Apple planned ahead for the inevitable hardware slump

It was inevitable but nonetheless concerning to investors: iPhone sales flattened out this quarter, part of an overall trend of weakness in the smartphone market, and Apple admitted that next quarter will see sales decline year over year for the first time. Yes, the company just reported record-breaking profit — again — but as the iPhone goes, so does Apple. As such, the company is forecasting its first revenue decline in years.The job of a good CEO and CFO is to spin this news and keep investors calm through a downturn, and Tim Cook and Luca Maestri gave plenty of reasons for the upcoming decline — as well as plenty of reasons they’re not worried yet. The crux of Apple’s argument centered around the whopping 1 billion active Apple devices currently in use worldwide.”A growing portion of our revenue is directly driven by our existing install base,” Cook said on Tuesday. That installed base supports two of the most important messages Apple shared on Tuesday: Its users are both satisfied and loyal, and that keeps them generating revenue for the company through the wide network of services that Apple offers. Basically, the company’s insistence on controlling both the hardware and software has provided Apple with a revenue source that hardware makers like Samsung and LG can’t hope to duplicate.

Source: Apple planned ahead for the inevitable hardware slump

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