iPhone X drives Apple growth past analyst expectations

Apple has reported its quarterly results for the three months ending June 30, collecting an eye-watering $585 million in revenue a day over the period.

Total revenues stood at $53.3 billion, a year-on-year increase of 17%, with iPhone X sales and the services business unit leading the charge with year-on-year rises of 20% and 31% respectively compared to the same period of 2017. While it might have been a slow-start for the ridiculously expensive flagship device, the premium seems to compensated for slightly jaded 1% increase in smartphone shipments.

“We’re thrilled to report Apple’s best June quarter ever, and our fourth consecutive quarter of double-digit revenue growth,” said CEO Tim Cook. “Our Q3 results were driven by continued strong sales of iPhone, Services and Wearables, and we are very excited about the products and services in our pipeline.”

“Our strong business performance drove revenue growth in each of our geographic segments, net income of $11.5 billion, and operating cash flow of $14.5 billion,” said Luca Maestri, Apple’s CFO. “We returned almost $25 billion to investors through our capital return program during the quarter, including $20 billion in share repurchases.”

Looking deeper into the business, Cook pointed towards first time buyers of the iPhone as a win, while the services unit brought in record revenue of $9.5 billion. Paid subscriptions from Apple and third parties have now surpassed $300 million, an increase of more than 60% in the past 12 months, while the CEO also claims the App Store generated nearly twice the revenue of Google Play so far in 2018.

Services is a significant growth area for the iChief, which seems to be able to print cash with whatever it touches (except original content… who remembers Shark Tank). Apple Music grew by over 50%, AppleCare revenue grew at its highest rate in 18 quarters, and Cloud services revenue was also up over 50%. When you also tie in the wearables division, which finally seems to be making progress, its smart speaker reaching new markets, Siri improving and products like Apple TV gaining a bit of traction, Apple is giving a perfect lesson in exploiting customer loyalty.

Looking forward, the Apple train looks like it will continue to print off cash. For the next quarter, the team expects revenue between $60 billion and $62 billion, compared to $52.6 billion brought in during Q4 2017, with a gross margin between 38% and 38.5%.

Seat and Orange aim to make car your home away from home

Orange Spain and Seat have signed an agreement to promote new advances in the development and use of the connected car, promising to make it your home away from home.

The agreement itself will focus on three separate areas. Firstly, improving the experience of vehicle occupants by developing connected car services. Secondly, developing the digital home or office experience for car users. And finally, promoting a loyalty programme that promotes the frequent use of new connectivity and mobility solutions they launch.

“We feel privileged to have strategic arrangements with partners such as Orange that give a major boost to our development of car connectivity,” said Seat Head of Business Development Arantxa Alonso. “This partnership opens up a large collaborative space for both companies that are pursuing a common goal – promote the use of the connected car and make the car user’s experience easier and more efficient.”

“This strategic agreement with Seat is a great step for Orange in its strategy of connected objects and Big Data and opens the door to innovations and new developments surrounding cars of the future, which will contribute to helping us achieve our goal of connecting our customers with what truly matters most to them,” said Orange Director of Innovation and New Digital Services for Spain Luis Santos.

While it does sound like marketing jargon, the home away from home idea is simply down to getting those in the car to use the same services there as they do at home. We pretty sure Orange and Seat are not suggesting the driver load up a Modern Family box set just yet, but there are of course numerous services which can be used in a safe manner. Part of the partnership will be a joint effort to create leisure and entertainment services that drivers and other passengers can enjoy.

Of course, while the idea of a connected (or autonomous) car does sound attractive in theory, success to date has been very slow. That said, incentivised customers can be forced out of their comfort zone as we all like free stuff. Offers for discounts on other services, freebies and gifts will be up for grabs depending on how much the customers actually interacts and uses the connected features.

Loyalty is the word being used here, but normality is one which is probably more accurate. Customers might need a little push to use the services, but this will normalize the new ideas in the mind of the customer, and also offer data for Orange and Seat to adjust and improve. The customer gets more comfortable with a scary new thing, while Orange and Seat make the service better. It’s a win for the pair.

Nokia puts Global Services at the centre of its diversification strategy

Using a mixture of artificial intelligence, automation and consulting, Nokia is hoping its Analytics Services offering will unlock a bunch of new markets.

All the big kit vendors have been trying to diversify for years, as the margins on networking kit are squeezed and the vendor lock-in model disappears into the past. Among the challenges associated with that are picking winners, not straying too far from their core competencies and maintaining their core business at the same time as looking beyond it.

The telecoms industry is littered with failed diversification moves, from Cisco’s forays into consumer electronics to Ericsson’s struggles in the TV industry. Nokia, of course, got out of the smartphone and mapping games to focus on networks and seems to have made a relative success of acquiring another networking player in Alcatel Lucent.

But however much Nokia can now bang on about end-to-end networking solutions, it knows merely supplying and maintaining kit will not result in much growth. The main strategic alternatives, therefore, are to extract more revenue from its core CSP market and to take its core offering to different markets.

This, according to the President of Nokia Global Services – Igor Leprince – who spoke to a small group of journalists at a briefing, lot of the heavy lifting for this diversification is being done by his division and specifically the Analytics Services offering that Nokia has just augmented. In the strategy diagram below, the first point refers to offering more services to CSPs and the other three represent targeted new markets.

Nokia global services 2

Just as important as strategic targeting is changing the way services are delivered, according to Leprince. Here we start getting into familiar buzzwords such as digital transformation and DevOps, but also the use of automation, machine learning and clever algorithms that claim to speed things up, reduce human error and anticipate problems. Supporting all this are things like the Nokia AVA cognitive services platform and the Shannon Intelligence set of predictive and AI tools.

Nokia global services 3

The successful implementation of all this cleverness in a more consulting setting isn’t necessarily a traditional core competence for vendors so Nokia has had to undergo its own cultural transformation and take on talent such as data scientists that it didn’t have on board previously.

The underlying picture Leprince was keen to communicate was one of Nokia Global services using things like AI, automation and consulting to both provide extra value for CSP customers and offer telecoms-like solutions to other verticals. In the latter case the need for agility and a use-case driven, ‘as a service’ delivery model is vital but equally there’s no point in Nokia trying to take on the big IT services players at their own game.