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The smart hardware industry is facing increasing challenges. On January 26, Apple released its first-quarter results for the 2015-2016 fiscal year, ending on December 26, 2015. The report revealed that Apple's revenue reached $75.9 billion, a 1.7% increase from $74.6 billion in the same period the previous year. Net profit also rose to $18.4 billion, up 1.9% from $18 billion. While both revenue and net profit hit record highs, the growth rate has slowed significantly.
Mac sales dropped slightly to 5.31 million units, down from 5.52 million in the same quarter last year, with revenue falling by 3% to $6.74 billion. iPhone sales, however, increased by 0.4% to 74.8 million units, just short of the estimated 75 million. iPhone revenue climbed to $51.64 billion, a 1% increase from $51.2 billion.
Apple CEO Tim Cook noted that iPhone, Apple Watch, and Apple TV sales hit new records, showing that the company is still moving forward. However, he warned that the second quarter would be the most challenging due to supply constraints and a different global market environment.
Industry observers are concerned that Apple’s rapid growth may slow down, which could affect not only Apple but also other smart hardware manufacturers, including domestic brands, who might face similar development bottlenecks.
Despite the overall single-digit growth, China remains a key driver for Apple. Greater China's revenue was $18.373 billion, a 14% increase year-over-year. Sales in India jumped 76%, and Western European markets saw a 20% rise. This highlights that even though China's consumption growth has slowed, the region still leads in Apple’s revenue structure.
Cook emphasized that China remains a top priority for Apple. Although the market has its challenges, he doesn't believe it will be as bleak as some predict. “If we make great products, we can attract enough users,†he said. He also pointed out that 50% of iPhone buyers in China are first-time buyers.
Looking ahead, Cook believes the Chinese middle class will grow from less than 50 million in 2010 to 500 million by 2020, presenting a huge opportunity. Apple plans to expand its presence in the region.
Although Apple's financials were strong, the stock market didn’t react positively. Apple’s share price fell over 5% in early 2016, reflecting broader industry concerns.
According to Gartner, global smartphone sales in Q3 2015 grew by just 3.7% to 478 million units. Meanwhile, emerging markets have driven local brands like ZTE, Huawei, and Xiaomi to gain momentum.
In an interview, telecom analyst Zeng Wei noted that domestic manufacturers are shifting from low-end to high-end markets, both in design and pricing. This shift poses a challenge to Apple, forcing it to innovate more in the coming years.
Fu Liang, another IT analyst, said the gap between iPhones and other brands—accounting for nearly 70% of Apple’s sales—is narrowing. Even the iPhone 6, while a strong product, struggles to support Apple’s ecosystem and long-term growth.
With Apple slowing down, it's time for Cook and his team to think differently and introduce more disruptive innovations.