Apple guides first-ever iPhone sales decline in Q2

Posted:
in iPhone
During Apple's quarterly conference call for the first fiscal period of 2016, CEO Tim Cook said he expects year-over-year iPhone unit sales to decline in the current March quarter, the first downturn for iPhone since its launch in 2007.




Cook's statement came in response to a question posed by Sanford Bernstein analyst Toni Sacconaghi, who asked whether Apple's iPhone guidance for the current quarter suggests a broader negative trend resulting in a year-over-year decline for all of fiscal 2016.

"We do think that iPhone units will decline in the quarter," Cook said. "We don't think that they'll decline to the level that you're talking about. We aren't projecting beyond the quarter as [Apple CFO Luca Maestri] mentioned earlier, but at this point in time, we see that Q2 is the toughest compare."

Last year, Apple sold a record 61 million iPhones in the quarter ending in March, a high number for a period that usually suffers a massive sequential decline from the holidays. Cook attributed the unseasonably positive result to catch-up from the first quarter of 2015, which saw supply constraints due to overwhelming demand for then-new larger format 4.7- and 5.5-inch handsets.

"Plus, we're in an environment now that is dramatically different from a macroeconomic point of view than last Q2," Cook said. "From a currency point of view, from the level at which we've had to adjust pricing in several of these markets and sort of the overall malaise in virtually every country in the world. It's really all of those factors that play in there, and it's difficult to sort out how much is due to which one."

The future may not be as bleak as some analyst predict, however, as Apple saw more Android switchers than ever in the first quarter. Further, some 60 percent of existing iPhone owners have yet to upgrade to the iPhone 6/6s series, a market Apple began to address in earnest in September with its iPhone Upgrade Program.

Looking beyond the current March quarter, Cook foresees an upside in important markets like China. He pointed to low penetration in areas just now moving from previous generation 3G phones to faster LTE smartphones. Cook is also banking on China's booming middle class, a demographic responsible for iPhone's regional success, saying that market is expected to ballon to half a billion people by 2020.
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Comments

  • Reply 1 of 62
    Peak iPhone
    /s
    cornchip
  • Reply 2 of 62
    Expect the stock to go through the shredder tomorrow.  /s
    cornchip
  • Reply 3 of 62
    steviestevie Posts: 956member
    This is not exactly a surprise.  The tech press has been predicting this for months.

    And it is probably not even that big a deal for Apple.  At least 30% of their profits come from other products.
    edited January 2016
  • Reply 4 of 62
    One quarter of decline (yr over yr) does not a trend make. OMG! What am I saying -- Apple is Doomed! /s
    cornchiplostkiwijonagoldRayz2016argonautjbdragon
  • Reply 5 of 62
    I think there are four things driving iPhone:
    1. Longer replacement cycles as smartphones have become good enough and improvements are now largely incremental.
    2. Higher prices due to FX impacting demand
    3. Apple perhaps overestimating the % of the install base that wanted larger screen iPhone
    4. Intangible; some people just don't like the 6 series for whatever reason
    I'd like to see Apple release a flagship 4" phone and then see what percent of
    cnocbuibobschlobcornchip6Sgoldfishargonaut
  • Reply 6 of 62
    This is not exactly a surprise. The tech press will keep predicting doom until the day they are right.
    cornchipargonautjbdragon
  • Reply 7 of 62
    foggyhillfoggyhill Posts: 4,692member
    I think there are four things driving iPhone:
    1. Longer replacement cycles as smartphones have become good enough and improvements are now largely incremental.
    2. Higher prices due to FX impacting demand
    3. Apple perhaps overestimating the % of the install base that wanted larger screen iPhone
    4. Intangible; some people just don't like the 6 series for whatever reason
    I'd like to see Apple release a flagship 4" phone and then see what percent of
    The rise of 40% of the US dollar over 2 years.... That's one major obstacle to buying in many places.
    It may lead to you're #1, but the main factor is that.
    Others are not a factor directly.
    netmagepalomine
  • Reply 8 of 62
    The iPhone is the gift that keeps on giving and it had its run -- and then some. And there's still more life left, so no need to panic. As for the other gadgets, well, they need Steve Jobs -- and he's not here. 
  • Reply 9 of 62
    I think there are four things driving iPhone:
    1. Longer replacement cycles as smartphones have become good enough and improvements are now largely incremental.
    2. Higher prices due to FX impacting demand
    3. Apple perhaps overestimating the % of the install base that wanted larger screen iPhone
    4. Intangible; some people just don't like the 6 series for whatever reason
    I'd like to see Apple release a flagship 4" phone and then see what percent of
    The 4" iPhone is going to be a replacement for the C. Flagship implies the 'leading product' and that it will not be. It's going to be iPhone 6 guts in a smaller form factor. Your 1st point I think is the main point, they aren't really introducing new stuff for the everyday person to really WANT to have the new phone. Theres certainly new stuff in the latest models but there's not a real compelling addition to get it. For the common consumer. They will regress here and make up the difference in Asia, maybe. I'm surprised they turned their attention to the iPad Pro to be honest, I just don't see how that was a good use of time for the revenue it's going to bring in.
    williamh
  • Reply 10 of 62
    Services are going to matter more than ever now. I wish Tim would bring someone in that could really improve that part of the business. I don't think Eddy Cue is that guy.
    brakkenmr onetmagepalomine
  • Reply 11 of 62
    I still think Apple TV is a big untapped area.  They need to do whatever it takes to get the right content to scoop up cord cutters.  Partner with Comcast, Charter,Dish, DirectTV, whatever.  Make DVRs obsolete.

