Apple's record-breaking quarterly financial results for the most recent financial period, including the highest number of iPhones ever sold in a single quarter, might not sound like bad news.
But things aren't quite as rosy as they seem. For one thing, for the first time Apple is predicting sales of its flagship device will fall in the near future.
And all this comes on the back of its lowest rate of iPhone sales growth ever.
What’s the deal? And what can Apple do about it? Here are five things you need to know.
1 Sales were up, but hardly
Apple’s press release trumpeting its latest quarterly results was chock full of the usual buzzwords.
‘All–time records’, ‘biggest ever quarter’, ‘world’s most innovative products’.
But step away from the PR spin and things look a whole lot different.
Apple sold 74.779 million iPhones between September and December.
That compares with 74.468 million in the same period in 2014. In other words, the iPhone flatlined.
Launching in China at the same time as Europe and the US gave it an initial boost, but since then things seem to have died down massively.
2 And sales are even set to decline soon
Apple says revenue for the first three months of 2016 will be between $50 and $53 billion. Last year the figure was $58 billion.
What’s more, Chief Financial Officer Luca Maestri freely admitted in a conference call that iPhone sales were likely to drop compared with the same period last year.
This would mark the first time there’s been a year–on–year slide since the iPhone first launched in January 2007.
3 New products will need to come to the rescue
Apple is said to be planning a new phone, dubbed the iPhone 5SE, for launch this spring.
The four-inch phone, known to many as the iPhone 6C, is going to need to do swift business if Apple is going to reverse the trend for decline.
Its much-rumoured iPhone 7 will also need to offer a radically different approach to last year’s products in order to entice upgraders.
As the lifecycle of iPhones increases thanks to improved, more durable tech, Apple is going to find it harder to convince customers to upgrade.
4 China to blame
Maestri said that the ‘softening’ of the Chinese market was partly at fault. He’s not wrong.
Growth in that most key of markets was at 14% in the three months to December. In 2914 it sat at 70%.
The Chinese economies continued state of flux is clearly harming sales of devices there, with cheaper rivals ready to pounce.
Apple may be experiencing the same woes its rivals at Samsung has had to deal with in recent years.
5 But it’s not all bad news. Just look at the profits
Apple is still making oodles of cash. Its margin per product is now a staggering 40.1%.
It has $216 billion in the bank and what CEO Tim Cook last night called ‘the mother of all balance sheets’.
The key now though is to wean itself off its reliance on the iPhone, which generates 68% of all Apple's revenue, and create some in-demand products to plug the gap.