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.
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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.
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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.
iPhone’s $40 Billion Quarter
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
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