The performance of Greater China is still facing challenges.
Editor’s note: This article is from WeChat public account “deep” (ID: deep -echo), author Zhao Yu.
Core Points
Feeding, wearables and iPads have become Apple’s biggest growth drivers.
The release of the iPhone11 series of mobile phones can stop Apple’s decline in Greater China is worthy of attention.
The new mobile phone that Apple expects to launch next fall is the touchstone to test Apple’s hardware innovation capabilities.
Cook can breathe a sigh of relief this time: Apple’s just released second quarter results for the 2019 fiscal year have finally bid farewell to this downturn.
The financial report shows that Apple’s fourth-quarter revenue was $64.40 billion, up 2% from $62.90 billion in the same period last year, exceeding last quarter’s performance forecast; net profit was $13.686 billion, compared to $14.125 billion in the same period last year. Decrease by 3%.
It is worth noting that the fourth quarter earnings report period ended September 30, so the iPhone11 released on September 11 has not had much impact on the fourth quarter earnings.
Cook is clearly satisfied with this result, he commented, “With the accelerated growth of services, wearables and iPads, we ended up with groundbreaking revenues in the fourth quarter of the company’s record. The fiscal year 2019.”
Yes, services, wearables and iPads have become Apple’s biggest growth drivers. Affected by the earnings report, Apple’s share price rose more than 3% after the market.
After standing at trillions of market capitalization, Apple seems to have found a way to continue to grow.
Services and wearables have grown into engines
With the decline in mobile phone sales, iPhone sales revenue has gradually decreased for Apple’s revenue. However, Apple’s eco-based service business, as well as wearable devices, homes and accessories made up of iWatch and AirPods, are growing rapidly. At the stage, they became the growth engine that drives Apple.
Financial report shows by product:
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Apple’s fourth-quarter iPhone sales were $33.362 billion, down 9% from $36.755 billion in the same period last year;
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Mac sales were $6.991 billion, down 4.8% from $7.340 billion in the same period last year;
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iPad sales were $4.656 billion, up 17% from $3.983 billion in the same period last year;
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Saleswear, home and accessories sales were $6.52 billion, up 54% from $4.223 billion in the same period last year;
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Service business revenue was $12.51 billion, an 18% increase from $10.599 billion in the same period last year.
iPhone sales accounted for more than 52% of total revenue, still the most important source of revenue for Apple, but the rapid growth of wearables, home and accessories business and service business revenues smoothed iPhone sales year-on-year. The risk of a downturn.
The financial report shows that Apple’s revenue from services this quarter was $12.51 billion, 18% higher than the $10.599 billion in the same period last year. This is also a highlight of Apple’s performance this quarter. Apple’s service business mainly includes applications such as AppStore, Music (AppleMusic), Payment (ApplePay) and Cloud Service (iCloud).
Cook commented after the release of this quarter’s earnings report, “As customers and critics have been talking about the next-generation iPhone, the noise-removing AirPodsPro released today, the AppleTV+ that people are eagerly awaiting to release in two days, and We have the best product and service lineup ever, and we are very optimistic about the prospects for the holiday season.”
Apple’s third-quarter earnings report showed that the company’s service business revenue was $11.5 billion, accounting for 21% of total revenue, making it the second pillar business under the iPhone business. This kind of eye-catching data performance is not without root cause.
In addition to the “Apple tax”, Apple is also expanding its service business to increase its revenue. For example, in August of this year, Apple and Goldman Sachs jointly launched MasterCard (AppleCard) and opened applications to US users. The main purpose of this move is to enhance user stickiness, promote ApplePay, and gain more service revenue.
Apple’s pioneering service business is still going on. At the autumn new product launch conference held on September 11 this year, Apple launched several new service projects., including:
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The game subscription service Arcade, which can be used on iPhone, iPad or AppleTV, has thousands of games on the platform;
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Video subscription service AppleTV+, covering more than 100 countries, offers Apple original programming, movies and documentaries, which are available on AppleTV apps on platforms such as iPhone and iPad.
In addition, Apple has also broken the previous subscription service with the iPhone, iPad, Mac and other hardware devices, trying to expand the subscription service to non-Apple platform to attract more users, bringing continued Apple Source of income from service business.
September 6 this year, Apple released a new web version of AppleMusic, and began beta testing, subscribers can log in to AppleMusic on the browser without having to install the app. Apple also said that new users will be able to register directly on the web in the future, and can be used on non-Apple platforms such as Windows.
It’s not hard to see that Apple’s many practices are intended to lower the threshold for subscription services and attract more consumers to become Apple users, in order to promote the growth of the company’s service business revenue.
