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Services Gloss Over Apple's Hardware Slump


This article is published in collaboration with Statista

by Felix Richter


Citing strong currency headwinds and an "uneven macroeconomic environment", Apple reported its third consecutive quarter of declining sales on Thursday. The overall results were slightly better than expected, however, as record services sales partly glossed over lackluster iPhone, Mac and iPad sales. Total sales were down 1.4 percent to $81.8 billion year-over-year, but without the positive impact of Apple's ever-growing services segment, the decline would have been significantly steeper at 4.4 percent. CEO Tim Cook was quick to point out that iPhone and overall sales grew on a constant currency basis, but that will likely not be enough to appease Wall Street, which has come to expect more of the same from Apple, meaning perpetual growth.


iPhone sales, still at the heart of Apple's business, fell 2 percent to $39.7 billion in the June quarter, which is traditionally weak in terms of iPhone sales as new models are just around the corner. Mac sales dropped by 7 percent to $6.8 billion, but Apple remains positive on its Mac line-up, which is now running exclusively on the company's own silicon. iPad sales saw the biggest year-over-year decline at almost 20 percent, which can partly be explained by the launch of the popular iPad Air in last year's June quarter.


Meanwhile Apple's services business was once again the star of the show, as it grew 8 percent to a new record of $21.2 billion, more than 25 percent of the company's overall sales. "We had all-time records in cloud, in video, in AppleCare, in payments and June quarter records in App Store, advertising and Music," CFO Luca Maestri said in a conference call with investors. "It goes from the fact that our installed base continues to grow, so we've got a larger pool of customers, to the fact that our customers are more engaged as we have more transacting accounts and paid accounts on the ecosystem," he explained.


Looking ahead, Apple expects more of the same for the upcoming quarter, as improvements in the iPhone and services segments are projected to be offset by double-digit declines in iPad and Mac sales.


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