10 May 2017
Apple announced record profits in the first three months of 2017, despite a small drop in iPhone sales as fans wait for the iPhone 8.
Tim Cook laments 'wait for the 8'
iPhone sales declined by around 1%, with 50.8 million units sold in the first three months of 2017, compared with 51.2 million in Q2 2016last.
CEO, Tim Cook, has attributed the drop to the 'wait for the 8' syndrome.
We’re seeing what we believe to be a pause in purchases on iPhone, which we believe are due to the earlier and much more frequent reports about future iPhones.
Cook said the many rumours and expectations that the next iPhone would be significantly different from recent models, had hurt sales of the iPhone 7 in the past three months.
Analysts agree.
“We believe iOS subs are deferring purchases ahead of the iPhone 8," Nomura analysts advised clients.
At UBS, analyst Steve Milunovich wrote:
“Overall smartphone buying intent for the next 90 days fell to a nine-year low as did Apple’s share of these planned buyers. It appears Apple users are holding off upgrading but not necessarily leaving the ecosystem. … Most of the pullback in smartphone demand appears to be Apple users deferring upgrades.”
This sets Apple up for a huge wave of new sales when iPhone 8 is released.
“Less demand now could mean more later as long as the retention rate remains high. Apple’s retention rate at 80% has been trending down the last two years,” Milunovich wrote
Profits are up on reduced costs
But while sales are down, profits are up.
The average selling price of an iPhone grew more than it has since the days of the iPhone 6, which resulted in iPhone revenue rising 1.2 percent in the quarter. The company earned a total of $11 billion on revenues of $52.9 billion.
“We are proud to report a strong March quarter, with revenue growth accelerating from the December quarter and continued robust demand for iPhone 7 Plus,” said Cook.
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