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New Macs may ease pain of iPhone decline this quarter

Apple expected to announce first fall in iPhone sales for Q416, but has hopes of a Mac revival to offset iPad problems

One of the most striking aspects of Apple’s performance in the past couple of years has been the decline of the iPad, which was once the shining star which was meant to create a new form factor and offset the squeeze in the PC and even the smartphone markets. Now, however, the supposedly dying laptop is gaining a newly pivotal role in the Apple growth strategy, even if that results in iPad cannibalization.

On Thursday, Apple will unveil new Macs, and will boast of a new alliance with IBM which could drive the product beyond its single-digit market share in the enterprise. IBM has already been an important factor in boosting the iPhone’s presence in corporate markets, thanks to a partnership to develop vertical mobile applications.

IBM is now the world’s largest deployer of Macs, having started a roll-out to its employees in 2015, which will cross the 100,000 mark by the end of this year. Leaving aside the ironies of a Mac drive by the firm which created the Microsoft PC power base, moves like IBM’s indicate that the traditional Mac, not the iPad, has the growth potential.

Apple had launched the iPad Pro with the assumption that many laptop users wanted to convert to tablets (and to compete with Microsoft Surface) but sales have not been dramatic.

In Apple’s fiscal third quarter, iPad sales fell below 10m units for the first time in 20 quarters, the end of a three-year slide from a high of 26m iPads sold in fiscal Q114. Mac sales hit an all-time high in Apple’s fiscal Q415 (ended September 2015), but have lagged the past three quarters with the delays to upgrades for the Macbook Pro and Mac Pro lines.

Now Apple is expected to launch new MacBook and MacBook Pro models, though not a new iMac. The Macs are important in several ways. The PC market is contracting, but Apple has the chance, with support like IBM’s, to seize more share of a smaller pie. And while the company has always said that iPhones can act as entry points for the rest of its devices, driving sales of Macs, iPads and even Apple TV, the same may prove true in reverse.

As the iPhone comes under pressure from rising competition and falling growth in the handset space, it is becoming heavily reliant on upgrades. New enterprise Mac users could introduce new customers to the iPhone, especially with the improved business capabilities it has acquired in the past two years.

This would be a welcome result, since some analysts expect Apple to report the iPhone’s first annual decline in sales volumes when it announces its fiscal Q416 results tomorrow. It is forecast to report iPhone sales of about 45m units, which would be the third successive quarter of decline for its flagship. That would take total iPhone sales to 211m for the financial year, which would represent a full-year drop of 9%.

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