Apple earnings report confirms iPhone slowdown
5:56

Apple earnings report confirms iPhone slowdown

Tech Industry
Apple's latest earning report confirmed what we've all known for weeks. The new iPhones aren't selling as well as Apple had anticipated, and overall revenue is down. CNET Executive Editor Ian Sherr is joining me today to talk about what this means for Apple, and what Apple is planning to do to come back from this. Thanks for joining us, Ian. My pleasure. So let's start with the number, it seems like everything we've heard basically confirms what Tim Cooker had warned us about earlier this month. Where there any surprises? Not particularly, everything that Apple kind of spelled out a couple of weeks ago came out that way We don't know how many iphones they've sold anymore, because the company doesn't announce them. But we do know that revenue was down about 15% for the iPhones. What was interesting is that the Mac, the Apple TV, all these types of other businesses they have seems to have grown and so it really underscores how important the iPhone is to Apple. It's almost two-thirds of their revenue. And it means they have a lot of work to do to get out of this kind of rut they've gotten into. With trying to sell a product that people are not buying as much of, anymore. And let's talk about kind of the cause of this. Tim Cook, when he'd warned us before, he'd mentioned the trade war in China, and he'd mentioned the economic slowdow. Was there, in this call, specifically, mention of those other factors? Did he finally acknowledge that there were other factors at play? Yeah, one of the ones he really called out was the $29 battery replacement program. You may remember last year, there was this big controversy about how Apple slowed down the software of their iPhones and iPads if the batter was older so that it wouldn't crash. But it cause this huge kerfuffle, and they ended up offering $29 battery replacements. So this caused a problem for Apple. Tim Cook actually said he was cautioned against doing this. But he felt like it was the right thing to do for customers. He was also under a ton of pressure from all of the criticism he was getting. We'll see whether or not now that that $29 program's over whether that's gonna continue being an issue. Well and it's unclear whether or not it was a good move in terms of the brand in general, did that make people want to stay with Apple more and long term that was a good plan, but definitely short term it effected, it made people hold onto their old iPhones. And those Potentially 11 million people they've gotten their battery replaced. Could have maybe had to buy a new iPhone last year. So. Right now there's a lot of things that this could have impacted, right? And that's really interesting. And that was probably one of the stand outs other than stuff like the trade war in China which it makes sense is having trouble affecting other companies too. It's very clear that the world is not working on Apple's favour at the moment and they're trying to figure a way out of that. And do you think this is part of a larger trend that we're seeing here with just mobile sales in general kind of flattening out, as people, you don't have that new novel feature that's gonna force you to upgrade. Is this Just Apple you think? Or is it kind of across the board? I mean, this is a larger question, right? Like, how many different ways do you sell glass on top of a metal body? At one point you need to innovate enough. And I'm not saying Apple isn't. The people who are buying Ipones clearly think it is. We're going to see, probably some massive changes within the next year, with the idea of foldable phones. And all these other ideas that are coming out. And hopefully that will get people interested in devices again. If we're going to see whether this industry can grow again. So obviously, the Iphone was the main story here, but it's not the only story that we can take away from this earnings report. So what are some of the other highlights that we're seeing from this report? Well, one of the other things was that Apple really talked a lot about their services stuff, right? We're talking about stuff like possibly, when they decide to do this Gaming thing like Netflix that we've been hearing rumors about. Or a TV service plan, or whatever. All that's gonna fall under there. And it underscores how even though selling iPhones has been the most important thing for Apple for a very long time, selling Stuff after the iPhone is gonna become more and more important to them over time. And they spent a lot of time talking about that. And so, all this talk about services, did they give any kind of preview, any hints at when we expect this video streaming service that's been rumored to be in the works for so long? Any hints? You know Apple loves to say how excited they are about the future and that's basically what we heard. Look we're gonna probably hear more about it this year. Tim Cook made a point of saying he's really excited about what's coming this year. Is he really excited? Which sometimes if you wanna read the tea leaves, maybe he's more excited than last year, I don't know. So I think we're gonna be hearing a lot more about what can you do on your iPhone versus getting a new iPhone So, obviously, services was a huge win this time around. But also what struck me was the fact that other products are growing like the accessories and the wearables. Things like the Apple watch, I'm sure, helped with sales this time around. And the air pods, which have been a breakout hit. I mean, was that notable, the increase? We've seen them increase before. Was this quarter specifically interesting? What was interesting, I think, was that Apple made a point of saying that if that was its own business, it would be almost a Fortune 200 business, which it's important to remember how large Apple is, right. Even though they are struggling to sell more iPhones and everything. This is a company who everyone would like to have their problems, right? They are making boatloads of money every quarter, they are still getting a ton of profit, it's not like this company is feeling. The question is, where are they on the trend line, Right? Are they starting to go down Or are they just in a hiccup. And that's the real question. The wearable stuff is very promising, but just like Apple TV, it hasn't gotten big enough that Apple's actually breaking out, giving us actual numbers. They just keep giving us these rough estimate stuff that we can work with and these very positive things that they say. That's not enough to say this is really gonna be the next thing to take on the iPhone. And that's the hard thing when you have a breakout hit like the iPhone. What do you do next? It's cool, you've got all these other businesses, and yeah, they're massive, but they're not big enough to counteract. Well, Ian, thank you again for helping us put this into perspective and we're just pretty much scratching the surface over here. There's a lot more to unpack, so make sure to check out Ian's full analysis of the Apple earnings report at cnet.com.

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