iPhone sales stagnate as first fall looms

Expected decline in number of units sold has investors worried if Apple has peaked

Apple iPhone 6S
(Image credit: Apple)

Apple has reported its slowest ever growth in iPhone sales since its launch in 2007 and warned that the first drop in sales is now inevitable.

The tech giant sold 74.8 million iPhones in the final three months of 2015, a figure The Guardian says is "below analysts' expectations". In the same period in 2014, it sold 74.46 million handsets, just 0.4 per cent less, meaning "sales were essentially flat".

Regardless, it still represents Apple's best ever quarter. Revenue in the three months to 26 December was $75.9bn (£53bn), with net profits of $18.4bn (£12.8bn), the highest the company has ever recorded.

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But, Apple says the next quarter will see revenues between $50-$53bn (£35bn-£37bn) – a drop from the $58bn (£40.5bn) reported for the same quarter last year.

The iPhone increased its position as the company's dominant product and now represents 68 per cent of all revenues.

However, investors and critics are now worried Apple has hit "peak iPhone".

"Now that Apple has scaled so many peaks, the worry is that the only way is down," says the BBC's Rory Cellan-Jones. Fears about the smartphone peaking have been touted before, only to evaporate thanks to high-selling products such as the iPhone 6. "But the pressure is now mounting on Apple to deliver another blockbuster product to keep the profit engine running," adds Cellan-Jones, in reference to the upcoming iPhone 7.

Apple itself said the results were due to a strong US dollar and a slowing global economy, with China, its largest overseas market, "showing signs of softness". Chief financial officer Luca Maestri said the company was operating in "a very difficult macroeconomic environment".

Sales in China were up 14 per cent compared to the 70 per cent growth last year, though Apple chief executive Tim Cook said iPhone sales were up 77 per cent in the country.

The smartphone market in general is slowing globally, though, as fewer people are adopting the technology for the first time, reducing the penetration of the devices. Analysts Gartner reported that second-quarter growth in 2015 was slow, while The Verge says that more than half of iPhone users have yet to upgrade to an 6 or 6S since their introduction in 2014.

Infographic by www.Statista.com for TheWeek.co.uk

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