On July 31, Apple announced its third quarter financial report.

Although iPhone revenue has declined for three consecutive quarters and net profit has dropped 12% year-on-year, Apple's stock price rose sharply by 4% after the bell as revenue and profit were higher than market expectations.

This issue recommends the article "Apple finds silver lining in iPhone sales drop" on the Financial Times website.

The author Patrick McGee believes that Apple’s third-quarter financial report performance may really show that Apple has the ability to get rid of iPhone dependence and become a more powerful technology company, and points out the three most important reasons.

The author mentioned that although iPhone sales accounted for less than half of Apple’s third-quarter revenue, the company’s attitude has become increasingly optimistic.

Apple Chief Financial Officer Luca Maestri (Luca Maestri) said that to some extent, iPhone’s 48% revenue share is good news for Apple and shows that the company The scope of business is expanding, which is the primary reason cited by the author.

The Silicon Valley technology company highlighted the variety and depth of its business development last Tuesday.

More optimistic than expected Chinese market performance and the rapid growth of wearable devices such as AirPods headphones and Apple watches have offset the decline in iPhone sales. Apple's other product lines have not been affected, forming independent attractions.

Thomas, a business professor at Georgetown University, said that Apple has really diversified its business and made the iPhone less important.

In the past, if you wanted to understand Apple's performance, you would look at how many iPhones it sold. Now, you need to know more about things other than the iPhone.

You know, as recently as the beginning of 2018, iPhone accounted for 70% of Apple’s revenue.

Even though the third fiscal quarter tends to be a seasonal low for iPhone sales, this is the first time since 2012 that the iPhone accounted for less than half of the company's revenue.

Apple CEO Tim Cook also explained to analysts from this perspective why Apple is entering the fields of games, video streaming and credit card services.

He said that it is necessary for Apple to take a step back, broaden its horizons, not be limited to the iPhone, and grow into the only company that can provide customers with higher value and a complete ecosystem.

Secondly, the author also mentioned that the performance of the Chinese market played an important role in driving up Apple's stock price in after-hours trading.

In January this year, due to reduced demand for iPhones in China, Apple was forced to issue a rare revenue warning. This has intensified investors' concerns, with Apple's profits affected and its brand image greatly compromised.

But in the third quarter of this year, revenue in Greater China fell only 4% to US$9.2 billion, compared with a 22% drop three months ago. Revenue in Greater China actually grew on a constant currency basis.

This is not unrelated to the iPhone's price reduction strategy, but also the performance of each of Apple's product categories - iPhone, iPad, Mac, wearable devices and software services.

The author believes that the last reason is Apple's efforts to promote new users to buy iPhone.

In addition to price cuts, Apple has also strengthened its trade-in preferential policies to attract new users into Apple’s ecosystem. As long as it's in this system, Apple can sell its high-margin subscription services.

Analysts are still worried about iPhone users upgrading their phones less frequently, but Tuesday’s earnings report did give them a shot in the arm, allowing the market to focus less on iPhone sales and more on how Apple can be better. Spreading its record 240 million paying users across platforms including music, TV, apps and AppleCare.

The author pointed out that quarterly revenue from product categories other than iPhone increased by 17% year-on-year.

Among them, Apple’s services business increased by 13% to US$11.5 billion; wearable devices increased by 48% to US$5.5 billion; Mac sales increased by 11% to US$5.8 billion; iPad sales increased by 8% , to US$5 billion.

Apple also forecast that revenue for the next quarter will be between US$61 billion and US$64 billion, higher than analysts’ expectations of US$61 billion.

It’s time for people to change their perception that “Apple is equal to iPhone”.

However, although Apple's performance this time feels a bit "surprising", it may also be because market expectations have been lowered, making it easier to "exceed expectations".