Apple's iPhone Success May Be Reaching Its Peak

SAN FRANCISCO — Apple could soon face one of its biggest challenges to date: Peak iPhone.

 

Most analysts believe Apple surpassed its own record by selling more than 74.5 million units of its flagship product in the final three months of 2015. But there are signs that iPhone sales in the first three months of 2016 will — for the first time ever — show an abrupt decline from the same period a year earlier.

 

That could mark a pivotal moment for the Silicon Valley giant. Apple is the world's biggest company, in terms of stock value, thanks to the iPhone's surging popularity around the world. In business terms, Apple makes most of its money from iPhone sales.

 

But concerns about slowing growth have sent the stock into a months-long slump, fueling debate about what kind of company Apple will be in the future.

 

The iPhone contributed nearly two-thirds of Apple's $234 billion in revenue last year. None of the other new products Apple has launched in recent years have emerged as blockbusters. That's led some critics to suggest Apple has lost its innovative touch, while others say it's evolving to depend on a broader base of related tech products and services.

 

One thing is clear, said analyst Angelo Zino at S&P Capital IQ: "Last year was an unprecedented year for Apple and the iPhone.... You'll never see that type of growth from the iPhone again."

 

When CEO Tim Cook reports Tuesday on Apple's sales for the last three months of 2015, investors will be watching closely for any hints about how Apple's signature smartphone is faring in the current quarter. Sales usually fall somewhat after the holiday shopping season. But analysts say it appears Apple has cut production orders from key suppliers in recent weeks, suggesting it's lowered its own forecasts.

 

Apple hasn't commented on iPhone sales since last fall, when Cook struck an upbeat tone. In part, Zino and other experts say, the company is suffering from its own success. Apple sold 61 million iPhones in the March quarter of 2015, or 40 per cent more than it did a year earlier. To match that growth rate, Apple would need to sell more than 85 million in the current period. Instead, analysts are expecting around 55 million.