Is Apple about to move beyond selling iPhones?

Apple released its latest financial report on Tuesday, and for the first time since 2012, iPhone revenue did not account for half of total revenue, but total revenue still grew compared to the same period last year, proving that the company has found a way to survive besides selling iPhones. However, Bloomberg believes that most of Apple's services are still closely related to the iPhone, and if it wants to continue operating, it must continue to sell iPhones and provide services that are superior to its competitors.

Although Apple's service revenue hit a new record of $11.5 billion in the third quarter and its wearable devices performed very well, Bloomberg pointed out that the company is still deeply dependent on the iPhone. The smart watch Apple Watch, wireless headphones AirPods, and subscription services such as Apple Pay, Apple News+ and the upcoming gaming platform Arcade must be used through the iPhone to get the best experience.

Although revenue from other independent devices such as Mac computers and iPads was better than the same period last year, it still only accounted for 20% of total revenue.

Bloomberg believes that in order for these businesses to succeed, Apple must continue to sell iPhones, or make the subscription services available smoothly on other brands of mobile phones, and the quality must be good enough to attract other Android users to switch to Apple's services.

iPhone revenue this quarter fell 12% from the same period last year, but Apple said the strategies it used to revive sales have gradually taken effect. Apple Chief Financial Officer Luca Maestri pointed out that the number of customers coming to stores to trade in old phones for new ones has increased five times compared with the same period last year.

Apple also expressed optimism about its performance in the next quarter (ending September), estimating revenue to be between $61 billion and $64 billion, better than the $61 billion generally expected by analysts.

Bloomberg Intelligence analyst John Butler said Apple’s third-quarter non-iPhone revenue was encouraging for analysts and showed the company was becoming more diversified and less dependent on devices.

Cook is also confident about the performance of other subscription services, believing that by 2020, the annual revenue of the service business can reach US$50 billion.

As technology continues to advance, Apple is likely to make Apple Watch and AirPods independent products in the future, or make them work better with other brands of mobile phones. However, Apple does not seem to be ready to launch any new services on other platforms yet.

Dan Ives, an analyst at Wedbush Securities, said that the iPhone is still the core of Apple, but the development of services business and wearable market shows that they will undergo a transformation, and this financial report performance will be a stepping stone for the company to achieve its goals.