That darn cat: Schrödinger’s iPhone revenue

iPhone revenues are bad when they're high and bad when they're low.


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Once again, The Macalope is forced to drag Schrödinger’s cat from its theoretical box in order to present the mystery of how the iPhone’s percentage of Apple’s revenue can be both bad when it’s high and bad when it’s low.

If you hear a lot of hissing and plaintive meowing, you know why.

The cat’s name is Mr. Whiskers, by the way. Nobody every asks that on quantum mechanics tests but you can put it down for extra credit.

Writing for MarketWatch, Jon Swartz says “The iPhone just did something it hasn’t done in nearly 7 years, and it isn’t good for Apple.” (Tip o’ the antlers to Philip.)

Well, to be fair, Jon, if a thing happens, is it ever good for Apple? Clearly the answer is “no.”

“Two Tiny Particles Collided In A Nebula 495 Light Years Away, And It Isn’t Good For Apple.”

What is the truly awful news for Apple about the iPhone?

The iPhone is no longer the unrivaled king of Apple Inc.

For the first time in nearly seven years, Apple’s flagship product accounted for less than half of its quarterly revenue…

And this is… bad. Which is funny. Because if you’re older than, oh, 12 months you might remember that not so long ago pundits were hammering Apple because it was too dependent on iPhone revenue.

Let us journey now all the way back to 2012. (Due to Disney using up all our strategic national reserves of CGI, this time-travel will have to be done without special effects. THANKS, DISNEY.) That’s when MoneyWeek declared “Apple will lose the smartphone war: it’s time to sell.”

Why was MoneyWeek so adamant that you take your money out of AAPL which was clearly moments from going out of business after… [checks notes]… winning a legal battle with Samsung?

…far from being good for Apple, last Friday’s events may have revealed its Achilles’ heel - it’s simply too dependent on the iPhone.

Now, of course, that Apple is relying more and more on revenue from services and wearables and is still managing to raise revenue slightly, the fact that the iPhone is falling as a percentage is a big problem. Because of course it is. Because nothing that ever happens is not a problem for Apple.

Swartz claims:

The iPhone could use an innovative kick in the behind, with most eyes looking toward 5G…

Faster speeds are not innovative. How does The Macalope know this? Because iPhones have been getting faster for years and he keeps reading how they’ve lost all innovation. QED.

5G is not really going to be here for real for a while yet. And even when it does get here, as The Verge’s Vlad Savov says, it’s not going to be revolutionary like 4G was.

Once you know what 4G is like, 3G feels like crap.

Once you know what 5G is like, 4G is actually still pretty good.

The Macalope fondly remembers reading back in 2006 that Apple was doomed because the iPod was such a big part of its business and was going to be replaced by people playing music on their phones and Apple didn’t make a phone. The basic idea was right, but the conclusion was made way too early.

Apple redefined the smartphone market in 2007 by making the best smartphone it knew how to make and everyone rushed to copy it. It’s probably not going to ever redefine the smartphone again… unless it replaces it with something else.

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