Apple Delivers a Blockbuster Quarter, But…
- Paul Thurrott
- Aug 01, 2018
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66
Tuesday night, Apple reported yet another record quarter with double-digit growth. And yet Huawei also surpassed it as the second-biggest smartphone maker.
“We’re thrilled to report Apple’s best June quarter ever, and our fourth consecutive quarter of double-digit revenue growth,” Apple CEO Tim Cook is credited with saying in a prepared statement. “Our … results were driven by continued strong sales of iPhone, Services, and Wearables, and we are very excited about the products and services in our pipeline.”
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Apple posted a net income of $11.5 billion on revenues of $53.3 billion, the latter of which is up 17 percent year-over-year.
Apple’s ability to sell iPhones remains impressive: The firm shipped 41.3 million iPhones in the quarter, roughly flat with the same quarter a year ago, when it sold 41 million units.
In a post-earnings conference call, Mr. Cook referred to the smartphone market as “very healthy,” which is a curious assessment: In the quarter ending on June 30, smartphone sales declined year-over-year and Apple lost market share. Worse, China-based Huawei surged past Apple with 54.2 million smartphone sales, despite being essentially locked out of the U.S. market. So Huawei is now the number two smartphone marker in the world, behind Samsung (71.5 million units) and ahead of Apple.
But iPhone, finally, isn’t Apple’s only major business, at least not directly: Where this product once accounted for over 70 percent of Apple’s revenues, the iPhone this past quarter accounted for just 56 percent of revenues. The reason? Services revenues surged by 31 percent to about $9.6 billion.
Of course, those services revenues are largely consumed by iPhone users. When combined, iPhone and Services do account for 74 percent of Apple’s revenues.
The smartphone market may or may not be “very healthy,” but Apple is having trouble selling Macs all of a sudden: The firm shipped just 3.7 million units in the quarter, a double-digit decline of 13 percent year-over-year. This happened in a quarter in which PC sales, overall, actually rose by about 2 percent, to 62 million units. So the Mac’s market share has fallen to 5.97 percent. I don’t believe Mac market share has been this low since the early 2000’s.
Worse, Apple’s “post-PC” solution, the iPad, is also coasting: The firm sold 11.55 million iPads in the quarter, flat with the same quarter a year ago. But iPad revenues fell 5 percent, which may indicate that buyers are rejecting the pricier and PC-like iPad Pro for the less expensive, entertainment-based basic iPad.
Finally, Apple’s “Other products” business, which includes Apple Watch, Apple TV, and other outliers, saw revenue growth of 37 percent to $3.7 billion. This is Apple’s smallest business, and the firm doesn’t provide unit sales for any of the products it contains. But Mr. Cook indicated that Apple Watch sales grew in the quarter somehow.
Conversation 66 comments
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Stooks
<p>Windows PC's, Apple everything else for me. </p><p><br></p><p>I have 1 Mac, a 2014 loaded Mini that I own and it works fine for what I use it for (home server). I also have a 15inch Macbook Pro from work, 2017 but I simply hate the keyboard and the dongle hell I have to live with when using it. </p><p><br></p><p>Apple seems to be pushing Mac's away from consumers. Jacking the price crazy high (new 13inch 8th gen starts at $1799) and they have never been in the "Form over Function" more than they ever had with the latest Macbook's. Throttlebooks because they just have to force the thiness.</p>
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shameermulji
<blockquote><em><a href="#298337">In reply to Stooks:</a></em></blockquote><p>"Apple seems to be pushing Mac's away from consumers.</p><p><br></p><p>Exactly. They're aiming iPad / iPad Pro at consumers and Macs at the niche high-end market.</p>
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Stooks
<blockquote><em><a href="#298339">In reply to Michael_Miller:</a></em></blockquote><p>"Apple dominates the mobile market"</p><p><br></p><p>No they do not. In the US they have something like 53%? World wide Android has 85%.</p><p><br></p><p>Apple is making crazy money for sure. Their strong points are iOS based devices (iphone, ipad, iwatch, apple tv, homepod) using their services. The Mac division is the odd man out these days. Crazy pricing, crazy form factor choices. The result is professional users abandoning the Mac.</p><p><br></p><p>I predict they will have a touch based Mac by 2020 running iOS on their own ARM chip for Mac's (bigger more powerful) and they will ditch the x86 world. I think by then it will work for them. Most Mac users I know could use an iPad for their computing needs (web surfing, email, photos, hey look at me I have a cool Mac). If it does not then no big deal since they would lose at most 10% of their revenue. Doubtful they would lose 10% as the loyal…cult members will buy and vehemently defend to a embarrassing fault anything Apple does.</p>
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Stooks
<blockquote><em><a href="#298437">In reply to robsanders247:</a></em></blockquote><p>"But with the improved reliability of the keyboard and the new CPUs"</p><p><br></p><p>Oh you mean the Throttlebook Pro's? With their new fix that never lets them go above base speed when running CPU intensive loads so they wont throttle.</p><p><br></p><p>My daughter leaves for college in a few weeks. I was going to buy her a Macbook, 2018 13inch even though they cost $1799 with 8th gen CPU, 8gigs of RAM and a 256gig SSD. She did not want one. Her private high school used Lenovo touch screen laptops for her 4 years. First two years on Windows 8 and the last on Windows 10. She said she wanted a touch screen and OneNote. The Mac was out. </p><p><br></p><p>I got her a Lenovo Yoga 920 directly from Lenovo. $1599, 8gen CPU, 16gigs of RAM, 1TB SSD, 4K touch screen, and their new pen (version 2). USB-C (thunderbolt 3) and USB-A ports. The Pen works really well with OneNote. Her school uses Office 365/OneDrive, just like her high school did. A 13inch Mac with those same specs would have cost me $2599 (16gig, 1TB SSD) no 4k, no touch, no pen. I got her another power adapter so she can leave on in her dorm room and one in her bag.</p><p><br></p><p>Only a few of us have updated our Macbooks. The keyboard is not popular. Nor is the lack of USB-A ports. The loss of the magsafe is a huge. The touchbar is a gimic and I wish I could have gotten the old buttons and the old keyboard. Thankfully work paid for it.</p>
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Stooks
<blockquote><em><a href="#298544">In reply to Jeffsters:</a></em></blockquote><p>Yes actually. Both their XP’s 15 and their Alienware i9 out perform the new MacBook i9 even after the patch. </p><p><br></p><p>‘’This from the Dave Lee guy that posted the video that started throttlegate in his follow up video. He tested 6 i9 laptops and the MacBook, post patch, was last. </p>
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skane2600
<p>I think it's pretty clear that Apple is just going through the motions with respect to Macs. They don't seem to think Macs have much of a future and if they stay on their present course they won't.</p>