Apple Revenue Growth Slows to 2 Percent

Apple reported revenues for its fiscal first quarter (to December 2015) up just 2 percent year-over-year to US $75.9 billion. The sales were at the low end of its forecast of US $75.5–77.5 billion and include US $548 million from the company’s patent settlement with Samsung. Apple blamed the slower growth on the strong U.S. dollar, saying revenues would have risen 8 percent at constant exchange rates. At constant rates, revenues were up 18 percent in Europe and 17 percent in greater China, while falling 1 percent in the Americas and 4 percent in Japan. The company’s net profit rose to US $18.4 billion or US $3.28 per share, from US $18.0 billion or US $3.06 per share a year earlier, and Apple maintained its quarterly dividend at 52 cents a share. While Apple said it set a new record for iPhone sales in the quarter (the iPhone 6s was launched in September) unit sales of the smartphone were unchanged year-over-year at 74.78 million and iPhone revenues were up just 1 percent compared to the same quarter a year earlier. iPad sales fell 25 percent year-over-year to 16.12 million, and sales of Mac computers were down 3 percent over the same period to 5.31 million units. Apple highlighted the growing contribution from its services business, which grew revenues by 15.5 percent year-on-year to US $5.5 billion in the quarter. Apple said it recently passed the milestone of an installed base of 1 billion devices accessing its services, including iPhones, iPads, Macs, Apple TV, iPod touch and Apple Watch. For fiscal Q2, Apple forecast a sharp slowdown in sales to US $50–53 billion and a gross margin of 39.0–39.5 percent compared to 40.1 percent in Q1. Questions of the exchange rate aside, these results make it clear that Apple’s growth, particularly of its flagship iPhone, is slowing. Not only that, but there is no upturn in sight—the U.S. technology giant predicts a continuation of the trend, with an actual decline in revenue impending. This situation should come as no genuine surprise; growth, and especially steep growth, cannot go on forever, and Apple’s slowdown can be considered as a sign of maturity. And it is not just Apple that has matured; the global smartphone market has. With iPhones in the hands of a huge range of users in developed and developing countries, saturation has set in. What is more, as manufacturers of budget devices (especially in China) include more and more advanced features and capabilities in their low- to medium-priced smartphones, they are closing the gap with Apple’s high-priced phone. And finally, Apple has not, to date, expanded into the very fast-growing new sector of connected cars and other IoT applications.

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Dutch Tablet Penetration Equals That of PCs

As many Dutch consumers have tablets as personal computers—61 percent of the population in December, according to a report on digital media trends. In December 2013, 65 percent had a PC while only 53 percent had a tablet. The report also found that 77 percent of people have laptops and 76 percent own smartphones.

We have written rather extensively on tablet adoption in a variety of markets worldwide. In some less-developed markets in Asia, voice-enabled tablets are surging ahead, driven by the desire of budget-minded consumers to have only one device for all purposes. In a developed market such as the Netherlands, that type of concern is far less likely to be a factor. Nonetheless the fact that tablets have pulled right along PCs in terms of market share illustrates the point that increasing mobility is the major trend when it comes to data use. The change in the Dutch market has been quite rapid over the past year. As mobile devices gain in functionality and users grow more mobile, tablets appear poised to supplant stationary PCs and even laptops, in the Netherlands and elsewhere.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues or to speak with the research team: http://www.tarifica.com/contactus.aspx

Worldwide Tablet Shipments Decline as Global Smartphone Market Grows

According to recent reports, worldwide shipments of tablets and 2-in-1 devices decreased to 50.4 million units in the first quarter of 2014. That represents a decrease of 35.7 percent from the previous quarter and an increase of 3.9 percent in comparison with the same period a year ago. Apple continues to lead the global tablet and 2-in-1 market, shipping 16.4 million devices. Samsung, on the other hand, increased its worldwide share from 17.2 percent in the last quarter of 2013 to 22.3 percent in the first quarter of 2014. While global tablet shipments decreased, the worldwide smartphone market showed a 28.6 percent increase in the first quarter of 2014, year over year. Manufacturers shipped 448.6 million units, up 3.9 percent from the 431.8 million devices shipped in the first quarter of 2013, but down 9 percent from the 492.8 million units shipped in the last quarter of 2013. Samsung shipped an estimated 85 million smartphones, which is 30 percent of the global market share and represents a year-over-year increase of 25 percent. Apple shipped 43.7 million iPhones, constituting 15.5 percent of the worldwide market share, for a year-over-year growth figure of 17 percent. Other major smartphone manufacturers such as Motorola-Lenovo, LG, Huawei and ZTE also maintained their market share and showed overall growth.

Based on the current reports, Samsung and Apple continue to dominate the market. For the last few years we have been following the two tech giants as they competed against each other. Samsung’s Galaxy S smartphone was introduced in June 2010 and within about a year its manufacturer became the world’s largest smartphone seller. In 2013 Samsung shipped more than 300 million units of its various models, while Apple sold about 150 million iPhones. While Samsung leads in global smartphone shipments, Apple’s iPads continue to outsell its Korean competitor’s tablets.

When it comes to smartphone popularity and overall usage, the developed markets offer very limited opportunities for growth, as smartphone penetration is already high there. Emerging markets, on the other hand, are trying to eliminate feature phones and are slowly replacing them with entry-level smartphones. These are the markets that offer growth opportunities for handset manufacturers as mobile devices become more affordable and more essential to all daily activities. Subscribers in the developing world are increasingly using their mobile phones to complete banking transactions, receive daily news updates, check their emails, and fulfill many other vital functions.

Mobile networks continue to expand, so operators and device manufacturers would both benefit from working closely together to develop strategies that would drive tablet sales through attractively priced smartphone bundles. Operators should also continue to create innovative services that are specifically targeted to tablets or smartphones, as well as plans that bundle services for both.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx