Apple Inc (NASDAQ:AAPL) released its quarterly results on Tuesday and while the company managed to beat expectations for sales and profits, it wasn’t without blemishes. iPhones, which have carried the company’s popularity for years, were down 15% year over year. iPad sales, however, were up 17%.
Apple’s CEO Tim Cook noted that customers were “holding on to their older iPhones a bit longer than in the past.” That’s a troubling statement because it suggests what we already know: new iPhones are expensive and offer customers little reason to upgrade. Since the passing of Steve Jobs, there just hasn’t been the same level of innovation coming from Apple with respect to its iPhones as the focus seems to be more on screen size rather than on cutting-edge technology.
It’s no surprise then that the company opted to stop reporting on the number of iPhones and iPads it sells anymore, as the numbers could be alarming to investors and shine a light on how poorly the company is really doing.
While Apple saw a 19% increase in its services segment which includes Apple Pay, Music and iCloud, that segment is going to have difficulty growing if consumers aren’t continuing to buy and upgrade their iPhones. It’s not likely that many consumers are going to be hanging on to old iPhones, especially with iOS upgrades slowing down older models.
And if iPhone sales are struggling, that means fewer users will be using the company’s services. Apple may discount the importance of declining iPhone sales today, but they could tell a much different story in future quarters.
