All good things must come to an end. This includes Apple's run on ever-increasing profits. Apple's profits are down for the first time in 13 years, due in large part to a drop in iPhone sales. Don't start crying for Apple yet, though; they are still making money hand over fist.
Reuters laid out the numbers, relaying that
"Apple said it sold 51.2 million iPhones in its second fiscal quarter, down from 61.2 million in the same quarter a year ago, but above analysts' estimates of about 50 million devices." They also said that
"shares of Apple fell 6 percent on heavy volume in after-hours trade, falling below $100 for the first time since February."
Apple has struggled lately. Market saturation is believed to be part of the problem. According to the New York Times, almost half of the smartphones sold in the United States are iPhones. There may not be many new customers for Apple to lure in unless they come up with something groundbreaking. Apple sales have dropped more than a quarter in China, which is Apple's second largest market (only behind the United States). The Apple Watch has not been the success that Apple had hoped it would be, iPad sales have dropped, and the iPhone 6s is not moving at the same rate as the iPhone 6.
Not all the news is grim, though. Apple Chief Executive Tim Cook points out that the company's service division is growing. The service division includes the App Store and Apple Music, and that division's revenue grew by 20 percent to bring in a respectable $6 billion.
There has been some speculation as to what is happening with the once unstoppable Apple. Reuters was told by Chief Financial Officer Luca Maestri that "the success of the iPhone 6 a year earlier had set a difficult bar to beat in the second quarter. "The iPhone 6 is an anomaly,"
Amit Daryanani, an analyst with RBC Capital Markets told the New York Times that "Apple may be entering a period of slowing replacement sales, similar to what happened in the personal computer market a decade ago." Mr. Daryanani also noted that many companies had been hurt by the strong dollar, which makes American products more expensive overseas. “It’s a common theme across technology companies,”
Apple's Tim Cook also feels that this is all part of the normal two-year life cycle of Apple's iPhone. He promises that Apple has a few exciting products up its sleeve. Any thoughts on what those might be? Let us know in the comments below!