The Apple iPhone recently turned a decade old, and has seen unprecedented success as a consumer electronics device. As Steve Jobs said at the launch of iPhone 3G in 2008, the iPhone has turned into “the phone that has changed phones forever.” Also Read - Apple co-founder Steve Jobs' job application sold for over Rs 2.5 croreAlso Read - Apple iOS 15, iPadOS 15 beta 4 released: What’s new, how to download
While iPhone has seen unprecedented success as a mobile device and drives nearly 70 percent of Apple’s revenue, the device seems to be facing new challenges as evident from the decline in sales during the first quarter for fiscal year 2018. Analysts at Swiss financial services firm UBS believe the predictability of Apple’s quarterly performance is decreasing. Also Read - Apple shines in June quarter, posts record sales for iPhones, Macs and iPads
Apple’s best quarterly performance comes with the announcement of first quarter results where the company sees supercycle with customers upgrading from older models to a newer device. However, the first quarter results announced last week, see increase in revenue and average selling price of iPhone but the sales were lower than what street was estimating, hoping for a supercycle driven by the new iPhone X.
As reported by 9to5Mac, UBS has raised many questions regarding the long-term performance of iPhone including: What’s going on with the super cycle? How will we think about iPhone pricing and volume change in the future? Is there an overall decline in the consumer electronics market, or is Apple struggling with innovation?
The analysts at UBS believe Apple will depend on services and other products for its revenue growth more than ever going forward. There is no doubt Apple’s services division has been growing at a steady pace for the past few quarters and CEO Tim Cook has observed that services division is alone capable of being a Fortune 500 company. During the earnings call, Apple CFO Luca Maestri touted the revenue growth coming from services and how it has met goals last year.
UBS notes that the growth of iPhone and Apple’s quarterly performance is becoming unpredictable. While Apple’s commitments and obligations with third-party vendors have been a good indicator in the past, USB says those indicators are no longer reliable as Apple is using more and more third-party vendors.
Despite challenges in predicting Apple’s performance, UBS has a buy rating on iPhone mainly because of strong fundamentals, loyal customer base, growth in installed user base and iPhone gaining market share in new markets like India and other Southeast Asian markets. It also highlights that Apple leads the wearable market despite the segment failing to attract new consumers.
Apple’s product cycle was seen as one of the most well-guarded secret in the tech industry but secrecy doesn’t seem to be a key anymore. KGI Securities analyst Ming-Chi Kuo and other tech publications have detailed Apple’s product lineup reliably well in the past and Apple has also slipped the information with the release of beta software.
Apple CEO Tim Cook is looking for its next big product after iPhone and has invested extensively on augmented reality technologies. With ARKit, Apple has the largest Augmented Reality platform in the world and the company is expected to launch its first AR glasses sometime next year.