What is the Reason Behind Apple’s Financial Decline in the Last Three Months

Apple published the company’s financial results of this year’s fiscal Q3 a week ago. It’s hardly a surprise to anyone that they have a significant decline in profit on the revenue – $6.9b on $35.3b, as compared to the same fiscal quarter last year when the profit was $8.8b on $35b revenue. That’s an undismissable diminution of 21.6%.

Macbooks

One of the reasons for the reduced profit is the decrease of iPad sales from 17 million in Q3 2012 to 14.6 million this quarter but it’s hardly the only one. As it turns out, the company has seen an ASP (average selling price) decline to many of its products, as well, which is additionally contributes to the company’s reduced profits.

This is not a huge shock considering the fact that last year Apple had just released their third generation of iPads on the market which made it much more desirable for consumers as a new and hot product on the market. The drop in the number of sales of the company’s tablet isn’t the only reason for their decreased profits. The ASP of some of their devices also took a dive, like we said before, as a growing number of people decided they would rather purchase the company’s lower costing alternatives. The iPad’s average selling price is now $436 after its continued decline due to the introduction of the cheaper iPad mini. iPhone’s ASP  remains almost untouched with the product’s growing sales from 26 to 31.2 million, but it’s still fallen to $581 average price which is a lower value than it’s ever been before.

The iPod and Mac account for a relatively small portion of Apple’s overall revenue, but that doesn’t mean their decrement as compared to the Q3 of 2012 is insignificant. This year’s iPod sales saw a 32% year-to-year decline by selling 4.57 million units. Be that as it may, iTunes revenue is still increasing compared to last year from $3.2 to $3.99 ipadbillion. The Mac sales are also lower this fiscal quarter with 3.75 million units sold, whereas 4.02 million Macs were purchased from the company last year.

 

All of this can be a cause for concern to current and potential inventors. Generating lower profits doesn’t mean the company is no longer as strong as it used to be, but it’s certainly a red flag that needs to get some attention. We are expecting to see “new and exciting products” from the company this fall, as teased by its CEO Tim Cook. It’s interesting for most of us to see what they are cooking but the kitchen is closed at the moment. Will something truly new and exciting be introduced this fall that will make Apple’s revenue and profits skyrocket? Or is it just another marketing scheme involving smoke and mirrors that will not change the company’s current path and policies? Whatever the case may be, we can be sure of one thing – sooner or later Apple might want to introduce new and original products in order to satisfy a wider customer base unless they believe this year’s decline in sales and ASP is just a bump and not an emerging trend. After all, $9.5b profit on $43.6b revenue were reported in Q2 of 2013 which is significantly higher than this fiscal quarter. If the high demand for iPhone decreases, however, the company’s profits and revenue will plummet, which is why preventative measures and the debut of new products are expected. Whatever happens, Apple remains one of the leaders on the market in terms of revenue and profit, and is still one of the world’s biggest and most valuable companies.

 

Rose Finchley is a passionate about everything related to technology and gadgets. She works for DreamCleanersLondon and in her spare time she loves to read and write about smartphones.