Apple silences talk the world has hit ‘Peak iPhone’

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In response, Apple spent years pointing shareholders to the growth of online services such as its App Store, iCloud and Apple Music. The iPhone became a commodity, something that consumers upgraded when their old one broke or their phone contract ran out, not something to get particularly excited about.

The sales leap on Wednesday (US time), however, defied this idea. The device brought in $US47.9 billion, a record for the first three months of the year, which follows the typically more lucrative Christmas period.

In recent years, the device has seemed like it could become part of Apple’s past; this week’s results suggest its future could still be bright.

This was artificially boosted because production difficulties forced last year’s iPhone 12 to be released later than normal, pulling more sales into the new year, but sales over the last six months, which ignores this blip, are still up by a third.

The new iPhone’ 5G capabilities appear to be the most obvious driver: sales growth was fastest in China, where mobile networks have been upgraded quicker than in the West. There is a good chance of the boom continuing as more of the world switches 5G on. Cook told analysts that “a lot of the 5G upgrades will be in front of us, not behind us”.

That suggests that this quarter is not a one-off. Next generation mobile networks may finally be what drives the fabled “supercycle” that tech analysts have long predicted, in which wavering consumers decide to switch from Android devices or upgrade their older phones.

Cook said that the number of new customers who had never bought an iPhone before had grown by double digits. Wedbush analyst Dan Ives estimates that 40 per cent of users have a phone older than 3.5 years – prime upgrade territory.

Pandemic lockdowns have led to booming sales for Apple.

Pandemic lockdowns have led to booming sales for Apple.Credit:Bloomberg

Apple has spent the last few years attempting to tell a story in which services revenues, such as the App Store and a lucrative search engine deal with Google, become its growth engine, even as hardware sales slow down.

Now, a wave of competition investigations and lawsuits adds a question mark to that idea. The European Commission is expected to charge Apple with monopoly abuse within days, and the company faces a brutal lawsuit with Fortnite maker Epic Games in the US that starts next week.

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It is good timing for Apple, then, that iPhone sales are roaring back. In recent years, the device has seemed like it could become part of Apple’s past; this week’s results suggest its future could still be bright.

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