iPhone Unit Sales Plunge In Fiscal Q2: Apple Must Innovate With iPhone 8 As Consumers Shy Away From Upgrades
Apple's earnings results for the second quarter of its fiscal year revealed that it sold 50.8 million iPhone units for the months of January to March for a revenue of $33.2 billion.
The number of iPhones sold in the quarter represents a slight drop from the 51.2 million units sold in the corresponding quarter last year. The 1 percent decrease is considered to be a surprising one, as Apple reported that it sold a record 78.3 million iPhones in the previous quarter.
Apple Q2 iPhone Performance
Apple fell short in meeting analyst expectations of 52.2 million units of the iPhone sold in the quarter. However, despite selling fewer units, Apple was able to rake in more revenue from its flagship smartphones, with the average selling price reported to be $655 compared to only $642 in the year-ago quarter.
This resulted in a slightly higher revenue from its iPhone division of $33.2 billion, up by 1 percent from $32.9 billion in the second quarter of the previous fiscal year.
The higher average selling price, resulting in higher revenues from iPhones despite the lower number of units sold, is attributed to the popularity of the iPhone 7 Plus. The smartphone, which was launched alongside its smaller iPhone 7 counterpart in September 2016, featured a better camera that led to robust demand.
For the first time in Apple's history, iPhone sales fell in the second quarter of the previous fiscal year, followed by three more quarters of dropping iPhone sales compared to their corresponding quarters the previous year. However, Apple was able to bounce back in the holiday season with the launch of the iPhone 7 and iPhone 7 Plus to post a new record in number of iPhones sold, with 78.3 million units booked in the first quarter of the fiscal year.
The demand for the iPhone 7 Plus was not able to boost sales in the second quarter, though, resulting in the 1 percent decline and the fourth time that iPhone sales have decreased.
The continued decline in iPhone sales could be partly attributed to market saturation, with iPhone owners not willing to upgrade their devices as soon as new models are rolled out. In addition, customers are always waiting to see if the next model will carry bigger upgrades compared to what is currently available.
Apple Services Continues Growth
Apple touted the 18 percent growth in its services revenue, with $7 billion from the division compared to $6 billion in the second quarter of the previous fiscal year. While Apple's services are not drawing in the same revenue as the iPhone division, it is being tagged as an indicator that Apple is starting to decrease its reliance on the iPhone as its major revenue source.
In addition to the growth in services, Apple posted a 31 percent increase in the sales of devices in the "other products" category, which includes the Apple Watch, Beats headphones, iPods, AirPods, and other accessories. The division raked in $2.87 billion in revenue in the quarter.
Overall, Apple posted a revenue of $52.9 billion, which is an increase of 4.6 percent from the same quarter last year. While the figure slightly missed analyst expectations of $53 billion, it further shows that despite iPhone sales staying flat, the company is now starting to experience growth in its other businesses, with more to come in the near future.