During today’s earnings call covering the third fiscal quarter of 2018, Apple CEO Tim Cook was questioned about the health of the smartphone market and the impact the company’s choice to offer low-cost battery replacements might have on replacement cycles.
In response, Cook said that he believes the smartphone market is “very healthy. “It’s the best market to be in for someone in the business that we’re in,” said Cook. “Whether it grows one percent or two percent or five percent or six percent or 10 percent or shrinks one or two percent, it’s a great market because it’s just huge.”
iPhone revenue, Cook pointed out, was up 20 percent during the quarter compared to the third quarter of 2017, and Apple has seen mid-single digit growth averages on a weekly sales basis and double-digit growth on an ASP basis. Apple sold a total of 41.3 million iPhones during the quarter, bringing in revenue of nearly $30 billion. The iPhone X continued to be the most popular iPhone during the quarter.
Cook said that he does believe replacement cycles are lengthening, and he says the “major catalyst” for that has been the fact that subsidized plans have become a much smaller percentage of total sales around the world. Apple’s goal is to make great products to encourage customers to purchase new devices.
I think for us, the thing we always have to do is come out with a really great, innovative product. I think iPhone X shows that when you deliver that, there’s enough people out there that will like that, and it can be a really great business.
In a separate response given to a question about Apple’s focus on the home, Cook shared additional comments about the importance of smartphones. “The smartphone has become the repository that goes across the whole of your life, not something meant for a portion of it,” he said. He went on to explain that Apple is focused on a number of areas with its product lineup — home, work, the time between, health, and more. “We’re focused on all of those things.”
In terms of the battery replacement program that has seen Apple offering $29 iPhone battery replacements since the beginning of the year, Cook reiterated a statement he made back in February during an earlier earnings call. Apple, he said, has never done an internal analysis on how many people bought a battery compared to purchasing a new phone because it wasn’t a factor in the decision.
“It was never about that for us,” said Cook. “It was about doing something great for the user. Treat users and customers well and you have a good business over time. That’s how we look at that.”