After nearly a year in which Apple Inc. (NASDAQ: AAPL) said it would increase its services business to offset falling iPhone sales, the company has increased the manufacture of its new iPhone 11. Some analysts said the smartphone was not enough of an improvement over the iPhone X, the new product’s immediate predecessor. It appears they were wrong.
The Nikkei Asian Review reported Apple asked for the production of an additional 8 million iPhone 11 units over original requests, or about 10%. The demand is apparently for the relatively low-priced base model and the iPhone 11 Pro.
Apple must believe sales will surge during the critical holiday season, which by most measures is the final two months of the year, which are just weeks away.
In its most recent quarter, iPhone revenue dropped from $29.5 billion in the period a year ago to $26 billion. Services revenue rose from $10.1 billion to $11.5 billion.
Apple is fortunate that iPhone sales may have recovered. The services business has become risky. Much of its growth is based on new products like Apple TV+. That effort will compete with Amazon, Netflix and a small army of other streaming services from companies as broad as HBO to Disney.
iPhone sales also have begun to recover as products from rivals, especially Samsung, have faltered. Its new “foldable” phone has received almost universally poor reviews. Its foray into 5G hardware seems premature as infrastructure for the new wireless signal has been slow. The iPhone 11 does not have 5G capacity.
If the iPhone is off the ropes, Apple has gotten an unexpected boost ahead of the holidays.
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