MacRumors

Apple CEO Tim Cook confirmed during the company's financial earnings conference call today that iPhone sales will likely decline in the March quarter, marking the first year-over-year decline since the smartphone was released in June 2007. The decline will be realized if Apple sells fewer than 61.2 million iPhones this quarter.

Apple forecasts that its total revenue in Q2 2016 will be between $50 and $53 billion, compared to $58 billion in the year-ago quarter, signaling the company's first year-over-year drop in revenue in thirteen years. Apple has posted over 50 quarters of year-over-year revenue growth since 2003.

Apple is currently facing significant foreign exchange headwinds. A strong U.S. dollar makes it more difficult for Apple, which reports its earnings in U.S. dollars, to perform when some 66% of their business is overseas. Every $100 of Apple’s non-U.S. dollar revenue earned in Q4 2014 translates into only $85 U.S. dollars today.

Financial analysts had already predicted the iPhone would face its first quarterly sales decline in Q2 2016 compared to the year-ago quarter, with some reports claiming the iPhone 6s and iPhone 6s Plus may not outsell last year's iPhone 6 and iPhone 6 Plus, its first devices with larger than 4-inch screens.

iPhone growth in the just-announced first fiscal quarter of 2016 was the slowest since the smartphone's introduction in 2007. Apple sold a record 74.8 million iPhones during the quarter, which includes the busy holiday shopping season, up only 300,000 units from 74.5 million a year earlier.

Nevertheless, Cook said that 60% of customers who have owned an iPhone prior to the iPhone 6 and iPhone 6 Plus have not yet upgraded, meaning there is a large base of potential customers that could upgrade to newer models, including the iPhone 7 expected in September, over the coming year.

Today's announcement has been referred to by some as "peak iPhone," but Cook remains optimistic about annual iPhone sales in 2016. Even if Apple sells a projected 45 to 50 million iPhones next quarter, that would still be more revenue from one product than most companies earn overall in a single quarter.

During today's earnings call for the first fiscal quarter of 2016 (fourth calendar quarter), analyst Gene Munster asked Tim Cook to share his thoughts on virtual reality in an effort to get a hint on whether or not that's a feature Apple is working on for future devices. "What are your thoughts on the VR theme?" Munster asked. "Is this a geeky niche or something that could go mainstream?"

In response, Tim Cook said that he does not believe that virtual reality is a niche. "It's really cool," he said. "And it has some interesting applications."

With virtual reality products like the Oculus Rift gaining in popularity, there has been speculation that Apple will release some kind of virtual reality or augmented reality feature in its iOS devices. Apple reportedly has a small team of employees working on exploring the augmented reality field.

Last week, Apple hired one of the leading virtual reality experts in the United States, Doug Bowman. Apple has also made some recent acquisitions that point towards an interest in VR/AR, including augmented reality startup Metaio, real-time motion capture firm Faceshift, and expression analysis startup Emotient.

Apple has also filed several patents for virtual reality products over the years, including video goggles, motion-sensing 3D virtual interfaces for iOS devices, and 3D "hyper reality" displays.

Apple today announced financial results for the first fiscal quarter of 2016, which corresponds to the fourth calendar quarter of 2015. For the quarter, Apple posted revenue of $75.9 billion and net quarterly profit of $18.4 billion, or $3.28 per diluted share, compared to revenue of $74.6 billion and net quarterly profit of $18 billion, or $3.06 per diluted share, in the year-ago quarter. Both revenue and earnings were company records.

Gross margin for the quarter was 40.1 percent compared to 39.9 percent in the year-ago quarter, with international sales accounting for 66 percent of revenue. Apple also declared an upcoming dividend payment of $0.52 per share, payable on February 11 to shareholders of record as of February 8. The company currently holds $215.7 billion in cash and marketable securities, partially offset by $53.2 billion in long-term debt.

Apple sold a record 74.8 million iPhones during the quarter, up slightly from 74.5 million a year earlier, while Mac sales were down slightly to 5.3 million units sold from 5.5 million units in the year-ago quarter. iPad sales were also down once again, falling to 16.1 million from 21.4 million despite the introduction of the iPad Pro during the quarter.

“Our team delivered Apple’s biggest quarter ever, thanks to the world’s most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV,” said Tim Cook, Apple’s CEO. “The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of one billion active devices.”

Apple's guidance for the second quarter of fiscal 2016 includes expected revenue of $50–53 billion and gross margin between 39 and 39.5 percent. Revenue guidance is slightly below analyst expectations.

