Cause for Worry? Sales of iPhones Slump for First Time Ever
Has the mighty iPhone reached its selling peak? If good sales, as opposed to outrageously great sales, are any indication, that could be. Apple said on Tuesday that it sold 74.8 million iPhones during its fiscal first quarter, which ended December 26.
That marks the slowest quarter of growth since the company began selling the smartphones in 2007. In the same period in 2014, Apple sold 74.5 million units were sold, meaning sales were basically flat. Analysts had expected the company to sell 76.3 million units in this year’s first quarter, according to a poll by Fortune.
Apple CEO Tim Cook (pictured above) also predicted that total company revenue would slide in the second quarter and conceded that iPhone sales will probably hit their first slump ever. In a conference call with analysts, Cook blamed the stronger value of the U.S. dollar and global economic softness.
Cause For Worry
While the iPhone’s sales figures might be great news for another manufacturer, they’re a cause of worry for Apple since more than two-thirds of the company's revenue comes from the iPhone. The iPhone 6s and 6s Plus models, didn't sell in markets such as the U.S. and China as well as the company had hoped.
Cook didn’t say whether iPhone sales will drop for the entire year, but he did say he doesn't think the market is saturated thanks to emerging markets where many citizens have yet to invest in smartphones.
We contacted independent tech analyst Jeff Kagan to ask his opinion on Apple's news. He told us that he's been expecting this story since the iPhone craze began.
"Nothing stays on the same growth track forever," he said. "Every company needs to update and create the next hot wave to grow on or else it will begin to crest, then fall. Apple does not have anything as exciting as the iPhone. Other technologies like the iPad and the watch are exciting, but they just capture a part of the iPhone market."
New Features Needed
In the same quarter, Apple reported revenue of $75.9 billion, up from the record quarterly revenue of $74.6 billion it posted in Q1 of 2015. Analysts had expected revenues of $76.5 billion.
The iPhone isn't the only Apple product to hit hard times. Sales of the iPad stagnated during the quarter despite the introduction of the 12.9-inch iPad Pro. The company aimed the new device at business users and other buyers of its tablet line, which has also been struggling.
Kagan said he expects the newest version of the iPhone to spur growth, provided it has the right eye-catching new features.
"Even though Apple is not selling as many iPhones as expected, they are still selling a ton of them. The problem is not with Apple. The problem is with the marketplace maturing," he said. "Customers still love Apple and the iPhone. It’s just that the urgency is being tempered by a maturing marketplace and no really new, valuable features."