Apple’s (AAPL) iPhone sales account for more than half of its revenues. So the demand for iPhones becomes an essential factor in determining Apple’s revenues.
In fiscal 2017, Apple’s iPhone shipments increased 2% YoY (year-over-year) to 216.7 million, driven by an increase in shipments of the iPhone 7 and 7 Plus. However, Apple saw a significant decline of 8% in fiscal 2016 shipments to 211.9 million units from the fiscal 2015 level. Apple noted that there was a lower rate of iPhone upgrades in fiscal 2016 than fiscal 2015, which led to the decline. Apple’s iPhone 6s and iPhone SE models also failed to increase unit sales in fiscal 2016.
Apple’s most expensive phone: iPhone X
Apple, which is known to make premium high-end phones, announced its most expensive smartphone, the iPhone X, in September 2017. The base model of the iPhone X was priced at $999 and can go up to $1,149. At that price, Apple’s iPhone X offered an edge-to-edge OLED (organic light-emitting diode) screen and a new biometric solution called Face ID that scans a user’s face to unlock the phone.
However, in fiscal 1Q18, Apple’s iPhone shipments declined 1% from fiscal 1Q17. Although iPhone sales grew 13% YoY to $61.6 billion in fiscal 1Q18, sales growth came from higher selling prices that were 14.7% higher than last year.
The decline in 1Q18 shipments came as a surprise to investors, who were optimistic for the flagship iPhone X. Many analysts also talked about weak demand for the product and that Apple is cutting its iPhone X production target for the March and June quarters. Apple’s CEO Tim Cook stated that the iPhone X is the company’s highest-selling model.