Sales of iPhones drop by 8%, Macs drop by 30%: Why is Apple facing problems?

February 3, 2023  17:30

Apple's business has been going pretty well in recent years, but now, in the first quarter of fiscal year 2023, which ends Dec. 31, the company's revenue is down 5%. This is the first time since the second quarter of 2019. The company's stock is down 4%.

The company's revenue last quarter was $117.2 billion, down 5.49% from the same quarter last year and several billion less than analysts had predicted ($121.1 billion). Earnings per share were $1.88, down 10.9% from a year ago.

The main reason for the company's problems is believed to be a decline in iPhone sales due to quarantine measures in China. But other factors also played a role, including a stronger dollar and general macroeconomic factors.

In an interview with Reuters, Apple CEO Tim Cook said that disruptions in production of the iPhone 14 Pro and Pro Max in Zhengzhou, China, due to the blockages continued for most of December, but that production is now back to where it was. That's what they want, Cook said. He added that the blockades not only slowed smartphone production, but also led to a drop in demand for smartphones in China, sales in that country fell 7 % to $23.9 billion. The difficult macroeconomic situation in the world also had a negative impact on sales of the iPhone, as well as other devices manufactured by Apple.

iPhone sales may also have been affected by the fact that there are good smartphones on the market today that offer good features at a lower price. With economic problems around the world, many users may begin to favor such devices.

In addition, users did not particularly like some models of the iPhone 14 series, many customers complain about a number of problems with these smartphones, in addition, their specifications are also not very competitive and do not differ much from last year's models. For example, sales of the iPhone 14 Plus are virtually nil.

According to the company's report, revenue from iPhone sales last quarter was $65.8 billion, down 8% from the previous year. Meanwhile, analysts had expected smartphone revenue to reach $68.3 billion.

Sales of other Apple devices were also down. Revenue from wearables and other devices in the latest quarter was $13.48 billion, down $8.35 billion from a year earlier and again below analysts' estimates of $15.23 billion.

Last quarter, Mac sales fell even more than iPhone sales, with Mac revenue at just $7.74 billion, down 28.66% from a year ago and well below analysts' projections of $9.6 billion. On the other hand, the decline in Mac sales was expected. Sales rose last year amid a pandemic as many people moved to remote work.

Unlike the iPhone and Mac, the iPad performed well last quarter – their sales rose 29.66% to $9.4 billion and even exceeded analysts' forecasts of $7.76 billion. Еxperts attribute this increase to the release of new models, which, by all accounts, consumers liked.

According to the report, Apple's business in the services segment is going well. This segment, which includes streaming audio and video services Apple Music and Apple TV+, App Store, payment service Apple Pay, cloud service iCloud and other services, grew by 6% year-on-year to $20.8 billion, which is even slightly more than analysts expected ($20.7 billion).

Unlike many other IT companies, Apple has not announced mass layoffs. However, the company has slowed its hiring process and is cutting costs. 


 
 
 
 
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