Apple is preparing to report its first-ever drop in iPhone sales as the company braces itself for a rare rocky patch.
Apple is set to release its results for the first three months of 2016 on Tuesday evening, in which it predicts sales of the smartphone will decline for the first time, alongside the first decline in revenue for more than a decade.
The Californian company said in January it expected to report sales of between $50bn and $53bn (£35-37bn), marking a decline on the $58bn during the same period last year.
Analysts project Apple will have sold around 50 million iPhones during the period, an 18 per cent fall from the 61 million units shifted during the same period in 2015.
They estimate the total number of iPhones in Apple’s fiscal 2016, ending October, will have fallen 6 per cent from 2015’s 231 million units to around 217 million iPhones.
The drop in demand has been attributed to high market saturation, meaning the number of first-time buyers is falling, and lacklustre sales of last September’s iPhone 6s, which contained features analysts deemed too similar to the previous year’s iPhone 6.
The company recently slashed the price of the Apple Watch, prompting analysts to suggest the product is not selling as well as Apple hoped.
Consumers are upgrading their smartphones and tablets less frequently than in the past, which coupled with weak international currency and fears of economic slowdown – particularly in China – have led to a downturn in demand.
Apple’s latest sales figures will not include sales of the recently-announced iPhone SE, which went on sale on March 31. While rumours surrounding Apple’s interest in developing an electric car gather pace with the news the company has poached a top British engineer from Tesla, any such product is unlikely to go on sale before 2019.
According to market research firm TrendForce, iPhone shipments fell close to 44 per cent between January and March amid fears of slowing growth and reaching “peak-iPhone”.
Apple shipped around 42 million iPhones to retailers during the period, a 43.8 per cent decrease compared to the previous quarter’s 75 million units.
Apple’s global market share fell from 20.9 per cent in the fourth quarter of 2015 to 14.4 per cent in the first quarter of 2016 according to TrendForce, while arch rival Samsung managed to increase its share from 22.1 per cent to 27.8 per cent thanks to strong sales of its Galaxy S7 and Galaxy S7 Edge handsets.
Sales of Apple’s high-end smartphones suffered their first ever year-on year decline of 4.4 per cent in February, another market analyst Gartner claimed.
It was reported earlier this year that Apple planned to slash its iPhone production by around a third amid fears of slowing demand.
iPhone 6s and iPhone 6s Plus units have “piled up” at retailers across Europe, China, Japan and the US, although older, less expensive units have continued to sell, suppliers reportedly said.
While Apple initially told its suppliers to maintain the production levels it established for the wildly successful iPhone 6 and 6 Plus the previous year, it has now told them to scale it back until inventory adjustment is complete. Production is expected to return to normal by the second quarter of the year, April – June.
The iPhone 7, due for release in September, is crucial to Apple’s continued success as the world’s second-largest smartphone maker behind Samsung.