Apple’s intention, which is to implement a structural transformation strategy to move from the category of a manufacturing company to the category of a full-fledged ecosystem with a service orientation, is gaining momentum in the practical plane and is gradually forming the contours of a new corporate space that is in the stage of gradual development.
The third quarter of the fiscal year 2023, which ended on July 1, became ambiguous in terms of the level of performance for the technology giant, in a certain sense demonstrating the usual dialectic of being, where success and failure, growth and decline coexist with each other. During the reporting period, the company’s revenue as a result of the sale of equipment decreased by 4.7% year-on-year. At the same time, an increase in sales related to services was recorded at the level of 8.2%.
The tech giant’s total net sales for the third quarter totaled $81.8 billion. This indicator is 1% lower than the result of a year ago.
Sales of smartphones of the technology giant related to the products of the iPhone line turned out to be below the expectations contained in the forecasts of the purchase dynamics of devices in this category. During a telephone conversation with analysts, the company’s executives, speaking about this result and similar indicators of products from other technical groups, noted that in the last quarter, the company had to face such an insurmountable economic obstacle as a currency headwind. CFO Luca Maestri and Apple CEO Tim Cook said that sales dynamics could show annual growth in the case of currency stability, which currently does not exist.
The iPhone failed to continue on the road to success, carefully seeping between the mountains of fragments from the economic downturn that hit partners and competitors. Qualcomm, a maker of chips for mobile devices and a supplier to the tech giant has already caused concerns by reporting its earnings, which do not inspire optimism. The stock price of this company has fallen.
The tech giant’s smartphone sales decreased by 2.4% year-on-year in the third quarter. In monetary terms, this result is equal to $39.7 billion. The company’s management acknowledged that there is currently a downward trend in the smartphone market, noting that this situation is especially relevant for the United States.
Currently, the firm adheres to a cost-containment policy. Luca Maestri says that it was decided to slow down the pace of recruitment. He also noted that the company is satisfied with its ability to partially limit the rate of expense growth.
iPhone 14 is gradually losing popularity amid the preparation of the technology giant for the presentation of a new model in its line of smartphones. The company says that the new device will be the most significant update in the last three years. Traditionally, the tech giant presents its new gadgets, including smartphones, in September, a few weeks before the end of the fourth quarter of the fiscal year. The iPhone 15 Pro, according to preliminary information, will have many innovations, including a titanium frame, a faster processor, and thinner frames around the screen.
The volume of iPad sales in the third quarter decreased by 20% year-on-year. In this case, the revenue amounted to $5.79 billion. Since last year, the tech giant has not updated its line of tablets. This year the company plans to present the updated iPad Pro.
The volume of sales of Mac PCs in the third quarter in monetary terms amounted to $6.84 billion, which is 7.3% lower than the result of a year ago. In part, this indicator is a consequence of the suspension of factories work last year. In this situation, the negative factor was not only the failure of supplies but also the increase in the cost of products against the background of production problems
The segment of wearable devices, household goods, and accessories, which includes the Apple Watch and AirPods, generated revenue of $8.28 million in the third quarter. This figure is about 2% higher than the result of a year ago.
According to the results of the third quarter, the company’s services activities turned out to be the most successful part of the business structure. In this case, the revenue amounted to $21.2 billion, exceeding the result of a year ago by 8.2%. Tim Cook said that the positive dynamic is due to more than 1 billion paid subscriptions.
Advertising and Apple Music were designated by the company as record-setting categories. The tech giant also said that its cooperation with Major League Soccer turned out to be more productive than initial expectations. This year, Apple began streaming league games on its TV+ streaming service.
Tim Cook also noted that Apple Pay continues to gain momentum, mentioning that Apple Card replenished deposits in the amount of $ 10 billion. It is this fact that means that a full-fledged ecosystem of the technology giant is actively being formed, which, within a single space, combines services, which in this case are the most promising business line, but it cannot be excluded that this is a situational trend and production.
Luca Maestri, stating that the company’s service system consists of more than 2 billion active devices, noted that the number of transactional accounts and paid accounts show double-digit growth from year to year. He also stressed that the number of paid subscriptions has doubled compared to three years ago.
Luca Maestri said that sales of smartphones and products provided by the services are expected to grow in the fourth quarter of fiscal year 2023. Separately, he predicted a double-digit year-on-year drop in revenue from Mac and iPad sales.
Tim Cook said that the growth of the services segment indicates a high level of customer involvement in the company’s ecosystem. Such corporate spaces are beneficial to firms because they guarantee stable financial revenues and a high level of interaction with consumers on an acceptable scale. Apple, in a conceptual sense, is increasingly becoming an ecosystem, and not just a manufacturer of certain devices and the owner of several online services.
