Apple has returned to winning ways after three consecutive quarters of slipping revenues, but growth of 5% in a quarter where a brand-new iPhone was fresh on the market, without any viable rival to contend with, is simply not as impressive as Apple fan boys want us to believe.
We would go as far to say that this quarter may well be the last good quarter the company ever has. It’s not just the iPhone that has peaked, but all smartphones, unless Apple can pull something out of the bag to put an end to its prolonged period without innovation.
The iPhone 7 launched in September last year, taking full advantage of a turbulent period for main handset rival Samsung amid its exploding Galaxy Note 7 debacle. It’s not surprising then that Apple overtook Samsung as the highest shifter of smartphones globally in the quarter, marking the first time the firm has managed to do so in its history.
Apple shipped 78.3 million iPhones in the quarter, making up the lion’s share of its total revenues by contributing $54.38 billion, a quarterly increase of almost 32.8 million units – setting another company record, but one that was fully expected during a festive period of smartphone domination. Compared to the fourth quarter of 2015, units increased by a less impressive 3.5 million.
Samsung isn’t too far behind though, moving 77.5 million smartphones in Q4, a quarterly rise of 2.2 million, but a year-on-year slide of 3.8 million units. The upcoming launch of the Galaxy S8, expected for release in early April, will likely return the South Korean tech giant to the top of the pile for smartphone shipments.
For the whole of 2016, Samsung still reigns supreme with 309.4 million smartphone shipments compared to Apple’s 215.4 million – with a market share of 20.8% and 14.5%, respectively.
The chasing pack is made of the usual Chinese suspects Huawei, Oppo, Vivo and Xiaomi, all with respectable shipment growth that has helped chip away at Apple’s performance in China, with iPhone revenues declining 12% to $16.2 billion – making China Apple’s worst performing country for every quarter of 2016.
China has long been a key target area for Apple, but it is frankly failing miserably there. Consumers are waking up to the iPhone’s premium price tag and instead opting for cheaper alternatives from local manufacturers, in what is a savagely competitive market.
Apple achieved another milestone with record quarterly revenue of $78.4 billion, rising from $75.9 billion in the same period in the previous year. Overseas sales accounted for 64% of revenues for the quarter.
The services arm of Apple’s business, including its App Store, iTunes, Apple Music and Apple Pay, rose by 18% to bring in revenues of $7.2 billion. CEO Tim Cook noted during this week’s conference call that the company is exploring original content options for Apple TV, to add to the Apple Music originals. “We are learning a lot about the original content business and thinking about ways we could play in that,” said Cook.
Let the familiar rumors of Apple buying a major content company commence, and it’s worth noting that Apple is one of only a handful of companies that can afford to buy Netflix, but everyone knows it doesn’t like to splash out when it comes to acquisitions.
“Our holiday quarter results generated Apple’s highest quarterly revenue ever, and broke multiple records along the way. We sold more iPhones than ever before and set all-time revenue records for iPhone, Services, Mac and Apple Watch. Revenue from Services grew strongly over last year, led by record customer activity on the App Store, and we are very excited about the products in our pipeline,” added Cook.
Luca Maestri, Apple’s CFO, noted: “We returned nearly $15 billion to investors through share repurchases and dividends during the quarter, bringing cumulative payments through our capital return program to over $200 billion.”