Yahoo Finance

Apple having its much anticipated iPhone 16 event today, but how much do iPhone sales make up Apple's total revenue? Yahoo Finance's Julie Hyman joins me now with a closer look.

The short answer is a lot. Uh Apple is still quite uh reliant on that Apple iPhone revenue. It's also profitable product and high margin, particularly with these newer, higher margin phones. So if you look at the iPhone revenue through the years here, you go all the way back to 2014. It was right around 100 billion dollars. Now, in 2023, that had just about doubled to 200.6 billion dollars. Now, as you can see, there have been up and ups and downs some years. In fact, we saw a bit of a decline last year in that iPhone revenue. But if you look at it relative to overall, it's remained pretty consistently at least around half of Apple's overall revenue. It peaked, by the way, at about 66%. That was back in 2015. So that was the biggest proportion. Since then, of course, we've seen Apple introduce new products like the watch, for example, and of course, beef up its services business as well. So that now makes up a much larger proportion. Now, as to whether this new iPhone 16 is going to be a big driver of revenue and profitability for that matter, we talked earlier to Ben Bajarin about that, and he thinks this will power a refresh cycle.

The base iPhone 16 is probably the best base iPhone they've ever made, which could actually very interestingly lead to a stronger cycle for the base model where this is actually we've actually noticed and a mix shift the last couple years to the Pro. And I think if that happens, if this aging base does more up for iPhone 16, um we might see more of that mix shift either go toward iPhone 16, which again is not something we've seen before, and um we'll see a stronger uh stronger sales cycle for that, which again might impact ASPs slightly.

So ASP's average selling prices again. So that would help potentially the profitability for Apple and those margins. By the way, overall analysts are project projecting revenue for the full year of 390.4 billion dollars. That would be about a 2% increase over 2023's revenue. And of course, Josh, a lot of that's going to be iPhone sales.

Yeah, it was interesting to hear Ben Bajarin talk about, you heard him say that aging base right there, Julie. Just to put a number on that, I was talking to Gene Munster, you know, long time Apple analyst. Munster estimates there are roughly 700 million active iPhones out there that are at least three years old, which is just an incredible number. And it's part of the reason Munster, I think Ben there too, saying some relative optimism because the bull case and part just rests on, listen, the iPhone 16s. So they bet will be compelling enough to get a lot of those people to upgrade. Right. We'll see.

Well, and and it's whether the Apple intelligence that AI offering is going to be compelling enough. You know, I was just talking to Josh Shafer about this in the newsroom, this question of whether it will be enough. And I think that at this point, we just don't know the answer to that. Uh you know, when they start rolling this out, it gets in people's hands, word of mouth starts to spread, critics come out and review the product, not necessarily the phone, but all of those AI products, maybe then we'll start to see uh some traction here and we'll get a better feel for what demand is going to be like.

Yeah, part of it is, you know, you listen to those Apple executives, and I think part of their job today was to make the case, to really explain to the millions of people, and it really is millions of people who tuned into this event, explain, okay, these these AI features, and really explain to them why they're important, why they're compelling, you know, why you need to upgrade. As you said, Julie, we'll have to wait and find out, you know, whether they made their case as effectively as they could have. Yeah.

We shall see.

All right. Thank you, Julie.