Shira Ovide is a Bloomberg Gadfly columnist covering technology. She previously was a reporter for the Wall Street Journal.

Many things aren't going Apple's way right now. The company's disclosures Tuesday about its revenue, profits and projected sales for the next quarter were all pretty awful. And China, once a chief source of strength, is now among Apple's long list of bummers. 

Sales in what Apple calls Greater China -- including China, Hong Kong and Taiwan -- have been essential to Apple, expanding from 9 percent of the company's total revenue five years ago to 25 percent in the company's fiscal second quarter ended March 26.

Apple CEO Tim Cook had assured investors (through Jim Cramer) that China's economic growth troubles had nothing to do with his company. Then three months ago, Cook warned sales in the China region had recently started to show "some signs of economic softness." Boy, did they ever. 

The company's revenue from Greater China fell 26 percent compared with results in the period a year earlier. During Apple's last fiscal year ended in September -- a period during which Apple's revenue exploded -- sales in the China region grew at rates of 70 percent or better for four consecutive quarters. 

Key Market Turns South
Apple had relied on the region including China for growth. Now, sales have come to a halt in the market including China, Hong Kong and Taiwan.
Source: Bloomberg
Note: The quarterly figures reflect Apple's fiscal year, which ends in September

Economic hiccups in the China region could be temporary. But Apple has arguably been the biggest beneficiary of mainland China's smartphone sales explosion, which is running out of steam. Apple also recently has faced government scrutiny in China that the company had ably worked around. Cook said Hong Kong was the biggest culprit for the downdraft in its Greater China results, and he said China continues to hold great promise. Nevertheless last year's big China lift was likely a one-time event for Apple. 

That has made the growth slowdown in the region a significant -- but by no means only -- contributor to Apple's overall shift from hyperdrive to reverse. Let's take a moment to wallow in the other unhappy milestones Apple just reached.

Sales of iPhones fell 16 percent from the March quarter of 2015 -- the first decline in the device's nearly nine-year history. As expected, total company revenue fell 13 percent, the first time since 2003 that Apple has posted a year-over-year revenue decline. In case you have a foggy memory of that year, the hot song in the spring of 2003 was 50 Cent's "In Da Club." Apple's stock market value at the time was about $5 billion, or less than 1/100th of its current value.

Apple expects its sales to fall again in the fiscal third quarter ending in June, by even more than Wall Street expected. Apple's shares swooned about 8 percent in after-hours trading on Tuesday. Now we know for sure that the laws of physics apply even to Apple. 


It's interesting to consider that maybe the anomaly was Apple's revenue didn't shrink before now. Jan Dawson, a tech industry analyst, wrote that Apple's pace of sales had been slowing -- and then the larger-screen iPhone 6 was introduced in late 2014. The massive hit perversely set a high growth bar that even Apple can't clear. 

Apple by any measure -- except for its own historical standard -- is an incredible company. Its $10.5 billion in net income for the last three months was more than the yearly profits of all but 15 companies in the S&P 500 index, according to Bloomberg data. 

At least before Tuesday's clunker of an earnings report, analysts were expecting Apple's sales to pick up again next year. It's tough to be confident. Essentially, growth hopes all rest on the next iPhone launch expected in September. These periods between launches of major new iPhone models are always fretful. The anxiety is Mel Brooks level this time.

Plump Profits
Apple has the biggest profits by far among companies in the S&P 500
Source: Bloomberg
Note: Apple's profit figure is for the 12 months ended Dec. 26.

There's no immediate spark beyond the iPhone. The Apple Watch is simply too small and perhaps will never catch on widely. Apple trumpets its large revenue from apps and other Web services, but it's not clear those sales can continue growing if iPhone sales don't. Potential projects like an Apple car or a Web TV service are too speculative to count on. China's economy doesn't seem to be getting better.

And two longer-term wild cards should worry Apple optimists. One, each year all new phones get a bit less exciting. That trend, and changes in how smartphones are sold, may be spurring people to hold onto their phones for longer. Apple needs people to keep replacing their smartphones early and often. 

And two, now that large chunks of the world's population own smartphones, the biggest money-making opportunity is shifting from hardware makers like Apple to Web technology firms such as Facebook, Amazon and Google, whose popular apps and online services ride on the smartphones made by Apple and others. To steal a phrase from tech investor Marc Andreessen, software may eat Apple.

Those are hypothetical fears. The trouble is that it was already obvious the immediate horizon for Apple would be cloudy. And it's even darker than we thought. 

-- with chart assistance by Rani Molla

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Shira Ovide in New York at

To contact the editor responsible for this story:
Daniel Niemi at