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Apple's decision to launch a smaller, cheaper iPhone during the pandemic has clearly paid off, helping to push the company's iPhone business back to growth.
It was one of the highlights in Apple's blowout fiscal third-quarter earnings, which saw overall revenue increase year-over-year by 11%, the company said on Thursday
The company's iPhone business grew by 2% year-over-year after experiencing multiple quarters of declines.
Many analysts didn't expect the iPhone to return to growth until Apple's anticipated 5G iPhone arrives.
But the cheaper $400 iPhone SE gained traction during the company's fiscal third-quarter, even as consumer spending habits had changed.
During the earnings call on Thursday, CEO Tim Cook also credited the iPhone SE with getting more smartphone users to switch to the iPhone from competitors like Android.
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Apple's bet to launch a smaller, low-cost iPhone is clearly paying off, helping to push the company's all-important iPhone business back to growth after several quarters of decline even during a global pandemic.
Apple posted blowout earnings results for its fiscal third-quarter of 2020, coming after the coronavirus pandemic appeared to stall the company's growth last quarter. Among the highlights was Apple's revelation that iPhone revenue had grown by 2% year-over-year, generating $26.4 billion in revenue compared to $25.9 billion in the same period one year ago.
Apple cited the new iPhone SE, its $400 iPhone that debuted back in April, as a key reason why its iPhone business had grown this past quarter. Positive reception of the iPhone SE, along with higher iPhone demand in May and June, continued economic stimulus, and the reopening of some store locations, set the stage for a great quarter for the iPhone and all of Apple's products.
The strong results come after Apple's iPhone sales had fallen for several quarters, only growing in its most recent holiday quarter before dipping again in the second quarter of 2020. It's not just Apple that has struggled, however — the global mobile device market experienced industry-wide decline in recent years, according to the International Data Corporation. That's largely because the market is saturated, smartphone prices had increased, and people have been holding onto their devices for longer periods of time before upgrading.
The $400 iPhone SE is one of Apple's biggest attempts yet to curb those negative trends by offering a phone for nearly half the price of its flagship iPhone 11, but with the same new processor.
Many analysts predicted that it would be Apple's first 5G iPhone, expected to debut this fall, that would bring the company's smartphone business back to growth.
What they certainly didn't expect was that Apple's iPhone business would show growth during a global pandemic that has damaged the economy and uprooted consumer spending habits. The pandemic pushed personal savings rates to an all-time high of 33% in April, the United States Bureau of Economic Analysis announced in late May, showing that Americans had prioritized saving over spending as unemployment rates soared.
That could have made the iPhone SE's low price particularly appealing to those looking to upgrade their iPhone.
"And it also seems to appeal to some people that were holding onto the device a little longer because they wanted a smaller form factor phone," Apple CEO Tim Cook said during the company's earnings call. "And so the combination of the smaller form factor and an incredibly affordable price made the iPhone SE very popular."
The growth isn't just from people upgrading their existing iPhones, however. Based on Cook's comments, it sounds like the SE may have also convinced more people to make the switch from Android.
"The iPhone SE, it's also clear that from the early data we're seeing a higher switcher number than we did in the previous year, which we feel very good about," Cook said.
Apple said some of its product segments, such as the iPad and Mac, likely saw growth because people have been relying on such devices to work, socialize, and consume entertainment while under stay-at-home orders.
Although it had a blockbuster quarter that exceeded expectations, Apple's iPhone business is not necessarily back on track for good. The company didn't issue guidance for its fiscal fourth-quarter, citing uncertainty caused by the pandemic. In another indication that the pandemic is still causing businesses like Apple to change course, the company reclosed some of its retail stores in the US in areas where cases have spiked after initially reopening locations in May.
Moreover, Apple's bar to achieve year-over-year growth may not have been so high: iPhone sales had dropped in the company's fiscal third-quarter of 2019, which this quarter's sales were compared against. Analyst estimates were also muted given the pandemic.
