Apple Inc. (AAPL) iPhone Sales Have “Peaked,” But This Time Is DifferentAuthor: Paul SheaLast Updated: May 20, 2020 Apple Inc. (NASDAQ:AAPL) is hitting a roadblock. Sales of its iPhone have “peaked” according to a new report from Deutsche Bank. The firm’s future growth will have to depend on something else, and there’s no clear path for the firm ahead. The Apple Watch is a “wildcard” according to Sherri Scribner, who authored the report for the German investment bank.Th news that iPhone sales are slowing has come in the middle of each of the last few generations of the device, and each time Apple has managed to beat the expectations of the market and drive its share price ever higher. With earnings due to hit on July 21, it may be time for traders to see that this time it’s different and even Tim Cook is looking to a slower iPhone future.Apple can’t change the world againApple changed the world when it released the first iPhone. It created demand for something that never existed before, and in doing so it created a market for a new kind of device. The market that Apple created isn’t about to disappear, but it is extant and no longer growing at a blistering pace.Scribner says that “we believe iPhone will have another good quarter” and is looking for Apple to show sales of an incredible 50m units of the phone in the three months through June. It’s clear to her, however, that “the overall smartphone market slowing.” That means “slower growth rates for Apple.”The firm may also suffer from its success with the iPhone 6. “Given strong growth this cycle,” she wrote, “we expect iPhone’s growth to underperform the overall market’s growth as we anniversary the iPhone 6 launch.”World smartphone growth is slowing. Neil Mawston, Executive Director at Strategy Analytcis, reckons that the total sales will grow from 1.5 billion in 2015 to 1.7 billion in 2017. Apple will get around 200 million of those sales this year, but with much of new growth coming from India, the firm will not be able to catch a disproportionate number of new purchases.Linda Sui, who co-authored a Strategy Analytics report on the future of the smart phone market says that India’s growth is being driven by “low smartphone penetration, expanding retail availability of devices, wealthier middle-class consumers, and aggressive promotions from local smartphone brands like Micromax.” None of those factors are likely to favor Apple in an outsized way in the coming years.Looking for growth in the Apple WatchThe Apple Watch, released earlier on in 2015 to lukewarm reviews, was thought to be the next big hardware play from Apple. Those not looking at buying a new phone might consider a Watch. For this year at least the device is unlikely to move the needle on Apple sales.“Tight supply early on, continued international expansion and recent comments from Apple lead us to believe that supply and demand has stabilized,” wrote Scribner, but sales are still a mystery. Tim Cook has hidden the sales numbers for the Apple Watch inside the firm’s earnings report and offered no sales after the first weekend or at the WWDC 2015 keynote held on June 8.The lack of solid numbers from Apple hasn’t stopped Scribner forecasting sales of 3.9m units of the Watch in the three months through June, and sales of 18m devices for the year through January.With an ASP of $500, those units would add $1.6bn to revenue in the June quarter and $9bn for the calendar year. Those numbers won’t be enough to drive trader confidence in sales growth at Apple, but they would give credence to the idea of a strong future for the Watch.“Investors will be disappointed if Apple does not disclose numbers for this new product,”says Schribner, but the firm may decide to conceal the sales of the Watch for the time being as it fosters many different areas for growth.Services may be the futureMany on wall street are inferring Apple’s belief on the slow down in iPhone sales from the spectrum of new services that the firm has gotten into in the last twelve months. With Apple Music already on the market and Apple Pay about to expand into the UK, it’s clear that Apple wants to add value to the iPhone while reaping the revenue of a service.None of those spaces is likely to offer Apple much in the way of growth, but all of them together could form a nice boost to sales in the years ahead. “Planet Apple,” as Brian White of Cantor Fitzgerald calls the new move in the Apple ecosystem, is going to be an important part of a wide base of growth going ahead.Music, TV and payments are, among a plethora of other software and media services, the next big are that Apple will try and conquer. The Apple Watch should drive hardware sales higher over time, though 2015 might be a rough patch for growth overall as the Watch struggles with growing pains and the iPhone slows its role. This time it’s differentPast warnings about a slow down in the sales of the iPhone were proved wrong, but this time there’s more solid proof for the trend. Sales around the world are not going to be the same as they were in the last decade, and a single firm can’t greatly outgrow a market unless it’s able to offer something much much better.Apple won’t be able to do that right now, and it won’t be able to repeat the same level of sales in India that it did in China because people in that country are much poorer.That means that Apple is likely to get only a small portion of the 174m units that the Strategy Analytics team expect will sell in India in 2017. At the start of this year the firm had just a 2 percent share of the Indian market.Apple will need to do something else in order to create growth, and it’s working on that on all fronts. The firm is trying to expand its reach into many more parts of a user’s life and, if rumors are believed, its charge into the office and the living room will come later on this year.With so many grasps in so many directions, its becoming clear that Tim Cook and the rest of the leaders at Apple can see the writing on the iPhone wall and are looking for something else to bring the company through the coming years.Investors believe there’s little downside to a stock with such a cash pile and cash flow, but if sales don’t hit targets there could still be a pull back. Shares in Apple have lost 1.5% in the last three months of trading.This time it’s different. iPhone sales have to slow and Apple has to find something else to spend its time on. For now those holding shares are behind the firm’s leaders, but the result of slower iPhone sales remains to be seen.