Apple is not doing very at the moment and things will get even worse because of the weak iPhone sales.
The iPhone is a top priority for Apple’s business and it is responsible for 60% of the $265 billion revenue for Apple last year. Still, the iPhone has started to lose its appeal.
Credit Suisse expects the sales of the iPhone to drop by 12,4% in 2019, after the sales of the iPhone already dropped by 3.2% in 2018.
“The iPhone is in a pretty difficult spot. More and more users are keeping their phones longer and the smartphones price boost will probably be history” Matt Cabral, the equity research executive at Credit Suisse.
Apple’s earnings suffered last year after the company announced too expensive phones on a very competitive market. As such, Apple reduced its sales expectations after the low demand of the iPhone XS and iPhone XS Max and after the low iPhone sales in China.
Apple dropped the prince of the iPhone in China by 6% after the China revenue dropped by 27% in just one year. Credit Suisse says there is no solution for Apple to quickly solve the problem in China.
Apple is changing strategy and it focuses on services in order to better monetize the millions of iPhone users. So, Apple released multiple paid services including a subscription for news and magazines called Apple News+, a TV streaming platform and also a gaming platform.
Since the Apple News+ service was released in March of this year, more than 200,000 people decided to buy subscription. The price of the Apple News+ subscription costs $9,99 ( the first month is free ) and provides access to more than 200 magazines and access to paid content published by The Wall Street Journal, Los Angeles Times and other important media outlets.
Apple keeps 50% of the money earned by the Apple News+ service and the rest goes content partners. This change of strategy is not going to be made overnight, but it was required considering the weak iPhone sales.
The iPhone 11 will most likely not cause enough interest if we were to believe the information that has been published online.