Apple has a plan as iPhone demand peaks; many suppliers don’t

“In a world where iPhone demand is on the wane, Apple Inc. has a Plan B. As customers wait longer between upgrades and the smartphone market saturates, Apple can fall back on charging higher prices for each handset and raking in more money from services such as streaming music, digital videos and data storage,” Jeran Wittenstein and Mark Gurman report for Bloomberg. “But there’s no back-up for many of the companies that supply components for the iPhone.”
“The latest evidence that what’s bad for Apple can be terrible for suppliers came on two continents within hours of each other,” Wittenstein and Gurman report. “Japan Display Inc., which gets more than half its revenue from the iPhone maker, cut forecasts. Then Lumentum Holdings Inc., a top maker of iPhone facial-recognition sensors, lowered its second-quarter outlook. On Tuesday, Hon Hai Precision Industry Co., the biggest assembler, missed estimates.”
“The 3-D sensing components from companies like Lumentum are found in iPhones that often cost more than $1,000. Fewer people can afford to pay that much for a new device. But when a sale does happen, suppliers get a one-time payment for their component, while Apple can generate hundreds of extra dollars per gadget,” Wittenstein and Gurman report. “In its most-recent quarter, Apple reported almost no increase in the number of iPhones sold, but revenue from that business jumped 29 percent from a year earlier.”
Read more in the full article here.
MacDailyNews Take: Apple has an installed base of 1.3 billion devices. When that number finally sinks in on Wall Street, hopefully sooner than later, Appel shareholders will benefit.
Apple’s Services business is a tremendous machine that hasn’t yet even begun to gallop. — MacDailyNews, May 3, 2017
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