Apple’s Tim Cook explains suffering iPhone sales

Image: Justin Sullivan / Getty Images

Apple really isn’t selling as many iPhones.

The company reported earnings for its December quarter Tuesday, revealing that iPhone revenue fell 15 percent, compared with the same time last year. That would be a steep decline for any quarter, but is particularly significant for a holiday period, when sales are typically strong. 

We don’t know exactly how much iPhone sales are suffering, as Apple conveniently announced last quarter that it would stop breaking out individual unit sales for the iPhone and other products. But sales are down enough to hurt Apple’s bottom line. Revenue was down 5 percent overall this quarter, largely due weaker demand for iPhones. 

The news wasn’t unexpected, though, as earlier this month Apple CEO Tim Cook published a letter to investors warning that revenue wouldn’t be as strong as it had initially projected.

On a call with investors Tuesday, Cook again cited last year’s iPhone battery replacement program as one reason for the worse-than-expected sales, but defended the move. “Some people have suggested we shouldn’t have done this because of its impact on upgrades, but we strongly believe it was the right thing to do for our customers,” he said.

Other contributing factors, according to Cook, include a decline in carrier subsidies and a stronger U.S dollar, which he said impacted sales in countries like Turkey.

Tuesday’s results were Apple’s first since it told investors it would no longer reveal exactly how many iPhones it had sold. But the company did share a few new metrics on its active install base, reporting more than 1.4 billion active devices, including more than 900 million iPhones.

There were some other bright spots for the tech giant, too. Revenue for other hardware categories was up, with Mac, iPad, and wearables all selling better than expected. Apple’s revenue from services, which includes software like the App Store and iCloud, grew to $10.9 billion, up 19 percent from the same time last year.

“We are as confident as ever in the fundamental strength of our business,” Cook told investors.