Apple has a problem it doesn’t want to talk about


(CNN)The era of rapid iPhone growth ended years ago. Now Apple is making a change to ensure it doesn’t have to talk as much about that problem.

Daniel Ives, an analyst with Wedbush, called the announcement a “jaw dropper” in an investor note Friday morning, particularly because Apple is at a “critical juncture.” He said Apple is trying to make up for slowing unit sales growth by charging more for its lineup of devices.
Sure enough, in the three month period ending in September, Apple sold just shy of 47 million iPhones, representing 0% growth in the number of smartphones sold from the prior year. In future quarters, the number of iPhones Apple sells could decline — but we probably won’t know about it.
    Apple’s Mac and iPad unit sales fell by 2% and 6%, respectively, during the quarter compared to a year ago.
    Yet Apple’s overall revenue continues to climb from one year to the next. That’s in large part because the company is hiking prices across the board. Apple made $8 billion more dollars selling iPhones than it did a year earlier (when it sold almost the exact same number of iPhones).
    Apple now has not one but two smartphones on the market — the XS and XS Max — with price tags that can exceed $1,000. Apple also recently introduced more expensive iPad Pros and MacBook Airs.
    On the call with analysts, Apple CEO Tim Cook tried to explain the decision to do away with unit sales figures by way of a grocery store analogy.
    “If you go to the market and you push your cart up to the cashier and she says, or he says, ‘How many units you have in there?’ It doesn’t matter a lot how many units there are in there in terms of the overall value of what’s in the cart.”
    What matters now, in other words, isn’t necessarily how many devices Apple sells from one quarter to the next, but how much it makes from the devices sells. That’s a tough pill to swallow for Wall Street.
    “The elimination of reporting unit metrics for iPhone, iPad, and Mac is significant — the Street obsesses over them,” Gene Munster, an analyst with Loup Ventures, wrote in a note Friday.
    More than that, the decision once again raises concerns about what the next big driver of growth will be for the world’s largest company. Apple has never disclosed unit sales for the Apple Watch, its most recent new hardware category. And despite years of rumors about an Apple Car, there is still nothing on the horizon.
    That leaves its existing slate of hardware products. Investors, and price-conscious consumers alike, will both wonder how much more Apple can charge for future iPhones and iPads to keep sales growth humming along. Will people pay $2,000 for an iPhone?
    Instead, Apple continues to try to focus investors on the strong sales growth for supplementary services, including Apple Music, Apple Pay and iCloud. In the most recent quarter, Apple said sales for this category hit nearly $10 billion, an all-time high and larger than most standalone businesses in the world.
    “The new reporting methodology is Apple’s attempt to get investors to think of their entire business as a service,” Munster says. But, he admits it could take a year for investors to embrace it.
      But even the success of subscription services ultimately depend on getting customers to keep flocking to the Apple devices that support these services, with the iPhone chief among them.
      At some point Apple will need to figure out what will replace the iPhone, or its growth engine could stall out.

      Original Article : HERE ; This post was curated & posted using : RealSpecific

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