Rumors have started to fly about the possibility that Apple (
AAPL - Free Report) will roll out cheaper iPhones. On top of iPhone speculation, Apple is reportedly set to launch new products, including headphones, at higher price points. All of this said, now is a great time to check out some of the latest Apple news and take a look at its revenue breakdown. iPhone
Reports began to surface recently that Apple will introduce a less expensive or
budget iPhone X in the fall. Furthermore, Apple is expected to sell more of its less costly LCD screen models in favor of its OLED iPhone X.
Earlier this month, Apple reportedly told suppliers to manufacture roughly 20% fewer components of it upcoming iPhones, according to
Nikkei. The company is set to take a more "cautious approach," telling suppliers to prepare for 80 million iPhones, down from the 100 million last year.
The problem for Apple is that its highly anticipated iPhone X, which costs $1,000, has not performed up to Apple’s lofty standards. Apple’s second-quarter revenues jumped by 16% to reach $61.14 billion, with iPhone revenues up 14%. However, Apple’s iPhone unit sales climbed just 3% to hit 52.22 million in Q2.
Cleary, investors can see that the high price of the smartphone led to the large top line growth. They might even be pleased to note that total quarterly iPhone revenue—$38.03 billion—accounted for just over 62% of Q2 sales, down from 70% in Q1.
Apple’s iPhone is one of the most successful consumer products in history and continues to be Apple’s single biggest revenue driver, but the company understands that it has to become more than an iPhone company, especially because prestige consumer products don’t always last forever.
Apple will reportedly begin to sell higher-end AirPods and other headphones, on top of its Beats offerings. The Cupertino, California-based company is set to launch noise-canceling and water resistant AirPods, starting in 2019—at a $159 price point, according to
. Meanwhile, the company will also update its HomePod speakers and introduce new studio-quality over-ear headphones. Bloomberg
Investors should also note that Apple announced on Monday that it will launch a curated “2018 Midterm Elections section” in Apple News. The company noted that it hopes to provide a new resource for “timely, trustworthy midterm election information,” aiming to help news seekers “access the most important reporting and analysis from a diverse set of publishers.”
Apple’s latest additions help exemplify the company’s push into new areas in search of more diversified revenue streams. Now, let’s take a look at how Apple’s non-iPhone businesses performed last quarter.
Apple’s Services revenues climbed roughly 31% to hit $9.19 billion last quarter, making it the company’s second-biggest revenue generator, nearly outpacing iPad and Mac’s growth combined. Apple’s Services unit features revenue from digital content and services, such as iTunes and Apple Music, as well as AppleCare, Apple Pay, and other services.
Services revenues also topped our consensus estimates of $8.33 billion by 10%. On top of that, Services accounted for 15% of the company’s total Q2 revenues, which is up 2% from the year-ago period and 5% from last quarter.
Apple Music, which recently reported 38 million subscribers, though CEO Tim Cook recently noted the service boasts 50 million if you include users on a free-trial, is one of the most impressive potential growth stories in the Services sector, and is already competing directly against Spotify (
SPOT - Free Report) , Amazon ( AMZN - Free Report) , and more recently, Google ( GOOGL - Free Report) .
Apple’s “Other Products” unit includes Apple TV, Apple Watch, Beats products, HomePod, and AirPods. This segment saw its quarterly revenues soar by 38% to hit $3.95 billion.
Other Products is currently the company’s smallest division, accounting for roughly 6% of Q2 revenue. Going forward, with new headphones offerings, HomePod updates, and the increased prevalence of products like Apple TV—that offer users access to streaming services such as Netflix (
NFLX - Free Report) and Hulu—Apple’s Other Products could continue to expand rapidly.
Investors should also note that despite much negativity surrounding its iPad and Mac businesses, the two product categories have not completely fallen off a cliff. iPad unit sales popped 2% to 9.11 million in Q2, while revenues jumped 6% to $4.11 billion. Meanwhile, Mac sales remained flat at $5.85 billion, with unit sales down just 3%.
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