Apple Is Struggling With Low Sales

Posted by Kirhat | Saturday, April 30, 2016 | | 0 comments »

Apple Store
After 13 years, Apple posted its first-ever decline in iPhone sales and its first revenue drop as the company credited with inventing the smartphone struggles with an increasingly saturated market.

The company's sales dropped by more than a quarter in China, its most important market after the United States, and it also forecast another disappointing quarter for global revenues.

Reports last 26 April revealed that Apple shares fell about 8 percent, dropping below US$ 100 for the first time since February. A hike in Apple's share buyback and dividend as well as bumper revenue from services failed to mollify investors.

Apple's results followed disappointing quarterly reports from Microsoft Corp and Google-owner Alphabet Inc , and microblog Twitter also on Tuesday reported results that missed expectations.

Apple said it sold 51.2 million iPhones in its second fiscal quarter, down from 61.2 million in the same quarter a year ago but above analysts' estimates of about 50 million devices.

While Apple executives had predicted iPhone sales would decline this quarter, they must reassure investors that the drop represents a momentary roadblock, rather than a permanent shift for the product that fuelled its meteoric rise.

After years of blockbuster sales, many investors fear the iPhone has reached saturation, spelling the end for Apple's exponential growth.

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

Apple Chief Financial Officer Luca Maestri told Reuters that the success of the iPhone 6 a year earlier had set a difficult bar to beat in the second quarter. "The iPhone 6 is an anomaly," he said.

But Chief Executive Tim Cook told analysts that the smartphone market was not growing, reinforcing wider concerns of saturation.

Cook also conceded that the iPhone 6s was driving customers to replace phones at a much lower rate than the 6. "I don't mean just a hair lower; it's a lot lower," he said. "If we'd had the same rate on 6s as 6, it would be time for a huge party."

He pointed to the services division, which includes Apple Music and the App Store, as a bright spot. Its revenue grew 20 percent to US$ 6 billion and surpassed iMac and iPad sales.

Cook also hinted that Apple had more gadgets to come.


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