First times always attract more attention than usual. So the first time Apple’s Year on Year iPhone sales dropped, the whole world wore an expert’s hat and floated forecasts and predictions. Most analyses centered around ‘beginning of doom’, ‘historical drop in sales’ or similar sensational ideas.

Very few came up with actual take-aways from the Quarter Two Sales results of Apple and what the market could learn from it. For the record, Apple’s financial results for its fiscal 2016 second quarter ended March 26, 2016 had a quarterly revenue of $50.6 billion and quarterly net income of $10.5 billion, or $1.90 per diluted share. These results compare to revenue of $58 billion and net income of $13.6 billion, or $2.33 per diluted share, in the year-ago quarter. Gross margin was 39.4 percent compared to 40.8 percent in the year-ago quarter. International sales accounted for 67 percent of the quarter’s revenue.

Why did it drop?

Apple, let’s recall, rides on innovative technology. So every six to eight months, it would launch a product, an upgraded product version, a brand new feature idea, a totally new looking iPhone or an iOS with exceptional features for the world to see and experience. During the sales drop quarter, Apple had an SE – an improved version of iPhone 5S with little innovation and hence very few features to justify the price it was released on. Most iPhone 5S users may have been looking for an upgrade without spending the whopping amount on which the iPhone 6 series was available. And many may have well been justified in rejecting SE on that ground. Note that iPhone 5 was launched in 2012 and by 2016, the expectations of the market for an upgrade (if at all) had peaked. The results now don’t sound surprising, do they?
The sales drop may not be the doomsday trailer
As long as Apple continues to innovate, focusing on making people’s lives easier and introducing unthinkable technologies, there’s little reason to believe that the Q2 sales drop may be the beginning of the company’s doom.
Message for mobile handset and application industry: Innovation and the ability to create futuristic products will be key drivers

Selling old wine in new bottle won’t get today’s customers

Today’s customers are more aware than ever. Ironically, it’s the mobile industry that’s responsible for creating such an aware consumer base. These consumers have reviews from peers, bloggers, experts and news at their disposal. And often they are uncompromising and unforgiving. Take for instance, the iPhone SE had little innovation and no major feature to justify its cost. Practically, the SE was pitched before the users of iPhone 5 launched back in 2012. By now these consumers knew better how to use their money and hence it wasn’t very well received in the market.
Message for mobile industry: Upgrades are a given but mobile market is the most competitive today and without innovation that gives actual value for money, it would be tough to survive.
One of the best take-aways from the first ever hiccup in the life of Apple is that a brand will remain a brand only as long as it continues to offer value.