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Full year iPhone shipments were down in 2016, but the launch of the iPhone 7 and 7 Plus helped Apple return to growth in Q4. The strong performance shows how the iPhone remains Apple’s growth engine. iPhones accounted for 69 per cent of revenues, the highest share since Q1 2015. It also validates Apple’s trade-off decisions regarding water resistance, removing the headphone jack and different camera technology on the 7 and 7 Plus. Apple’s results also indicate a higher iPhone average selling price, showing a shift in popularity towards larger screen Plus models.
Japan – particularly strong
The Japanese market was particularly strong for Apple. New factors such as supporting the local FeliCa contactless payments technology, popular local device features such as IP67 water resistance, and improved camera performance have been well received.
Americas returns to growth
Apple’s biggest market, the Americas, returned to growth after declining for four consecutive quarters. Americas’ revenue was up 9 per cent over the previous year.
Apple benefited from Samsung’s Note 7 recall. The absence of the Note 7 helped the competitive position of the iPhone 7 and 7 Plus in the premium segment in North America.
Services revenues reach new high
Apple’s services revenues – driven by record App Stores sales, Apple Pay, content sales and cloud services – also reached a new high in terms of overall revenues. But, the proportion of revenues fell because of the iPhone dominance. Apple’s growing installed base of devices means that services represent a valuable on-going revenue stream for Apple beyond device sales.
The smartphone market is becoming increasingly concentrated on the big three device makers – Samsung, Apple and Huawei.