iPhone slump eats into Apple's Q3 gains

SAN FRANCISCO • Apple reported lower sales and forecast a third straight quarterly revenue drop, dragged down by slowing demand for iPhones amid a lacklustre global smartphone market and intensifying competition in China.

The world's most valuable publicly traded company said it sold 40.4 million iPhones in the third quarter, down 15 per cent from the quarter a year ago but slightly more than the average analyst forecast of 40.02 million, according to research firm FactSet StreetAccount.

iPhone sales dropped for the second straight quarter, pushing down Apple's total revenue 14.6 per cent in the fiscal third quarter ended Monday. But as sales declined, Apple chief executive Tim Cook peeled back the curtain ever so slightly on its work in artificial intelligence and augmented reality, aiming to reassure investors that the company is ready to ride the next wave of technology.

Raving about hit smartphone game Pokemon Go, Mr Cook stressed that Apple is "high on (augmented reality) for the long-run" and investing heavily.

Augmented reality, in which computer-generated content is overlaid on the real world, is one of the latest fixations in the technology business, with Pokemon Go among the first applications to catch on.

Mr Cook also highlighted Apple's investment in artificial intelligence, which the company now uses to recommend content to users and even spot usage patterns to improve a device's battery life.

It was a small glimpse of the future from the notoriously secretive tech giant, which fiercely guards its product pipeline. But analysts said Mr Cook must do more to show his cards as sales of the iPhone slow.

Augmented reality and artificial intelligence are often regarded as an uneasy fit for Apple, a hardware-maker that tends not to embrace new technology until it matures. And Apple's habit of keeping quiet until it has a finished product to show - in contrast with rivals like Google and Facebook, which iterate products in the open - does not help, said analyst Bob O'Donnell of Technalysis Research.

But Mr Cook stressed that Apple is hard at work behind the scenes.

Meanwhile, Australia's three biggest banks, including No. 1 lender National Australia Bank (NAB), yesterday said they had lodged a joint application with anti-trust regulators seeking approval to collectively negotiate with Apple to install their own electronic payments applications on iPhones.

Apple, which operates Apple Pay mobile wallet, does not allow third-party electronic payment apps to be loaded onto the hugely popular smartphones.

A spokesman for the banks told Reuters their view is that position amounts to anti-competitive behaviour.


A version of this article appeared in the print edition of The Straits Times on July 28, 2016, with the headline 'iPhone slump eats into Apple's Q3 gains'. Print Edition | Subscribe