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What Can Apple Investors Learn from the iPhone XR?

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Lower-priced iPhone XR is the top-selling model

Apple’s (AAPL) vice president of product marketing, Greg Joswiak, disclosed recently that the iPhone XR has been the company’s best-selling iPhone model since it went on sale in October. The iPhone XR is the cheapest of Apple’s latest iPhone models. It costs $749 compared to $999 for the iPhone XS and $1,099 for the iPhone XS Max.

If the iPhone XR is outselling the iPhone XS and iPhone XS Max, it seems to suggest that there’s strong demand for Apple’s smartphones at the right price point.

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Apple missed iPhone unit sales in the latest quarter

Apple has struggled to sell more iPhones in recent quarters. It sold 46.9 million iPhone units in the fourth quarter of fiscal 2018, flat from a year earlier and below the 47.5 million units analysts had expected it to sell. With iPhone unit sales stagnating, Apple has taken to hiking iPhone prices with upgrades, leading to a higher iPhone average selling price and more revenue in the iPhone business.

Company-wide revenue rose 20%

The iPhone business generated $37.2 billion in revenue for Apple in the fourth quarter. The business was its largest single source of revenue, accounting for ~60% of its company-wide revenue. Apple’s company-wide revenue in the quarter rose 20% YoY (year-over-year) to $62 billion.

Alphabet (GOOGL) and Microsoft (MSFT) grew their September quarter revenues 21.5% and 18.5% YoY, respectively. Revenue rose 5.8% YoY at Sony (SNE) and 5.5% YoY at Samsung in the quarter.

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