Apple Amazon Partnership: A Dream Or A Nightmare?

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Tech giants Apple, Inc. (NASDAQ: AAPLand Amazon.com, Inc. (NASDAQ: AMZN) have just decided to join hands in a move nobody expected to see. Apple has just added Amazon to its list of vendors and selling points. For the upcoming holiday season in 2019, Apple will be selling its products – iPhone, iPad, Mac and more – directly via Amazon.com. Let us analyse the deal between the two giants in detail.

Amazon and Apple are basically behemoths in the mobile and e-commerce industry, respectively. So them partnering up is, very expectedly, ringing alarm bells for their competitors. But will it be beneficial for both the companies as well?

One of the downsides of the partnership for Apple is the fact that part of Apple’s customers’ data would be exposed to Amazon as well to facilitate this partnership. On the other hand, for Amazon, this move means that Amazon might also be on the receiving end of flak for Apple’s move to conceal its iPhone sales numbers in the following quarters.

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But regardless, this move for the 2019 holiday season seems to be way more beneficial than what its downsides project. But the question arises – Why would Apple, a company with stringent policies towards its vendors and selling points, allow a partnership to happen with a company which is its direct competitor?

Apple In A State of Limbo

The Cupertino giant is going through a period of time which very few companies have in the past. Apple’s revenue is going up every quarter. In fiscal Q4 2018, Apple generated a whopping $62.9 billion in revenue, that’s an increase of 20% YoY.

But on the other hand, the sales of the iPhone are constantly going down. It has been either stagnant or declining since the beginning of 2016. It has been experiencing negligible growth to no growth at all for four consecutive quarters now. And it is not the case for just the iPhone. Other Apple devices such as iPad and Mac have also experienced a similar stagnancy/decline in terms of sales. In the fiscal Q4 2018, the sales of iPad and Mac have declined a notable 6% and 2% YoY, respectively.

Not too long ago, Apple was declared as the first company to cross a valuation of a trillion dollar. Tim Cook seems to be leading the company to be as profitable as possible.

That begs the question – How is Apple able to generate a greater revenue by each passing quarter with such declining sales figures of its products?

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High Prices Overcoming Low Sales

The sole reason behind the growth of Apple’s revenue is the skyrocketing prices of its devices, especially the iPhone. With every passing model of the iPhone, its profitability per unit keeps on increasing. The higher average selling price per model, in turn, profits the company.

In this scenario, Apple should have nothing to worry about at all. Its overall revenue isn’t being affected and the company is breaking new revenue records every quarter. But the one thing that might affect its image is its relatively low figure in sales. This might be bad in terms of PR for the company. This is one of the reasons that the company has decided to not reveal its sales in the upcoming quarter.

Win-Win For the Customers

Regardless of what this deal might mean to both the tech giants, this spells out a sweet time for the customers. People will now be able to buy Apple products online with just one click. Holiday period has given us a surprise already it seems!

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