Plus, the company kept pumping money into research and development. As the iPhone business is slowing, Apple is splurging on research and development to give the iPhone a makeover.
Apple’s expenditure on research and development surged 15.0% in the third quarter, reaching $4.26 billion. Meanwhile, the company also spent aggressively on marketing. Its selling, general, and administrative costs rose 7.7%.
The company is trying to boost its “Services” segment by entering new businesses like its own video streaming service, a gaming platform, and Apple News+.
Apple does have the financial muscle to make these services successful. However, all these services will face immense competition, given ever-increasing players—especially in the streaming and online gaming businesses. As a result, its margins in these businesses may not be as high as the iPhone segment once was. The stock is down 15% over the last ten months.
The tech giant’s App Store remains strong, however. Here’s what drove Apple’s app revenue at the start of the current quarter.
View more information: https://marketrealist.com/2019/08/apple-margins-shrinking/