Apple touts apps as iPhone sales sag

Associated Press

SAN FRANCISCO

You can expect to hear a lot more from Apple about the virtues of mobile apps and online services in coming months. And for good reason: They’re about the only part of Apple’s business that’s growing now.

Apps and services have always been key to the appeal of Apple products. But with iPhone sales down for the second quarter in a row – and speculation that a major redesign won’t arrive until late next year – Apple is talking up its online business, promoting it with new kinds of ads and even sponsoring an upcoming reality TV show called “Planet of the Apps.”

The giant tech company sold 40.4 million iPhones in the last quarter – 15 percent fewer than a year ago, according to its earnings report Tuesday. Analysts say consumers just aren’t as excited about the newest iPhone models. As a result, Apple’s overall revenue fell 15 percent to $42.4 billion for the three months ending June 30.

Apple also sold fewer iPad units, Mac computers and Apple Watches in the last quarter, although iPad revenue increased, thanks to the introduction of higher-priced iPad Pro models. And a modestly better forecast for the current quarter sent Apple shares up nearly 7 percent in late trading, after closing at $96.63.

But the biggest bright spot in the company’s report was a 19 percent sales jump for the segment that includes iTunes, Apple Music, the App Store and services such as Apple Pay and iCloud storage. That segment produced nearly $6 billion in sales – more than Apple pulled in from quarterly sales of either iPads or Macs.

Apple makes money from online services by taking a percentage whenever users pay to download a song from iTunes, buy an app from the App Store or subscribe to a streaming service such as Apple Music. It keeps 30 cents of every dollar spent in the App Store, for example, and passes 70 cents to the app developer. Apple also collects fees from people who buy extra iCloud storage and from banks when customers use their credit cards with Apple Pay.