The good news is Apple has several ways it can
still make money from the 900 million iPhones
in use today. Besides selling new models to
current iPhone owners after the current devices
eventually wear out, Apple has positioned itself
to make billions of dollars more from music,
video and gaming subscriptions, maintenance
plans and commissions from apps selling their
own wares on iPhones.
The bad news is that Apple is still getting more
than half of its revenue from the iPhone, and
the company hasn’t proven it can be as adept
peddling digital service as it has been making
sleek devices. For instance, Apple’s four-year
old music streaming service still lags Spotify.
Apple is preparing to launch a video streaming
service more than a decade after Netflix
pioneered the concept.
And a recently opened U.S. Justice Department
investigation is expected to look into whether
Apple unfairly favors its own services and
gouges others through its app store, raising the
specter of changes that could further depress
its revenue.
“Apple has become a victim of its own success
and there also appears to be a lack of urgency,”
Chatham Road Partners analyst Colin Gillis said.
“Apple is still the iPhone company and it may
always end up being the iPhone company.”
The lingering doubts hanging over Apple are
one reason why Apple’s stock price remains well
below its peak of $233.47 reached last October,
even as the rest of the market has soared to
record highs. The company’s shares gained 4%
to $217.40 in extended trading after the release
of its numbers for the April-June period.