Apple Q2 2018 Earnings Call: iPhone X Beats Sales Predictions but Smartphone Sales Slump in General
When Apple announced the $1000 iPhone X, major publications of the world and the investors’ circle immediately stooped low with their sales predictions. The Apple Q2 2018 earnings call held earlier this week confirmed that the new smartphone didn’t perform as bad as people expected but rather managed to meet expectations.
According to the live report published on the Wall Street Journal, Apple sold a total of 52.2 million iPhones and the company managed to deliver on WSJ’ expectations by proposing a projected revenue for the third quarter of 2018. Surprisingly, the most expensive phone in the lot was the most sold device for the company and buyers don’t seem to bother at all especially when it offers some unique features that Android phones don’t.
CEO Tim Cook Wants to Send a Message
Throughout the Earnings Call meeting, the CEO of Apple, Tim Cook, wanted to rehash the fact that the iPhone X didn’t bite the dust as some speculated. When the product got launched, reports repeatedly claimed that Apple has considerably reduced orders placed to their vendors and is expected to reduce production plans as the phones were not selling as expected.
According to reports, Samsung, which supplied the OLED displays for the flagship phone, was disappointed with the sales figures. Putting an end to all these claims, Tim Cook spoke at length about how the iPhone X was the best-selling smartphone every single week ever since it got launched last year.
Cook shared the information in a surprised tone but he was confident and happy that he not only managed to satisfy investors but also gave a fitting reply to all the fake rumors that kept floating around. Most analysts predicted that the days of the iPhone boom has finally ended but there’s a different story to it as it is being said that smartphone sales are slumping as a whole due to saturated markets.
Increasing Production Cost
Speaking during the call, Maestri confirmed that they had to push the pricing of the iPhone X to $999 because of obvious jump in production costs. The previous models till the iPhone 8, were manufactured with an average cost of $655 while the newest model jumped up to $758. The pricing is the highest for the X variant but it is expected to witness some changes if they release three different variants in 2018 as rumored.
They further confirmed that despite the jump in pricing, customers were still happy with Apple products and continued to contribute to its revenue. The company pushed its forecast for the next quarter up to $53.5 billion surprising many including experts who opine that the world of technology is falling apart without any real innovation to interest people.
When Apple Proved Rumors Wrong!
In the past two quarters, before Apple officially revealed their sale reports in an investors’ call, many publications and blogs wrongly reported that the iPhone X was a big failure, according to Apple Insider.
Most companies have adopted the Apple model which is a known fact as Google upgraded from its cheap Nexus to the expensive Pixel devices. Microsoft launched the Surface Pro tablets which are priced as much as MacBook Pro or even higher for some variants. Many of Apple’s products were priced close to $800 or $900 in the past including the iPhone 7 but it was the iPhone X that made the news.
The reports released by the company today confirmed that the phone did not fail at all, despite its price tag. Besides, Apple introduced the device as a starter as they have multiple cheaper devices planned for 2018 launch. In their March event, they launched the $329 iPad with Pencil support which made the tablet more affordable for the masses.
A similar launch is expected towards the end of the year when Apple is expected to release the new version of iPhone X with LCD display and a lower price tag. While all major smartphone manufacturers want to get into the premium flagship department, they continue to sell more in the mid-range and entry-level smartphones especially in developing markets whereas Apple continues to overcome hurdles by sporting positive earnings in the second quarter of 2018.
Apple’s Earnings in Numbers
Apple reported about 16 percent increase in earnings in the second quarter marked at $61.1 billion and the iPhone sales improved by 2.9 percent which is not high but a decent growth. The company also reported they made $9.2 billion in revenue which is 31 percent more than predicted and this earning comes from their other businesses including MacBooks, iPads, Apple Music among others.
The services offered by Apple including Apple Play, Apple Music, App Store and iCloud witnessed considerable improvement as they grew by 25 percent. The services industry from the company is projected to touch $51 billion on its own by 2021. Just a year ago, they had just 100 million subscribers in total using all these services combined which had jumped to a whopping number of 270 million paid subscribers making it one of the largest ecosystem to bet on.
The iPhone X witnessed a huge boost in China where Apple has managed to set their foot again. The company has witnessed 21% improvement in sales and according to reports, Apple’s $16.82 billion in the region was the largest since 2015. After a huge break, they have managed to set new records once again in China.
Confirmed Stock Buyback
Apple, during their investor’s call for the second quarter of 2018, confirmed that they will repurchase $100 billion in stocks and it is one of the important announcements Wall Street has been looking forward to. While major financial publications have failed to make proper predictions, the manufacturer has exceeded all expectations even though they didn’t do it as fast as they usually do.
Commenting on the average numbers and the slight increase in percentage, Tim Cook said that it feels like they watched their favorite team win the Super Bowl but managed to accomplish it with a slight score difference. It’s still great to see Apple iPhone X win the game but they would love to see it touch more milestones next time.