The Tech Bubble is Bursting

We aren't buying enough new iPhones. That's why Apple is expected to tell investors something it's never had to say before during its quarterly earnings call: iPhone sales likely dropped for the first time since the game-changing device went on sale in 2007.
That drop isn't a surprise to those who've been listening, however. Apple CEO Tim Cook and his team in January predicted a slide in total revenue and cautioned that iPhone sales would see their first-ever slump in the three months ended in March. The company reports fiscal second-quarter results Tuesday.
Analysts think iPhone shipments tumbled nearly 20 percent from the same quarter a year ago. Analysts, on average, expect Apple to sell about 51 million iPhones in the three months that ended in March, according to Morgan Stanley. That's down from 61.2 million units in the March quarter of 2015.
The bigger worry is whether this signals a tough year overall for the world's largest public company. Analysts who cover Apple think that's exactly what it means, citing the ho-hum reaction to last year's iPhone model, the 6S.
"Given the similar form factor for the iPhone 6S and softer smartphone global demand trends, we anticipate down year-over-year iPhone sales for the remainder of [fiscal] 2016," said T. Michael Walkley, an analyst with Canaccord Genuity.
Walkley's not alone. Most analysts polled by Thomson Reuters expect Apple's revenue to slide about 3 percent this year as fewer people buy iPhones. The reason for that concern is simple: More than two-thirds of Apple's sales come from the iPhone. One bad quarter of phone sales translates into a bad quarter overall.
Revenue could drop about 10 percent in the second quarter to $52 million and slip about 4 percent to $47.4 billion in the quarter ending in June.
The year is off to a tough start for many tech companies. Intel, the world's biggest provider of chips for computers and servers, is cutting 11 percent of its workforce as it grapples with a steep drop in PC sales. IBM reported a 14-year low in quarterly sales. And Netflix raised concerns about winning over fewer subscribers in its overseas and US businesses. Even Alphabet, the parent company of Google, reported disappointing sales and profit.

For Apple, the problem is that people just aren't excited about phones. The devices haven't really changed that much over the past few years -- at least not enough to get you running to the Apple Store and buying a new model every year or two. Apple's current flagship phones, the iPhone 6S and 6S Plus, didn't add enough new features to persuade most iPhone customers to trade up.
And the economy in China, one of Apple's most important markets, has been struggling
Apple's first smartwatch -- the Apple Watch, which hit the market a year ago -- hasn't sold in high-enough numbers to boost the company's sales, and its iPad business has dropped every quarter for the past two years, even with the introduction of the 12.9-inch iPad Pro in late 2015. So its not to go without saying that the tech world as a whole is in a large bubble.

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