AH Tech Talk: Apple's Revenues Decline 13% YoY in Q1, 2016

Although not totally unexpected, Apple’s disappointing quarterly result is certainly something that has got people talking. After well over a decade of high-growth led first by the iPod and then by the iPhone, Apple’s dedicated group of fans had almost started believing in the invincibility of the Silicon Valley tech giant, but apparent discomfiture among investors about the ‘lack of innovation’ at the Cupertino, California-based company had been growing by the day. With the iPhone continuing to bring in almost two-thirds of the company’s revenues, the inability of its newer products such as the Apple Watch, the iPad Pro and the iPhone SE to gain any type of traction among the target audience is certainly a cause for concern for the Wall Street.

Taking a look at the company’s Q1, 2016 result shows that revenues and profits still remain at enviable levels overall, but the quarter marks the first time since 2003 when the company has witnessed a de-growth on a YoY basis. According to the announcement from Apple on Tuesday, the company raked in $50.6 billion in revenues and $10.5 billion in profits for the January to March quarter of this year. That is significantly lower than what the company came up with in the corresponding period last year, when the company had earned $58 billion in revenues and $13.6 billion in profits. As if the 13% lower revenues last quarter wasn’t bad enough, the company is also projecting a 15% drop in revenues for the next quarter, with the CEO, Mr. Tim Cook, alluding to “challenging” times for the company.

What must be worrying Apple executives more than anything is the fact that the company has witnessed a slowdown in sales across the board, with every product category seeing lower numbers than the corresponding period last year. While sales of the Apple Watch have slowed down to a crawl since its spectacular debut last year, things are significantly better with the iPhone and Macs, although sales have been lower even in those two product categories in most large markets, including the US and China. iPhone sales in India, however, bucked the trend and grew 50% over the same period last year, but that’s small consolation for a company that must be frantically searching for a new product that will allow it to get back to being the darling of Wall Street.

Towards that end, the company is said to be looking at Virtual Reality and self-driving vehicles as its future growth engines, but in the short term, the company is likely waiting for the September launch of the iPhone 7 to rescue it from its current slump. Meanwhile, even though its hardware sales let it down in Q1, revenues from its App Store, media services as well its payments gateway, Apple Pay, all seemed to be on a growth trajectory during the quarter, with Apple Music growing to 13 million paying customers. Meanwhile, Mr. Cook sought to soothe the nerves of investors by claiming that “things are a lot more stable” than it looks from the outside, even as he tacitly acknowledged that the heady days of double-digit growth for the company may now be a thing of the past, saying that, “We may not have the wind at our backs as we once did”.

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About the Author
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Kishalaya Kundu

Senior Staff Writer
I've always been a tech buff and have been building my own PCs since as far back as I can remember. My first computer was a home-built desktop running MS-DOS on which I learnt to program in GW-BASIC and my interests apart from technology include automobiles and sports.
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