Apple has just recently announced its earnings for the second quarter of the year which basically refers to the first three months of the year; that is January to March. According to the company’s report on the news release, Apple made revenue of 90.8 billion dollars. It has also been pointed out that this sum portrays a 4% decrease when compared to the results for the second quarter of the last fiscal year.
Apart from that, it could be extracted from the report that the Apple Services on its own generated 23.70 billion dollars, which brings a raise of 14% percent in profit to this segment of the company. This part of the company includes all services which are available to the iOS system, such as Apple Music, Apple TV, Apple Pay, Apple Store and so forth.
During this quarter of the fiscal year, Apple presented the Apple Vision Pro which of course became a hot topic and caused a stir among the customers worldwide. For many, this new device was a rather dystopian invention, while others think it’s a revolution added to the pack of new devices which make our lives easier.
A separate report on how well this new addition to the Apple family of products has sold was not provided. Nevertheless, it should be pointed out that different from the other products that Apple offers which are also accessible for the common customers, the Apple Vision Pro headset alone costs $3500. Hence, it was expected and forecasted that this product will not sell in mass as the iPhone does for example.
When speaking of iPhones, they don’t seem to be doing that well either. It was at least given a – what could be called a hint – from the main chip making company that Apples has, Skyworks. When reporting on their Q2 of the 2024 fiscal year, they stated that there has been a lower demand than expected for the smartphone components they produce. Although they did not relate this information with Apple, we know that they are one of their main clients so associations could be made.
Why are the global smartphone continuing to drop?
Recent reports show that the smartphone global market is slowly dropping. This has caused a stir among manufacturing companies who are directly affected. But one might ask – how come there is a drop in this market? I mean, we live in a digital world and smartphones are literally the center of it.
People use their phones for just about everything. To illustrate, one of the most popular markets that keeps growing day by day and drives high revenue is that of gaming on smartphones. For instance, it is reported that 80% of the online casino players use their smartphones to play. Similarly, millions of users use Twitch to either stream or watch gaming on their phones. So, on the contrary, one would expect this market to skyrocket, right? Well, that is not quite the case.
One big reason that is related to any drop in the markets nowadays is inflation. It has unfortunately been made clear that the staggering increase of the inflation worldwide has made it difficult for people to survive, let alone think about purchasing a new smartphone. Hence, if we are to look at reports of the global smartphone markets that were conducted before the pandemic in 2020, contrary to now, we see a growth in interest in the upcoming smartphones.
If we are to compare Canalys’s reports on the worldwide smartphone shipments and annual growth, we can easily see the difference. For instance, the report from Q4 of 2019 which was the last quarter before the pandemic hit, we see that Apple had an annual growth of 9% with 78.4 million revenue in shipments. On the other hand, the report from Q1 of 2024 shows that Apple’s annual growth is at -1% with 48.7 million revenue made on shipments. This goes to explain the drop in the demand for smartphones in these challenging times for people worldwide.
Where is the market headed?
What should we expect and where is the global smartphone market headed? This is certainly one of the key topics of discussion among analysts. Although the numbers in those quarter reports or the whole fiscal year ones might be dropping, one thing is for sure: smartphones will not go out of the market. Thus, it can easily be concluded that the smartphone market will continue to evolve, although maybe at a slower pace.
On a bright note, the worldwide market of smartphones is expected and forecasted to increase during the period of four years between 2024 and 2028. The CAGR is anticipated to increase up to 7.5% by 2028 in the United States alone. Analysts say that the market is headed in the right direction and 2024 specifically is a year for rebound of the market shares when compared to the two previous years.
Finally, it can be concluded that the smartphone market is currently recovering from the drop in the past years. The growth nevertheless is slow and steady, but it is important that it is there. Let’s see what the two quarters of this fiscal year bring us and hope for the best!
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