It’s an impressive milestone. Given the monthly rate at which
Analysts expect the company to announce later today that it has sold 40 million iPhones in its third quarter, or 13 million a month. That brings the total to 1 billion sold since the gadget was first launched in 2007. Few, if any, device lines have ever been so successful.
There are dampeners to this landmark figure, though.
Apple will probably report its second-consecutive quarterly decline in sales. Analysts expect the company to unveil revenues of approximately $42 billion, down 18% from the $49.6 billion it reported last year when it was still riding on the stunning success of the iPhone 6, its first large-screen iPhone. Apple also said, in the second quarter, that it would post a three-month sales decline.
Apple knows this was inevitable. The ubiquity of Apple’s flagship device, the fact that the number sold matches one-seventh of the global population, is part of the problem.
Developed markets like North America and Europe, along with fast-growing Asian markets like China are saturated with smartphones. It’s becoming harder for large technology players to differentiate themselves significantly from one another.
The so-called innovation cycle is speeding up, making it more difficult for market leaders to create home-grown software and hardware that’s revolutionary.
The likes of Apple and Samsung need to become savvier about buying smaller, more-nimble companies whose technology they can integrate into their flagship products.
Apple’s upcoming iPhone 7 is not expected to showcase any groundbreaking new features, but the company will at least bring out a number of new products in the second half of 2016: along with the iPhone 7, there’s the upcoming Apple Watch 2, and the 2016 MacBook Pro.
Shares of Apple dropped from $112 to $93 in the last two weeks of April, after the company announced its first quarterly decline in 13 years. Since then the stock has recovered, even flirted again with $100, to trade at $97.80 on Tuesday morning in New York.
Analysts are divided over what will happen next. Brian White of Drexel Hamilton expects to see Apple's shares trading hands at $185 in a year's time, while BGC analyst Collin Gillis believes they'll fall to $85. Many say that the stock has taken a fair drubbing since April, and that the inevitable softening of sales after the unprecedented success of the iPhone 6, has now been priced in.
If Apple can pull something spectacular enough out of the hat for the iPhone 7 to perk up revenues, that may reverse these quarterly declines in 2017. There will be much reading between the lines when Tim Cook talks to analysts and investors in his quarterly phone conference on Thursday, to get a feel for how bright or dim the outlook may be for next year.
