27 July 2016
World’s most profitable company, Apple Inc., has recorded a 27 per cent drop in profit at the beginning of the third quarter of 2016, reports the Wall Street Journal.
This follows an initial drop in Apple’s profit in the previous quarter, making this the first prolonged slump in iPhone sales since the product was introduced in 2007.
Apple’s flagship smartphone, the iPhone, which is awaiting the launch of a new version later in September, suffered a major drop in sales.
The drop in the sales of iPhones adversely affected Apples profit as the flagship accounts for two-third of its revenue.
The Wall Street Journal reports that some 40.4 million iPhones were sold in the second quarter of 2016, a 15 per cent drop when compared to the corresponding period in 2015 when 47.5 million units were sold.
Sales of the Mac on the other hand fell by 13 per cent. Notwithstanding the drops recorded, the results showed increased sales for services including the App Store and iCloud – raising six billion dollars, a rise of 19 per cent.
Apple also saw a drop in iPad sales, selling 9,950 units in the same period, compared to 10,931 units sold in the corresponding time frame in 2015, representing a smaller drop of 9 per cent.
Apple sales in China which were phenomenally poor fell by a massive 33 per cent. This may have been responsible for the overall decline as China happens to be a large consumer of Apple products.
Analysts have been divided on the reason for this massive drop. Some analysts are of the opinion that it is because of America’s economic showdown with China. Analysts claim this showdown meant a growing number of consumers were failing to upgrade their iPhone models.
Apple CEO Tim Cook seemed to think this wasn’t as much of a setback as it seemed as he said: “we are pleased to report third quarter results that reflect stronger customer demand and business performance than we anticipated at the start of the quarter.
“We had a very successful launch of iPhone SE and we’re thrilled by customers’ and developers’ response to software and services we previewed at WWDC in June.”
The iPhone 7 is set for launch in September and will run on the upcoming iOS 10.
Author: Ekpeki Donald Pen Prince
Ekpeki Chovwe Donald styled the PenPrince is a writer and lawyer in equity. He has an unhealthy interest in wit, pun and poetry. When he’s not writing, he’s reading and when he’s not reading, he’s breathing. He breathes words.