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Apple's Other Products save the day (AAPL)
Apple reported uninspiring FY Q2 2017 earnings on Tuesday largely as a result of sluggish demand for the iPhone.
Apple reported uninspiring FY Q2 2017 (CY Q1 2017) earnings on Tuesday largely as a result of sluggish demand for the iPhone. Global iPhone sales reached 51,000 in Q1, remaining mostly flat from the same quarter last year.
This affected overall revenue for the quarter, which grew 5% year-over-year (YoY) to reach just shy of $53 billion, up from $50 billion in Q1 2016. CEO Tim Cook blamed iPhone 8 rumors for the less than stellar iPhone sales. The news was unsurprising considering that the global smartphone market has cooled over the past 12 months.
Nevertheless, Services and Other Products — Apple’s peripheral segments — are showing significant growth, offering a bright light amid the dark cloud of iPhone sales:
The wearables segment — Apple Watch, Beats, and AirPods — is performing particularly well, according to comments made by Cook during earnings call. Although the company doesn’t break out this segment by product, Cook noted that the combined 2016 revenue of Apple's wearables equates to a Fortune 500 company. Considering that Burlington Stores (No. 500 on the Fortune 500 list) generates $5.1 billion in annual revenue, it's safe to assume that Apple’s total wearables likely generate at least this much on an annual basis.
Apple’s Q1 2017 performance suggests that the foundation the company has been laying over the past two years is finally gaining traction among consumers. With global premium smartphone shipments stagnating, Apple’s ability to generate revenue outside of iPhone sales is imperative to its future bottom line. To achieve this, the company is expanding existing platforms such as its app ecosystem, creating the iMessage App Store for mini apps launched within the iMessage interface, as well as pushing further into areas like healthcare through its ancillary products, such as the Apple Watch. It’s likely that these formerly peripheral segments will become increasingly important moving forward.
Cloud computing — on-demand, internet-based computing services — has been successfully applied to many computing functions in recent years.
From consumer-facing, web-based productivity apps like Google Docs to enterprise database management suites, the tools businesses rely on are increasingly moving to the cloud.
But developing a cloud strategy is no easy task. Public cloud solutions will likely come to dominate the market over the next decade, but business constraints, such as security concerns and the limitations of existing infrastructure, make it difficult for companies to fully adopt the public cloud right now.
That means that hybrid clouds,in which multiple cloud implementations (including public and private) are connected,will remain popular for the time being, at least until these constraints are addressed. The tech giants that dominate the IaaS market — Amazon, IBM, Microsoft, and Google — are constantly expanding their offerings to address current business constraints as they compete for market share.
Christina Anzalone, senior research analyst at BI Intelligence, Business Insider's premium research service, has compiled a detailed report on cloud computing that evaluates the current business considerations for the various cloud solutions and provides an outlook on the state of the market.