Tim Cook just made a very disturbing revelation : Apple is reducing its revenue guide for the first quarter of 2019. In other words, Apple is not going to make as much money as expected, and it seems that part of the fault is China’s. And how bad is the matter? Apple now expects to earn only $ 84 billion this quarter.
Ok, 84 billion dollars seems like a large sum of money, especially considering that Apple expected its quarterly operating costs to be around 8 billion dollars. But the current figure is several billion dollars below the range that Apple had planned (between 89 and 94 billion). The difference has been significant enough that Apple shares have fallen almost 9% after Tim Cook’s Q1 report. In an interview with CNBC , published just after his report to investors circulated on the Internet, Tim Cook blamed China.
So, according to Cook, the fault that Apple is not generating as much money as expected was from China, and also from Trump. Cook delved deeper into this issue in his report to investors, noting that China’s GDP suffered a significant slowdown in the second half of 2018, which could explain why Apple apparently did not sell as many iPhones in that region as it had done in the past.
However, Apple says it has a plan for the future, one in which they foresee that there will be fewer people buying iPhones and in which Apple will change its business to new growth areas such as services (things like Apple Music subscriptions and all that ). Cook noted that the categories that are not iPhone “combined to grow almost 19 percent year after year.”
We should have seen this coming. After Apple took such drastic measures to put on sale new iPhone models before the holidays, it was clear that the company was leaning over the precipice of its decline. Keep in mind that this decrease means for Apple to earn a few billion less than expected this quarter, but even so, it is a clear sign that Apple’s business model is changing as the world stops buying iPhones. It is also further proof that Apple is not releasing new hardware that will thrill potential buyers. This does not mean that Apple’s rumored video streaming service is not going to work perfectly. It’s just not as impressive as getting a new device that surprises everyone.
In his letter, the CEO of Apple wanted to defend the innovation of his company and said: “Apple innovates like no other company on earth, and we will not lift our foot off the accelerator”. Cook did not detail exactly what Apple was going to do next in terms of innovation, but he said the following:
“We can not change macroeconomic conditions, but we are looking for new projects and strengthening other initiatives to improve our results. One of those initiatives is to make it easier to exchange phones in our stores, finance purchases over time and get help to transfer data from the phone to a new one.”
So Apple can not bend the world economy to its will, but it will make it easier for you to change your old phone for a new one and not lose contacts in the process. This seems like a strange interpretation of what innovation is, but hey, better treatment in the Apple store sounds almost better than an augmented reality helmet . And cheaper, too.