The three charts that show why investors are getting worried about smartphone sales

Investors fear that the smartphone market might be reaching its limit

Hazel Sheffield
Thursday 23 July 2015 12:05 BST
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Louise Thomas

Louise Thomas

Editor

After Apple announced its results late last night, a curious thing happened to its share price.

The results were largely positive. Apple’s profit was up 38 per cent.

But Apple’s share price crashed 7 per cent in after-hours trading, wiping $60 billion off the value of the company.

It seems investors weren’t so happy with the results. IPhone sales were up, Apple reported. The company sold 47.5 million iPhones in the three months to June. Analysts expected it to sell even more than that – some 49 million.

Apple is not the only phone provider to find that sales are slipping. Samsung’s latest phones have seen its market share eclipse Apple’s, making it the biggest phone manufacturer in the world. But the company has marked down its annual shipment forecasts.

Investors fear that the smartphone market might be reaching its limit, especially in emerging markets like China, where steep sales growth used to be a given. In the graph below, the Chinese market for mobile phones is tapering off.

In the future, phone manufacturers will have to make sure they release new models that are significantly different - as Apple did with the bigger screen on the iPhone 6 - so that people who already have a phone are tempted to buy a new one. If not, sales and profit growth will start to suffer.

The iPhone accounted for nearly two-thirds of Apple's revenue in the three months to June. No wonder investors get scared quickly if it looks like that revenue stream could slowing down.

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