Apple's iPhone sales flat for first time in history of flagship smartphone

Apple may have hit peak iPhone after sales stagnated for the first time in the company's history, with analysts suggesting the flagship device may have hit a downward trajectory.

iPhone 6: sales of Apple's smartphone barely grew in the last three months of 2015
iPhone 6: sales of Apple's smartphone barely grew in the last three months of 2015

Apple still remains hugely profitable, but its golden period of continued iPhone growth may finally be at an end.

That may be why CEO Tim Cook referenced new areas of investment, like virtual reality, and the firm's increased focus on software.

iPhone sales grew just 0.7% during the last three months of 2015, usually its most important sales period as consumers snap up devices for Christmas. Apple sold 74.8m iPhones during that period, barely up the 74.5m iPhones sold the previous year.

Faring even worse than Apple’s flagship mobile device, iPad sales were down 25%, while Mac sales fell 4%.

Smartphone market saturation

But the company is clearly still hugely profitable and high-performing, posting quarterly revenue of $75.9bn and a record net profit of $18.4bn.

That compares with $74.6bn and $18bn respectively in the same period the year before.

For Connor Campbell, a senior market analyst at financial spread betting firm Spreadex, the miniscule rise in iPhone sales "for Apple’s flighty investors just doesn’t pass muster".

According to Bryan Yeager, analyst at eMarketer, Apple’s share of smartphones, which account for around a third of its revenues, is on a downward trajectory.

"In 2015, Apple's share of US smartphone users rose to 43.3% in 2015, up from 42.3% in 2014," he said.

"Android, by comparison, saw its share of US smartphone users rise to 51.7% in 2015, up from 51.3% the previous year."

Its a similar story this side of the Atlantic, eMarketer suggests. In the UK, Apple is expected to account for a 32.4% share of smartphone users this year, compared to 32.2% last year, with Android accounting for 56.4% of UK smartphone users this year, compared to 56.2% last year.

Apple TV, software, and Apple Watch up

In brighter news, Tim Cook noted "record" Apple Watch sales over the Christmas period - not surprising, as the device was slated by many analysts to be the most popular gift.

The refreshed Apple TV also saw strong sales, said Cook.

Cook also highlighted the growing importance of software and services - like iCloud and the App Store - to Apple's business.

He said: "Our team delivered Apple’s biggest quarter ever, thanks to the world’s most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV.

"The growth of our [software] business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of one billion active devices."

Apple warned that revenues were likely to fall this quarter.

"A mere (in Apple’s high expectations at least) 2% rise in revenue to $75.9 billion only compounded matters, with the sour cherry on top an ominous warning that next quarter’s revenue would be between $50-53 billion," Campbell said. "If accurate, that would mark the company’s first ever year-on-year decline in revenue since the iPhone’s inception."

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