Despite Sluggish iPhone Sales, Apple’s Services Business Thrives

Despite Sluggish iPhone Sales, Apple’s Services Business Thrives

Good news comes from the giant technology company, Apple Inc. After the iPhone sales performance slumped, Apple reportedly experienced growth in its service business such as Apple Music and the App Store.

Revenue from the services business boosted growth to reach US$10.8 billion. Meanwhile, its gross margin was 63%, up from 58.3%. “This service business is becoming more efficient as it gets bigger,” said Tim Cook, Apple’s CEO.

The California-based company claims to have as many as 360 million customers for its service business, both alone and with third parties. Apple targets to increase its user share to 500 million by the end of 2020.

Currently, Apple has 1.4 billion active devices, up 100 million from the previous 900 million. The device includes an iPhone variant whose sales last year were less than encouraging.

To develop this service business, Apple plans to continue to make regular updates on iPhone devices and other Apple devices. These devices are more commonly referred to as potentially installable bases.

Apple has also calculated, as much as 30% of these service businesses use Apple’s payment system. “The number of services is good, and it’s the engine of future growth that investors will be focusing on,” said Ivan Feinseth, analyst at Tigress Financial Partners.

This news is a breath of fresh air in the midst of sluggish sales of iPhone devices in the Chinese market some time ago. Apple’s revenue is also reported to have fallen 15% on an annual basis to $51.9 billion. Cook said the weak Chinese economy had an impact on iPhone sales performance there.

Apple is also carrying out a new business strategy and is thinking about a more competitive Apple selling price. Understandably, sales of Apple devices are mostly in US dollars and make mobile phones more expensive than the local currency due to the strengthening US dollar.

This news raised Apple’s share price by 6% to US$ 163.50 in yesterday’s trading (29/1). Previously, the performance of Apple’s shares fell 30% since November amid concerns of sluggish sales of iPhone devices.

Apple had a ‘buy back’ worth US $ 8.2 billion in the last quarter of last year. while the net cash position was US$ 130 billion, up from the previous quarter of US$ 123 billion.

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