In supplemental materials, Apple explains that currency headwinds have cost the company 15 percent in earnings over the past 18 months. Using "constant currency" measures, Apple's revenue for the holiday quarter would have been $80.8 billion for an 8 percent increase year-over-year.

Apple will provide live streaming of its fiscal Q1 2016 financial results conference call at 2:00 PM Pacific, and MacRumors will update this story with coverage of the conference call highlights.

Conference Call and Q&A Highlights are available in reverse chronological order after the jump.

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Apple is planning to add subscription content from publishers with paywalls to its Apple News app, reports Reuters. This will allow sites that require subscriptions or memberships to view content to have more control over who reads their articles, but it will also introduce barriers for readers.

All content on Apple News is available for free with the existing model, but with support for subscriptions, publishers like The New York Times and The Wall Street Journal could limit the number of free articles Apple News users can access before requiring them to subscribe.

With no support for subscription content, publishers are limited on how they can make money through Apple News. Existing subscriber-only sites currently share their articles for free or offer only an excerpt, directing readers to a website to read the full content. Publishers are said to be unhappy with the information Apple provides them about readers, so this paywall compromise could soothe relationships and give publishers new ways to gain potential subscribers.

"Ensuring subscription mechanisms in our off-platform distribution partnerships is critical," said Katie Vanneck-Smith, chief customer officer of Dow Jones, which publishes the Wall Street Journal. Dow Jones is working with Apple and others to take advantage of new platforms, she added. She declined to comment on the specifics of conversations with Apple.

Apple's decision to allow subscription content in the Apple News app may not be popular with Apple News readers, but it's a feature that will allow Apple to differentiate itself from other news platforms that don't offer paid content to attract publishers.

Introduced in September, Apple News is said to have somewhere around 40 million users, but it is not clear if that number reflects people who use the Apple News app on a regular basis or those who have accessed the app at one point or another. It's also not clear if that number is accurate - Apple recently announced that it has been underestimating the number of Apple News readers and providing incorrect usage statistics to publishers.

Barclays has confirmed that it will launch Apple Pay within the next 45 to 60 days, based on a two-week-old email dated January 12, suggesting the large British bank will support the iPhone-based mobile payments service by no later than March 28.

The launch date was provided by Barclays CEO of Personal and Corporate Banking Ashok Vaswani in what appears to be a legitimate email sent to customer Oli Foster-Burnell, and later reported by Engadget. We can verify the executive has emailed customers about Apple Pay in the past.

Barclays is the only financial institution among the "Big Four" banks in the U.K. that has yet to adopt Apple Pay. The country's participating issuers include the Bank of Scotland, First Direct, Halifax, HSBC, Lloyds Bank, M&S Bank, MBNA, Nationwide, NatWest, Royal Bank of Scotland, Santander, Tesco Bank, TSB and Ulster Bank.

Apple Pay launched in the U.K. in July 2015 at more than 250,000 locations across England, Scotland, Wales and Northern Ireland, and Barclays is perhaps the most notable holdout from the group of banks supporting the mobile payments service. The bank serves over 48 million customers.

Apple has added refurbished Apple TV 4 models to its online store for refurbished products, less than a week after refurbished 12-inch Retina MacBook models became available.

The base model with 32GB storage is available for $129, compared to its regular $149 price, while the 64GB model costs $169, down from $199. The total savings are between $20 and $30.

While these are Apple's best prices for the new Apple TV, RadioShack is currently selling brand new 32GB and 64GB models bundled with an HDMI cable online for only $119.98 and $169.98 respectively. There is a $5.95 shipping fee on all orders.

The fourth-generation Apple TV was released in October 2015, and features an App Store, Siri and tvOS software. Earlier today, Apple seeded the second beta of tvOS 9.2, which introduces support for Bluetooth keyboards, app folders, a new look for the App Switcher interface, MapKit, additional Siri languages and more.

(Thanks, Jeremy!)

Apple today provided developers with the second beta of an upcoming 9.2 update to tvOS, the operating system that runs on the fourth-generation Apple TV and powers its built-in App Store. Today's tvOS 9.2 beta 2 comes two weeks after Apple released the first beta of tvOS 9.2 and just hours after the release of tvOS 9.1.1, a minor update that follows tvOS 9.1.

tvOS betas are more difficult to install than beta updates for iOS and OS X. Installing the tvOS beta requires the Apple TV to be connected to a computer with a USB-C to USB-A cable, with the software downloaded and installed via iTunes or Apple Configurator. Those who have already installed the first tvOS 9.2 beta will be able to download the update over the air.