    Forget the Apple car, that's not good for the company and too risky.  Honestly I don't see tablets and watches growing much anytime soon.  The American public is saturated with smartphones, maybe some bold steps with iPhone 7 or 8 will shake up the market again.

    Maybe services is a good area.  But if Apple expands on their service business I'd like to see them do it in a platform independent way.  More services that are proprietary, hard to leave, and tied to Safari/Mac/iPhone is not the right direction.  


  • Reply 12 of 62
    steviet02 said:
    I think there are four things driving iPhone:
    1. Longer replacement cycles as smartphones have become good enough and improvements are now largely incremental.
    2. Higher prices due to FX impacting demand
    3. Apple perhaps overestimating the % of the install base that wanted larger screen iPhone
    4. Intangible; some people just don't like the 6 series for whatever reason
    I'd like to see Apple release a flagship 4" phone and then see what percent of
    The 4" iPhone is going to be a replacement for the C. Flagship implies the 'leading product' and that it will not be. It's going to be iPhone 6 guts in a smaller form factor. Your 1st point I think is the main point, they aren't really introducing new stuff for the everyday person to really WANT to have the new phone. Theres certainly new stuff in the latest models but there's not a real compelling addition to get it. For the common consumer. They will regress here and make up the difference in Asia, maybe. I'm surprised they turned their attention to the iPad Pro to be honest, I just don't see how that was a good use of time for the revenue it's going to bring in.
    Apple needs to re-assert the narrative of being disrupters and innovators the 'C' model does nothing for that.
    A flagship 4inch could because it plays to the segment of their traditional market that has backed them to date on that narrative.
    More so an iPhone Minus allows them to court controversy then offer an innovative solution while still keeping the main/Plus iPhone on a less controversial track. Then all press is "Apple dropped X is Apple X really better?" well assuming that Apple has something they can offer as better.
    bobschlobrogifan_oldnetmage
  • Reply 13 of 62
    fallenjtfallenjt Posts: 3,837member
    Get Sog35 on executive board as product strategist...we will have iMediaCenter to rule all home entertainment, subscription TV service with a la carte channels and last but not least: a folable iPhone...

    singularitywonkothesanejackansi
  • Reply 14 of 62
    Mr_GreyMr_Grey Posts: 118member
    foggyhill said:
    I think there are four things driving iPhone:
    1. Longer replacement cycles as smartphones have become good enough and improvements are now largely incremental.
    2. Higher prices due to FX impacting demand
    3. Apple perhaps overestimating the % of the install base that wanted larger screen iPhone
    4. Intangible; some people just don't like the 6 series for whatever reason
    I'd like to see Apple release a flagship 4" phone and then see what percent of
    The rise of 40% of the US dollar over 2 years.... That's one major obstacle to buying in many places.
    It may lead to you're #1, but the main factor is that.
    Others are not a factor directly.
    Indeed.  A 16Gb iPhone (commonly referred to on this forum as "useless"), costs one thousand dollars in Canada.  The prices are set to go up soon as well. 

    I still think that the answer (not that Apple will ever take it) is to reduce prices.  Apple still has the highest margins of all tech companies.  Their profit on each product has been variously estimated at two or three times the profit the other manufacturers make.  

