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Apple sales drop by – 40.5% – OUCH that has got to hurt!

Showing that even Apple are not untouchable – things are slowing up

40.5% drop in sales for the Apple & their Macs

The hour looms

Apple has two big events looming on the horizon – one is WWDC in June, and before that, on 4th May, Apple will announce and discuss its second quarter, 2023 financial results.

The year for Apple, in general, looks to be quite upside-down, and topsy-turvy, and there have been other storm clouds gathering of late too for the Californian company.

The week that was

The year started unusually enough with a flurry of January booty – a new HomePod, Mac mini, and MacBook Pros.

As far as WWDC goes, who knows, it could be a hell of an event or a damp squib. We mightget the long-awaited, and overdue AR/VR headset, the first Apple Silicon Mac Pro – or, possibly, nothing more than just a 15-inch MacBook Air – who knows? And this is almost indicative of the road ahead for Apple in 2023 and beyond.

Add to that list of uncertainty that Apple showed the first signs of weakness in the employment sector too last week, announcing that they were laying off a small number of staff.

But Apple might already have been well aware of another sign of the almost inevitable slowdown that was about to be confirmed, too.

Slowing down

A month or so ahead of those Q2 financial results being announced, the dust is still settling over Apple’s results from the previous quarter. For that period, it had already been confirmed that revenue on Mac sales was down by 29 per cent. Allowances were being made for those results of the China COVID shutdowns, and the resulting supply chain issues.

But now, analysts are bracing themselves for even more bad news. Admittedly, it’s not only Apple that has been hit hard, but they have certainly come out with a bloody nose.

Trending down

Reports that came out over the weekend have shone a worrying light on the entire PC market. Two market research companies, IDC, and Canalys, both reported that shipments of desktops and laptops have shrunk by 30 per cent in the first quarter of 2023, year-on-year.

Whilst the actual numbers vary slightly between the reports, the actual number of laptops and desktops shipped in that period is down well over 50 million units.

Of the top five companies (Lenovo, HP, Dell, Apple, and ASUS), Apple seems to have been hit hardest. The other four companies all saw sales dwindle by numbers in the mid-twenties, to the low-thirty per cent mark. Apple’s drop, though, was over forty per cent! Worse still, their market share dropped a few per cent as well. As much as Apple’s Senior Vice President, and Chief Financial Officer, Luca Maestri had warned of a “substantial decline”, I’d think these new figures are worse than even he had anticipated.

Apple, seeing the writing on the wall, actually halted the production of the M2 chip in January, as Mac sales had slowed that dramatically.

The writing was on the wall

As I mentioned, the decline in sales is not purely an Apple issue, but industry-wide. There are some reasons behind the slump that fingers can be pointed at.

The post-COVID demand is now slowing as the world returns to its ways of old. No longer are employees and students trapped at home day after day. The demand for PCs during those times was inflated, unsustainable, and high.

But, peeling back the layers further, suggests, that alone does not tell the full story. IDC highlights that this quarter’s figures were ‘noticeably lower’than pre-pandemic levels. Other factors are also likely at play in these results, though. A wide-reaching global, economic uncertainty, and rising interest rates, could also be factors.

For Apple, the reasons affecting their slump could almost be self-inflicted.

When Apple silicon was first brought out, it was an almost once-in-a-lifetime, seismic change in personal computing. The floodgates were opened, and everyone clamoured to refresh their ageing Intel machines. The M2 chips, though, were only ever a stop-gap. The demand, just eighteen months later, was never going to be high, to replace such costly equipment. The Apple brigade will be waiting to see what comes along with the latest three-nanometer technology, and the performant M3 Apple silicon chips hand-in-hand, later this year.

A brighter tomorrow

Linn Huang, Research Vice President, of Devices & Displays for International Data Corporation (IDC), is optimistic that by either late this year or early next, we will start to see signs of new growth.

“By 2024, an ageing installed base will start coming up for refresh. If the economy is trending upwards by then, we expect significant market upside as consumers look to refresh, schools seek to replace worn down Chromebooks, and businesses move to Windows 11.” However, if the recession in key markets drags on into next year, recovery could be a slog.”

There is one benefit of this slowdown, which is that the supply chain will earn itself some breathing space – some time to catch up. Companies now will have some precious time to look to outsource production to countries apart from China – which Apple is openly doing, with their interests in India blooming.

Wrapping up

So much of this year hinges on WWDC and that headset this year and beyond for Apple.

Wearables and the iPhone continue to be successful for Apple, but the Mac market at best looks highly unpredictable. They managed to shake up personal computing once, with Apple silicon. Can lightning strike twice?

We’ll soon find out!

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