Mac + iPad revenue nosedives, adds to Apple's woes

Mac + iPad revenue nosedives, adds to Apple's woes

Combined revenue of the two lines plunges to five-year low

Although weaker iPhone sales were certainly the biggest contributor to Apple's downturn in the March quarter, the Mac and iPad also failed to hold up their ends, according to an analyst.

"The trend line in Mac sales has been worsening consistently over the past year, and [the growth rate] has now been below zero for the past two quarters," said Jan Dawson, principal analyst at Jackdaw Research, in an analysis posted to the firm's website Wednesday. "That's significant, because for a time the Mac was offsetting shrinkage from the iPad, such that combined revenues from the two were rising or steady. Now that this aggregate number is also in the red, the declining iPhone sales just exacerbate the problem."

Dawson blamed the Mac -- which had its worst quarter in three and a half years -- but the iPad also contributed to the weaker revenue.

iPad unit sales contracted for the ninth straight quarter, and the tenth time in the last 11, falling to 10.2 million, down from 12.6 million in same period of 2015. That was a year-over-year decline of 19 per cent.

Revenue from the iPad was also down 19 per cent, falling to $US4.4 billion, more than $US1 billion off 2015's March quarter.

The problem, as Dawson pointed out, was that the Mac had been taking up the slack from the iPad, and that that was not the case this time around.

When the revenue of iPad and Mac were combined, it was clear that the pair's production was at a near-record low.

For the March quarter, iPad + Mac revenue totalled $US9.5 billion, down 14 per cent from the year prior. More importantly, it was the smallest number in five years, when in the March quarter of 2011 - less than a year after the iPad's introduction - the two lines generated $US7.8 billion.

Charting a rolling four-quarter average - to smooth out seasonality spikes, particularly the large fourth-quarter the iPad traditionally enjoys - illustrated the same downward trend. For the four quarters ending March 31, 2016, iPad + Mac averaged $US11.3 billion every three months, or 10 per cent off the four quarters that ended March 31, 2015.

The $US11.3 billion in average revenue was the smallest since the March quarter of 2011, when only the Mac was bringing in dollars, and off 22 per cent from the pair's peak of $US14.6 billion in Q1 2013. Not surprisingly, that quarter was the last during which the iPad grew revenue by more than 50 per cent over the previous year's same period.

While Dawson was cautiously optimistic that the Mac's fortunes would revive - like Ezra Gottheil of Technology Business Research, he noted that most models have not been refreshed for a year or more - and contended that the iPad's rate of decline had dwindled in three of the last four quarters, Apple executives gave little indication they expect a quick turnaround.

On Tuesday during Apple's earnings call with Wall Street, Luca Maestri, the company's CFO, told analysts to expect "seasonal sequential declines in ... iPad sales and a sequential increase in Mac sales," for the June quarter.

In other words, Apple believes it will sell fewer than 10.2 million iPads in the stretch ending June 30, and somewhere north of 4 million Macs. In the June 2015 quarter, Apple sold 10.9 million iPads and 4.8 million Macs.

To match the iPad + Mac revenue number for last year - $10.6 billion in the June 2015 quarter - Apple would have to boost the latest quarter's total by 11 per cent.

With iPad sales expected to be down - again - that seems unlikely, no matter how the Mac does.

ipad mac revenue

Data: Apple

The combined revenue of the iPad and Mac lines dropped to the lowest level in five years as the Mac, which had been taking up slack from the slumping iPad, also brought in fewer dollars.

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