Apple’s iPhone Revenues Fell by Over 15% in the Holiday Quarter as it Points Finger to a Slowdown in China and US-China Trade War

Apple released its 2019 Q1 fiscal earnings report recently which reported a drop in iPhone revenues by over 15% from the previous year. The quarter also includes the December 2018 holiday shopping season. Apple also reported a 5% decline in revenue from the previous year at $84.3 billion. Although the revenues from iPhone sales declined the total revenue for all the combined services and products grew by 19%. The earnings per share stood at $4.18 nearly equal to analyst expectations of $4.17 per share.

The decline in profits and revenue in a holiday season has been witnessed for the first time since the initial introduction of iPhones in the market which is a surprise for many. Apple has 1.4 billion devices as an active install base while 900 million of those are iPhones. The company lowered its revenue guidance for iPhone sales because of the slowdown in emerging markets including China. Apple reported that its revenues from products excluding iPhone has increased from the previous year quarter. Revenues from Mac, iPad and wearables and home accessories were up by 9%, 17% and 33% respectively from the previous year-ago quarter.

Apple cited weaker iPhone demand, strong US dollar and phase-out of carrier subsidies as the factors responsible for decline in iPhone revenues. The battery replacement program also led consumers to hold on to older versions of iPhones for longer period which further contributed to the slowdown in iPhone demand.

Apple reported $13.17 billion revenues from Greater China in the Q1 which is a decline of 27% from the previous year. The decline in revenues were credited to the stiff competition faced by Apple from smartphone manufacturers who price their devices lower than iPhones. The ongoing US-China trade war and China’s economic slowdown has further complicated the financial outlook of the company.

Apple’s services division has shown impressive growth with the revenues from the Apple Pay, Apple Music, iCloud, iTunes Digital Content, AppleCare, iBooks and App Store climbing up to $10.8 billion in December quarter. Beats-branded headphones, HomePod, Apple TV, AirPods and Apple Watch gathered $7.3 billion in revenues in Q1, surpassing the iPad and Mac business.

Apple is trying to attract customers to its retail stores by launching initiatives such as Today at Apple through which it offers free learning sessions to customers visiting its stores.

Author: Rahul Pandita

An experienced writer and editor, Rahul Pandita has written extensively about the impact of policy changes on business and finance. He is a regular contributor to many authoritative sites. When he is not writing, you can find him playing a game of chess.