Published in Mobiles

Apple tanks

by on26 October 2016

Apple sees first sales decline since 2001

The shine has finally come off the tax-dodging fruity cargo cult Apple and no amount of spinning is saving it.

In a year where its main rival product caught fire and had an embarrassing recall, Jobs’ Mob posted its first annual sales decline since 2001.

To the Tame Apple Press, the numbers are still pretty big. Annual sales fell to $216 billion in the 2016 fiscal year ending September 30, which is not bad considering the company pays sod all in tax.

However given that Apple sold $234 billion in 2015 and has not found any product to replace its iPhone cash cow, it could be the beginning of the end.

The problem is that fewer people are buying the iPhone and that is Apple's largest source of revenue.

Apple sold 45.5 million iPhones in the September quarter, down from 48 million iPhones in the same quarter a year earlier. This means for three quarters iPhone sales have fallen.

The iPhone 7 was supposed to turn that around, but it seems that too many Apple fans suddenly woke up and realised that the iPhone 7 was the same as the iPhone 6 and so upgrading was not necessary.

But the biggest problem for Apple is China. Apple claimed that it could prop up its cash cow by selling big in China. We said that was not likely because Apple had competition from companies which offered rather a lot more for less money.

The figures from Apple show that after a promising start, sales in China fell 30 per cent which suggests that any novelty value Apple had has long since vanished.

As you would expect, Apple is spinning the situation like crazy. Supreme dalek Tim Cook and Apple's CFO Luca Maestri both claimed that demand was outstripping supply. However since Apple did not order so many phones this time that is a perfectly silly thing to say.

If the main rival in your price bracket catches fire and drops out of the market and you still can’t make piles of dosh you might be having a bit of a problem.

Cook claimed that things would get better in China next year because a vast number of "people growing into the middle class". Apparently, this social transformation will happen in a few months and Cook believes that promotion to the middle class will mean that the normally frugal Chinese will suddenly spend their money like there is no tomorrow. Tim clearly doesn't realise that when people enter the middle class for the first time they are even less likely to spend their cash.

Apple is projecting that it will post sales of $76 billion to $78 billion in the upcoming quarter, up from $74.8 billion a year earlier.

The real test for it all will be this Christmas when Apple has to lean on its lacklustre iPhone 7 for Christmas sales.

But Apple is facing a bigger issue, which no one appears to want to mention. For a long time it has relied entirely on a single product – the iPhone. All other products such as tablets and smartwatches have tanked. It can’t get into the car business as it had planned. It is basically starting to follow Blackberry which also suffered from a similar problem. It has no ideas and there are people which can make its product better and cheaper. Unless Apple can find a way out of this problem fast, it is doomed to be a 21st century footnote.

Apple stock was down 2.5 per cent in after hours trading following the earnings release.

Last modified on 26 October 2016
Rate this item
(10 votes)

Read more about: