Apple Experiences First Lacking Quarter in 13 Years
It was foreseeable: Apple has posted the fiscal results for Q1 2016 in its earnings report and the numbers aren’t looking very promising. Due to the unsustainable growth seen in the prior periods that were fueled by the Chinese market, a noticeable drop was unavoidable. Market expectations might have been set too high by the iPhone’s potential and name, say analysts. Apple’s quarterly profit suffered a 22.5% drop or a 15% year-over-year drop as revenue saw a steep decline, in fact the first real drop since 2003 and the very first time that iPhone sales noticeably lessened.
The spike in sales that came before the drop can be ascribed to the introduction of the iPhone 6 and iPhone 6 Plus with their larger screens, meeting market demand and wowing consumers in late 2014 – while their successors haven’t caused a similar reaction in prospective buyers. Nonetheless, one must acknowledge the role the s-generations have played in the past. The in-between models aim to perfect and refine what the preceding flagship has presented and offer a more performant device in practically the same packaging.
Apple shares have plunged 7%, reflecting the market’s disappointment with Apple’s projections and latest fiscal results. Another thing to keep in mind as an investor, is that silicon valley peers Alphabet Inc. (Google), Facebook Inc. and Amazon.com Inc. do not match Apple’s numbers in their combined earnings. Apple is definitely retaining the tech throne, despite failing to keep the attention of the notoriously finicky Chinese consumer electronics market, where the iPhone was seen as a status symbol and probably the most “premium” smartphone.
Tim Cook offered varying explanations for the drop in sales. Consumers weren’t upgrading because the iPhone 6 did so well. New buyers are still coming in via the Android platform, with iOS posing as the most popular destination for switching customers. More Android users transitioned to iOS in the last two quarters than ever before. Is Apple cannibalizing its own success with the iPhone? For the planet as a whole, a slightly reduced pace in the product life cycle of smartphones would certainly reduce the toll they take on natural resources and the environment. This of course won’t change the stockholder’s objective of seeing increasing returns and growth. Sooner or later, Apple will have to repeat the iPhone’s success by means of introducing an entirely new product line or service to please Wall Street.