The global smartphone market is in a rut, tablets and computers have stopped growing many years ago, while smartwatches are saving lives around the world but not on a large enough scale to single-handedly satisfy the expectations of Apple investors. Unlike Samsung or Huawei, however, the Cupertino-based tech giant is adopting a wait and see approach as far as foldable handset designs and 5G connectivity are concerned, betting big instead on “services.”

That’s the broad and generic description of the company’s most lucrative business division nowadays, which actually includes quite a few different things. We’re talking App Store revenues, Apple Pay transactions, cloud services, and Apple Music subscriptions, as well as the recently released Apple News+ platform and a bunch of upcoming products unveiled with great fanfare a few weeks back, like TV+, Arcade, and that swanky Apple Card.
Combined, these “services” are considered Apple’s best chance to keep investors happy with thriving profits during a time of hardware industry stagnation. But according to leading global financial services firm JP Morgan, as quoted by Apple Insider today, those glamorous recent announcements failed to impress in terms of “depth.”

No clear positioning for success

Basically, what JP Morgan is summarizing in its latest investor note is more or less what most other analysts and market research companies have been saying before Apple TV+ was even formally unveiled. Namely, that Apple is entering a crowded and incredibly competitive segment without offering a great value proposition. There’s simply nothing concrete about the Apple TV+ platform right now that Netflix or Hulu aren’t already giving their subscribers at pretty reasonable prices.

Furthermore, while Netflix’s ambitions are growing, with its own production studio in place and a massively popular original content library essentially expanding every day, Apple is barely getting started, promising a slew of interesting shows… that don’t even have individual trailers yet.

All in all, despite “more breadth than investors expected” (guess the Apple Card took them by surprise too), the “depth” of Apple’s non-hardware plans going forward is not looking very encouraging. As such, JP Morgan is basically urging Apple investors to remain patient as time will tell if this long-term gamble eventually pays off.

Apple Music is still a major cash cow for the company

Apple Music is still a major cash cow for the company

 

Until then, it’s important to remember Apple reported all-time high services revenue of close to $11 billion in the final calendar quarter of 2018 without any help from News+, TV+, or Arcade platforms. And both Apple Music and Apple Pay are expected to continue growing in the next few months.

No clear sign of an iPhone sales rebound

While Apple managed to surpass Huawei again and recoup its second place in global smartphone shipments at the end of 2018, quarterly iPhone volumes reportedly declined by around 11.5 percent year-on-year. Based on information from the supply chain, JP Morgan is also forecasting a small drop in Q1 2019 sales compared to the first three months of last year, followed by another weak quarter between April and June in terms of revenue.

Expect those numbers to continue to drop, but perhaps not as badly as previously expected

Expect those numbers to continue to drop, but perhaps not as badly as previously expected

That’s obviously bad news for a company that’s been making unusual efforts to boost its numbers in key markets like China and India, although it shouldn’t exactly come as a surprise. Besides, March revenue may have actually increased substantially both from a month-on-month and year-on-year perspective, while Q2’s projected sales decline is described as less drastic than previously expected.
Bottom line, it looks like there’s no end in sight for Apple’s global iPhone demand problem, but at least there’s a good chance the bleeding will stop soon enough. If not in Q3, surely during the holiday season, when the first triple camera iPhone model (s) are likely to be released.

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