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2016 Hasn't Been a Great Year for Apple So Far

By Chris Neiger - May 25, 2016 at 6:00PM

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Falling iPhone sales, Mac sales slipping to Chromebooks, and trouble in India define most of Apple's year so far.

Perhaps you've already noticed, but Apple's (AAPL -2.77%) having a fairly drab year so far. Sure, the company's stock is down about about 7% since the beginning of the year, but there's much more to it than that.  

Apple's had some bad news in few of its product categories over the past five months, and some of the company's biggest prospects are having a hard time gaining traction. 

Let's take a quick look at how the company's year is going so far: 

iPhone sales slipped

It's no secret that Apple's iPhone sales fell in fiscal Q2 by 16% year-over-year, the company's first-ever year drop since the device debuted. Most of the problems stem from stagnating demand in China, where iPhone sales were down 26% year-over-year. 

The news wasn't all that surprising considering Apple mentioned back in January that iPhone sales would slow, but that didn't make news any easier to swallow for investors. 

The success of the iPhone 6 last year made it difficult for the 6s to outperform its sales numbers, but it's hard to know right now whether the next iPhone will bring sales back to their usual levels, or if lower sales are the new normal.

Apple Watch gets a price cut

Apple entered the wearables market just over a year ago, and so far it's doing pretty well. The company currently holds the No. 1 position for smartwatch sales and is the No. 2 worldwide wearable tech vendor, according to IDC. 

But Apple made a curious move in March when it announced $50, or 14%, price cut for the Apple Watch. Despite the company making some positive inroads into wearables, the price cut is clearly a move to spur sales. 

It's not unprecedented for Apple to drop the price of a new device (it shaved $200 off the original iPhone price a few months after it launched), but it still indicates that Apple many be unhappy with the number of Apple Watch sales. 

Chromebooks overtake Macs

In the first quarter of this year Chromebook shipments surpassed Mac shipments for the first time ever. 

Most of this came from increasing Chromebook sales in the U.S. to the K-12 education market. Chromebooks outpacing Mac shipments for one quarter could be a short-lived story, but it's worth mentioning that Google just announced Android apps will soon be able to run on the Chrome OS, which could spur even more interest among consumers.

The news is by no means damning for Apple but is a setback considering Apple CEO Tim Cook says that Chromebooks are simply "test machines" for school kids. 

Apple's struggling in new growth markets

And last, but not least, Apple is struggling to get its footing in the potentially lucrative smartphone market in India. 

India rejected Apple's request to sell refurbished iPhones in the country. The country's government also recently said Apple won't receive an exemption on the high taxes it's set on iPhones because they're not made with at least 30% of locally sourced materials. 

That's bad news because the iPhone's average selling price in the country is about 253% higher than Samsung's devices -- which is the No. 1 vendor in the country. 

Apple's struggles in India come at a time where the country will soon become the second-largest smartphone market in the word. And with iPhone sales slipping in the current second-biggest smartphone market -- the U.S. -- Apple is in need of finding a new country where it can increase sales. 

It's not all bad

Apple could turn things around in the second half of this year, of course. These problems could all be fixed over time with the right strategies. 

Apple's services revenue was up 20% year-over-year to $6 billion, and the company ended fiscal Q2 with $233 billion in cash and marketable securities. Additionally, sales from the quarter didn't include the company's latest iPhone SE release, so we'll have to wait until next quarter to see if those help prop up iPhone sales.

Apple could certainly turn things around the rest of this year, but the problems listed above certainly should give investors some concern as Apple seeks to grow in the post-PC and soon-to-be post-mobile era.

 

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