performance in China played a significant role in boosting the company’s standing in the market. When the tech company released a rare revenue warning at the start of 2019, investors were afraid of what the slowing Chinese economy would mean for profits. The on-going trade spat between the US and China did not help much either. The biggest fear was that the brand image was taking a hit in favour of other major industry players like Samsung and Huawei. However, the company recorded a 4% decline in sales in the third quarter compared to 22% in the previous one.
One way that the mobile phone manufacturer is creating a new consumer segment through the trade-in program. When trading in, you get to sell old iPhone in exchange for another one. You don’t pay the full retail price of the new phone because you only have to top up the value of the old one. For example, if your old 256 GB iPhone 8 is worth $400 and you want an iPhone X valued at $900, then you add the $500 and get the device you want. Trade-ins are relatively easy now, thanks to the internet. The point of encouraging phone trade-ins is to boost the use of the company’s products. A higher iPhone ownership will also provide the tech firm with opportunities to sell subscription services to a large customer base. The option for phone owners to sell online also reduces electronic waste in the environment, reducing the company’s carbon footprint.
A big concern for the California-based tech giant is that iPhone users are not upgrading their phones like they used to. The more customers upgrade their handsets, the higher the sales go for the flagship smartphone. For many people, upgrading to the latest devices means spending money that they might not have. However, iPhones are readily available at a fraction of the original cost at platforms like Sell My Mobile. You will find previous phone owners who sell online at reduced rates. Buyers have an extensive collection from which to choose, so they can get any devices they prefer. An increase in iPhone sales would boost the services category such as iTunes and Apple Pay. As more people sell old iPhone devices and get newer ones, a bigger chunk of consumers will have access to the latest services.
According to forecasts from the industry, Apple is set to bring in approximately $61 billion in revenue in the next quarter. The company’s estimates are between $61 and $64 billion. As the tech firm works on diversifying its offerings, expectations are that the company will continue to enjoy dominance in the smartphone market and beyond.