Home / Technology / Apple Sales Continue to Drop, but Services Are a Bright Spot

Apple Sales Continue to Drop, but Services Are a Bright Spot


Apple’s new flagship store in San Francisco. Credit Justin Sullivan/Getty Images

SAN FRANCISCO — Have consumers lost their affection for Apple gadgets, or are they just waiting for the new iPhones to come out in September?

Every one of Apple’s major hardware businesses posted declines in the three months that ended in June, the company reported on Tuesday.

The number of iPhones sold dropped 15 percent, compared to the same quarter a year ago, and revenue plunged 23 percent as customers switched to cheaper iPhone SEs. The number of Macs sold fell 11 percent, and the number of iPads fell 9 percent. And sales of the Watch, Apple’s newest product, plunged 55 percent compared to the previous year, according to the research firm IDC, which published its own assessment on Friday since Apple does not break out its smartwatch sales.

Just about the only bright spot for the company in its third fiscal quarter was its services business, which includes its iCloud storage business, Apple Music and Apple Pay. Revenue in the segment rose 19 percent to $ 6 billion, and Apple predicted strong future growth as it markets services to the owners of the more than one billion Apple devices in use.

Apple’s stock price over the last six months.

Over all, the company posted revenue of $ 42.4 billion, down 15 percent compared to the same quarter last year. Net income was $ 7.8 billion, or $ 1.42 a share, down 27 percent. That was less weakness than Wall Street had expected after Apple’s dismal performance last quarter, and the company’s stock rose 7 percent in after-hours trading.

Apple’s chief financial officer, Luca Maestri, said the numbers were not as bleak as they looked, as Apple held back on shipments to retailers, particularly in China, so that the stores could clear out their existing inventory of Apple gear. On that basis, iPhone sales were down only 8 percent, Mr. Maestri said.

Apple’s dismal results, which mirror its performance last quarter, were partly a result of the company’s position at the end of its product cycle. In September, it is expected to announce major upgrades to its iPhone hardware and software, something that happens every two years. Many Apple customers hold off buying a new phone in the months before a big release so that they can get the newest model.

But Apple is also wrestling with longer-term issues. The smartphone market in developed countries like the United States is saturated, newer markets like India buy hardly any iPhones, and China, long a source of growth for Apple, is itself slowing down.

The iPad is in long-term decline as consumers switch away from tablet computers to bigger smartphones instead. Personal computers of all makes and models have also been struggling for years.

Apple has been cutting prices of important products in an effort to bolster sales, but that has done little to reverse the tide.

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