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Apple iPhone sales slide as CEO talks augmented reality, AI

Apple beat third-quarter earnings estimates despite a continued decline in iPhone sales. In his commentary, CEO Tim Cook looked to future projects around augmented reality and artificial intelligence.
The latest quarter, which ended June 25, brought $42.4 billion in revenue and $7.8 billion in net income, which comes out to $1.42 per diluted share. Those numbers fell short of the $49.6 billion in revenue and $10.7 billion in net income posted by Apple during its third fiscal quarter of 2015. It’s latest gross margin was 38% compared to 39.7% in Q3 2015. International sales made up 63% of quarterly revenue.
This is the second quarter in a row Apple reported declining iPhone sales. According to BGR, Apple sold 40.4 million iPhones in Q3 2016, compared to 47.5 million units in the same quarter last year.
Niantic’s smash hit Pokemon Go mobile app has brought augmented reality to market in a major way, which wasn’t wasted on Cook based on his comments around AR.
“It also does show that AR can be really great,” said Cook. “We have been and continue to invest a lot in this. We are high on AR for the long run, we think there’s great things for customers and a great commercial opportunity. The No. 1 thing is to make sure our products work well with other developers’ kind of products like Pokemon, that’s why you see so many iPhones in the wild chasing Pokemons.”

“AR can be huge,” Cook added. “There’s a tendency to call everything the next platform … but regardless, it will be huge.”

Speaking about artificial intelligence, Cook said the company is using AI in products like its Health app and CarPlay vehicle platform.
“We have focused our AI efforts on the features that best enhance the customer experience,” Cook said. “For example, machine learning enables Siri to understand words as well as the intent behind them. That means Siri does a better job understanding and even predicting what you want, then delivering the right responses to requests. To make Siri an even smarter assistant, we’re opening the service to developers, and this fall Siri will be available across our entire product line. We’re also using machine learning in many other ways across our products and services, including recommending songs, apps and news.”
As for Q4 estimates, Apple expects revenue between $45.5 billion and $47.5 billion with gross margin between 37.5% and 38%. Operating expenses are estimated at between $6.05 billion and $6.15 billion.

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Sean Kinney, Editor in Chief
Sean Kinney, Editor in Chief
Sean focuses on multiple subject areas including 5G, Open RAN, hybrid cloud, edge computing, and Industry 4.0. He also hosts Arden Media's podcast Will 5G Change the World? Prior to his work at RCR, Sean studied journalism and literature at the University of Mississippi then spent six years based in Key West, Florida, working as a reporter for the Miami Herald Media Company. He currently lives in Fayetteville, Arkansas.