Apple plan to get more money from iPhone services is paying off, results show

Sales of the flagship phone dropped – but investors were very happy

A guest attendee uses an iPhone to take a photograph of Japan's Prime Minister Shinzo Abe during the cherry blossom viewing party at the Shinjuku Gyoen National Garden on April 13, 2019 in Tokyo, Japan (Getty)

Once again, sales of the iPhone have dropped, even more dramatically than before. That pulled down revenues at Apple, which took in 5 per cent less than it did in the same period a year ago, it said in the new results.

But the market was happy, as shares surged and Apple presented the results optimistically.

That seems to be largely because of Apple's growing services business, onto which it has tried to switch attention recently. Faced with a decline in iPhone sales, and a technology market that is switching towards people paying for recurring services rather than hardware with one-off big purchases, it has switched attention to subscriptions.

Now, that appears to be working. The company so famous for the iPhone appears to have found a way to a future where it sells less, according to the latest results, with the money from people buying iPhones dropping and the money that people spend on those iPhones growing.

As part of the results, Apple said its services business had hit record success. Though it does not break down exactly which services are doing well, it has rolled out a whole host of paid-for services in recent times, including the introduction of a paid-for magazine and newspaper subscription service called News+ along side older services like Apple Music.

The company's services business - which includes Apple Pay and streaming service Apple Music - saw its revenue rise to 11.4 billion (£8.7 billion), it said.

"Our March quarter results show the continued strength of our installed base of over 1.4 billion active devices, as we set an all-time record for Services, and the strong momentum of our Wearables, Home and Accessories category, which set a new March quarter record," Tim Cook said.

"We delivered our strongest iPad growth in six years, and we are as excited as ever about our pipeline of innovative hardware, software and services. We're looking forward to sharing more with developers and customers at Apple's 30th annual Worldwide Developers Conference in June."

Apple plans to introduce even more services in the months to come. At an event in March, it revealed a whole host of different subscription offerings – as well as news, there will be games and film streaming services, too.

The decline of iPhone sales was also less dramatic than the market had expected. Overall revenues were $58 billion, beating predictions of $57.5 billion; revenue from iPhone sales were $31 billion against predictions of $30.5 billion.