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  • The Apple logo is pictured at its flagship retail store in San Francisco.

    The Apple logo is pictured at its flagship retail store in San Francisco. | Photo: Reuters

The Silicon Valley giant's revenue dropped 13 percent as sales of its signature smartphones appear to stagnate. The company hopes to pivot to services.

Technology giant Apple has posted the first drop in revenue in the 13 years since it debuted the iPod, its revolutionary portable music player that paved the way for the iPhone and iPad.

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Revenue for its second fiscal quarter declined 13 percent to US$50.6 billion. Analysts say that the Silicon Valley company may have reached saturation in the U.S. and other developed nations.

Rival Android phones offer similar products at a lower prices, making them more attractive to consumers in developing nations. Apple is reportedly shifting to services.

"For the strategy to really make a lot of sense, you want to be more aggressive in building that services revenue," Colin Gillis, an analyst with BGC Partners, told Reuters.

Services from other application makers, including Google, Spotify, Facebook and Microsoft, are often preferred over Apple's own services.

"Apple has settled into this annual upgrade cycle for hardware and software," said analyst Jan Dawson at Jackdaw Research, referring to the company's strategy for hardware.

"That's quite different than the way that say Facebook pushes out updates to its app or Google makes changes to its search engine—they do that almost in real time."

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