In making the new iPhone 7 and 7 Plus, Apple has not been innovative. The phone is merely an upgrade of the previous model. The company that is led by Tim Cook is facing slowing profits and its latest four-inch iPhone SE has received a poor response.
As the SE that was aimed at emerging markets didn’t impress consumers, the company’s shipments were hit.
In April, Apple reported its first-ever drop in iPhone sales, with shipments down 16% to 51.2 million in the second quarter. In this quarter, last year, the company sold 61.1 million units.
The company expects the sales for this quarter to fall in double digits again. Apple aims to make sales between $41 billion and $43 billion for the three months ending in June, below analysts’ expectations of $47.3 billion.
The company is also facing a sales crunch in China that was its biggest overseas market. A Canalys report said the company would continue to face pressure in the Chinese market even after the iPhone 7 launch and has to focus on markets like India to increase sales.
“The launch of the iPhone 6 saw Apple’s shipments in Greater China skyrocket, but the company has struggled to maintain this momentum,” Jessie Ding, Canalys research analyst, said in the report.
“The iPhone 6s had a lacklustre reception in comparison and the iPhone SE is unlikely to make a big difference to Apple’s fortunes in the region this year. Huawei, Oppo and Vivo offer products with better specifications at significantly lower price points,” Ding added.
However, experts have mixed opinions about the iPhone 7. “Apple needs the iPhone 7 to be a major success because it is the main growth driver for the company. Direct revenues for the iPhone represented 57% of total Apple revenue in the second calendar quarter, but the importance of the iPhone for Apple is much greater than direct revenues alone,” Ian Fogg, head of mobile analysis of IHS Technology, told HT.
Moreover, Apple Watches, especially in India, have failed to make a mark. “Watches are not selling as expected in India. There are other cheaper products that cater to fitness better such as Gooqi, Fitbit and others,” said Vishal Tripathi, research director at Gartner, adding the Watches will give stiff competition to other global brands like Fitbit and Garmin.