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Apple doesn’t have an iPhone to start and uses accessories and wearables

Apple’s most memorable events always ended with “one more thing” – Steve Job’s famous catchphrase for the surprise launch of a new product.

However, next week’s product launch will be one less thing.

For the first time in nearly a decade, Apple’s flagship will miss the company’s most famous and profitable product in September after the launch of the highly anticipated 5G iPhone was postponed to October due to a coronavirus-related supply chain disruption.

Instead, the company will showcase its accessory store and other hardware at the Time Flies event on Tuesday, including the sixth version of the Apple Watch, a new iPad Air ̵

1; and possibly over-the-ear headphones called the AirPods Studio and a Lost-Der Article tracker is supposedly called AirTags.

“The oxygen these products receive will be unprecedented,” said Ben Wood, an analyst at CCS Insight. “You will be the story instead of just being ‘the other thing’.”

Line chart of 12 months revenue ($ Billion) shows Apple stopped relying on the iPhone

Beyond the iPhone

The lack of the iPhone 12 has given Apple an opportunity to demonstrate to the public what Wall Street has already recognized – that the company has shifted from trusting the smartphone to an increasingly diverse product portfolio.

For the fiscal year ended this month, Apple is projected to have sales of $ 274 billion and profits of $ 57 billion – up just 17% and 7%, respectively, versus sales of $ 234 billion and net income of 53 . $ 3 billion that the company made in 2015.

While growth appears sluggish, Apple stock has quadrupled over the same period to a market value of more than $ 2 billion – a discrepancy that reflects the move to become “more of a technology or consumer platform than a more cyclical hardware company” Katy Morgan Stanley’s Huberty said in a note to customers.

“I’m sure they will absolutely tell the story that this is more of a service and wearables event and add value to the non-iPhone material,” said Ben Bajarin, analyst at Creative Strategies.

With iPhone sales no longer the driving force for the business, other areas become more central to the business.

Over the past five years, iPhone sales are down 16 percent – 44 percent of Apple’s total revenue last quarter, compared with 63 percent. However, the wearables and accessories businesses have grown significantly due to the success of the Apple Watch and AirPods. Growth rose 144 percent to $ 6.45 billion. Revenue in the iPad unit rose 45 percent to $ 6.45 billion, while services rose 162 percent to $ 13.2 billion.

Tuesday’s event is an opportunity for Apple to highlight the myriad ways that are fueling the growth of nearly 1 billion iPhone users and to keep them in their walled garden with companion products that will help smooth out profits Increase sales in a year outside the smartphone Sales.

Canalys estimates that for every 100 iPhones sold, Apple ships 49 pairs of AirPods and 14 Apple Watches. In contrast, for every 100 Galaxy S flagship phones sold by Samsung, 34 Galaxy Buds and 14 companion watches are shipped.

Apple’s devices also typically sell at a higher profit margin. For example, Samsung sells its Galaxy Buds for $ 85 and its Plus version for $ 140, while AirPods are $ 134 and the Pro version is $ 229.

In the global smartwatch market, Apple had a market share of 40 percent in the second quarter – twice as much as its closest rival Huawei, according to Canalys.

A new addition to the service business could be an all-in-one subscription that includes music, videos, games, news, and more and is reportedly referred to as “Apple One”.

Line chart of revenue as a% of total sales Despite falling sales, the iPhone is still a major sales driver

New frontiers

Bulls believe this growth is just beginning. Gene Munster of Loup Ventures estimates that only 9 percent of iPhone users currently own an Apple Watch – around 100 million people – but believes it could reach 50 percent over the next decade, which is 50 million each Year means.

In the “true wireless” headphones category, Apple achieved a market share of 38 percent in the second quarter, four times more than its closest competitor Xiaomi, Canalys data shows.

Jason Low, analyst at Canalys, suggests that Apple can continue to grow its sales as it is just beginning to get involved with “spatial audio” – a way to use sensors in the AirPods to deliver immersive surround sound.

He said Apple headphones would soon be able to take advantage of the processor on the iPhone for new features and take advantage of hardware integration that traditional competitors like Bose may not be able to match.

“Direct use of the smartphone creates this benefit and the opportunity for more seamless first-party integration. This is a major obstacle for any third-party brand.”

Still, the iPhone 12’s delay could affect sales of the updated Watch, iPad Air, and other devices that are expected to be released, Creative Strategies’ Bajarin said.

“I’m concerned that sales will be delayed as people wait to see what’s going on with the new iPhone.”

Luca Maestri, Apple’s CFO, warned investors in July that the next iPhone would hit the market “a few weeks later” than usual. Nevertheless, the share reached record highs.

With a shortened sales window for holidays and the pandemic that is making freight and retailing difficult, Apple may continue to run the risk of missing Wall Street’s December quarter sales forecasts, Bajarin said.

“Delayed sales are not a loss of revenue, so they won’t be postponed until the first quarter of next year,” he said. “Historically, however, the vacation quarter is a big sales quarter and a big iPhone quarter.” That is in danger. “

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