While iPhone sales have steadily increased each year since 2007, it’s widely believed that 2016 will mark the first time that year-over-year sales of Apple’s iconic smartphone will experience a decline. Hardly a point of idle speculation, even Tim Cook during an earnings conference call earlier this year alluded to this fact.
“We do think iPhone units will decline in the quarter,” Cook said this past January. “We don’t think that they will decline to the levels you’ll talk about. We aren’t going to project beyond the upcoming quarter.”
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While initial reports claimed that Apple’s iPhone sales slump would only affect the company’s March quarter, a new report from Nikkei suggests that the slump may very well affect sales during the current June quarter as well.
Slow sales of the flagship iPhone 6s and iPhone 6s Plus, which debuted last autumn, have forced Apple to adjust inventories. It lowered production for the January-March quarter by about 30% from the year-earlier period. With sales still sluggish, the U.S. company has told parts suppliers in Japan and elsewhere that it will maintain the reduced output level in the current quarter.
Apple apparently does not plan to produce a large enough volume of the small iPhone SE released last month to offset the slump of its flagship series. However, should Apple decide to release its next flagship model earlier than the usual September launch, parts production for that smartphone could take off around late May.
One of the more interesting points here is Apple’s apparent refusal or perhaps inability to ramp up iPhone SE production. Across the country, 64GB models of the iPhone SE are practically non-existent. I’ve walked into a few Sprint and Verizon retail stores and employees there told me that they’ve never seen anything like the iPhone SE release insofar as supply appears to be nil.
All that said, we don’t want to make the leap and proclaim that we’ve already reached peak iPhone. Far from it, it’s a safe bet that the iPhone 7 release later this year will unleash a huge refresh cycle. What’s more, with reports suggesting that the iPhone 7s will incorporate an OLED display, it stands to reason that Apple’s best iPhone days still lie ahead.
Additionally, it’s worth noting that rumors from Apple’s supply chain should always be taken with a grain of salt. Recall Tim Cook’s remarks on the matter from 2103:
I’d recommend questioning the accuracy of any kind of rumor about build plans. I’d also stress that even if a particular data point were to be factual it would be impossible to interpret what it really means to our business. Our supply chain is very complex and we have multiple sources for our components. Yields can vary, supplier performance can vary. There’s just a long list of things that would make any single data point not a great proxy for what’s going on.
