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Apple’s Revenue Drop First Time in 13 Years with iPhone Sales Sinking

Apple has announced its Q2 2016 results and they aren’t what the company had expected. The latest result comes after a poor show from other U.S tech firms Microsoft, Alphabet, and Twitter. It had experienced the revenue drop for the first time since 2003 and the device sales are drastically decreased when compared to the Q2 2015. The total revenue for the Q2 2016 is $50.56 billion which is 33% lower than Q1 2016 and 13% lower Q2 2015. Apple blames the macroeconomic problems and strong year ago quarter for the revenue drop.

Even few investors expressed that the company had reached the saturation point with the current lineup of devices. Without major innovations and new line up of devices, we can’t expect Apple to grow further. In China, the company is facing stiff competition from the well established brands like Huawei and Lenovo along with the new entrant LeEco. The company’s revenue in China is decreased from $18.37 billion in Q1 2016 to $12.5 billion in Q2 2016.

In the Q2 2016, the revenue from Apple services like Apple Music and App Store is more than the revenue from Mac and iPad. Apple had sold 36% lesser iPads in the Q2 2016 when compared to the Q1 2016. While the company’s revenue from hardware products in decreased, the Apple services had seen a 20% growth from Q1 20015 to Q2 2016. The revenue from other products like Apple Watch, Apple TV, Beats products, Apple iPod and others products for the Q2 2016 is decreased by 50% when compared with Q1 2016.

In his recent interview to CNBC, Jia Yueting, CEO of LeEco said, Apple is outdated and losing momentum in China. He also added that the Apple’s innovation has slowed down and the launch of iPhone SE is an example since it comes with very low-level technology. Both Apple and Samsung are out of top 5 smartphone brands in China and we don’t expect them to be on this list anytime soon. In India, the company had recently increased the priced of the iPhones after the poor sales of 4-inch iPhone SE.

Leaving the Q2 2016 results, the company also announced the expectations for the Q3 2016. The company is expecting the revenue for the Q3 2016 to be between $41 billion and $43 billion which is much lower than the $50.56 billion revenue for Q2 2016. At last, Tim Cook, CEO of Apple shared that the future of Apple is very bright and some amazing innovations can be expected with the upcoming products. There are few rumors suggesting that the upcoming iPhone 7 might feature some out-of-the-box innovations like skipping the 3.5mm audio port.

Stay tuned for more updates!

By Teja Chedalla on Wednesday 27th of Apr 2016


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