Apple is expected to report iPhone sales increased slightly more than 1 percent in the holiday quarter when it announces earnings on Tuesday, its slowest growth ever and far from the growth investors have come to expect.
The iPhone 6S and 6S Plus, which boasted record weekend sales when they launched in September, are now facing weak demand because they have fewer distinguishing features than their popular last models.
FBR Capital Markets analyst Daniel Ives explained that “Apple has become a victim of their own success as the blockbuster iPhone 6 product cycle was hard to replicate as many customers are either buying an older, cheaper iPhone 6 or waiting for the iPhone 7.”
China, the company's fastest-growing market, may also had effect on first-quarter results, as a slowdown in the country's economy forced consumers to tighten their purse strings.
Analysts estimate Apple sold 75.5 million iPhones in the October-December quarter, a 1.3 percent increase from a year earlier. This compares with a nearly 46 percent year-over-year jump in iPhone sales in the first quarter of 2015. The slowest growth in quarterly iPhone sales so far has been 6.8 percent, in the second quarter of fiscal 2013.
To make matters worse, Apple is expected to forecast a drop in iPhone sales for the March quarter, the first time that sales will fall since the iPhone was launched in 2007.
Apple is expected to sell 54.6 million iPhones in the March 2016 quarter. The company sold 61.2 million iPhones between January and March, 2015 - a 40 percent year-over-year increase.
Analysts said the company will have to wait until the launch of the iPhone 7, expected later this year, to return to growth, as buyers upgrade to the latest version.
Analysts, technology blogs and company watchers say the iPhone 7 could include waterproofing, wireless headphones and use its new force touch technology to kill off the home button.
Apple shares closed down 1.98 percent at $99.41 on Monday. They have fallen nearly 10 percent since the start of October, steeper than a 2.2 percent decline in the S&P 500 index.
