Much of the iPhone's slowdown is attributed to the greater China region, where sales dropped from $15.8 billion to $14.7 billion for the quarter. In response, Apple discounted iPhone prices in China, resulting in a near 40% sales increase in May. However, Huawei, having developed its own chips and Android alternative following U.S. sanctions, saw a 41% year-over-year growth for the quarter, surpassing Apple's overall sales in China. This marks the second consecutive quarter of global iPhone sales decline, putting pressure on Apple's AI strategy outlined at WWDC in June.
Key takeaways:
- Apple's third-quarter financials surpassed Wall Street expectations with a 5% increase in overall revenue, largely driven by a significant increase in iPad sales which rose from $5.8 billion to $7.2 billion year-over-year.
- iPhone revenue, however, dropped from $39.7 billion to $39.3 billion year-on-year, with much of the slowdown attributed to the greater China region where overall revenue dropped from $15.8 billion to $14.7 billion for the quarter.
- Despite the drop in iPhone sales, Apple's service category, which includes software offerings like iCloud, Apple TV+ and Apple Music, continued to grow, rising to $24.2 billion from $21.2 billion over the same three-month period last year.
- Apple has been investing heavily in its generative AI strategy, with CEO Tim Cook noting that many resources have been redeployed to AI from other areas, a move that came after the company ended its autonomous electric car effort, Project Titan.