Why investors believe Apple’s future remains insanely bright and profitable, by jbarro
Photo: Brendon Thorne/Bloomberg/Getty Images If it is possible for Apple, arguably the world’s most successful company, to be in a rut, it was in one a year ago. Last January, the company sent a letter to shareholders saying it was cutting revenue forecasts, due to worse-than-expected consumer demand in China and weaker-than-expected iPhone sales globally, as customers waited longer than anticipated to upgrade their phones.
The first positive story is a return to form: iPhone sales are growing again. To a large extent, the iPhone business is the Apple business, with iPhone sales accounting for over 60 percent of the company’s total sales in the fourth quarter. But iPhone sales had slumped in recent quarters, in part because of weak Chinese consumer spending and in part because customers were waiting for the iPhone 11 to launch, which it did on September 20, just before the start of the fourth calendar quarter .
As an owner of an iPhone 11, I am unsurprised that the product has sold very well. The battery life and camera are markedly improved over past models. The phone takes great pictures even in the dark. And I no longer even really think about my battery. Previously, my main battery problem was draining it on active days away from my desk, like at a theme park or ski resort.
That gets to the other bright spot in Apple’s earnings report: services revenue. “Services” means the suite of nonphysical paid products offered by Apple: AppleCare product servicing, iCloud storage, Apple Music, Apple TV+, and sales and subscriptions through the App Store. Apple also earns revenue from payments through Apple Wallet and the Apple Card, which are free to you as a consumer, but not to the retailers you are paying.
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