Apple Q3 2016 earnings is a mixed bag, iPhone still its biggest product

Many people cite Sony’s PlayStation 4 as keeping the company afloat, but clearly Apple‘s in the same boat, using the iPhone as a paddle, bucket and plug for its current profit-leaking business model.

The company today announced its Q3 2016 earnings, and it’s a mixed bag. While its Q3 2016 sales and revenue beat forecasts, the company’s still down on its Q3 2015 numbers.

Let’s start with the brightest spark: the App Store.

“Our Services business grew 19 percent year-over-year and App Store revenue was the highest ever, as our installed base continued to grow and transacting customers hit an all-time record,” Apple’s CFO Luca Maestri revealed.

Beyond software, it’s smartphone also performed admirably. Apple pushed a remarkable 40-million iPhones out its doors in the quarter, however, this figure marks a 15% drop year-on-year during the same quarter. Even the launch of the iPhone SE couldn’t stem this drop, which Tim Cook remarks as a real power play to budget-minded consumers.

While Apple outperformed estimates, it under-performed against its 2015 numbers

Now, one could suggest that the iPhone 7 peeking over the horizon is responsible for the drop in sales, but we doubt that’s squarely the case. In fact, the company was down on its previous quarter too. But the iPhone remains its best performing device, especially considering that the iPad pushed just 10-million units.

On Gearburn: Here’s where you can get the iPhone SE in South Africa

Apple did however beat its revenue expectations. The company racked up an impressive US$42.4-billion in the quarter — but even those numbers are down by around US$7-billion at the same period last year.

So what does all this mean?

For one, analysts were remarkably accurate this time around, with revenues only slightly bettering estimates. This was great news for investors, as Apple shares rose 6.5% afterhours. Even so, Apple’s clearly losing its water-tight grip as a certain investment.

More importantly for consumers, it suggests that Apple really needs a rather special device in the iPhone 7 to turn its slowly declining, yet still impressive, iPhone sales around.

Andy Walker
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