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Slower tech market is backdrop for Apple revenue dip

Last week I wrote about the 13% fall in Apple revenue after 13 years of growth, surveying opinions on whether the news says something about Apple — and the product taking the blame for the slide, the iPhone — or about the market as a whole.

John-David Lovelock, analyst for market researcher Gartner, said the market for smartphones is saturated. People have their devices, whether Apple or Android, and for now they’re holding off on buying replacements. When they decide to buy them, Apple will return to revenue growth.

There are real signs of a smartphone market slowdown: Market researcher IDC declared sales largely flat year on year, while a study by another outfit, Strategy Analytics, shows shipments have fallen 3%, from 345 million units to 335 million.

Apple saw a 13% slide in revenue in April, thanks in part to a drop in the number of iPhones sold.

Tech sales lag

But the Apple revenue slump also plays into the sluggish-technology-market narrative of 2016, Lovelock said. Gartner predicted in early April that IT spending would contract 0.5% from 2015 to $3.49 trillion. That owes partly to the trend toward digital business models. Organizations are going into “cost-cutting mode” to fund them, putting money toward cloud-based services, which have lower upfront costs.

“And of course discretionary spend on things like mobile phones, PCs, tablets, storage arrays are the things we’re seeing suffering first,” Lovelock said.

CIOs are, of course, already hip to this. They’ve been moving away from supplying phones for employees to the model known as bring your own device, or BYOD, for some time. That’s good in this market, Lovelock said.

“This is a great opportunity for CIOs to continue that move — cost optimization means that they’re going to push BYOD and extending lifecycles more.”

Calls for bigger, better, newer

Yet the Internet rings with expectations for more innovation from Apple.

“Apple has had a fine, long run, but changes are constant, competition is everywhere and consumers are fickle,” wrote reader Norman C. Burns, who goes by ncberns on TechTarget’s community forum IT Knowledge Exchange, where this post can be found.

“Everyone has already bought their phone. Since evolution is far less interesting than revolution, Apple needs the next game-changer.”