iPhone sales dwindle as Apple’s Q2 earnings takes a hit for first time in 13 years

This is a first for the coming that was climbing up and up. A downturn in iPhone sales has resulted in the growth stalling for the first time in 13 years for Apple.

Apple has just announced its customary earning calls for Q2 2016, which is for the period January through March of this year. The results saw Apple’s earnings reach $50.6 billion with a quarterly net profit of $10.5 billion. However, for the same period last year, Apple had earned $58 billion in revenue, and $13.6 billion in profit.

This year’s second-quarter earnings have made Apple emerge as the second-largest business after the iPhone for the first time, fell, with little else to take its place. Also, the iPad and Mac saw lower sales. However, the makeup of this past quarter’s sales comes from 51.2 million iPhones, 10.3 million iPads, and 4 million Macs sold according to the call, which is again down on the same quarter from 2015.

Almost half of the smartphones sold in the United States are iPhones, and Apple may be reaching the saturation point among potential customers in other developed countries. Rival smartphone makers who are using Google’s Android operating system continue to challenge the company with powerful, less expensive devices.

Overall, Apple sold 16 percent fewer iPhones in the quarter compared with the same quarter last year.

However, the App Store, Apple Music, storage center iCloud and mobile wallet Apple Pay and other services have managed to generate nearly $6 billion in revenue, which is up by 20 percent from the previous year. The executives have applauded the progress they are making in subscriptions, touting Apple Music’s 13 million paying subscribers. Apple has also confirmed that it is planning to further expand its Apple Pay mobile payment system to more markets

“Our team executed extremely well in the face of strong macroeconomic headwinds,” said Tim Cook, Apple’s CEO. “We are very happy with the continued strong growth in revenue from Services, thanks to the incredible strength of the Apple ecosystem and our growing base of over one billion active devices.”

During the call, Apple CEO Tim Cook defined the past three months “a very busy and challenging quarter,” while also stating that Apple has been able to move a “huge” number of customers from Android to iOS platforms during the period. The number of customers purchasing their first Mac has also seen a successful quarter.

In a move to raise its stakes for services business, Apple made a decision to release the smaller, much cheaper iPhone SE in March – a move that is seen as trading revenue per device for broader adoption of its phones.

An analyst with BGC Partners, Colin Gillis said, “For the strategy to really make a lot of sense, you want to be more aggressive in building that services revenue.”

“Apple has settled into this annual upgrade cycle for hardware and software,” said analyst Jan Dawson at Jackdaw Research. “That’s quite different than the way that say Facebook pushes out updates to its app or Google makes changes to its search engine – they do that almost in real time.”

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