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tvOS 9.2 is a major update for the tvOS operating system. It introduces support for Bluetooth keyboards, allowing a keyboard to be paired to the Apple TV for text entry. Bluetooth keyboard support is a major feature that was missing from previous versions of tvOS and its addition should make it much easier to do tasks like entering passwords on the fourth-generation Apple TV.

Along with Bluetooth keyboard support, the tvOS 9.2 update introduces support for grouping apps into folders on the Home screen like on iOS devices, plus it includes a new look for the App Switcher interface.

tvOS 9.2 also includes support for the Podcasts app included in tvOS 9.1.1, introduces MapKit so developers can incorporate maps into their tvOS apps, and it adds Siri support for US Spanish (in the US only) and French Canadian (in Canada only). UK English, Australian English, and US English are also now available as Siri options in the UK, Australian, and US Storefronts when English is set as the tvOS language.

What's New in tvOS 9.2 beta 2:

iCloud Photo Library - Full iCloud Photo Library access is available on the Apple TV with the second tvOS 9.2 beta installed. It can be enabled through the iCloud section of the Settings menu. In the current public version of tvOS, users can only view Photo Stream content on the Apple TV.

Live Photos - With iCloud Photo Library access comes support for Live Photos. Live Photos saved to an iCloud Photo Library can be played by pressing on the trackpad on the Siri Remote.

Apple today seeded the second beta of an upcoming iOS 9.3 update to developers for testing purposes, two weeks after seeding the first iOS 9.3 beta and more than a month since the public release of iOS 9.2.

The second iOS 9.3 beta is available as an over-the-air update and through the Apple Developer Center.

As a major .1 update to the iOS 9 operating system, iOS 9.3 introduces quite a few new features. There's a new Night Shift mode that cuts down on the amount of blue light iOS users are exposed to in the evening hours by automatically shifting the iPhone or iPad display to a warmer (yellower) color spectrum, and there are several new features designed to improve the iPad for Education program.

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Several apps and features are also being updated. In-line video and a landscape view for the iPhone are available in the News app, which now offers more personalized recommendations and faster updates. Health includes a new Apple Watch-style "Activity" view that displays activity and goals, while Notes now has an option to password protect individual entries.

Apple Music on CarPlay now includes New and For You sections for better music discovery, and a Nearby feature in CarPlay Maps offers improved access to information about what's close by. Paired with watchOS 2.2, an iPhone running iOS 9.3 is able to support multiple Apple Watches, and for iPhone 6s users, there are new Quick Actions for the Weather, Settings, Compass, Health, App Store, and iTunes Store apps, along with new Peek and Pop gestures for the App Store.

What's new in iOS 9.3 beta 2:

Control Center Night Shift Toggle - As hinted at in the iOS 9.3 preview page provided to Canadian users, iOS 9.2 beta 2 introduces Night Shift controls in the iOS Control Center, accessible by swiping up from the bottom of an iOS device. Night Shift is denoted by a new eye-shaped icon in between the icons for the timer and the calculator on the iPhone. Tapping on the icon brings up options to turn the feature on or disable it until the next day.

Night Shift is denoted by a new eye-shaped icon in between the icons for the timer and the calculator on the iPhone. Tapping on the icon brings up options to turn the feature on or disable it until the next day. In the video below, you can see Night Shift's Control Center toggle in action.

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Night Shift Settings - In the Settings app under Display & Brightness, Night Shift has been moved to its own submenu. Tapping on "Night Shift" now opens up a menu that features all of the Night Shift controls. In the first beta, Night Shift was not in its own section.

Apple Music Playlists - In the Apple Music section of the Settings app, there's a new feature that lets users choose whether Apple Music songs added to playlists will also be added to iCloud Music Library. With this new toggle turned off, songs can be added to playlists without being added to a user's library.

Quick Actions - The 3D Touch Quick Action for the Settings app no longer offers an option to change the wallpaper.

iOS 9.3's features will be released to the public this spring following the conclusion of the beta testing period.

Apple today seeded the second beta of an upcoming watchOS 2.2 update to developers, two weeks after seeding the first watchOS 2.2 beta and more than a month after releasing watchOS 2.1, the first major update to the watchOS 2 operating system that runs on the Apple Watch.

The second watchOS 2.2 beta can be downloaded through the dedicated Apple Watch app on an iPhone running the iOS 9.3 beta by going to General --> Software update. To install the update, the Apple Watch must have 50 percent battery, it must be placed on the Apple Watch charger, and it must be in range of the iPhone.

watchOS 2.2, along with iOS 9.3, introduces support for pairing multiple Apple Watches with a single iPhone. Both updates are required, with each watch running watchOS 2.2 and each iPhone running iOS 9.3.

