For 13 years Apple's revenue just rose and rose. Quarter after quarter it registered growth. That was an unbelievable run from the company. But last night it got over. For the first time since 2013, Apple's quarterly revenue declined. So, what happened? There are several reasons. We highlight the 9 factors that seemingly contributed to Apple's results last night.
Apple's iPhone sales were already slowing down in last quarter. It saw the slowest growth in sales and considering the iPhone 6S had just launched, this was unexpected. As the uptake of the iPhone 6S was already slow, so it was inevitable that it slowed down further reflecting the decline in sales of the iPhone.
The iPhone is a great phone, which is the reason why it is so popular. It has a fast processor, a great camera and one of the best app ecosystems around, which results in a situation where people don't upgrade an iPhone as quickly as perhaps some other phone. That problem gets exaggerated when Apple releases a 'S' model, because it retains the same design and only updates the internal hardware. Apple's great service and software support also backfires in this regard as people keep their iPhones for an average of 2 years.
Even in the case of Apple's 'S' models, there have been feature additions which have been compelling and have become industry standards. With the iPhone 4S, it was the Siri, and with the iPhone 5S, it was Touch ID. Virtual assistants like Siri were quickly replicated by Google and Microsoft and in ways even bettered Apple's solution. Similarly, after Touch ID on the iPhone 5S, almost every smartphone maker now makes phones with a fingerprint scanner. 3D touch which is a tent-pole feature of the iPhone 6S hasn't created similar buzz. No wonder, people are not buying the new iPhones at the same rate.
The iPad has been tanking for a couple of years. The iPad sales remained sluggish. Compared to 12.6 million iPads sold last year in Q2, Apple has just managed to sell 10.3 million iPads in Q2 of 2016. This also shows that new products like the 12.9-inch iPad Pro haven't done much to improve things.
Surprisingly, this time around even the sales of the Mac declined. In Q2, 2015 Apple sold 4.6 million units of Mac. This year, the number is down to 4 million. The entire PC market is in decline and Macs have bucked the trend for a couple of years, but seemingly even they aren't immune anymore. It also doesn't help that Apple hasn't brought out a redesigned version of the MacBook Air, which is the most popular Mac laptop. Apple's new machines, which include the new MacBook, haven't reached a point where they can replace some of its older products.
Apple has struggled with currency problems all over the world. In Russia, due to currency issues, it had to briefly stop selling its products. In India, it had a built-in buffer for foreign exchange fluctuation, and that has made India the most expensive country to buy an iPhone.
Declining sales in the China region is a critical reason why Apple's revenue took a hit. In the last two years, China has become Apple's second most important market after the US. In Q2, sales in the China region, which includes Hong Kong and Taiwan, have dropped by 26 per cent.
Apple Watch is now a billion dollar business. It is the most popular smartwatch in the world and yet it has done little to enhance Apple's bottom-line. Apple doesn't include the Apple Watch business as a single entity, but bundles it as a part of 'others' category, which speaks volumes about how important it is to Apple's bottom-line. This was, by the way, the poorest performing of all of Apple's businesses. Additionally, the fact that it is dependent on an iPhone and doesn't work with Android smartphones, hampers its impact.
The competition has also upped its game. Xiaomi sells its Mi 5 for less than Rs 25,000, which more or less has features equivalent to the iPhone, for less than half the price. On the high-end, Samsung has improved by leaps and bounds. In 2014, its Galaxy S6 smartphone changed the notion that Samsung was a mere Apple copy-cat. In 2016, Galaxy S7 again showed that Samsung was coming out of Apple's shadows. For many users it is a better phone than the iPhone 6S, and that might have affected some of the iPhone business.
Apple's iPhone sales were already slowing down in last quarter. It saw the slowest growth in sales and considering the iPhone 6S had just launched, this was unexpected. As the uptake of the iPhone 6S was already slow, so it was inevitable that it slowed down further reflecting the decline in sales of the iPhone.
The iPhone is a great phone, which is the reason why it is so popular. It has a fast processor, a great camera and one of the best app ecosystems around, which results in a situation where people don't upgrade an iPhone as quickly as perhaps some other phone. That problem gets exaggerated when Apple releases a 'S' model, because it retains the same design and only updates the internal hardware. Apple's great service and software support also backfires in this regard as people keep their iPhones for an average of 2 years.
Even in the case of Apple's 'S' models, there have been feature additions which have been compelling and have become industry standards. With the iPhone 4S, it was the Siri, and with the iPhone 5S, it was Touch ID. Virtual assistants like Siri were quickly replicated by Google and Microsoft and in ways even bettered Apple's solution. Similarly, after Touch ID on the iPhone 5S, almost every smartphone maker now makes phones with a fingerprint scanner. 3D touch which is a tent-pole feature of the iPhone 6S hasn't created similar buzz. No wonder, people are not buying the new iPhones at the same rate.
The iPad has been tanking for a couple of years. The iPad sales remained sluggish. Compared to 12.6 million iPads sold last year in Q2, Apple has just managed to sell 10.3 million iPads in Q2 of 2016. This also shows that new products like the 12.9-inch iPad Pro haven't done much to improve things.
Surprisingly, this time around even the sales of the Mac declined. In Q2, 2015 Apple sold 4.6 million units of Mac. This year, the number is down to 4 million. The entire PC market is in decline and Macs have bucked the trend for a couple of years, but seemingly even they aren't immune anymore. It also doesn't help that Apple hasn't brought out a redesigned version of the MacBook Air, which is the most popular Mac laptop. Apple's new machines, which include the new MacBook, haven't reached a point where they can replace some of its older products.
Apple has struggled with currency problems all over the world. In Russia, due to currency issues, it had to briefly stop selling its products. In India, it had a built-in buffer for foreign exchange fluctuation, and that has made India the most expensive country to buy an iPhone.
Declining sales in the China region is a critical reason why Apple's revenue took a hit. In the last two years, China has become Apple's second most important market after the US. In Q2, sales in the China region, which includes Hong Kong and Taiwan, have dropped by 26 per cent.
Apple Watch is now a billion dollar business. It is the most popular smartwatch in the world and yet it has done little to enhance Apple's bottom-line. Apple doesn't include the Apple Watch business as a single entity, but bundles it as a part of 'others' category, which speaks volumes about how important it is to Apple's bottom-line. This was, by the way, the poorest performing of all of Apple's businesses. Additionally, the fact that it is dependent on an iPhone and doesn't work with Android smartphones, hampers its impact.
The competition has also upped its game. Xiaomi sells its Mi 5 for less than Rs 25,000, which more or less has features equivalent to the iPhone, for less than half the price. On the high-end, Samsung has improved by leaps and bounds. In 2014, its Galaxy S6 smartphone changed the notion that Samsung was a mere Apple copy-cat. In 2016, Galaxy S7 again showed that Samsung was coming out of Apple's shadows. For many users it is a better phone than the iPhone 6S, and that might have affected some of the iPhone business.
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