Despite Big Decline, Apple Inc. (AAPL) Still Leads The Industry

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Apple Inc. iPhone sales have declined year-over-year, and this has encouraged many to question Apple’s growth model. However, it must be noted that one quarter of iPhone sales data does not create a trend. The iPhone maker has over the past decade clearly gained the most from its smartphones, and in the years to come, the firm is better positioned to grow within both smartphone and PC industries than its rivals, says report from Apple Insider.


Mac’s and services – still going strong

Since 2009, Mac’s quarterly sales have fallen year-over-year on various occasions, but overall, its shipments have been increasing. As per the data from Gartner, over the last decade, the quarterly Mac revenues tripled from $1.7bn in Q2 2006 to $5.1bn in the most recent Q2 2016 whereas PCs are back down below where they were in 2008. Given the average selling price of Mac is more than $1,200, this is quite unbelievable that Macs are able to increase their overall market share.

Service is one of the fastest growing and largest business segments of the smartphone markets. Apple’s service business alone is more profitable than Facebook, the report says. The iPhone maker reported over $6bn in Services revenue in Q2 compared to the $5.38bn in Facebook’s advertising revenue.

When PCs witnessed the first year-over-year drop in overall sales, marketing groups assured that it is a temporary decline, and would be corrected by the release of Windows 7, then Windows 8 and then Windows 10. This went for years and not just for one quarter.

Now, only a layman would suggest that a new OS from Microsoft will bring an increase in the shipments of conventional PCs. New Surface hardware from Microsoft will save the PC in the form of “detachable” hybrid devices, claimed groups like Gartner and IDC. Despite the claims by Microsoft that iOS “isn’t a real OS” and cannot do real things, the 12.9-inch iPad Pro saw more value than Microsoft’s Surface.

Apple still king in phones

As per IDC estimates, in the most recent quarter, Samsung sold 81.9m smartphones whereas Apple Inc. sold 52.1m smartphones. It only looks impressive if you are not counting the entire mobile IM operations of Samsung (that includes tablet, PCs and other consumer device.) In the quarter, Apple earned over four times as much as Samsung IM. Even, the new low priced iPhone SE, which Apple started selling after the quarter ended, will sell for almost twice more than that of Samsung’s ASP.

Over the last decade, not only the Mac revenues have grown 3x, but the iPad sales have grown in parallel as well, suggesting that the non-phone computing devices that Apple sells have grown nearly by a factor of six – $1.7bn worth in Q2 2006 to $9.5bn in the most recent Q2. As for the Apple Watch, it already generated billions of dollars, and unlike other smart watches, it has gained a real traction.

It should never be assumed that a shrinking smartphone market will prevent Apple from increasing its sales and profits. Even Google commercially failed at MP3 players, netbooks, detachables, Nexus, wearables, tweener tablets, and big, but that does not mean the search giant has stop growing. And the same goes for Apple Inc. .

All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.

Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.


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