Report: iPhone Sales Are Slowing
Apple Inc. (NASDAQ:AAPL) stock has been having a rough time on the back of slowing iPhone sales. A new report has some good and some more bad news for Apple shareholders.
Gartner’s latest report revealed that worldwide smartphone sales grew by 9.7% in the fourth quarter of 2015. Not surprisingly, Apple’s numbers were disappointing.
Gartner identifies the problem and its causes.
The research confirmed that Apple has, in fact, lost sales momentum for the first time in history. “iPhone” sales fell by 4.4% in the last quarter of 2015. (Source: “Gartner Says Worldwide Smartphone Sales Grew 9.7 Percent in Fourth Quarter of 2015,” Gartner, February 18, 2016.)
Gartner’s research director pinpoints the problem. According to Anshul Gupta, local and Chinese brands in high-growth emerging markets have been employing aggressive pricing to undercut the iPhone.
Gartner points out that Apple continues to enjoy premium brand recognition in these markets, yet consumers in these emerging markets are switching over to cheaper “Android”-powered phones.
Gartner lists two reasons for this shift:
Firstly, technological advancements are fast-paced in this industry. New features get added with each new installment. Apple, itself, has released five different installments of the iPhone in the span of a little over a year. Ultimately, consumers do not want to stick with one smartphone for the long haul. They want to keep upgrading to better technology. Affordable, mid-range Android phones make this shift easier.
Secondly, the strong dollar is making U.S. imports expensive in the emerging markets that are facing currency devaluation. The iPhones are now priced outside of consumers’ affordability range. As a result, vendors are forced to hold off on bringing in new iPhones to these markets.
Nonetheless, AAPL stockholders need not lose hope. The report is not entirely bad for Apple.
The research shows that Apple still managed to gain market share for the full year of 2015. Albeit small, iPhone’s worldwide marketshare for the full year of 2015 went up by 0.5%. The only other company that managed to gain share during the same period was Huawei. On the contrary, Apple’s biggest rival, Samsung, lost 2.2% of its market share.
This confirms that the slowdown in iPhone sales began in the last half of 2015. In addition to the reasons Gartner points out, the slowdown may have had to do with the iPhone’s lack of appeal. It is safe to assume that the “iPhone 6s” and “iPhone 6s Plus” may not have found the same traction that the previous models did.
Now, Apple is all set to launch the smaller “iPhone 5se” in March, followed by the “iPhone 7” in September. Here’s to hoping that these phones can prove to be game-changers for the company and, ultimately, AAPL stock.