Apple has reported its first drop in revenue in 13 years after the tech giant sold 10 million fewer iPhones in the first three months of this year than during the same quarter a year ago.

It is the first-ever year-over-year decline in iPhone sales.

The slide is putting more pressure on Apple and CEO Tim Cook to come up with its next big product.

Cook, of course, has problems many corporate bosses would kill to have. Despite the decline in sales, Apple managed to rack up $10.5bn in profit for the quarter.

"The future of Apple is very bright," Cook told analysts on a conference call on Tuesday.


READ MORE: Apple rejects FBI order to crack Syed Farook's iPhone


But Apple is battling perceptions that its latest iPhones aren't that different from previous models, at a time when overall smartphone sales are slowing around the world.

Apple also sells iPads, Mac computers and other gadgets, but nearly two-thirds of its $50.6bn in quarterly revenue came from iPhones.

"They need to come out with that next great product," said Angelo Zino, a financial analyst with S&P Global Market Intelligence.

Zino said that while he is optimistic about the company's future, "Apple absolutely needs to start diversifying their revenue base."

Overall, the company's revenue in the January-March quarter was down 13 percent from a year earlier. And the company surprised analysts by forecasting another revenue drop of 13 percent or more in the current quarter.

The forecast, which was announced after Apple had closed for the day at $104.35 a share, drove its stock price down 8 percent in extended trading.


READ MORE: Apple versus the FBI


Apple hasn't reported a year-on-year sales decline since 2003, when the iPod was still relatively new and the iPhone didn't exist.

Since then, the iPhone and other products have propelled the company's stock value from $5bn to $579bn, making it the most valuable public company in the world.

Analysts are expecting Apple's performance to improve in the autumn, when it is expected to release the next generation of iPhones with as-yet undisclosed new features.

For now, Apple is finding it difficult to match the blockbuster sales it racked up last year, when shoppers flocked to buy the first iPhones with larger screens - similar to models that Samsung and other competitors were already selling.

Source: AP