The 15-year streak at Apple (NASDAQ:AAPL) is officially over. It is the first time since 2001 the business has reported an annual sales decline. That was when Apple began launching groundbreaking products, including the iPod. However, this year, they have reported three successive quarters of declining iPhone sales. The profit forecasts are also slimmer than expected.
On Tuesday, the California-based tech firm reported annual sales of $216 billion, which is down from last year’s $234 billion. This decline has been attributed to the falling sales of their flagship product, the iPhone. In the September quarter, Apple managed to sell 45.5 million iPhones. But in the same quarter of 2015, they sold 48 million. This means the sales of iPhone has come down for the third successive quarter.
Is the Smartphone Market Saturated?
Apple’s overall revenue has also declined the third successive time this year, a serious concern for the business. Many analysts feel that the smartphone market has already become saturated. Consumers are not replacing their phones so frequently anymore. There is no longer that keen desire to upgrade.
In what is a cause for concern for Apple, the sales have dropped sharply in China as well. It has come down by 30 percent even as the business is trying to fight it out with local competitors like Huawei and Xiaomi. Just a year back, China was viewed as a country that could give Apple promising growth.
More Demand Than Supply
Tim Cook, the CEO, feels that this decline is because “demand is outstripping supply in the vast majority of places, particularly on the iPhone 7 Plus”. Analysts had earlier warned the tech giant about this as well, saying that there are supply chain issues that need to be sorted out quickly.
Luca Maestri, the CFO is not worried about the competition, even in China. Luca says this is “not particularly relevant”. He said that the iPhone demand is so high already that “we are selling everything we can produce”. Cook himself is bullish on China because a lot of people in the country are scaling up into the middle class.
The next quarter’s projection is better, though. Apple Inc. (NASDAQ:AAPL) says that the sales are likely to be between $76 billion and $78 billion because of the imminent holiday season purchases. Last year in the same period, it was $74.8 billion. So the decline could just be a minor hiccup.
But everyone is not convinced because of the three successive quarters of decline.