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Why future projections for Apple are gloomy even after 38 per cent rise in profits

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San Francisco:  Apple announced on Tuesday its profits rose 38 percent in the second quarter due to a surge in iPhone sales.

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However, Apple’s Chief Executive Tim Cook expressed concerns over the rising competition. “The gap is widening between us and our competitors,” Tim Cook said in an interview with the newspaper, the Wall Street Journal.

Headquartered in Cupertino, California, the company earned $10.7 billion during this period, its fiscal third quarter, compared to $7.74 billion in the same quarter of 2014, equivalent to earnings of $1.85 per share, reported EFE.

It sold 47.4 million iPhones in the second quarter, 35 percent more than the same period last year and more than double from four years ago. iPhone sales in China too, more than doubled to $13.2 billion.

In total, iPhone sales contributed $31.4 billion, a 59 percent rise over last year, owing to an average $100 increase in their prices.

Apple Watch concerns?

The company did not share information on the sales of the Apple Watch, which they recently began to sell, although Cook said it exceeded internal expectations.

The gross margin of the company’s profit was 39.7 percent, as opposed to the expected 38.5 percent to 39.5 percent.

Apple shares, however, fell 6.7 percent in after-hours trading at Wall Street, owing to what analysts called gloomy projections for coming months.

The company forecast revenue of $49 billion for the third quarter ending in September, against analysts’ expectations of $51.13 billion.

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Apple Spent Over $30 mn on Amazon Cloud in Q1 2019

In December last year, the iPhone-maker said it would spend $4.5 billion of that amount through 2019, the report added

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Customers walk past an Apple logo inside of an Apple store at Grand Central Station in New York, Aug. 1, 2018. VOA

In its determination to expand its online services like iCloud, Apple spent over $30 million on Amazon’s Cloud services in the first quarter (Q1) of 2019. The amount is 10 per cent higher than what it spent in Q1 2018.

Internationally, there are more than a billion recorded users of Apple devices every month. Given its considerable storage requirement, the company relies on major big cloud providers like Amazon Web Services (AWS) and Google, CNBC reported on Monday.

If Apple’s AWS use stays at those levels for the rest of 2019, its annual spending would exceed $360 million, the report noted.

Earlier this year, Apple agreed to spend at least $1.5 billion on AWS over the next five years as part of an agreement. The iPhone-maker’s AWS expenditure may only expand further, said the report.

In a February job posting, Apple said it was looking for someone who could “lead and architect our growing AWS footprint”.

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A customer is entering the Apple store in Fairfax, Virginia. VOA

For some time now, Apple’s top product — the iPhone — has been experiencing saturation status in the markets because of which the company has begun pointing more to online services as a key contributor.

Talking about the use of Cloud-based services in the past, the iPhone has specified that it uses AWS for iCloud storage. The company however, did not disclose whether any other Apple services depend on AWS or not.

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To support its Cloud needs, the company is also investing heavily into building its own infrastructure.

In January 2018, Apple announced plans to spend $10 billion on data centres in the US within five years.

In December last year, the iPhone-maker said it would spend $4.5 billion of that amount through 2019, the report added. (IANS)