The iPhone, Apple’s cash cow isn’t the darling it used to be a while ago. Its sales slump widely affects Apple since it accounts for almost 60% of the company’s revenue. Yesterday’s earnings call gave us a slightly different picture of what has become of the phone and results were no different to the quarter before it.
iPhone sales are down! Apple sold 40.4 million phones the last quarter compared to the 47.5 million it sold the very quarter last year. A slight dip it should be but continues the downward trend that has affected it since the last quarter.
In the due process, Cupertino launched the cheaper iPhone SE but had little impact to suppress the sales slump and it marginally sells for far less than Apple’s current flagship 6S. The iPhone SE sells for $400 and is intended to attract price sensitive buyers, first time Apple phone buyers, iPhone owners stuck in the 5 era, and maybe Android converts. Apple says sales of this model are on par with their projections but little did it do to save it than lower its gross margin to 39.7% from 38% since technically, it isn’t premiumly priced like the $600 iPhone 6S.
While we keep watch of what unfolded at Apple, it still made a tonne of money, $42.4 billion to be exact and is expected to continue doing so in the medium term. However what raises questions is its upcoming iPhone 7 (rumors purportedly have it that it might even not be called so) said not to differ from the current 6S, which might give the buyers another reason not to upgrade and wait for 10th anniversary iPhone model,that is expected to be a game changer.
The iPhone 7 allegedly omits the 3.5mm headphone jack, has better antenna lines but nothing as groundbreaking to talk of with the exception of its bigger sibling, the 7 Plus/7 Pro that is said to ship with a dual camera setup.
Apple is said to offset the loss in iPhone sales numbers by selling services (iTunes, Apple Music, Apple Pay etc) over its established hardware given the section brought in an astonishing $6 billion and continues to show stronger growth.
All we can do is wait till this September when Apple finally unveils the next iteration of its phone and the impact it will have over the whole industry.