What’s in a week? That’s something Apple’s critics didn’t think about in speculating that iPhone X sales tanked — big time. Despite surveys showing the opposite, the stories were enough to impact the company’s stock price in recent days as people waited for the bad news. Or perhaps lots of corporate spin control.
The end result was somewhat mixed. Revenue hit record levels, iPhone revenue hit record levels. But then there were other numbers, which missed estimates.
But, as I said, it’s about a week.
So the December quarter in 2016 lasted 14 weeks; last year it lasted 13 weeks, and that meant for some sales shortfalls.
So iPhone sales declined from 78.3 million in the year-ago quarter. This year they totaled 77.3, a decline of 1.2%. But what a minute! The sales mix made a big difference. Despite claims that customers would resist the $999 price tag for the entry level iPhone X, claims that persisted for months, that definitely wasn’t how it turned out. According to Canalys, a worldwide market analysis firm, the iPhone X was the top-selling smartphone on planet Earth in the December quarter.
Apple CEO Tim Cook confirmed those results, saying, “It has been our top selling phone every week since it launched.”
But remember that it didn’t launch till about six weeks after the iPhone 8 family shipped, so it had lots of catching up to do. The sales picture was helped along by the fact that supplies approached demand right before Christmas, another development the skeptics didn’t predict. You may also be surprised to learn that the second-best selling smartphone worldwide was the iPhone 8 Plus, followed by the iPhone 8.
That wasn’t what the skeptics expected, not even close. So rather than preferring cheaper gear, customers went large in both display size and price. This may encourage Apple to consider building an ever bigger iPhone X this fall, something that’s already been predicted.
As to other numbers, revenue totaled $88.3 billon compared to $78.4 billion the previous year. That’s a big increase by any measurement and it exceeds Apple’s guidance that ranged between $84 billion and $87 billion. Cook also announced that the company’s active installed base of devices hit 1.3 billion, representing a 30% increase over the past two years.
For the third consecutive quarter, iPad sales increased, but just 0.7% to 13.2 million. Revenue grew by 5.9%, meaning that sales were weighted towards the more expensive iPad Pros. According to Apple, half of those iPad sales went to first-time buyers or those switching from other platforms. Take that Samsung!
Interesting that this is what Apple used to say about Mac sales, quarter after quarter, but not recently.
The arrival of the iMac Pro at the end of the quarter, however, didn’t help Mac sales much. They still fell 4.8% to 5.1 million, with revenue declining by similar amount. Indeed, this is one of those rare instances where Mac sales were actually lower than estimated by Gartner and IDC, which usually understate those figures. Again, that missing week surely didn’t help.
On the other hand, it does appear the Apple Watch is doing quite well. Even though sales figures are buried in the Other Products category, Cook said that the Apple Watch grew 50% in both revenue and units sold for the December quarter compared to the previous year. At a time where other smartwatches are tanking, Apple has assumed a high percentage of the market all for itself. It’s hard to even remember what those other models are.
Unfortunately some of this growth may be due for a pause. Apple’s guidance for the current quarter includes revenue of $60-62 billon. Wall Street was expecting something in the range of $65 billion. But some of the naysayers were suggesting that March quarter revenue would be in the $60 billion range or less.
But remember that Apple exceeded its guidance for the December quarter, so revenue for this quarter may also be higher than the early numbers indicate. Apple is generally conservative with its quarterly guidance.
What is helping Apple is the fact that the average sale price of iPhones has soared because of the popularity of the iPhone X and the iPhone 8 Plus. Again, this was not what Apple critics expected when they spent the better part of a year telling us all how people would reject a $999 iPhone, or even a $799 model, the iPhone 8 Plus.
Despite what you might expect by missing some expectations, Wall Street is reacting positively to the December quarter results. In after hours trading, Apple stock rose 3.35% to $173.40 per share.
Whatever you say about Apple, it is a money machine, and reporting sales a few billion more or less isn’t hurting so much. But these results have surely overturned expectations big time for the future. Does it mean Apple will place a greater emphasis on more expensive models, or just continue to balance the iPhone lineup with cheaper products, such as the iPhone SE and some older models, to allow it to reach a wider range of customers.
1.3 billon active devices is certainly something to shout about.
In any case, that’s it for the hard figures. If you want to dive more deeply into the numbers, you can find them at Apple’s Hot News site.
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