Apple announced its earnings yesterday and the results were a pretty fascinating indicator of how we’ll be spending our money on smartphones in future.
The number of phones shipped by Apple fell 1% compared to the last year, and yet it still made record profits of £14bn.
How did it manage that? Well there’s the £1000 iPhone X which Apple claims was its top-selling handset every week since it launched. So while Apple was selling less phones, it was making just as much, if not more money.
What’s truly interesting though is that as Apple moves towards becoming the first trillion dollar company the way it makes is money is slowly changing.
Jordan Hiscott, Chief Trader at ayondo markets, explains: “Consumers have become so dialled into the Apple eco-system, including movies, payments, music, cloud services, and storage, that they are no longer as dependent on flagship or super hardware tech gadgets as they once were.”
Combine that with the simple truth that Moore’s Law has greatly slowed in the last several years and major technology companies are finding it harder to reveal a WOW factor big enough to justify us making a new purchase every single year.
“Although iPhones are still market leading,” says Hiscott. “Apple has only really made incremental improvements, in terms of new features, in comparison to older models or industry competitors.”
So where does Apple make its money from instead? Well a £1000 iPhone certainly helps, but it’s services like Apple Music and iTunes that will start becoming the real foundation of Apple’s profits.
Apple recently announced it would support 4K and HDR on iTunes and Apple TV, a move that now puts its film and TV library in line with streaming competitors such as Netflix.
And with new products like HomePod exclusively tied into Apple’s services the tech giant will surely be looking to reinforce its position as not just an iPhone maker, but as a provider of ecosystems.