Apple’s First Revenue Decline Since 2001

Whatever goes up, must eventually come down. At least for most things anyway. Apple’s phenomenal growth in the last decade or so is finally hitting a road bump. Just released financial results for its final fiscal quarter of 2016 (3rd calendar quarter) reveal that revenue and profits have declined compared to the same quarter from 2015.

For the quarter, Apple posted a profit of US$9B on revenue of US$46.9B, down from US$11.1B profit on US$51.5B revenue in the year-ago quarter.

More significantly, the full year revenue stands at US$217B, compared with US$233.7B from 2015. This is Apple’s first annual revenue drop since 2001, and it’s largely attributed to declining iPhone sales.

Apple’s definitely still making lots of money, that’s for sure. They are still number 1 in market cap, valued at about US$628B currently. They just aren’t making as much as they used to be. Whether this spells serious trouble remains to be seen.

It’s not just iPhone sales that’s down. iPad sales are down 6% from last year, while Mac sales are down 14%. The Macs haven’t been updated in a long time, and thankfully we are expecting some new product announcements later this week. Apple Watch isn’t doing all that great either, with sales 71.6% down from the year-ago quarter. The Apple Watch Popup shop in Galeries Lafayette, Paris, is going to close in 2017 due to poor sales.

While the new Macs are expected to be exciting, I don’t think it’s enough to turn around the revenue decline. Competition is getting really tough. Apple may have caught a lucky break with the Galaxy Note 7 debacle, but realistically you wouldn’t expect a large number of Android users suddenly wanting to switch to an iPhone just for that reason. Furthermore, with Google themselves now into selling phones directly, and numerous other Android manufacturers up’ing their game, I don’t expect to see Android users wanting to switch camp. We might even start to see Apple trying to catch up with Android phones, like the recently unveiled Xiaomi Mi Mix, a stunning phablet with practically no bezels.

The new Macs will be great. You see, there will be no escape (key). (There’s a virtual one though.)