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Apple iPhone And Mac Sales Down, But Services Division Continues To Grow

Steve McCaskill is editor of TechWeekEurope and ChannelBiz. He joined as a reporter in 2011 and covers all areas of IT, with a particular interest in telecommunications, mobile and networking, along with sports technology.

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Apple will hope Christmas period revives sales of iPhone, Mac and Apple Watch. But Apple Pay, Apple Music helps service revenue grow again

Sales of Apple’s iPhone and Mac have fallen year-on-year, but the company will be encouraged by the continued growth of its services division and the expected performance of the iPhone 7 over the Christmas period – not to mention the refreshed Mac line up set to be revealed on Thursday.

Overall fourth quarter revenues were $46.9 billion (£38.4bn) and net income was $9 billion (£7.4bn)– down from $51.5 billion (£42.2bn) and $11.1 billion (£9bn) year-on-year.

But despite the launch of the iPhone 7, and the possible boon from the Samsung Galaxy Note 7 recall catastrophe, the number of units sold fell from 48 million to 45.5 million.

Apple iPhone 7

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iPhone 7 (1)

Apple results

Apple iPhone 7 Plus 2Mac sales also slowed from 5.7 million to 4.9 million and ‘other’ sales, which comprises iPod, Apple Watch, Beats headphones, Apple TV and accessories, dropped from $3 billion (£2.5bn) to $2.3 billion (£1.9bn).

This could be because of slowing demand for the Apple Watch. Recent figures show demand for smartwatches has halved in the most recent quarter and given Apple’s reluctance to ever issue sales figures for the device, it’s difficult to tell.

Apple has also just launched the Apple Watch Series 2, which it hopes will revive interest in the concept.

However iPad sales remained stable at 9.9 million and the services division increased its revenue from $5 billion (£4.2bn) to $6.3 billion (£5.16bn), fuelled by income from Apple Pay, Apple Music and others.

Good or bad?

“Our strong September quarter results cap a very successful fiscal 2016 for Apple,” said Tim Cook, Apple CEO. “We’re thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2, as well as the incredible momentum of our Services business, where revenue grew 24 percent to set another all-time record.”

Cook’s enthusiasm is shared by analysts who believe the growth in services and the Christmas period will be of greater interest to Apple.

“This is an unrepresentative quarter in Apple’s trajectory,” added Ben Wood, chief of research at CCS Insight. All eyes will be on iPhone numbers and growth in Apple services. Analysts will also be looking to glean anything about expected performance of iPhone 7 in the all important [next] quarter.

“This is expected to be the first quarter of volume declines for Apple. It is exacerbated by blow out sales of the iPhone 6 a year ago, but the iPhone 7 will give a substantial boost.

“Some reports will focus on Apple having a weak quarter which ignores the fact that it continues to be the most profitable device maker on the planet and there seems little evidence that will end any time soon.”

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