Apple's Core Business Shrinks, Services Paper Over Problem

Supply Chain Crisis Only Drag on Apple's Enormous Growth

iPhone Maker Poised to Report Another Record Quarter but Crisis in Obtaining Chips Weighs

Apple (AAPL) has long grown on the back of increasing device sales and innovation in new products. However, the company's core business is now shrinking, and services are papering over that problem. In the company's latest quarterly earnings report, Apple reported that iPhone sales declined by 5% year-over-year. This is the first time that iPhone sales have declined in over a decade. The decline was attributed to the global chip shortage, which has made it difficult for Apple to obtain the components it needs to produce iPhones. Despite the decline in iPhone sales, Apple's overall revenue grew by 9% year-over-year. This growth was driven by strong sales of the company's services, such as the App Store, Apple Music, and iCloud. Services now account for over 20% of Apple's total revenue. While Apple's services business is growing, it is not clear if it can offset the decline in iPhone sales in the long term. The iPhone is still Apple's most important product, and it is responsible for the majority of the company's profits. The global chip shortage is expected to continue to weigh on Apple's iPhone sales in the coming quarters. However, Apple is taking steps to mitigate the impact of the shortage, such as increasing its production of chips in-house. Despite the challenges, Apple is still a very strong company. The company has a loyal customer base, a strong brand, and a healthy balance sheet. Apple is also well-positioned to benefit from the growing demand for digital services. In conclusion, Apple's core business is shrinking, but services are papering over that problem. The global chip shortage is a drag on iPhone sales, but Apple is taking steps to mitigate the impact of the shortage. Despite the challenges, Apple is still a very strong company with a bright future.

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Bloomberg