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Apple Turns to Wearables, Services as Its Next Bastions of Growth

Apple reported fiscal fourth-quarter earnings that showed a decline in iPhone sales but wearables and services were booming.

Apple may still churn out beautifully designed and often coveted smartphones, but when it comes to the future of the company, Tim Cook is hanging his hat on the Apple Watch and the accompanying health apps and features that come with it. 

During a conference call to discuss fourth-quarter earnings with Wall Street CEO, Cook said he sees wearables as the future of the Cupertino, California tech giant. "There will be a day in the future that we look back and Apple's greatest contribution will be to people's health," he said, according to a transcript of the earnings call

RELATED: APPLE FOCUSES ON APPLE ARCADE, APPLE TV PLUS IN FIRST MINUTES OF EVENT 

Apple Watch has saved lives before 

Apple's Watch has already been credited with helping people avoid heart attacks and other ailments.

In Late September news broke that if it wasn't for an alert a UK man received from the Apple Watch about an irregular heartbeat he would have suffered a stroke or heart attack. Meanwhile in March of 2018  reports surfaced that the Apple Watch alerted a teenager in Tampa Bay, Florida after her resting heart rate jumped to 190 beats per minute. She was rushed to the hospital where doctors said her kidney was failing and had it not been for the quick intervention she may have died.

For the three months completed at the end of September, Apple said growth in the quarter was driven by services, wearables and the iPad, not the iPhone. “We concluded a groundbreaking fiscal 2019 with our highest Q4 revenue ever, fueled by accelerating growth from Services, Wearables and iPad,” said Cook said in prepared remarks.  The strength in those businesses was enough to enable Apple to beat Wall Street's targets on revenue and earnings and provide an outlook for the fiscal first quarter that is higher than what Wall Street is looking for. 

The company, which has been pouring tons of money into its services business which includes its iTunes, iCloud, Apple Arcade and its upcoming Apple TV Plus streaming content service, said subscriptions grew 40% in the fourth quarter compared to last year. As it stands, there are now 450 million paid customers subscribing to Apple's services. 

 “Outside of iPhone, we grew 17% year on year and underneath that, wearables were well over 50%, continuing the strong momentum of accelerating that’s driven by Apple Watch and AirPods,” Cook told CNBC. He noted that the wearables business increased in every market across the globe during the quarter. 

iPhone sales fail to impress 

While Apple is seeing strong growth outside of the iPhone, that part of the business is still struggling. In the fourth quarter, iPhone sales were 9% lower than a year ago. Still, it is an improvement from quarters past when revenue in that area of its business dipped as much as 15%, according to CNBC.  Mac revenue also declined during the quarter, nearly 5%. For its first quarter, Apple is forecasting revenue of between $85.5 billion and $89.5 billion, higher than the $84.3 billion it had in last year's fiscal first quarter. 

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