Apple confirmed it had seen what chief Tim Cook described as a “pause in our growth”, with a sharp drop in iPhone sales following a bumper quarter for the company this time last year.
The company reported a profit for the quarter to 26 March 2016 of $10.52 billion, down 22.5 per cent, on revenue of $50.56 billion, down 12.8 per cent. This apparently marked the company’s first revenue decline in 13 years.
Sales in the iPhone unit dropped 18 per cent to $32.86 billion, off the back of a 16 per cent drop in unit volumes to 51.19 million. The CEO said that last year it saw an acceleration in iPhone upgrades (leading to a 40 per cent increase in shipments), making this year’s comparison a tough one for the company.
iPad sales also continued to slide, with a 19 per cent drop in revenue to $4.41 billion, and a 19 per cent drop in volume to 10.25 million units.
The positive in the numbers came from the services business, which saw 20 per cent growth to $5.99 billion – it was Apple’s second biggest revenue generator during the period. App Store revenue was up 35 per cent “to beat last quarter’s all-time record”, and Apple Music now has more than 13 million paying subscribers, leading to “an inflection point” following many quarters of decline in music sales from downloads.
Changes in China
While the top three places remained unchanged – Samsung, Apple and Huawei – Oppo and Vivo took fourth and fifth places, displacing Lenovo and Xiaomi (see graphic*).
“These new vendors would be well-advised not to rest on their laurels though, as this dynamic smartphone landscape has shown to even cult brands like Xiaomi that customer loyalty is difficult to consistently maintain,” Melissa Chau, senior research manager, said.
Oppo has been in the smartphone game since 2011, and is primarily focused on China, although since 2012 it has been shipping to other markets in Asia, Middle East and Africa.
The company’s efforts are centred on “fostering channel partnerships, supplemented with large marketing budgets and entertainment sponsorships to increase visibility”, IDC said.
Vivo has also offered smartphones since 2011, but is focused more on its home market (less than 10 per cent of 2015 volume was outside China).
It is positioned as “relatively premium”, and “slightly differentiated by its focus on audio”, IDC said.
Of the more familiar brands, Huawei saw continued growth, as it looked to compete both in premium devices and, through its Honor brand, at the entry level. Samsung retained top spot despite a slight (0.6 per cent) decline in shipments year-on-year.