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| 04 February, 2018

Apple's less-is-more vibe bodes well for profit

The company sold fewer iPhones for more money in last quarter.

An attendee uses a new iPhone X during a presentation for the media in Beijing, China October 31, 2017. Image for illustrative purposes.

An attendee uses a new iPhone X during a presentation for the media in Beijing, China October 31, 2017. Image for illustrative purposes.

REUTERS/Thomas Peter
NEW YORK- Apple has long followed Mies van der Rohe’s design precept that “less is more.” Now it’s doing the same financially. The company sold fewer iPhones for more money in the last quarter, it reported on Thursday. That raises fears that the company is losing its innovation edge. But that’s OK – persuading customers to pay more arguably requires as much genius as getting people to adopt the technology in the first place. Shares in the $850 billion Apple have fallen by 7 percent over the past two weeks as rumors circulated of suppliers curtailing production. Sure, similar seasonal slowdowns have become a regular occurrence. People buy fewer phones after the holidays are done. The worry for investors is that Apple fanatics have already bought the iPhone X, and regular people won’t bother. Moreover, the tepid reception for Apple’s newest phones in the quarter – it sold 1 million fewer phones than last year – indicates the company is running out of ideas.

Yet the fact remains that Apple reported over $61.6 billion of iPhone revenue, 13 percent more than the same quarter a year earlier. Its design and marketing skills have whipped up buyers for a $999 phone. These abilities, and customer’s desire for luxury, aren’t going away.

A design precept Apple isn’t following is that of architect Adolf Loos, who advised that “ornament is crime.” Apple’s store sold a lot more apps, watches and accessories to users. Those sales now account for 16 percent of revenue, compared to 14 percent a year ago. Moreover, that helped Apple’s earnings rise 12 percent to $20 billion. That’s the kind of accessory investors are happy to flaunt.



CONTEXT NEWS

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- Apple reported revenue of $88.3 billion for the quarter ending Dec. 30, an increase of 13 percent from the same period last year. The company earned $20.1 billion, or $3.89 per share, compared with $17.9 billion, or $3.36 per share, a year ago.

- The company said it sold 77.3 million iPhones during the quarter versus 78.3 million a year earlier.



(Editing by John Foley and Ben Kellerman)

© Reuters News 2018