Apple narrowly beat Wall Street expectations, but the third quarter was pretty bad for hardware sales.
Let’s begin with iPhone sales, which at 40.4 million, is the lowest sales Apple has seen since Q4 2014. While not exactly falling off a cliff, it’s an indication of just how weak iPhone sales are, and how badly Apple needs the new iPhone to be a hit.
More worrying is how far the iPhone’s average selling price has dropped dramatically this quarter, from $641 last quarter to around $595, which is lower than the $606 that analysts were expecting.
This suggests that consumers have been opting to buy cheaper/lower capacity iPhones over higher-priced models. This is likely to be down to the lower-priced iPhone SE, which Apple is using to entice new users into the iPhone fold (probably in the hopes of selling them a more expensive iPhone down the line).
What’s really worrying though is not only have iPhone sales gone weak, the safety net that Apple built around the iPad and the Mac is evaporating.
Apple’s iPad sales seem stubbornly stuck at around the 10 million mark, but it seems that sales are being buoyed by more expensive models, as the average selling price has risen from around the $430 mark — where it has been hovering for a few quarters — to $490.
So, while Apple is not selling any extra iPads, it is pulling in more revenue from the device. One possible explanation for this is that iPad Pro sales are beginning to pick up.
Things are also pretty grim for the Mac, which sold 4.3 million units. Average selling price continues to hover around the $1,230 mark.
Another silver lining comes from an unlikely source: the Apple Watch. Based on estimates derived from data crunched by Apple-watching analyst Neil Cybart of Above Avalon, Apple Watch sales are estimated to be in the region of 1.6 million. Assuming an average selling price of around $400, that means that Apple’s smartwatch business is now worth some $640 million a quarter.
That’s chump change next to the iPhone, but it’s indicative of strong growth — especially given that this is still a first-generation device.