There are were no other obvious outward-facing changes introduced in the first watchOS 2.2 beta aside from an update to the Maps app, but the update undoubtedly includes under-the-hood performance updates and bug fixes to address issues that have been discovered since the release of watchOS 2.1.

Apple today seeded the second beta of an upcoming OS X 10.11.4 update to developers for testing purposes, two weeks after seeding the first OS X 10.11.4 beta and a week after releasing OS X 10.11.3.

The second OS X 10.11.4 beta can be downloaded through the Apple Developer Center or via the Software Update Mechanism in the Mac App Store.

OS X 10.11.4 includes a couple of new features, such as the ability to support password protected notes in the Notes app, but like the recent OS X 10.11.3 update, it appears to focus primarily on under-the-hood bug fixes and performance improvements with few noticeable outward-facing changes.

We'll update this post with any new features that are discovered in the second beta of OS X 10.11.4.

Apple today released the third update to tvOS, the operating system designed to run on the fourth-generation Apple TV. tvOS 9.1.1 is a minor update that likely includes bug fixes and performance updates to address issues discovered since the launch of tvOS 9.1, which was released to the public in December of 2015.

The new 9.1.1 update can be downloaded over the air through the Settings app on the Apple TV by going to System --> Software Update. Those who have automatic software updates turned on will be upgraded to the new 9.1.1 operating system automatically.

tvOS 9.1.1 is available a month and a half after the release of tvOS 9.1. Like the first minor tvOS update, tvOS 9.0.1, tvOS 9.1.1 focuses on under-the-hood improvements, but it does introduce one major change -- a new Podcasts app for the Apple TV.

tvOS 9.1.1 comes as Apple is testing the second major update to the tvOS operating system, tvOS 9.2. Apple has thus far seeded one beta of tvOS 9.2 to developers, which includes new features like support for Bluetooth keyboards, app folders, a revamped app switcher, and more.

The next-generation iPad Air 3 could adopt the iPad Pro's four-speaker design and gain an LED flash next to the rear-facing camera, according to leaked design drawings shared with French website Nowhereelse.fr. The website cannot fully guarantee the veracity of the sketches, but the report does mention its source has been reliable on two out of three occasions in the past.

If the design drawings prove to be true, the iPad Air 3 would have two speakers on both the top and bottom of the tablet like the iPad Pro. The inclusion of rear-facing LED flash seems more trivial, since the iPad is not a camera device in the traditional sense, but some owners do use the tablet to take photos, and Apple may be looking for ways to combat declining iPad sales.

Apple is rumored to announce the iPad Air 3 at a March media event, possibly alongside a new 4-inch iPhone and Apple Watch updates. Little is known about the iPad Air 3, beyond a report saying it will lack 3D Touch, but plausible updates could include a faster A9 or A9X processor, Oxide TFT display, Smart Connector and improved cameras.

Oxide TFT display technology would allow for more uniform color and brightness, and improved contrast, on the iPad Air 3. The tablet could also adopt the iPad Pro's variable refresh rate technology to preserve power when static images are on the screen, enabling the iPad Air 3 to have longer battery life.

Apple has not updated its 9.7-inch tablet since releasing the iPad Air 2 in October 2014.

Following the departure of Steve Zadesky, hiring for Apple's "Project Titan" Apple Car is reportedly on hold as Apple executives are not happy with the progress being made on the development of the vehicle, reports AppleInsider.

Citing a "previously reliable source" with knowledge of what's going on at Apple, the report suggests a hiring freeze for Project Titan was implemented after a recent progress review conducted by Apple's Chief of Design, Jony Ive. Executives are said to be unhappy with the project's direction, with Jony Ive having "expressed his displeasure."

AppleInsider's information is in line with a report from The Wall Street Journal that covered the departure of Steve Zadesky, Apple's VP of Product Design. Zadesky was rumored to be in leading the development of Apple's rumored electric vehicle, hiring hundreds of employees to work on the project.

While Zadesky's departure is said to be due to personal reasons, The Wall Street Journal suggested there's tension on the Apple Car team, leading to difficulties establishing clear goals for the project. Apple executives have reportedly urged the team to try to meet ambitious deadlines, which some employees feel are unattainable.

Apple has hired hundreds of employees to work on its rumored electric car project, recruiting talent from companies like Ford, Tesla, GM, Samsung, and NVIDIA. Apple may be aiming to hold off on making additional hires until a new leader for the project can be established.

Rumors have suggested Apple is aiming to have its final engineering specifications for the Apple Car completed by 2019 or 2020, but its internal issues could potentially result in delays.