It’s over. Yes, the company which recorded uninterrupted sales growth for 13 years (51 quarters) hit a wall as it reported a drop in its sales last month.
The era of expansion for Apple Inc. was technically over for the quarter that ended in March as fewer people upgraded to the latest iPhones, and the company is predicting another decline in the current period.
Apple shares were down more than 7% after the company came with the much anticipated quarter results. To cover this up, CEO Tim Cook described the quarter as a pause and not any significant change in the company’s business. We have had Nokia.
We have had Blackberry.
Is this it for Apple iPhone?
Much of the falloff is attributable to the struggling Chinese economy, which includes Hong Kong and Taiwan, than in any other region, where revenues have slumped by 26 percent compared with the previous year.
China is the second-largest market in the world for Apple products behind the US. Facing a hard time (manipulating) growth estimates, the Chinese economy will take some time to come back to normal which will make it difficult for the world’s most valuable publicly traded company to post a rise in sales in the next quarter given that the Chinese government recently shut down the Apple’s iBooks Store and iTunes Movies just six months after they were started there.
Apple share price (one-year data)
The company had warned investors to brace for impact. The iPhone accounts for nearly two-thirds of Apple’s revenue and the company sold 16% fewer iPhones than it had during the same period in 2015, and made 18% less money from them. The total tally for the device was $32.9bn from 51.2m phones sold; the year previous Apple brought in $40.3bn from 61.2m phones.
SOAR AWAY SUCCESS
Some people still believe that the sales fall is due to the phenomenal welcome the iPhone 6 and its bigger stalemate, iPhone 6 Plus had after their launch.
With screens measuring 4.7 and 5.5 inches, the two phones, the largest the company had ever released, were an answer to all the haters of iPhone who claimed that it was an expensive toy with a (very) small screen. The 6 Plus was Apple’s habitual (pseudo-intellectual) attempt at “phablets”: hybrid devices, smaller than a tablet but larger than a conventional smartphone, which had proved particularly popular in Asian markets.
They were a huge success, with the two models selling 4m in their first 24 hours. But keeping up the pace of sales was always going to be a big ask.
ANY INCENTIVE TO BUY 6PLUS IF I HAVE IPHONE 6?
Fewer customers had incentives to trade up for the latest iPhone this year if they bought an iPhone 6 just over a year ago. Apple has been the master of invention, but the real innovation is now proving tough. The Apple Watch too has been underwhelming and people wouldn’t pay 70k for incremental innovation in terms of size and makeup.
Despite the sales decrease and warning about its growth, the company is confident that its future (if any) of Apple is very bright, thanks to some “amazing innovations” in the pipeline. One of those new products should be the iPhone 7.We will have to wait and see how iPhone 7 fares in the market but Apple has to ponder if the recent sales plunge is calm before the storm ?
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Views presented in the article are those of the author and not of ED.