Why Apple’s Margins Have Been Shrinking

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/

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