Why We’re Not Freaking Out About iPhone Sales | Summary and Q&A

TL;DR

Apple's iPhone sales, which account for two-thirds of their revenue, experienced a down year-over-year growth due to lack of significant upgrades and changes in the form factor.

Key Insights

• ❓ iPhone sales contribute significantly to Apple's revenue, accounting for two-thirds of their total revenue.
• 🥺 The lack of major upgrades and changes in form factor between the iPhone 5 and iPhone 6SE led to a decline in sales.
• 🧭 Apple's growth in iPhone sales should be considered on a two-year comp cycle rather than just year-over-year.
• 💗 Expanding into new territories and growing in important countries contribute to Apple's long-term iPhone sales trajectory.
• 🥺 Apple faced supply constraints during the launch of the iPhone 6, leading to higher demand in subsequent quarters.
• 🌓 Quarter-to-quarter fluctuations in iPhone sales are to be expected, but the overall trend shows some growth.
• 🧚 Comparing numbers year-over-year may not provide a fair assessment due to Apple's product cadence and two-year comp cycle.

Transcript

Dylan Lewis: The first of those things you wanted to focus on was iPhone sales. Why don't we start there? For the most recent quarter, 51.2 million units sold. They still clock in at roughly 2/3 of their revenue, so that is the big driver for them, and probably the culprit when you look at this down year-over-year revenue growth. So, what did we se... Read More

Questions & Answers

Q: Why did Apple's revenue growth decrease year-over-year?

The decline in revenue growth can be attributed to lower iPhone sales due to the lack of major upgrades and changes in form factor between the iPhone 5 and iPhone 6SE.

Q: How does Apple's upgrade cycle impact iPhone sales?

When Apple introduces a new form factor or a significant upgrade, such as the transition from iPhone 5S to iPhone 6, it leads to blockbuster sales. However, sales tend to decline when there isn't a major upgrade or change in form factor.

Q: Is Apple's decline in iPhone sales a cause for concern?

While the decline in sales is not favorable, it doesn't necessarily indicate a reason to sell Apple stock. The longer-term trend shows some growth, and the company continues to expand in important markets.

Q: What were the supply constraints faced by Apple during the iPhone 6 launch?

Apple experienced supply constraints during the launch of the iPhone 6, which resulted in pent-up demand. Some of this demand spilled into the following quarter, inflating the sales numbers.

Summary & Key Takeaways

• Apple sold 51.2 million iPhone units in the most recent quarter, contributing significantly to their revenue.

• The lack of significant upgrades, with the iPhone 6SE being similar to the iPhone 5 in form factor, led to a decline in iPhone sales.

• Apple's long-term trajectory for iPhone sales shows slight upward growth, but quarter-to-quarter sales fluctuate.