For months, we’ve been hearing about an alleged “iPhone Super Cycle.” The introduction of a premium model, the iPhone X, was supposed to be so compelling that scads of people were expected to upgrade, far more than in the usual cycle. Thus sales would soar, and, until things died down, or unless a new super cycle was launched, Apple would sell far more iPhones.
Now this claim has been repeated over and over again, and has been used as leverage by some of Apple’s critics to claim that the iPhone X was thus a failure for failing to meet such unrealistic expectations. Add to that the persistent claims that the most-expensive iPhone was a big fail, not matching Apple’s alleged inflated expectations whatever they were.
Of course, these outsiders no doubt haven’t a clue how many units Apple expected to sell, beyond the usual quarterly earnings guidance. The claim about an alleged super cycle never had anything to do with reality. It was just a made up story, a product of someone’s imagination that caught a wave and was given a level of credibility it did not deserve.
But before I get to the sales numbers that many of you have probably read about already, consider that the smartphone market is highly saturated. Manufacturers are finding it more difficult to convince you to upgrade. After all, the better models are good enough already. Take a nearly three-year-old iPhone, such as the iPhone 6s. Unless damaged beyond repair, they still work just fine. Well maybe it needs a new battery. But Apple continues to sell them. Even an iPhone 6 works pretty well with iOS 11, and if the one you have is in good shape, do the new models offer enough compelling new features to convince you to buy the latest and greatest?
Apple’s apparent solution to this dilemma is to sell several lines of iPhones, dating back to 2015 models. So if the iPhone X is too rich for your blood, way too rich, consider the iPhone 6s. Or the 2016 iPhone SE, for $349, if you don’t mind a smaller display.
Despite that, during the March quarter, the iPhone X remained Apple’s largest selling iPhone. You can’t do much better than that, and this happened despite all the stories about collapsing sales, huge supply chain cutbacks and so forth and so on.
During Tuesday’s quarterly conference call with financial analysts, Apple CEO Tim Cook remarked, “It’s one of those things where a team wins the Super Bowl. Maybe you want them to win by a few more points, but it’s a Super Bowl winner and that’s how we feel about it. I could not be prouder of the product.”
In its March quarterly financials, Apple reported sales at the higher end of its guidance and in line with some analyst expectations. So total sales were $61.1 billon, an increase of 16% over last year. Apple sold 52.2 million iPhones, a unit increase of 3% over last year, where some 50.8 million units were sold. The average iPhone sales price was $728.30, compared to $655 last year. While down from the $796.42 number during the December quarter, it’s still clear the iPhone X continued to make a substantial difference.
So iPhone sales are flattening, but earning more money per sale surely compensates.
Obviously, the claim that Apple is having trouble convincing people to pay $999 and up for an iPhone is false. And despite rumors of falling sales in China, Apple reported 20% growth in “Greater China and Japan.”
Sales of other products and services mostly increased too. Apple’s wearables business, for example, has become as large as a Fortune 300 company, and the Apple Watch remains number one in its market. Don’t forget how it was denigrated year after year, as the rest of the smartwatch market collapsed around it.
iPad sales increased slightly to $4.1 billion, compared to $3.9 billion last year. Sales came in at 9.1 million, up from 8 .9 million last year.
The Mac, however, had a slight dip, from 4.2 million down to 4.1 million. This is in keeping with an overall flatness of the PC market, although Cook said that some 60% of purchases were made by people new to the platform. This may indicate the fact that people are keeping their Macs for longer periods, while more people in the enterprise, when given a choice of which personal computer to place on their desks, choose Apple.
For this quarter, Apple is expecting revenue between $51.5 billion and $53.5 billion, and gross margins between 38% and 38.5%. This appears to be at the higher end of Wall Street expectations, so the volume of the fear mongering has been quieted.
If you want to know more about Apple’s March numbers, you can check its press release.
I am not going to bother writing about the stock buybacks and increased dividends. If you’re already invested in Apple you know about it, and if you’re not able to afford the price of Apple’s stock, no sense in worrying about it. It’s just typical of what’s been happening in greater frequency since the 2017 tax cut was passed. Rather than give large wage increases to employees, companies are focusing mainly on stock buybacks and other money games that seldom enrich anyone but investors and executives.
Meantime, fears about iPhone X sales will temporarily abate — until the next time.
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