Apple guides first-ever iPhone sales decline in Q2
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.
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.
Comments
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And it is probably not even that big a deal for Apple. At least 30% of their profits come from other products.
It may lead to you're #1, but the main factor is that.
Others are not a factor directly.
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.
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.
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.
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.
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.