Apple's iPhone sales in surprise drop

Tim Cook

You may never have to plug in your iPhone again.

During a phone call to discuss Apple's most recent earnings yesterday, the company noted a slight drop in iPhone sales, down from 51.9 million in the same quarter a year ago to 50.7 million. Fortunately, iPhone 7 Plus sales are still strong, says Apple, which is why the decline was only 1 percent.

On Tuesday, Huawei announced that it shipped 34.55 million smartphones in the first quarter this year, up 21.6 percent from the same period in 2016, according to a Sina news report. Still, it is interesting to see that Apple has managed to squeeze more money out of the iPhone while selling less. But that reversal proved to be short lived.

This resulted in a slightly higher revenue from its iPhone division of $33.2 billion, up by 1 percent from $32.9 billion in the second quarter of the previous fiscal year. But the slight dip in iPhone demand is nonetheless a red flag. That report knocked as much as a quarter off of Dialog's market value on the day. Analysts believe the simplest theory could be that users are holding off on buying new devices until the fall. "Investors need faith that users are waiting rather than switching". In fact, this may be the case with iPhone 8, the tenth-anniversary device that has the smartphone niche talking.

While a 1 percent decline is not a big deal, that's still 430,000 units lower than a year ago. However, iPhone sales were below expectations. Cook is blaming this downturn on a product that hasn't even been released.

Cook said if these products were lumped together into a standalone business, it would already be "well into the Fortune 500" in annual sales.

Despite unit sales of the iPhone falling, revenues from the division increased due to strong sales of the larger iPhone 7 Plus, which unlike the smaller model boasts an improved dual lens camera. Cook did not specify if the investment fund will come from Apple's cash stock, or debt financing, which it commonly uses for dividends and share buyback programs. The company has been in investors' focus since mid-April when a research note from German broker Bankhaus Lampe suggested Apple could be developing the capacity to bring its power management components in-house.

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