Apple reverses slump, but what’s next?


AP

SAN FRANCISCO — Apple has snapped out of the first sales slump in the iPhone’s decadelong history, although the modest upturn doesn’t mean that it has broken out of its innovation funk.

If anything, the numbers Apple released Tuesday highlight the company’s growing dependence on the iPhone, whose sales tower above Apple’s other current offerings. The company hasn’t managed to come up with another breakthrough product since its chief visionary, Steve Jobs, died in 2011.

Meanwhile, Apple’s rivals have been rolling out new products in other promising fields such as augmented reality, virtual reality and artificial intelligence. Apple currently trails in those areas, although many analysts believe the company may try to catch up with products featuring those trendy technologies later this year.

No matter what’s coming down the pike, the iPhone remains a huge moneymaker. Its success is the main reason Apple boasts a market value of US$640 billion — more than any other company.

The iPhone is also driving the rapid growth of Apple’s services division, which makes money from fixing devices, selling music streaming subscriptions and commissions on sales of mobile apps. Apple’s services revenue surged 18 percent to US$7.2 billion in the past quarter, putting it on pace generate enough annual revenue by itself to rank among the world’s largest companies.

IPhones on the Rise Again … Barely But selling more iPhones has been getting tougher as more people hold on to older models for longer periods and competitors such as Samsung and Google entice customers with sleek devices running on Android software. The trend led to three consecutive quarters in which iPhone sales fell compared to the prior year, causing Apple’s total revenue to sag as well.

Apple bounced back in the quarter ending in December, buoyed by a positive response to the late September release of the iPhone 7 and 7 Plus. That device featured a better camera, which drew rave reviews, and no jack for headphones, which irked some consumers and befuddled others.

Apple shipped 78.3 million iPhones in the latest quarter, a 5 percent increase compared to the previous year. It benefited from a year-end quarter consisting of 14 weeks, one more than the previous year period. If not for the calendar quirk, the iPhone sales slump might not have ended. Apple sold an average of 5.6 million iPhones per week in the latest quarter compare to 5.7 million iPhones per week in the previous year. About 17 percent of all iPhones are now 7 models, according to Localytics, which tracks activity on mobile devices. Most of the rest are older iPhone 6 or iPhone 5 models.

Apple could have sold more of the iPhone 7 Plus, which boasts a bigger screen and an extra camera, but the company misgauged demand and didn’t make enough to meet customer demand, CEO Tim Cook said during a conference call.