Wall Street analysts were disappointed by Apple’s most recent quarter. Revenue fell a small fraction to $82 billion. Net income was almost $20 billion. The worry is that iPhone revenue dropped a click to $39.7 billion. That number is still extraordinarily high. And it comes near the end of a product cycle. The iPhone 15 will be on the market soon. (Customers are abandoning these 25 brands.)
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Apple’s shares retreated by the most in three years. If iPhone sales fall off, what will be the new revenue engine? Maybe services revenue, which reached $21 billion. Unfortunately, it will not match iPhone sales for years, if ever.

The anxiety about each generation iPhone is that it will not sell as well as the previous one. It is reasonable to assume that the features of the new generation will not be very different from the iPhone 14. People will have little reason to upgrade. Who needs a new camera when most people don’t know how to use all the features of the current one?

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However, people upgrade each year regardless of whether it is sensible. Apple’s powerful brand makes a new generation a status symbol. And carriers make the cost of these phones only $30 or $40 a month when they are bought as part of a two-year subscription.

When will a next-generation iPhone fail to draw the tens of millions of customers investors expect? It has not been a problem since the first iPhone was invented. There is no reason to think that pattern will break anytime soon.

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