iPhone growth stagnated? Expectations for iPhone 8 will bring Apple a big explosion

According to Leifeng.com, in the early morning of August 2, Apple released its third-quarter financial report.

By region, only Greater China experienced a glaring year-on-year negative growth . In the third quarter, Greater China's revenue was $8.004 billion, down 10% from $8.848 billion in the same period last year.

Apple sales and revenue performance by region and product

By product category, Apple's most eye-catching performance this time was neither the backbone iPhone nor the Mac.

iPhone sales in the quarter were 41.03 million units, up only 2% year-on-year, and sales revenue increased by 3% year-on-year. In the second fiscal quarter of this year, Apple's iPhone sales were 50.8 million units. Since the fourth quarter is the routine release period for new iPhones, the performance in the third quarter is often weak, which is understandable.

The best performing categories in the third quarter were iPad, services and other products. Revenue from iPad was $4.969 billion, up 2% from $4.876 billion in the same period last year, but in terms of sales, 11.424 million iPads were sold, up 15% year-on-year.

iPad sales growth rate and revenue growth rate (from Jackdaw Research)

Leifeng.com learned that this is the first year-on-year growth in iPad sales in four years. The last growth was in the fourth quarter of 2013. At the same time, iPad sales rose by only 2%, which means that the cheaper iPad contributed more to the sales growth than the more expensive iPad Pro. According to Apple, the sales growth was mainly driven by school and business cooperation.

In addition to iPad, Apple's service business performed well, with revenue reaching nearly $7.3 billion, a year-on-year revenue growth of 22%. The service business mainly includes data content and services, AppleCare, Apple Pay, authorization and other services. The number of paying users of all service businesses exceeded 185 million, and increased by 20 million in the past 90 days.

CEO Cook joked that this division could become a Fortune 100 company. He often uses this metaphor for the divisions he is more optimistic about, and he also said that the wearable business could become a Fortune 500 company.

Revenue from other products also grew 23% year-on-year, including Apple TV, iPod, Apple Watch, AirPods, Beats headphones, etc.

Cumulative sales of iPhone since its launch

In the conference call after the release of the financial report, Apple also implicitly revealed more information about the new iPhone and the Chinese market.

If you still remember Apple's earnings conference three months ago, you will find that the focus of the outside world on Apple at that time was the company's nearly $250 billion in cash (Apple had $261.5 billion in cash as of the third quarter, 94% of which was outside the United States) , but now the outside world is more concerned about the stagnation of iPhone sales and the development progress of the next generation, as well as its relationship with the Chinese market. To some extent, these two issues can be summed up as one issue, because Chinese users may be waiting for the next generation iPhone 8 (or iPhone 7s or iPhone X) .

In the 10 years since the iPhone was born, its cumulative sales have reached 1.2 billion units. Leifeng.com reported that Cook said in May last year that the outside world's expectations for a major upgrade of the iPhone did lead to stagnation in sales. And this is all speculation from the outside world (especially the media) , and Apple has not revealed any information at all.

Speaking about the iPhone, he said rumors about the product are more intense than ever and are affecting sales of existing products, especially the iPhone 7 line.

“We think sales have really stalled a bit, but that also means there’s strength going forward.”

iPhone fatigue this quarter will not be a problem for Apple, because any user who intends to buy an iPhone but does not buy one will most likely buy one in the next quarter, and the price will be higher then. The higher the expectations now, the louder the trumpet of victory will be at the end of the year.

The inventory of iPhone products decreased by 3.3 million, reaching the lowest point in two years. And due to the iPhone 7 Plus, the average selling price of iPhone reached $606, higher than the previous $595. The increase in average selling price means that the new iPhone is still popular and users do not want to buy outdated phones.

Apple's own revenue forecast for the next quarter is $49 billion to $52 billion, significantly higher than the $49.2 billion expected by the outside world, and hinted that the performance will be very eye-catching due to the emergence of new products. Cook said:

“We are very much looking forward to the new product launch.”

We ordinary consumers have the same expectations.

Apple certainly did not say when the iPhone will be officially released, because it never talks about unreleased products, but at least it did not say it would be delayed. And from this confident attitude, it can be seen that the release and sales of the iPhone will not be delayed, which also means that it has not encountered (and has overcome) the production obstacles rumored by the outside world.

Apple's market share in China also dropped to fourth place, and Wall Street attributed this to... WeChat. Compared with mobile phones, WeChat is a more rigid demand for Chinese users, and cheap mobile phones can also run WeChat smoothly and can also give rewards.

Even though Greater China’s performance was not satisfactory, Apple has proved that even if this second-largest market shrinks, the company’s overall growth will continue (Chinese users should not be too confident) .

Apple's performance in other emerging markets, such as India, is similar to that of the Chinese market a few years ago, and is generally optimistic. Cook said that growth in emerging markets has not really started yet, and excluding China, the growth in emerging markets has reached 18%. After all, Apple's goal is the global market.