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Apple posts record quarterly profit but iPhone sales flatline and iPad sales drop

Roc Chester

Missing a beat … Apple quarterly results show record profits but iPhone sales flatline. Picture: Chris Ratcliffe/Bloomberg

EVEN Apple has to follow the rule that what goes up must, eventually, come down as its quarterly results show iPhone sales have flatlined for the first time.

The Cupertino-based technology giant sold 74.8 million iPhones in the last quarter. Judge that against other phone makers, and it’s a huge result. Judge that again Apple’s own performance and it is something else, with a year-on-year gain of 0.4 per cent.

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If the news for the iPhone is bad, the results of the iPad is worse. Apple sold 16.1 million iPads in the quarter, compared with 24.1 million in the same quarter last year — despite launching the 12-inch iPad Pro at the end of the quarter. Mac sales were also down 4 per cent.

Apple has also warned of bad times ahead, with the upcoming March quarter facing “the most difficult” year on year comparisons and Apple CEO Tim Cook warned of an iPhone sales slump in the upcoming March quarter.

New phone ... 40 per cent of iPhone users have upgraded to the new iPhone 6 and 6S phones. Picture: AP/Eric Risberg

New phone … 40 per cent of iPhone users have upgraded to the new iPhone 6 and 6S phones. Picture: AP/Eric RisbergSource:AP

Apple CEO Tim Cook admitted that there was “economic softness” in China sales, an area that has been a keen focus for Apple in the last year, although he said the company was still “incredibly bullish” about the region.

Cook says about 40 per cent of iPhone users have upgraded to the new iPhone 6 and 6S phones, meaning that most Apple users are still getting buy on their older iPhones.

Analyst Carolina Milanesi, chief of research with Kantar Worldpanel ComTech, says the iPhone 5s is still in the top five most sold smartphones in the United States.

That is both an indication that they haven’t felt a compelling need to buy a new iPhone, which is bad for Apple, but a sign of the potential market still likely to invest in the new iPhone 7 expected to be released in September.

It is not all bad news for Apple by a long shot. The company posted a record $75.9 billion revenue for the quarter and a record quarterly profit of $18.4 billion.

Apple doesn’t break down sales figures of the Apple Watch, instead it groups it in “other products” along with the Apple TV which was updated late last year. That “other” group jumped 43 per cent in sales in the last quarter to $4.35 billion, which is also a 62 per cent increase since the same time last year.

Not letting go ... The iPhone 5s is still in the top five most sold smartphones in the United States. Picture: AFP/Karen BLEIER/

Not letting go … The iPhone 5s is still in the top five most sold smartphones in the United States. Picture: AFP/Karen BLEIER/Source:AFP

The best indication that Apple Watch sales continue to rise came from Cook’s statement that the wearable device had set a quarterly sales record and had its strongest month in December.

Analyst Horace Dediu estimates that Apple sold 4.4 million smartwatches in the quarter and a total of 12.4 million since the Apple Watch was released in April.

Cook said “we were blown away by the level of Android switchers we had last quarter — highest ever by far.”

He also rejected the argument that the smartphone market is saturated, with people no longer needing to buy a smartphone because they already have one. “Metrics I see would strongly suggest otherwise,” he said.

The number of people using Apple devices also reached a new high, with Cook announcing that 1 billion Apple devices, be it an iPhone, iPad, Apple Watch or Mac, has been used in the past 90 days.

Assistant Professor Aleksi Aaltonen, of Warwick Business School, described the Apple result of the inevitability of it no longer being able to do the impossible.

“The longer the company keeps breaking its iPhone records, the more likely the following quarter shows that the product has finally peaked,” he said.