Apple’s incredible iPhone money-making machine is finally slowing down.
The technology giant announced Tuesday that it sold 74.8 million iPhones during the all-important holiday quarter of last year, an impressive figure by almost any standard â except Apple’s.
The sales figure represents a year-over-year gain of just 0.4%, Apple’s slowest iPhone unit sales increase since the device launched in 2007. To make matters worse: Apple now expects sales to fall to $50 billion-$53 billion in the upcoming quarter, down from $58 billion a year earlier, marking the first year-over-year sales decline in 13 years.
If that’s not troubling enough: Apple’s CEO admitted to some newly discovered “softness” in China, a key market for the Cupertino company as it looks to find growth around the world.
Suddenly the $500 billion tech company and its juggernaut iPhone product line that has long fueled it look to be reaching the end of limitless growth, at least for now.
The China problem
On a conference call with analysts Tuesday night, CEO Tim Cook admitted the emergence of issues in China while simultaneously renewing Apple’s vows to the country.
“We began to see some signs of economic softness in Greater China earlier this month, most notably in Hong Kong,” Cook said on the call. But, he added later, “We remain very bullish on china and don’t subscribe to the doom and gloom predictions frankly.”
On the call, Cook ticked off a long list of countries â Brazil, Russia, Japan, Canada â that are facing “slowing economic growth,” while pledging to invest throughout the economic downturn and avoid “retrenching.”
In addition to China, Apple stressed plans to double down on its investments in India, where it is experiencing strong sales growth and reportedly planning to launch retail stores.
In search of a new source of growth
For all the shiny new products in Apple’s pipeline â the second-generation Apple Watch, the larger iPad, a much-rumored electric car â it remains primarily a smartphone company, in terms of revenue. As the iPhone goes, so goes Apple.
During the holiday quarter in 2014, Apple sold an astounding 74.5 million iPhones, fueled by the pent up demand for the larger iPhone 6 and iPhone 6 Plus devices. Tim Cook, Apple’s CEO, said at the time that Apple was expecting the “mother of all upgrades.” The same, clearly, could not be said of the less-changed iPhone 6S and 6S Plus, setting the company up for a tough sales comparison that may explain the flat iPhone growth.
Other significant Apple product lines didn’t fare much better: the company sold just 16.1 million iPads in the holiday quarter, own from 21.4 million a year earlier. Even the introduction of the larger iPad Pro could not stop the tablet’s decline. Sales of the Apple Watch may be growing, but Apple continues to refuse to disclose hard numbers on the smartwatch.
In the weeks leading up to Apple’s quarterly earnings announcement, analysts and supply chain reports warned of a slowdown in iPhone sales as the smartphone market reaches its saturation point â not to mention the fact that Apple is in between major product upgrade cycles.
The renewed fear of an imminent slowdown in demand for what is still Apple’s chief moneymaker, combined with growing concerns about the combustible economy in China, a market Apple is increasingly betting on for future sales growth, caused numerous investors to flee the stock in recent weeks.
Apple’s market value has fallen by more than $30 billion (or 5.5%) just in the first few weeks of 2016, according to data provided to Mashable by FactSet, a financial research firm.
The company’s stock was down 2% in after hours trading following the earnings report and conference call.