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Apple Surprises With Another iPhone Decline

Tom Jowitt is a leading British tech freelance and long standing contributor to TechWeek Europe

Waiting for the 10-the anniversary handset? Shipments of the iPhone continues to decline

Apple has reported mixed fortunes in its second quarter results as sales of its cash cow, the iPhone, dipped yet again.

The decline could be down to users waiting for the launch of the 10th-anniversary edition later this year (iPhones are usually revealed to the world in September).

But the decline also means that Apple was only able to grow sales of its iPhone in the so-called holiday quarter at the end of 2016, just after the launch of the iPhone 7 late last year.

iPhone 7 red 2Mixed Results

Apple’s financials on the surface still make for impressive reading and in reality would be the envy of any tech firm.

Profit for the quarter ending 1 April rose to $11.1bn (£8.5bn) from $10.5bn (£8.1bn) a year earlier.

Quarterly revenues also rose 4.6 percent to a staggering $52.9bn (£40.9bn) compared to $50.5bn (£39bn) in the same year-ago period.

But this missed Wall Street expectations of $53bn (£41bn), and Apple sales fell approximately 1.5 percent in after hours trading.

“We are proud to report a strong March quarter, with revenue growth accelerating from the December quarter and continued robust demand for iPhone 7 Plus,” said CEO Tim Cook.

“We’ve seen great customer response to both models of the new iPhone 7 Product Red Special Edition and we’re thrilled with the strong momentum of our Services business, with our highest revenue ever for a 13-week quarter,” he added.

Apple had launched the Product Red iPhone 7 and 7 Plus during the second quarter to help finance programs tackling HIV and AIDS in sub-Saharan Africa.

It is worth remembering that the iPhone is by the biggest money earner for Apple, and it was this time last year that the iPad maker shocked the world when it revealed the first ever decline in iPhone sales.

Despite that, the iPhone remains Apple’s cash cow and it contributed $33.2bn (£25.7bn) to the quarterly revenue of $52,896bn ($40.9bn), a rise of 1 percent.

Unfortunately however this rise was not down to Apple actually selling more handsets, as it shipped 50.8 million iPhones in the quarter ended 1 April, down from 51.2 million shipped in the second quarter of 2016.

Analysts on average had expected iPhone sales of 52.27 million.

And even though Apple sold fewer handsets, the modest 1 percent rise in iPhone revenue was down to demand for the more expensive iPhone 7 Plus, which helped nudge the iPhone’s average selling price to $655 (£507) in the quarter, up from $642 (£497) a year ago.

Mac Success

So after digesting the fall in iPhone sales, with some industry analysts saying it is down to consumers waiting for the 10th-anniversary handset, the question has to be asked how did Apple’s other products do?

Well iPad sales continue to decline year-on-year with 8.9 million units shipped in the quarter.

Meanwhile Apple Mac sales rose from 4 million a year ago to 4.2 million (in line with analyst expectations). The controversial higher price for Macbooks helped drive a 14 rise in revenues here.

Apple’s services business meanwhile recorded an 18 percent rise to $7bn (£5.4bn).

Meanwhile sales of Apple’s ‘other products’, which include the Apple Watch, AirPods, Beats headphones, iPods and other accessories, rose 31 percent to $2.87bn (£2.2bn).

As usual, Apple did not break down the numbers of Apple Watches sold.

Last month it was revealed that Apple is being sued by the Australian consumer watchdog, over allegations that it used a software update to disable or ‘brick’ iPhones if a cracked screen was repaired by a third party (and not Apple itself)

Quiz: How much do you know about the iPhone?