Calvin University's official student newspaper since 1907

Calvin University Chimes

Since 1907
Calvin University's official student newspaper since 1907

Calvin University Chimes

Calvin University's official student newspaper since 1907

Calvin University Chimes

Apple’s revenue drops, company blames rotten iPhone sales

For the first time in over a decade, Apple Inc. saw a quarterly revenue drop.

Stock prices fell by 8 percent, and sales in China (Apple’s most important market besides the United States) dropped by 26 percent.

This drop has investors concerned that the period of the company’s exponential growth, during which Apple became the most valuable company in the world, is at an end.

A major factor in this drop was a drop in sales of the iPhone: sales dropped for the first time since debuting in 2007.

This drop comes on the heels of disappointing quarterly reports by other major technology companies, including Microsoft Corp., Alphabet Inc. (the company that owns Google) and Twitter.

Apple sold 51.2 million iPhones in the second fiscal quarter, a steep decline from the 61.2 million sold during the same time period last year. However, the company did sell more than analysts’ estimate of around 50 million devices.

After 13 years of hugely successful sales (the last drop in revenue was 2003), Apple must assure investors that this decline is a temporary stall as concerns over a saturated smartphone market rise.

“For years, analysts have warned that the smartphone market is becoming saturated, meaning that most people who would want to buy a smartphone already have one,” the Washington Post reported Tuesday.

“Apple needs to come up with a radical new innovation or product rather than just the current incremental improvements to existing products,” Neil Saunders, chief executive of research firm Conlumino, told Reuters. “This is the only way in which it will reinvigorate sales growth.”

iPhone sales were not the only Apple products that saw a decline. iPad sales were down 19 percent from this point last year, and Mac sales were down 12 percent.

In the face of this adversity, the company remains optimistic, pointing to its services sales as a bright spot. The App Store, iTunes Store and iCloud saw a 20 percent increase in revenue, bringing the total to $2.1 billion.

The products in the “Other Products” category also had a successful quarter. The Apple Watch, Apple TV and iPod brought in over $6 billion in revenue, a 30 percent increase from last year.

“Our team executed extremely well in the face of strong macroeconomic headwinds,” Tim Cook, Apple’s chief executive, said in a press release. “We are very happy with the continued strong growth in revenue from services, thanks to the incredible strength of the Apple ecosystem and our growing base of over one billion active.”

Still, the pressure is on for Apple to rebound.

“The industry is in a lull between the mobile boom and what comes next in automotive, the connected home, health and industrial applications of the Internet of things,” Geoff Blaber, vice president of Americas at CCS Insight, said in a note before the report.

“Pressure is likely to mount on Apple to reveal the next big source of growth.”

 

More to Discover