Saturation of smartphone market, lack of innovation explain drop: analysts
Handset maker Apple Inc on Tuesday reported its first quarterly revenue decline in 13 years, with China, its second-largest market in terms of revenue, posting the sharpest year-on-year decline among all markets.
The figures stoked concerns that the technology giant's golden era is over.
Apple posted revenue of $50.56 billion in the fiscal quarter ended March 26, down 13 percent year-on-year - a result that disappointed Wall Street and sent its shares lower on NASDAQ.
The company also reported the first drop in iPhone sales since the launch of the handset in 2007. It sold 51.19 million iPhones in the quarter, down 16 percent year-on-year, according to Apple's results.
Sales of Apple's other gadgets also declined. Sales of the iPad dropped 19 percent on a yearly basis to 10.25 million units and those of its Mac laptop dipped 12 percent to 4 million units, the company said.
The drop in iPhone sales didn't surprise many analysts.
"For one thing, the smartphone market is headed toward saturation; for another, the iPhone 6s, launched in September 2015, has failed to excite many consumers," Zhu Dalin, an industry analyst at consultancy Analysys International, told the Global Times Wednesday.
The company's China revenue dropped 26 percent year-on-year to $12.49 billion in the quarter, the sharpest among all markets. Other major markets like the Americas, Europe and Japan also reported year-on-year revenue declines.
"Apple is facing strong rivalry from China's domestic brands like Huawei and Xiaomi in the Chinese market," said Zhu, adding that these brands, though still targeting a lower-end segment than Apple, are also posing an increasing threat to Apple in the global market.
Globally, in terms of individual producers, Apple smartphone shipments ranked No.2 with a 14.4 percent share in the first quarter, following South Korea's Samsung with a 27.8 percent share. China's Huawei Technologies Co, Lenovo Group and Xiaomi Inc ranked after Apple with shares of 9.3 percent, 5.8 percent and 5.5 percent, respectively, according to a report from Taiwan-based consultancy TrendForce on April 18.
Zhu said that the company's small-screen iPhone SE, launched on March 21, isn't likely to see strong sales in China, as most Asian consumers "prefer large screens."
Apple has forecast revenue of $41 billion to $43 billion for the following fiscal quarter, according to the quarterly report, which also missed the Wall Street consensus of $47.3 billion, Reuters reported Tuesday.
But it seems that CEO Tim Cook, who took over the company in 2011, doesn't think the company is experiencing a downturn. In an interview with The Wall Street Journal Tuesday, Cook admitted that it was "a challenging quarter," but he attributed the slump to short-term factors like the strong dollar, difficult economic conditions and difficult comparisons for iPhone sales.
Despite the recent slump, some analysts are still upbeat about Apple's long-term performance. Li Yi, an expert at the Internet Society of China, said that Apple under Cook has been much more conservative than under Steve Jobs, but still, "Apple remains the best consumer electronics maker, and will remain so for at least another five to six years."
"It is not possible to see continuous robust growth in electronics like smartphones or tablets, as the market is becoming saturated," Li told the Global Times Wednesday. "But in new areas like virtual reality and smart cars, which Apple has already reportedly tapped into, it may still have the ability to amaze the world again."
