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iPhone Sales Fall 23 Per Cent in Q3, Triggering 27 Per Cent Drop in Apple Profits

Alex Spencer

Apple Logo IRLApple has posted a 27 per cent year-on-year drop in net profits, to $7.8bn (£6bn), in its financial report for Q3 2016 (the three months ended 25 June).

Revenues dropped 15 per cent to $42.4bn, due primarily to a 23 per cent fall in iPhone sales year-on-year, to $24bn. 'Other products', the segment of Apple's business which includes the Apple Watch, Apple TV and iPod, fell to $2.2bn, down 16 per cent – in line with IDC data released last week which reported that shipments of the Watch were down 55 per cent year-on-year during the quarter.

The two areas which saw an increase were iPad, up seven per cent year-on-year to $4.9bn, and 'Services' – which covers Apple's software offerings, from the App Store to Apple Pay and Apple Music – up 19 per cent to $6bn.

During the company's earnings call, CEO Tim Cook leaned hard on this last part as the great success of the quarter.

"The growth was broad-based, with App Store revenue up 37 per cent to a new all-time high, in addition to strong increases in Music, iCloud, and AppleCare," he said. "In the last 12 months, our Services revenue is up almost $4bn year-on-year to $23.1bn, and we expect it to be the size of a Fortune 100 company next year. Most of our terrific Services performance during the quarter was fueled by our active installed base of devices, with installed base-related purchases of $10.3bn, accelerating to 29 per cent growth year-on-year."

The decrease in revenues was fairly consistent across the globe – with China seeing the biggest drop, of 33 per cent – with one exception. In Japan, revenues were up 23 per cent.

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