    There are only so many rich people in the world.  They should try making a phone for the "regular" person instead of just the rich, if they truly want to dominate the market.  They could also try to be better world citizens and stop raping their customers for cash.  
    edited January 2016 cnocbui6Sgoldfish
  • Reply 15 of 62
    pmzpmz Posts: 3,433member
    Call me naive, but I don't understand how any product is supposed to grow quarter after quarter indefinitely.
    buckaleccornchipgtrpscooter63muppetryRayz20166Sgoldfishmrboba1netmageargonaut
  • Reply 16 of 62
    fallenjt said:
    Get Sog35 on executive board as product strategist...we will have iMediaCenter to rule all home entertainment, subscription TV service with a la carte channels and last but not least: a folable iPhone...

    I'm not his biggest fan but if he wants a la carte channels, I'm with him there. 
  • Reply 17 of 62
    Mr_Grey said:
    foggyhill said:
    The rise of 40% of the US dollar over 2 years.... That's one major obstacle to buying in many places.
    It may lead to you're #1, but the main factor is that.
    Others are not a factor directly.
    Indeed.  A 16Gb iPhone (commonly referred to on this forum as "useless"), costs one thousand dollars in Canada.  The prices are set to go up soon as well. 

    I still think that the answer (not that Apple will ever take it) is to reduce prices.  Apple still has the highest margins of all tech companies.  Their profit on each product has been variously estimated at two or three times the profit the other manufacturers make.  

    There are only so many rich people in the world.  They should try making a phone for the "regular" person instead of just the rich, if they truly want to dominate the market.  They could also try to be better world citizens and stop raping their customers for cash.  
    Apple charges what they do because they can. Plenty of alternatives to Apple.  So long as buying an iPhone is unambiguously "consensual" there's no rape.
    edited January 2016 monstrosityjagnutnetmageargonautnolamacguy
  • Reply 18 of 62
    Mr_Grey said:

    A 16Gb iPhone (commonly referred to on this forum as "useless"), costs one thousand dollars in Canada.  The prices are set to go up soon as well. 

    I still think that the answer (not that Apple will ever take it) is to reduce prices.  Apple still has the highest margins of all tech companies.  Their profit on each product has been variously estimated at two or three times the profit the other manufacturers make.  

    There are only so many rich people in the world.  They should try making a phone for the "regular" person instead of just the rich, if they truly want to dominate the market.  They could also try to be better world citizens and stop raping their customers for cash.  
    Such BS.

    Have you looked at your vegetable prices (mostly imported from the US) lately? I was just reading that a head of cauliflower in the supermarket sells for C$8 (up from 2.50 a year ago), and two heads of broccoli have gone up from C$1.50 to C$4. There are may more such examples. (How are prices of other electronic products from US companies doing?). If you think you're getting 'raped' (ugh) as a customer, perhaps it's because your economy is poorly diversified, dependent primarily on oil and commodities, whose prices have plunged in the past year. 
    edited January 2016 monstrositycornchipnetmagenolamacguy
  • Reply 19 of 62
    fallenjtfallenjt Posts: 3,837member
    Mr_Grey said:
    foggyhill said:
    The rise of 40% of the US dollar over 2 years.... That's one major obstacle to buying in many places.
    It may lead to you're #1, but the main factor is that.
    Others are not a factor directly.
    Indeed.  A 16Gb iPhone (commonly referred to on this forum as "useless"), costs one thousand dollars in Canada.  The prices are set to go up soon as well. 

    I still think that the answer (not that Apple will ever take it) is to reduce prices.  Apple still has the highest margins of all tech companies.  Their profit on each product has been variously estimated at two or three times the profit the other manufacturers make.  

    There are only so many rich people in the world.  They should try making a phone for the "regular" person instead of just the rich, if they truly want to dominate the market.  They could also try to be better world citizens and stop raping their customers for cash.  
    No. The answer is Apple don't ship junks and they leave the lower market with <10% profit to bottom feeding androids. Why try so hard to get those low end segment with very low profit margin? Race to bottom won't win. Targeting the lower segment by making junks is not Apple style. 

    monstrositycornchipjagnutnetmagenolamacguy
  • Reply 20 of 62
    bobschlobbobschlob Posts: 1,074member
    Said it before; Apple will make a mistake by coming out with a new "budget" 4". This new iPhone should have all technology as on par with their other flagship phones to the greatest extent that it can.
    Keep the 5s; make marginal update to the 5c (if they wish) and sell these as the entry level devices.
    A brand new device that is crippled just because Apple chooses to, is a waste.
    edited January 2016 monstrositycornchipwonkothesanenetmageargonaut
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