Apple CEO Tim Cook (pictured) reported a small decline in smartphone sales, but reaffirmed his view wearables were now a “big business” after almost doubling year-on-year sales of its Watch in its fiscal second quarter.
The company reported a 1 per cent year-on-year decline in iPhone sales for the three months to end-March, with 50.8 million units sold worldwide down from 51.2 million in the same period of 2016.
Speaking on the company’s earnings call, Cook attributed the fall to a “pause” in purchases of the iPhone due to “the earlier and much more frequent reports about future iPhones.” The device is set to celebrate its tenth birthday this year, with hopes high for a major new flagship launch.
Despite the lower sales, Apple’s revenue from its handset division increased due to recording a higher average price per unit.
Watch sales double
While sales of the iPhone declined, Cook was once again bullish on the performance of its Apple Watch and overall wearables segment.
The executive said its Watch sales almost doubled year-on-year during its latest quarter without revealing specific sales figures for the unit.
Watch shipments and revenue are filed alongside its “other products”, which includes Apple TV, its headphone range and official accessories. The overall segment reported a 31 per cent year-on-year rise in revenue to $2.9 billion.
Cook said he was confident on the future prospects of the Watch, but was not surprised some competitors exited a market he described as “very hard”.
The Apple chief said the company is “committed” to the wearables market, noting it is “already a big business” and will continue to grow.
For the second quarter in a row its Services division (including App Store, Apple Pay, Apple Music, iCloud, Messaging) topped revenue of $7 billion (up 18 per cent year on year), with Cook claiming the unit “is well on the way to being the size of a Fortune 100 company.”
App Store revenue grew 40 per cent year on year to a quarterly record, while Apple Music subscriptions and iCloud storage revenue saw double-digit growth. Apple Pay is experiencing “phenomenal traction,” live in 15 markets with transaction volume up 450 per cent over the last 12 months.
CFO Luca Maestri reiterated the company’s goal to double the size of its Services business by 2020.
Meanwhile iPad sales fell 13 per cent year on year to 8.9 million units in the quarter. The company said the segment had been impacted by “supply constraints”, but did not elaborate further on the declining sales.
Apple generated an overall net profit of $11 billion, up from $10.5 billion in the same period of 2016. The company grew revenue 5 per cent year-on-year to $52.9 billion, with the highest gains from Asia Pacific (excluding China and Japan) and the US.