Apple is preparing its iPhone 6 much awaited launch. It is assumed that about eighty million units will put on sale, to start with. Ramy Inocencio, writing for the Wall Street Journal explains why it took Apple such a long time to enter the market of over-sized phone screens.
Before the release of its new version of iPhone 6, Apple reported a 12% per cent increase in the sales of its current model, the iPhone 5, especially on markets located quite far from the US. On the other hand, the sales in iPad experienced an unwanted decrease not only for the first but also for the second quarter. This aspect raised lots of questions concerning the Apple tablet, especially now that big screen phones are about to hit the market.
The company says that the quarter which had its end on the 28th of June 2014 turned out to be a highly profitable one for the iPhone. During this period Apple managed to sell about 35.2 million iPhones. This figure represented an increase with 12.7% in comparison with last year’s sales. The electronics giant explained that the sales were boosted by the increasing demands coming from the Russian, Chinese, Indian and Brazilian markets, named the BRIC markets. Here the sales in iPhone 5 increased with an outstanding fifty-five per cent.
Due to the iPhone boost in sales Apple managed to obtain a profit of 7.75 billion US dollars for the third quarter of 2014. This is quite an achievement considering that the figures for the third quarter of 2013 were equal to 6.9 billion US dollars. Thus, the company revenues rose to 37.4 billion US dollars, which in percentages means 6 %.
Tim Cook, CEO of Apple, expressed its excitement with the increase and his hopes that the company would stay on the ascended trend. On Tuesday (the 22nd of July, 2014) the shares of Apple had a value equal to 94.72 US dollars.
The electronics giant is experiencing times of steady growth and has the capacity to produce billions of dollars every quarter. However, it will definitely need to start producing new items in order to preserve its market position and outstanding profits.
Apple fans are eagerly expecteing the new iPhone 6 and a smart watch to complete the Apple offer. The products are supposed to be released towards the end of the month of September. The June quarter has been the less productive for the company in the past. This is due to the fact that Apple prepares the products to be launched before the year comes to its end.
Although Luca Maestri, the new Chief Financial Officer, believes that the rumors about the new product have determined clients to refrain from buying an iPhone 5, the figures show that the sales of this particular smart phone exceeded all Apple forecasts.
However, not everything goes smooth for the company. Apple has made serious efforts in order to sell its iPads, which experienced a drop of 9.2 per cent, after another previous drop of 16 per cent which took place in spring. This is quite upsetting for the company since in 2012 the iPad was a must have gadget with sale up to 84 per cent.
Not only Apple, but also other tablet producers are facing hard times because of the decreasing demand on the US and European market. On the other hand these gadgets are highly required on the Middle East and the Chinese markets. In spite of the decreasing sales in the Western world, Tim Cook declared that the company was not worried at all about this aspect.
The Macintosh sales also experienced an important growth for the third quarter in a row. Apple sold 4.4 million units. The profit gap between the Mac and the iPads is being closed extremely fast. Thus, during the last quarter, the company sold Macs with a value of 5.44 billion US dollars and iPads valued at 5.9 billion US dollars.
The problem with iPads is that they are not as portable as smart mobile phones. Moreover, they are less useful for office work than desktop personal computers. In order to boost its iPad sales, Apple decided to team up with IBM in order to conquer the enterprise market with its office applications.
Apple hopes to obtain revenue between 37 and 40 billion US dollar. This is below the estimations belonging to various analysts who have credited the company with revenue equal to 40.44 billion US dollar.
The company’s officials declared that Apple’s gross margin for June was of 39.4% a bit higher than the 36.9% reported last year. For those who do not know, gross margin represents an indicator which measures in percentages all the revenue remained after leaving aside the production costs. Apple estimates a September gross quarter equal to 37%. Apple also announced that it has obtained cash holdings equal to 164.5 billion US dollars at the end of the month of June.
Furthermore, the increasing demand in Apple products on developing markets should compensate for the decrease experienced on the mature Western markets. Apple has made lots of efforts to reach the emerging markets and its price sensitive customers. It seems that the iPhone is the winning product which will bring lots of new opportunities for the American company.
Thus, on the Chinese market the sales went up with 26% (5.94 billion US dollars). This increase is enormous if we compare it with the meagre 1% increase experienced on the US market and the 6% increase determined by the sales in the European stores. Statistics have pointed out that iPhone sales increased with 48% on Chinese territory. The Asian buyers have shown a particular interest in Apple’s first product.
Apple has to handle the pressure coming from its rival, Samsung which has invaded the market with quite cheap smart phones.