'Peak iPhone' blamed for Apple's falling revenues

Apple's record-setting growth is officially at an end, with the company reporting a 13 per cent fall in its second quarter revenue.

The drop marks the tech giant's first backward step in sales since 2003, after 50 consecutive year-on-year quarters of growth.

Apple reported receipts of £34.39bn, down from £39.78bn in the same quarter in 2015. A drop in iPhone sales is largely to blame - the company sold 51.19 million iPhones in the quarter, down from 61.17 million units a year earlier.

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Chief executive Tim Cook told journalists he believed this was due to the success of the iPhone 6, which has stopped people from upgrading to the iPhone 6S.

As such, Gizmodo says it now "appears that people are finally wising up to the fact that they don't have to upgrade their phones every year".

The site points to the idea of Apple having hit "peak iPhone". New features and handsets are not as appealing to consumers as the technologies introduced year-on-year are no longer perceived as breakthrough or must-have additions.

However, Apple has also encountered trouble in developing markets. "China was a particular weak spot – sales there fell 26 per cent. Results were also hit by the impact of a stronger dollar," the BBC says.

The broadcaster's Dave Lee adds that the company needs "the next blockbuster category to come along" – something entirely new to capture the attention of tech buyers in the way the first iPhone did in 2007. But "there's no sign of one coming soon".

Apple's shares, which are down 20 per cent over the past year, fell a further eight per cent to $96.12 in after-hours trading yesterday. The decline "erased more than $46 billion of the company's market capitalisation", the Wall Street Journal says.

While news of Apple's decline is big, it isn't surprising – the company has been warning investors to "brace for impact" for some time now, says The Guardian, and given that the iPhone accounts for almost two-thirds of revenues, a 16 per cent drop dwarfs the growth seen in some of Apple's other products. The company's second-highest earner is now services, which grew 20 per cent thanks to successes with Apple Music, the App Store, and Apple Pay.