Apple Q3 Results: Full Steam Ahead For Services as The iPhone Makes up Less Than Half of The Revenue

Apple has announced the Q3 2019 financial results, and the company has ended the June quarter with a revenue of $53.8 billion, which is an increase from $53.2 billion in the same quarter a year ago. The iPhone revenue was $25.99 billion, which was lesser compared to the $29.47 billion in revenue in the same quarter a year ago. This means that the iPhone now contributes less than half of Apple’s total revenue. And it is the services which are steadily growing for Apple, raking in $11.45 billion in revenue, an increase from $10.17 billion last year.

Wearables including the Apple Watch and AirPods as well as the Apple HomePod speaker and other accessories combined to rake in $5.52 billion in revenue, up from $3.73 billion at the same time last year. Apple also earned more revenue from the Macs, clocking $5.82 billion in revenue, which is more than the $5.26 billion in Q3 last year. The iPad revenues also went up, clocking $5.02 billion in revenue, more than the $4.63 billion in the same quarter in 2018.

“This was our biggest June quarter ever — driven by all-time record revenue from Services, accelerating growth from Wearables, strong performance from iPad and Mac and significant improvement in iPhone trends,” said Tim Cook, Apple’s CEO. He also went on to add that Apple returned to growth in the Indian market. "India bounced back during the quarter, we returned to growth there. We’re very happy with that,” he said. And in general, Apple saw an upward trend in developing countries. "In emerging markets, we returned to growth in mainland China, grew strong double digits in India and in Brazil, and we set new Q3 records in Thailand, Vietnam and the Philippines," he added.

Apple has also given guidance for what to expect in Q4 2019, and they expect revenue between $61 billion and $64 billion for this period. Before the end of this quarter, we could see the launch of the 2019 line-up of iPhones, the release of iOS 13 and iPadOS, the launch of the Apple TV+ service, the Apple Arcade gaming service will also be rolled out, the release of the Apple Card and perhaps even updates to the iPad line-up.

It is not surprising then that Q4 2019 is definitely a very crucial quarter for Apple. The new iPhones are expected to offer significant hardware and software upgrades, including a third camera at the back for improved photography performance. The one issue for Apple has been that people are holding on to their iPhones longer than usual, something the CEO Tim Cook had alluded to previously. That has hurt Apple in the past few quarters, and it will therefore be important for the company to make the next iPhones as interesting as possible for anyone who is as yet undecided on an upgrade.

That is also the reason why Apple has invested heavily in the services. Apple Music, Apple Pay, iCloud and App Store are seeing more traction than ever before. Then there is the Apple TV+ service, which will now compete in the video streaming space with the likes of Netflix, Amazon Video and Hulu. The Apple Arcade gaming subscription service could entice casual as well as regular gamers alike.

Then there is the small matter of the rumoured 16-inch MacBook Pro, which could perhaps be the biggest refresh for the MacBook line-up in years, at least in terms of introducing a new screen size and perhaps even a new positioning. Q4 2019 will also be the first time Apple will not have the direct influence of Sir Jonathan Ive, the long-time Chief Design Officer, though the new products that we will see over the next few months will surely have the Ive influence.

Apple has also acquired Intel's 5G modem business, Not only do as many as 2,200 employees now become a part of the Apple fold, but this makes Apple totally self-reliant as far as the chips for the iPhones and iPads are concerned. The move gains even more significance after the rather ugly spat with Qualcomm dragged on for a bit, before the two companies reached a settlement.