February 1, 2018 / 11:14 PM / in a year

Breakingviews - Apple’s less-is-more vibe bodes well for profit

The Apple logo is seen on the facade of the new Apple Store in Paris, France, January 5, 2017. REUTERS/Charles Platiau

NEW YORK (Reuters Breakingviews) - Apple has long followed Mies van der Rohe’s design precept that “less is more.” Now it’s doing the same financially. The company sold fewer iPhones for more money in the last quarter, it reported on Thursday. That raises fears that the company is losing its innovation edge. But that’s OK – persuading customers to pay more arguably requires as much genius as getting people to adopt the technology in the first place.

Shares in the $850 billion Apple have fallen by 7 percent over the past two weeks as rumors circulated of suppliers curtailing production. Sure, similar seasonal slowdowns have become a regular occurrence. People buy fewer phones after the holidays are done. The worry for investors is that Apple fanatics have already bought the iPhone X, and regular people won’t bother. Moreover, the tepid reception for Apple’s newest phones in the quarter – it sold 1 million fewer phones than last year – indicates the company is running out of ideas.

Yet the fact remains that Apple reported over $61.6 billion of iPhone revenue, 13 percent more than the same quarter a year earlier. Its design and marketing skills have whipped up buyers for a $999 phone. These abilities, and customer’s desire for luxury, aren’t going away.

A design precept Apple isn’t following is that of architect Adolf Loos, who advised that “ornament is crime.” Apple’s store sold a lot more apps, watches and accessories to users. Those sales now account for 16 percent of revenue, compared to 14 percent a year ago. Moreover, that helped Apple’s earnings rise 12 percent to $20 billion. That’s the kind of accessory investors are happy to flaunt.


Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

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