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Apple bounces back, overtakes Samsung in smartphone sales


Business

Apple bounces back, overtakes Samsung in smartphone sales

Apple is back as the number one seller of smartphones for the first time in five years.

The new, top-of-the-line iPhone 7 Plus was the sales star over the end of year holiday season as the technology giant beat rival Samsung in terms of the number of handsets shipped to stores.

iPhones account for more than two-thirds of its total revenue and 78.29 million of them were sold in the three months through to the end of December 2016, up from 74.78 million the year before.

That generated a profit of almost $18 billion (16.6 billion euros).

However Apple sounded a cautious note for the first three months of this year expressing worries about the strong US dollar which has forced it to raise prices by as much as 40 percent in some markets which hits sales.

Samsung lags

Samsung recorded 77.5 million smartphone sales in the final quarter of 2016, according to tech data firm Strategy Analytics, the first time that has happened since the fourth quarter of 2011.

Apple may have benefited from Samsung’s much-publicised recall of its fire-prone Galaxy Note 7.

In addition global demand for smartphones is slowing and cheaper Android alternatives are flooding the market.

China postive or negative?

While Apple’s revenue from the Greater China region fell 11.6 percent to $16.23 billion (15 billion euros) for the quarter, Chief Financial Officer Luca Maestri cast the numbers as positive.

“We were encouraged by our performance in China because it was clearly an improvement over the last couple of quarters. In mainland China in particular, our revenue was flat and actually grew in constant currency terms,” Maestri said.

Services a future driver

Revenue in the services business – which includes the App Store, Apple Pay and iCloud – jumped 18.4 percent to $7.17 billion (6.65 billion euros), helped by the popularity of games, including Pokemon Go and Super Mario Run, and increased revenue from subscriptions.

Analysts expect growth in services to help offset declining hardware sales as the smartphone market matures. The services business also has gross margins that are higher than Apple’s overall company average, which could help offset the extra cost of new features like OLED screens.

Chief executive Tim Cook said that he expects services revenue to double in the next four years as the installed base of iPhones and iPads continues to grow.

Sales of iPads were down around 19 percent from the same period in 2015. Apple blamed that on changes in inventory levels and component shortages from one supplier.