Tuesday 27 September 2016

Apple becomes increasingly dependent on iPhone revenues

Adam Satariano and Alex Tribou

Published 06/09/2015 | 02:30

New models of the iPhone will be revealed this week
New models of the iPhone will be revealed this week

For all the attention Apple has received this year for its new smartwatch and music service, or rumours about an updated TV device and building a car, the company is increasingly dependent on the iPhone.

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Since the handset was introduced in 2007, the company has never collected as large a percentage of its revenue from one product as it's doing now - even as new products and services are introduced. The device's position at the centre of Apple's orbit will be on display next Wednesday when chief executive Tim Cook introduces new models at the Bill Graham Civic Auditorium in San Francisco.

The new devices are expected to have similar designs to the iPhone 6 and 6 Plus, with an improved camera, faster processor, and a new touch-screen interface so users can make a command by pressing hard on the screen. Along with the iPhone, the company is expected to introduce at the event an update to Apple TV, the set-top box that will get a new remote and be able to play such applications as games from outside developers, according to people familiar with the plans. A new, bigger-screen iPad also is expected, another person said. Apple declined to comment.

Even with the shared stage time, the iPhone shows no signs of losing its position as Apple's most lucrative product. If anything, its importance is increasing as sales of the iPad decline and while Apple Watch is still a young, if promising, niche product. Its revenue dominance raises the stakes for Cook to keep the company's marquee handset a top seller. Apple's stock has slid in recent months in part on concerns about future growth, particularly about iPhone demand in China. Its share price has declined 16pc since mid July, when the company reported iPhone shipments and issued a sales forecast that missed analysts' projections.

It is a dilemma any CEO would love to have: The iPhone generated $102bn (€92bn) in sales in Apple's last fiscal year, more than Google, Facebook, and Twitter's annual revenue combined. To put in perspective how large the iPhone business has become, look at the car market Apple has been exploring whether to enter. According to Benedict Evans, a research analyst and partner at venture capital firm Andreesen Horowitz, the premium car market, which includes Mercedes-Benz, BMW, Audi, and Lexus, generates about $220bn in annual revenue. "For comparison," he wrote last month, "iPhone revenue in the last 12 months was $146.6bn."

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