Tech giant Apple has predicted falling sales for the first time since 2003. The culprit is the iPhone, which accounts for around two-thirds of revenues. In the three months to 26 December, sales of the must-have gadget grew at the slowest pace since its introduction in 2007 – barely 1% up year-on-year. Overall profit rose to $18.3bn on revenue of $76bn. In the current quarter, Apple expects to make sales worth around $50bn-$53bn.
What the commentators said
“Apple has confirmed many investors’ worst fears,” said Therese Poletti on MarketWatch.com: the company “has hit peak iPhone”. It doesn’t issue forecasts for specific products, but it’s clear from the overall projection that iPhone sales are set to fall for the first time this quarter. But Apple’s other businesses can’t make up for it. iPad and Mac sales are unspectacular. In revenue terms these two products are around the $5bn mark, ten times less than the iPhone.
Still, all this hardly means Apple is about to fall off the tree. Apple has always had the knack of getting people to pay “luxury prices for commodity goods”, said Shira Ovide on Bloomberg.net. Apple sells just 14% of the world’s smartphones, yet secures more than 90% of the market’s profits. The cost of Android-powered handsets has fallen, but iPhone prices have barely changed in years. “The enduring price premium will let Apple continue to gobble outsized revenue and profits.”
This suggests that Apple should be able to get maximum mileage out of the iPhone 7 this autumn, especially if, as rumoured, it has some snazzy new features, such as wireless headphones and waterproofing. But longer term, if it is to regain its buzz, said Chris Caso and Liz Pate of SIG Susquehanna, Apple will have to “invent something new” – something with the appeal and impact of the iPod, iPhone, or iPad.