Apple said on Thursday that its second fiscal quarter iPhone sales fell 10%, from $51.33 billion to $45.96 billion year over year. An 8% decline in China was part of what caused the downturn.
Customers probably decided against buying a new iPhone because of Apple’s slower embrace of AI than rivals like Google and Microsoft. Apple has promised significant announcements on that front, likely at WWDC in June, even though the iPhone 16 itself won’t likely launch until the autumn.
“Keep in mind that, as we described on the last call in the March quarter a year ago, we were able to replenish iPhone channel inventory and fulfill significant pent-up demand from the December quarter COVID-related supply disruptions on the iPhone 14 Pro and 14 Pro Max,” CEO Tim Cook said during an earnings call. “We estimate that this one-time effect contributed $5 billion to revenue in the March quarter of the prior year. If we had excluded this from the previous year’s numbers, our March quarter total company sales this year would have increased.
Despite those dismal hardware numbers, the business exceeded Wall Street estimates, and the stock increased more than 6% after hours thanks to a massive $110 billion stock repurchase that surpassed the $90 billion purchase made the previous year.
Services increased 14% year over year and include products like iCloud, Apple TV+, and Apple Music. Apple’s growing emphasis on subscription services has partially offset the company’s long-predicted decline in hardware sales.
“We expect double digits at a rate similar to the growth we reported for the first half of the fiscal year,” CFO Luca Maestri said on the call. And he said, “The iPad should grow double digits.”
The business plans to unveil two new iPads at a stand-alone event next week. The fact that the corporation hasn’t updated its tablet lineup since 2022 undoubtedly played a role in its own year-over-year sales decline from $6.67 billion to $5.56 billion. We predict that Apple will unveil the M4 chip, the newest member of the Apple Silicon series, during Tuesday’s presentation. However, Microsoft’s anticipated unveiling at its Build conference in late May will quickly threaten the company’s chip advancements. More hardware is likely in store for its June annual World Wide Developers Conference, too.
Apple does not publish Vision Pro figures. Those figures are, instead, part of the Wearables, Home, and Accessories category, which also includes Apple Watch, AirPods, and HomePods. All reports, meanwhile, indicate lower-than-expected sales. Even so, the company made an effort to promote the headset’s introduction.
Cook said in a statement, “We were thrilled to launch Apple Vision Pro and to show the world the potential that spatial computing unlocks.” ” Next week brings an exciting product announcement, and next month brings an amazing Worldwide Developers Conference.”
Cook addressed concerns about the business’s lagging behind Google and Microsoft in February by promising to release further details about its generative AI initiatives “later this year.” The iPad event will undoubtedly focus on the topic, but it appears the firm is delaying the major announcement until WWDC in June. Meanwhile, there are rumors that Apple is planning to include Google’s Gemini and OpenAI’s ChatGPT into its next iPhone models.
“I don’t want to get in front of our announcements, obviously,” Cook said in answer to a query about it at the conference today. Simply stated, we believe that generative AI presents significant potential for all of our products. We also believe we have advantages that distinguish us there. We will therefore discuss it further in the next few weeks.
