Can't I sell my iPhone anymore? Apple has set a 7-year record for negative revenue growth for three consecutive quarters. This quarter | iPhone

On August 4th, Apple announced its third quarter financial report for the 2023 fiscal year, which showed a revenue of $81.8 billion, a year-on-year decrease of 1.4%. Apple has been experiencing negative growth in revenue for three consecutive quarters, setting a record for the longest consecutive decline since 2016. However, the company achieved a net profit of 19.881 billion US dollars during the period, an increase of 2.3% compared to the same period last year.

As a pillar business that accounts for half of the revenue, iPhone revenue also fell short of expectations. This quarter, iPhone, Mac, and iPad all experienced a decline in sales. Apple CFO Luca Maastricht said that Apple's sales in the fourth quarter are expected to show a similar performance to the third quarter.

"In recent years, the global consumer electronics market has seen a sharp decline in demand, coupled with a lack of innovation, and the profit contribution of traditional product lines to Apple is continuously declining. This has also sounded an alarm for Apple to achieve its long-term strategy. It has to adjust its strategy in the marketing market and business sectors, thereby increasing its expansion efforts in self-developed chips, AI applications, automobiles and other fields." Song Jia, director of the Integration and Collaborative Innovation Center of the Institute of Mechanical Industry Economic Management, said in an interview with Securities Daily.

Can't I sell my iPhone anymore?

The three major terminal businesses have all experienced a decline

The performance of Apple's most important product, the iPhone, has disappointed the outside world. In Apple's latest financial report, revenue from the iPhone was $39.669 billion, a decrease of 2.4% from the same period last year, lower than market expectations.

"The continuous downturn in the consumer electronics market has weakened the demand for smartphones, coupled with insufficient innovation, making it difficult to drive new phone sales. As a result, Apple's revenue has continued to decline. If Apple's sales continue to decline year-on-year in the fourth quarter, it will be the longest year-on-year decline in sales for the company in 20 years." Sun Yanbiao, the director of the First Mobile Industry Research Institute, told Securities Daily.

At the same time, the proportion of iPhone in Apple's revenue is also continuously shrinking. According to financial report data, the iPhone accounted for 48.5% of Apple's total revenue in the third quarter. In the previous two fiscal quarters, this figure was 56% and 54%, respectively.

At the performance press conference, Maastri stated that most iPhone sales are currently achieved through some kind of promotional plan, including trade in, installment payments, and other financial consumption methods, with a proportion far exceeding 50%. Apple will continue to advance work in this area.

Other previously popular terminals also performed poorly. This fiscal quarter, in addition to the iPhone, both Mac and iPad have experienced a decline in sales. Specifically, iPad sales decreased by 20% year-on-year, with a total sales revenue of 5.79 billion US dollars. Mac sales decreased significantly by 7.3% year-on-year to $6.84 billion. However, the service business is one of the few highlights in performance. The revenue of Apple's wearable devices, home devices, and accessories, as well as its service business, maintained a year-on-year growth of 2.4% and 8.2%, respectively.

Apple claims that its service division's revenue has reached a historic high due to paid subscriptions for services such as streaming music, TV products, or App Store software consumption exceeding $1 billion.

Overall, as the core of Apple's revenue, the iPhone remains a barometer of the company's performance. "In the first quarter of this year, despite the global smartphone market downturn, the iPhone still achieved counter trend growth, but its performance is no longer strong. Considering that the market has not yet stabilized, mobile phone sales have entered a transition period between old and new iPhones, new product stocking is not strong, and consumers are mostly cautious about the iPhone 15 series phones. Therefore, the industry will not have too high expectations for Apple's performance in the second half of the year." Li Xuan, a senior analyst in the technology industry at Haitong Securities, told reporters.

Looking at different regions, Apple's revenue in Greater China this fiscal quarter was 15.758 billion US dollars, an increase of 7.9% compared to last year. In contrast, Apple's largest market saw a year-on-year decrease of 5.6% in revenue in the Americas and an 8.5% decrease in revenue in other Asia Pacific regions. Apple CEO Cook said that thanks to the push of the iPhone, Apple still maintains strong momentum in emerging markets.

The industry generally believes that this is related to changes in Apple's marketing strategy. In order to sell more iPhones, Apple is even willing to lower the price of phones in markets such as China. The price of iPhone 14 has already set "new low prices" on multiple platforms. Meanwhile, the industry predicts that demand for the iPhone 15 series may be lower than that of the 14 series this year. The rapid return of Huawei and other mobile phone manufacturers in the high-end market and the continuous iteration of new products will also pose a threat to Apple's smartphone sales.

Slow progress in the field of AI

Where is the new power?

As traditional business sectors weaken, new terminals such as headsets that use AI technology have raised high expectations for Apple's performance improvement from the outside world.

Due to the expected small shipment volume of Apple's first headset Vision Pro in 2024, there has not been a significant performance improvement this time. And Apple CEO Cook did not bring much news about the integration of AI and Apple. At the performance meeting, Cook still did not proactively mention AI, only stating in response to investor questions that Apple has been researching generative artificial intelligence for many years, considering AI and machine learning as fundamental core technologies, almost embedded in every product.

It is reported that Apple is developing an AI tool similar to ChatGPT and a big language model called "Ajax" internally, but so far, this model and application are still mysterious.

Li Xuan believes that Apple's sales momentum in traditional terminal business has weakened, and in today's booming AI industry, its progress in new areas is slightly slow. However, it still has strong supply chain and research and development capabilities, and the launch of mature products is expected by the market. At present, it seems that Apple has no significant innovative products that can replace the cash cow effect of the iPhone, and the new driving force for performance growth is still unclear.

On August 3rd local time, as of closing, Apple's stock price fell 0.73%, with a total market value of $3006.9 billion.