Apple’s iPhone revenue decreased for a second consecutive quarter, with sales falling nearly 1 per cent year-on-year in the quarter ended June to about $39.3 billion (A$60.53 billion).
However, overall Apple revenue increased about 5 per cent to $85.8bn (A$132.15 billion).
While its rivals including Samsung, Huawei and Motorola are charging forward with smartphones that are equipped with generative AI technology, Apple is yet to fully enter into this segment.
It announced its Apple Intelligence features earlier this year and also a partnership with OpenAI, but those AI features are yet to come to its devices.
Apple is betting that when it does, most likely in the upcoming generation of iPhones that will be revealed in the next few weeks, it will be a reason for iPhone users to trade out their old iPhones or even for Android users to move to iOS.
Chief executive officer Tim Cook, speaking on a conference call Thursday to discuss third-quarter results, said that upcoming Apple Intelligence features will provide compelling reasons for customers to upgrade.
“It will be a very key time for a compelling upgrade cycle,” he told analysts on the call.
Apple will also have to move to counter sluggish sales in China over the coming quarter. Sales from China fell 6.5 per cent to $14.7 billion (A$22.64 billion).
Apple attributed a large portion of that decline to the impact of a strong dollar, saying that the underlying business in China is actually healthier than it was previously. “We do realise it’s a very competitive smartphone market, but we feel we are doing quite well within the context of the broader economy,” Chief Financial Officer Luca Maestri told Bloomberg TV.
While its smartphone sales are still to pick up pace, its iPad sales – helped by a refresh in May and the surprise inclusion of an M4 chip in the iPad Pro – led to Apple reporting $7.16 billion (A$11.03 billion) in revenue from the category, up 24 per cent, in the second quarter.
Meanwhile, Apple’s services business, which includes the App Store, Apple Music and the TV+ streaming platform, generated $24.2 billion (A$37.27 billion) in sales last quarter, up 14 per cent. Mac revenue rose 2.5 per cent to $7.01 billion (A$10.8 billion).
A disappointing area of sales for Apple was its wearables, home and accessories which includes products such as AirPods, the Apple Watch, the company’s TV set-top box, Beats headphones and HomePods. That division brought in $8.1 billion (A$12.48) in sales, down 2.3 per cent.
In delivering an outlook for the current quarter, Apple said that total sales in the September quarter will grow at a similar level as the second quarter, implying an increase of about 5 per cent.
Apple’s share price remained relatively stable on Thursday when its latest results were announced, with stock prices down 1.68 per cent to $218.36 (A$336.33).