Regardless, it's still enough to get Wall Street excited about the iPhone again, diverting potential concerns about the anticipated iPhone 12 seeing a slightly delayed launch this fall.SEE ALSO: I've been using Apple's big new iPhone update for a full week — here are 8 of the most useful features I've found so far
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A skills gap that could leave as many as 2 million manufacturing jobs unfilled by 2025 is one of the driving forces behind a new Clemson University program that for the first time matches graduate students with technical college students on an assembly line built for research.Laine Mears, the BMW SmartState Chair in Automotive Manufacturing at Clemson, said the THINKER team will be creating a new national model for graduate education."We do that by putting students into a manufacturing environment and teaching them how people and technology work together and how new technologies can emerge to support that vision," he said.The impact could quickly ripple through the broader regional economy.The idea is to recreate the dynamics that come into play when researchers, engineers and technicians collaborate on projects in actual factories.The teams will focus their research on connecting human workers and internet-connected machines that are often loaded with sensors and generating massive amounts of data.
California may continue to hold onto the lion’s share of tech jobs in the U.S., but other states are seeing a promising rate of steady growth in their tech industry.A new report out today from nonprofit IT trade association CompTIA finds that the states that saw the largest percentage increase in the number of tech jobs from the end of 2016 to the end of 2017 were, in order: Utah, North Carolina, and Michigan, all of which saw more than a 3 percent bump.CompTIA pulled data from sources including the U.S. Bureau of Labor Statistics and the U.S. Bureau of Economic Analysis.The report classifies 51 different occupations as “tech jobs,” ranging from web developers to database administrators.The two other states that saw the highest year-over-year percent increases were Washington and Idaho, at 2.9 and 2.8 percent.However, when looking at the total number of tech jobs added between 2016 and 2017, California comes out on top with 43,600.
By the White House's own admission, inadequate broadband access "stunts economic growth and prevents many rural Americans from engaging in the modern economy."Meanwhile, Federal Communications Commission chairman Ajit Pai recently proposed drastically limiting the broadband options available to poor Americans through the government's Lifeline program.Pai says it would help "curb waste, fraud, and abuse."That's why on Monday he and a bipartisan group of lawmakers, including fellow California Democrat Anna Eshoo and Pennsylvania Republicans Ryan Costello and Brian Fitzpatrick, introduced a bill to prove just how big a return on investment broadband access can provide for a community.Called the Measuring the Economic Impact of Broadband Act of 2017, it proposes that the Department of Commerce's Bureau of Economic Analysis study the effect of broadband access on employment, income, education, and population growth, among other things."The data that might come from this, I think will create a more compelling public policy imperative."
Or media.Beds account for a tiny share of gross domestic product even though sleep is tremendously useful to consumers, according to an academic paper presented at a conference this week in Dresden, Germany.The authors made the point to illustrate their research into free online media and its impact, or lack of it, on official GDP figures.The wide-ranging conference hosted by the German statistics office shines a spotlight on some of the weaknesses in the century-old measure of economic well-being, arguably bolstering the case for a hunt for better methods.Another paper looks at divergences between GDP per head and median household income -- one way of gauging inequality -- and concludes there is currently no clear choice for assessing trends in living standards.Take Facebook or Google.Yet because they re free, the contribution to the economy isn t currently captured in national accounts.Noting that some economists believe GDP growth is badly underestimated by the failure to include free media, Leonard Nakamura of the Federal Reserve Bank of Philadelphia, and Jon Samuels and Rachel Soloveichik of the U.S. Bureau of Economic Analysis tried to work out a number.They imputed production and consumption figures for advertising-supported media by treating the business model as a series of barter transactions -- YouTube videos for ad views.On the face of it, the results may disappoint critics of GDP.Including free media would have boosted real output in the U.S. between 1998 and 2012 by just 0.009 percent a year.