Apple's sales have stalled for the first time in 15 years

WHILE MOST COMPANIES would be thrilled with the kind of numbers Apple routinely delivers, the Silicon Valley tech giant will be hoping for a better year after stumbling in 2016.

The Silicon Valley tech giant is forecasting a return to growth in iPhone sales this winter, after a rare slump that dropped a wet blanket on Apple’s overall performance.

The company posted its first annual drop in sales in 15 years – releasing results for the year ending in September that showed revenue of $215.6 billion, nearly 8% down on the figure for 12 months earlier.

Apple has been struggling with shrinking demand for its signature products at a time when analysts say it’s increasingly difficult for tech companies to come up with dramatically new features.

Many warn the company relies too heavily on a single product line, the iPhone, which contributed nearly two-thirds of Apple’s revenue.

“Management hasn’t diversified the revenue stream,” said BGC Partners analyst Colin Gillis, who noted that Apple faces a host of competitors in a global smartphone market that’s seeing slower growth overall.

“Counting phones is a horrible way to live and die every quarter.”

Apple CEO Tim Cook

No reason to buy

Many consumers are holding onto their old smartphones and PCs for longer, seeing little reason to buy a new model that’s only slightly better.

One consequence: Apple sold 45.5 million iPhones in the quarter that ended in September, 5% below the 48 million iPhones it sold in the same period a year earlier.

The company is set to unveil new Mac computers later this week, hoping to boost lagging interest in a set of products that are symbolically significant even if they’re less financially important to the company than the iPhone.

Apple only started selling the new iPhone 7 models last month, which means it had less than two weeks of sales in the quarter.

Analysts say consumers are showing renewed interest in Apple’s latest iPhone models. Based on early sales, Apple chief financial officer Luca Maestri said, “We feel very good about the momentum of the 7 and 7 Plus.”

Reporting on its fiscal fourth quarter, which ended 25 September, Apple said revenue declined 9% to $46.8 billion, while profit fell 19% to $9 billion.

The iPhone 7 product launch

Bad for Samsung, good for Apple

Some of Apple’s forecast growth in coming months may come at the expense of its biggest rival.

South Korea’s Samsung was forced this month to recall its entire output of Galaxy Note 7 smartphones, which it introduced this fall to compete with Apple’s newest iPhones.

As consumers look for alternatives, analysts say that could boost iPhone unit sales by 5 million or more in the coming year.

Apple had its own setbacks this year, though on a lesser scale. While notoriously tight-lipped about future plans, Apple is widely believed to be working on new products in areas like virtual reality and self-driving cars.

But the company recently shifted gears on its automotive ambitions, deciding to focus on creating technology for autonomous vehicles, rather than take on the more daunting task of building an entirely new car.

According to news reports, the shift led Apple to cut jobs and trim its auto division.

Returned Galaxy Note 7s

Other hits elusive

Meanwhile, Apple’s flagship new product line, the Apple Watch, has drawn lukewarm consumer interest since it launched in 2015.

Apple doesn’t break out watch sales figures, but market researchers at IDC estimate the company shipped 1.1 million units in the last quarter. While that’s still more than any other smartwatch maker, it’s down significantly from IDC’s estimate that Apple shipped 3.9 million watches a year earlier.

Revenue in Apple’s ‘other products’ category, which includes the Apple Watch and the iPod music player, fell 22% to $2.4 billion in the July-September quarter. Apple recently updated the watch and Maestri said he expects strong sales in coming months.

Apple’s also hoping to reverse a year-long decline in sales of its Mac computers — its original product line — by unveiling updated Macbook and desktop iMacs later this week. Apple sold 4.9 million Macs in the latest three-month period, down 14% from a year earlier.

As in other recent quarters, Apple continued to show strength in its ‘services’ business, which includes iTunes, the App Store, Apple Pay and other digital services. Apple said revenue in that category rose 24% to $6.3 billion in the quarter.

The company is expected to relocate its iTunes business from Luxembourg to its office in Cork by early next year.

With reporting from AP