Apple Q3 Revenue Down 15% as iPhone Sales Drop Again
Charles King, principal analyst at Pund-IT, said the good news for Apple in its earnings report was that the company beat analyst's estimates, "meaning things aren't as glum as they might have been." Yet, at the same time, "weak iPhone sales contributed to overall revenues being substantially lower than they were a year ago," King said. "That's especially disturbing, given the company's dependence on iPhone revenues and the general slowing of smartphone markets. It also underscores continuing problems at Apple unless the company can develop a wider variety of successful products." Another analyst, Rob Enderle of Enderle Group, told eWEEK that while the company did beat analyst's expectations, "that is more about managing expectations than it is about actually executing." Most troubling for Apple is that smartphone sales for other vendors such as Huawei and Samsung "appear to be strongly up by 25 percent to 30 percent, which suggests these companies have started to cannibalize Apple users or, at least, there is revenue to be had but Apple is no longer getting their share of it."The tough third-quarter performance "puts an immense amount of pressure on the next-generation iPhone, iOS 10 and watchOS 3," said Moorhead. "Samsung and Huawei are absolutely getting more competitive and are narrowing the hardware gap and in some areas eclipsing it through further segmentation and better marketing," which Apple can fight due to its experience and brand. "I believe if watchOS 3 truly delivers an experience, as it showed on stage at [the Worldwide Developers Conference], this will bring in a second wave of new buyers for Watch that could be 10 times the initial wave of early adopters," he said. "This could be really big for Apple and I believe is being underestimated."
Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, said that a big problem for Apple in the third-quarter was that "China was a major letdown" in sales for the company. "I'm anxious to get more details as to what specifically drove the declines. Samsung and Huawei are much more competitive now versus a year ago and the Chinese economy is not doing well at all, all potentially contributing to the decline. Apple is clearly investing in India to diversify their emerging region performance."