ADVERTISEMENT

Apple's 'defining moment' is here — and it may mean moving past the iPhone (AAPL)

The slowdown in Apple's iPhone sales in the past holiday quarter may mean that the era of double-digit sales growth is coming to an end.

  • The age of double-digit growth in iPhone sales may be nearing its end, according to UBS Analyst Steven Milunovich.
  • But Apple has found ways to monetize its installed base through software and new accessories.
ADVERTISEMENT

The era of double-digit sales growth for the iPhone may be nearing its end.

Apple is reaching a "defining moment," according to UBS Analyst Steven Milunovich, as demand for the iPhone — the device which catapulted the smartphone revolution and the company's earnings growth — slowed this past quarter. The slowdown suggests that the iPhone" supercycle" is dead.

"The iPhone is now mature," Milunovich wrote. "A mature iPhone means that other categories, especially services and other products, will become material to growth."

ADVERTISEMENT

The supercycle is marked by a fresh wave of customers and upgrades for a new device, like the iPhone X, which did not materialize in the past quarter. In Apple's first-quarter of 2018 earnings report, the company said it sold 77.3 million iPhone units, down 0.9% year-over-year, compared to analysts' estimates of 80.2 million units.

Some of the weakness in iPhone sales came from China, where the iPhone X has failed to woo consumers because it has been perceived as a smaller phone compared to its predecessors.

But despite the slowdown in iPhone sales, Apple made a bigger profit this quarter from its installed base of users who bought additional hardware, software and services. Apple devices and accessories like the Apple Watch and AirPod grew 36% year-over-year, and its services segment grew 18.1% year-over-year.

"Not all is lost — the installed device bases are growing, loyalty is high, the iPhone is gaining share, and Apple is far ahead in wearables," Milunovich said.

Milunovich maintained his price target of $190 per share.

FOLLOW BUSINESS INSIDER AFRICA

Unblock notifications in browser settings.
ADVERTISEMENT

Recommended articles

Kenyan women are more obese than their men - here’s why

Kenyan women are more obese than their men - here’s why

Africa’s richest man Dangote stands between Europe and $17 billion in revenue

Africa’s richest man Dangote stands between Europe and $17 billion in revenue

After months of exchanging blows, Kenya and Uganda takes steps towards resolution

After months of exchanging blows, Kenya and Uganda takes steps towards resolution

Africa's first black billionaire could join $2.9 billion Vivendi bid for MultiChoice

Africa's first black billionaire could join $2.9 billion Vivendi bid for MultiChoice

10 most dangerous African countries in 2024

10 most dangerous African countries in 2024

Russia’s nuclear influence expands further north of Africa

Russia’s nuclear influence expands further north of Africa

Navigating the future: How AI transforms selling on Amazon

Navigating the future: How AI transforms selling on Amazon

Wall decor tips: Transforming your space with style and creativity

Wall decor tips: Transforming your space with style and creativity

Putin's African diplomacy: Security talks with West, Central Africa take centre stage

Putin's African diplomacy: Security talks with West, Central Africa take centre stage

ADVERTISEMENT