During Apple’s financial earnings conference call on Tuesday, Tim Cook mentioned that iPhone sales will likely decline in the March quarter, marking the first year-over-year decline since the smartphone was released in June 2007. The decline will be realized if Apple sells less than 61.2 million iPhones this quarter.
As of right now, the company is forecasting that its total revenue in Q2 2016 will be roughly between $50 – $53 billion compared to the $58 billion that the company sold in the same quarter one year ago.
Apple is currently facing significant foreign exchange headwinds. A strong U.S. dollar makes it more difficult for Apple, which reports its earnings in U.S. dollars, to perform when some 66% of their business is overseas. Every $100 of Apple’s non-U.S. dollar revenue earned in Q4 2014 translates into only $85 U.S. dollars today.
Many analysts continue to predict that the iPhone could face a decline in Q2 2016 with some reports claiming that the iPhone 6s and 6s Plus may not outsell last year’s iPhone 6 and iPhone 6 Plus. An issue raising more flags for some is the fact that iPhone growth was the slowest in Q1 2016 since the smartphone’s introduction in 2007. This past quarter, Apple only sold an additional 300,000 units, up from 74.5 million a year earlier.
Nevertheless, Cook said that 60% of customers who have owned an iPhone prior to the iPhone 6 and iPhone 6 Plus have not yet upgraded, meaning there is a large base of potential customers that could upgrade to newer models, including the iPhone 7 expected in September, over the coming year.
Despite the several negative outlooks, Cook appears to remain optimistic about iPhone sales in 2016. A higher average selling price indicates that there is a larger demand for the iPhone 6s and iPhone 6s Plus than originally anticipated.
Tim Cook Expects First Ever Decline of iPhone Sales Next Quarter