AppleMusic web page
In recent years, mobile phone hardware innovation has slowed down, and marginal innovation has to pay more from the supply chain perspective. In the context of increased competition, in the past, with the iPhone as the core, the logic of continuously increasing revenue through mobile phone sales is difficult to sustain. In the hardware sector, the growth of the wearable device business will become the main driving force for Apple’s revenue growth in the future.
In the earnings conference call, Cook was also very satisfied with the performance of the wearable device business. He used the “excellent” to evaluate the wearable device business, and he looked at it.Come, this business growth factor mainly comes from Apple wearable devices and fitness, medical related products. Therefore, “the company will continue to improve health-related data and integrate it into our APP… One day in the future, when we look back, Apple’s biggest contribution is in the field of human health.”
October 29, Apple introduced AirPodsPro with noise reduction, its performance and design performance has triggered a consumer rush. From the market reaction, users’ enthusiasm for Apple products will not diminish, and this will become the basis for supporting Apple’s future performance.
The Chinese market challenge still exists
The decline in mobile phone revenue is the “pain” of Apple in the past year, but this time Apple is not so painful.
Apple’s financial report shows that only the mobile phone revenue of all of Apple’s business declined in the last quarter, and its revenue ratio fell below 50% for the first time. However, in the fourth quarter, the revenue of the mobile phone business accounted for 52.10% of the total revenue of all businesses.
Since the first quarter of fiscal 2019, Apple has stopped advertising Apple’s mobile phone sales, trying to shift investors’ focus from sales to sales revenue. But for Apple, the mobile phone business is still the focus of attention, it not only brings sales, but also the basis for Apple to provide more services.
In September this year, Apple introduced the latest product, the iPhone11 series. According to various sources, iPhone11 series mobile phones have gained market recognition due to factors such as lower entry prices and improved camera performance. Due to the hot sales of products, Apple has increased production orders to foundries. Canalys’ data shows that the iPhone11 series of new products accounted for nearly 40% of Apple’s third-quarter shipments.
In the conference call, Cook is optimistic about the iPhone11 series. “The initial sales of iPhone11, iPhone11Pro and iPhone11ProMax are very good, and the growth trend is also very good. I don’t want to make predictions here. Refer to the company’s next fiscal revenue outlook. Look, we are still very optimistic.”
By this, Apple’s revenue for the first fiscal quarter of 2020 is expected to be between $85.5 billion and $89.5 billion.
The release of the iPhone11 series of mobile phones can stop Apple’s decline in Greater China. It is worthy of attention. The fourth quarter earnings report shows that it is divided by region:
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Apple’s fourth-quarter revenue in the Americas sector was $29.322 billion, up 7% from $27.517 billion in the same period last year;
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European sector revenue was $14.946 billion, down 3% from $15.382 billion in the same period last year;
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Great ChinaRevenue revenue was US$11.134 billion, down 3% from US$11.11 billion in the same period last year;
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The Japanese department’s revenue was $4.982 billion, down 3% from $5.161 billion in the same period last year;
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Revenues in other Asia Pacific regions were $3.656 billion, up 7% from $3.167 billion in the same period last year.
The market research company Canalys published a report on October 30th that in the third quarter, Apple’s share of the Chinese market fell to 5% from 7% in the same period last year, down 28% from the third quarter of last year. The Chinese market ranks fifth. At the same time, Huawei (including glory), the world’s top smartphone market, shipped 41.5 million smartphones, a record 42% in the third quarter, with an annual growth rate of 66%.
Canolys vice president of mobile business Nicole Peng said that the quarter from July to September is the worst quarter for iPhone sales in the Chinese market in the past five years, and its shipments have fallen by more than a quarter. .
In addition to the decline in shipments and market share, Apple faces an imminent challenge in the Chinese market, that is, Chinese suppliers and operators will promote 5G network-related marketing and promotion activities in the next two quarters, possibly Will overshadow Apple’s limelight.
In an interview with the media in September this year, Cook said that Apple has no plans to launch 5G phones in the next two quarters. Domestic operators are actively promoting 5G appointments through a large number of gifts, package discounts and free 5G data, and the number of reservations has exceeded 10 million.
From the current situation, smaller mobile phone manufacturers hope to use the 5G market opportunity to rapidly increase the market share of the smart phone. In addition to Huawei, vivo, ZTE, Xiaomi and Samsung have launched several smartphones that support 5G networks between $500 and $1,000. More 5G products will be available in the fourth quarter of this year.
Among them, Xiaomi Group founder, chairman and CEO Lei Jun said at the World Internet Conference held in Wuzhen not long ago that Xiaomi’s attitude towards 5G is optimistic and radical, and plans to launch more than ten 5G mobile phones next year. , covering all the price points in the middle and high end.
The 5G mobile phone battle, Apple is clearly facing more competition in the Chinese market, and its new mobile phone, which is expected to be launched next fall, is the test apple.The touchstone of hardware innovation capabilities.