Apple’s aim to incorporate generative AI into its Apple iPhones and restore slumping sales in the critical Chinese market will be scrutinised on Thursday when the tech titan is anticipated to post its most considerable quarterly revenue loss in over a year. According to the most recent expert predictions, Apple’s iPhone sales, a crucial component of the company’s income stream, might fall by 10.4 percent in the first quarter of 2024. According to LSEG data, this would be the steepest decrease in iPhone sales in more than three years if realised.
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Long considered a must-own stock on Wall Street, the company’s shares have lagged other Big Tech companies in recent months, plunging more than 10% year to date as concerns grow over its delayed rollout of AI services and a resurgent Huawei gains market share in China. Analysts expect iPhone sales, which account for over half of Apple’s income, will dip 10.4 percent in the first three months of 2024, according to LSEG. The drop would be the steepest in over three years.
Drop in sales of Apple iPhone
Given the significant importance of iPhone revenue to Apple’s overall profitability, a drop in sales could have serious consequences. The expected fall highlights Apple’s difficulty maintaining growth momentum in changing market conditions, such as altering consumer preferences and more competition in the smartphone business. Analysts predict Apple’s total sales fell 5% in the second quarter, from January to March. This would be Apple’s most significant revenue fall since the December quarter of 2022, when revenue dipped 5.5 percent. Apple lost its position as the world’s most valuable company to Microsoft earlier this year, and its market worth now stands at $2.68 trillion (approximately Rs. 2,23,68,017 crore) following a drop in its share price in 2024.
Bloomberg News reports that the business is in talks with OpenAI and Alphabet-owned Google to add genAI features to the iPhone, which might be presented at what is likely to be the company’s most significant annual developer conference in June. Analysts believe such an AI integration could boost demand for the next iPhone series, which is expected to be announced in the autumn. While executives from Microsoft, Alphabet, Meta Platforms, and other large technology companies have recently discussed their AI strategy on quarterly conference calls, Apple CEO Tim Cook has talked relatively less about the technology.
Adding AI elements to iPhones may also help Apple compete more effectively with Huawei and Samsung Electronics, which recaptured the position of the world’s top smartphone manufacturer from Apple earlier this year, owing to the demand for the AI features in their Galaxy S24 devices. Thursday’s earnings will also be eagerly followed for updates on the company’s stock repurchase program and the Vision Pro, Apple’s first significant product in years, which debuted in February.
Following initial euphoria, there have been signs that demand for the $3,500 device has dropped, with an analyst reporting this month that Apple has reduced its production projections for the mixed-reality headset.
The business is scheduled to have an event later this month to announce a new iPad lineup
The rest of the company’s hardware sector is also struggling with low demand, with iPad and Mac sales set to dip 11.4 percent and 4.3 percent, respectively, in the March quarter. Apple has indicated that it is increasing its focus on the devices, which has also been hampered by a lack of significant upgrades. The business is scheduled to have an event later this month to announce a new iPad lineup, and media rumours indicate that it intends to replace every Mac model with speedier, AI-focused M4 CPUs.
Conclusion
The services sector, which includes income from the App Store and subscription services like Apple TV, is forecast to expand at a 7.7 percent rate. While Apple consistently shows resilience in dealing with fluctuations in the market, the expected fall in iPhone sales emphasises the corporation’s need to develop strategies for maintaining its position in the highly competitive smartphone industry. Moreover, this could include using its product, investing in technical improvements, and increasing consumer interaction to boost sales and support long-term success. As the smartphone market evolves, Apple will likely focus on changing its business strategies and product offerings to fit consumers’ changing requirements and tastes worldwide. While problems may lie ahead, Apple’s track record of a dedicated customer base positions the business well to overcome market volatility and emerge stronger in the long term.
