Now, though, they will have to get used to the idea that the severe slump will go on for at least two quarters. And the longer Apple struggles to revive the fortunes of its dominant product, the greater the concerns that the iPhone’s glorious days of growth are behind it.
The depths of the trough in Apple’s core smartphone business became clear on Tuesday, as the company reported weaker results than expected for the first quarter of this year and issued a downbeat forecast for the second.
Rather than a steady recovery starting in the current quarter, iPhone unit sales could now be on track for an even bigger decline than in the first three months, when they fell 16 per cent year-on-year. The news sent Apple shares down 6.3 cent by close of trading on Wednesday.
It did not matter that Apple executives insisted that the weakness in the forecast was partly the result of a $2bn inventory adjustment that will mask the likely strength of consumer demand. At only $41bn-$43bn, Apple’s revenue forecast for the quarter ending in June was far enough below Wall Street’s expectations of $47bn to send a chill through the market, slicing 8 per cent from the company’s stock price in after-market trading.
The figures underlined what was already apparent: Apple is living in the shadow of its past success. The surge in sales following the launch of the iPhone 6, which began in September 2014, has left an acute hangover. And the longer it goes on, the more the pressure will grow on Apple to prove that it can still whip up fresh excitement for its ageing smartphone product line when the time comes to reveal the iPhone 7 later this year.
“We’ve hit an innovation plateau,” says Geoff Blaber, an analyst at CCS Insight. “The iPhone can’t grow indefinitely.” Apple’s greatest challenge, he adds, is living up to the outsized expectations generated by its own past success.
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