Forefront Communications

Wall Street Journal – Apple: Still a Hardware Company

Amanda Perrucci

Amanda Perrucci

By no longer reporting device unit sales, Apple Inc. actually hides some good news instead of obscuring bad news.

On the face of it, Apple’s unit sales haven’t been great for a while now. Unit sales of the iPhone and Mac computers peaked three years ago, and the iPad topped out even before that. Combined sales of iPhones, iPads and Macs totaled 279.5 million units for the fiscal year ended September—flat with the year before and down from 306.7 million combined units in fiscal 2015. Analysts estimate the Apple Watch added another 21 million units to the most recent fiscal year, according to Visible Alpha.

Unlike most consumer-electronics companies, though, Apple keeps generating revenue from its devices long after the initial point of sale through things like apps, content, advertising and Apple Care. The company has grown that contribution significantly. Apple’s service revenue per device unit reached about $124 in the most recent fiscal year—nearly double fiscal 2015, when combined device shipments hit their peak.

Services are now Apple’s fastest-growing segment, but they are tied to its devices. Apps purchased from the App Store don’t run on Android phones, for example. And even the estimated billions Apple gets from Google every year in licensing payments are predicated on the belief that Apple’s device users are valuable enough to justify buying that access.

To read full article, click here.