Michal Marek It was for Apple third fiscal quarter again a great success and the company did well on almost all fronts. The third quarter is usually the weakest and most boring when it comes to results, which was partly true this year as the company earned more in the first half of the year. However, year-on-year, Apple has improved significantly and in its own way has shown a really sleepy ride full of successes, some of which are definitely worth mentioning.
The iPhone is doing great
For Apple, the iPhone is a constant in terms of revenue, and this quarter was no different. A respectable 47,5 million devices were sold, another record since so many iPhones have never been sold in the same quarter. Year-over-year, iPhone sales increased by 37%, and even more interesting is the increase in revenue, which reached 59%.
Sales in Germany, South Korea and Vietnam, for example, which doubled year-on-year, greatly helped the increase. Tim Cook was particularly pleased by the fact that in the 3rd quarter of this year, the iPhone recorded the highest number of users switching from Android to date.
Apple's services have earned the most in history
Apple achieved an absolute record in terms of revenue for its services. Compared to last quarter, they earned 24% more and brought $5 billion to Cupertino. China stands out from the statistics, where App Store profits have more than doubled year-on-year.
Apple Watch is doing well beyond expectations
When publishing financial results, Apple provides statistics on sales and profits by category, which are as follows: iPhone, iPad, Mac, Services and "Other Products". The main component of the last category, whose name is rather generic, was iPods. In recent years, compared to Apple's main products, these were not sold so much that the company's management was worth a specific mention. However, the category now also includes the Apple Watch, with the result that sales statistics for Apple's latest product line are a mystery.
In short, Apple does not want to make it easier for competitors by revealing more detailed sales statistics about the Apple Watch, which is understandable. So Tim Cook limited himself to the statement that although the company is not yet able to produce enough watches to satisfy demand, more Apple Watches have already been sold than Apple's management expected.
Watch sales exceeded our expectations, despite shipments still not meeting demand at the end of the quarter... In fact, the launch of the Apple Watch was more successful than the first iPhone or the first iPad. When I look at all of this, we are very happy with how we did.
Of course, journalists during the conference after the results were published were very curious about the Apple Watch and therefore pushed Cook to share a few more pieces of information. For example, he denied a rumor that Apple Watch sales are rapidly declining after an initial boom. Sales in June were, on the contrary, higher than in April and May. "I find that the reality is very contrary to what is written, but June's sales were the highest."
Subsequently, Cook concluded by urging journalists not to try to estimate the success of the Apple Watch based only on the increase in the "Other products" category. Although compared to the last quarter, this component of the Cupertino company's income grew by $952 million and by an incredible 49 percent year-on-year, Apple Watch is said to be doing much better. This may be related, for example, to the drop in sales of iPods and the like. However, more detailed information is not public.
Apple watchOS 2 should guarantee success in combination with the holidays
Several times during the conference call, Tim Cook stated that Apple is still learning about the potential of the Apple Watch and that they hope to create a family of products that will be successful in the long term. But already in Cupertino they have a much better idea of the demand for the Apple Watch than they did a few months ago, which should have a positive impact on shipments of the device in the holiday season. "We believe the watch will be one of the top gifts of the holiday season."
Great results in China
It is clear from practically all appearances by Apple representatives that China is becoming an increasingly key market for the company. In this country with more than 1,3 billion inhabitants, Apple sees great potential, and is adapting its services and business strategy accordingly. The Chinese market has already surpassed the European market and its growth is incredible. The best news for Cupertino, however, is that this growth continues to accelerate.
Meanwhile, while growth hovered around 75 percent over the past two quarters, Apple's profits in China more than doubled year over year in the third quarter. iPhones were sold in China by 87 percent more. Although China's stock market has raised many questions in recent days, Tim Cook is an optimist and believes that China will become Apple's biggest market ever.
China is still a developing country and therefore has huge growth potential for the future. According to Cook, China represents a bright future for smartphones, if we look, for example, at the fact that LTE Internet connection is available in only 12 percent of the country's territory. Cook sees great hope in the rapidly growing middle class of the population, which is transforming the country. By all accounts, it is certainly not a vain hope. Study namely, they claim that the proportion of Chinese households belonging to the upper middle class will increase from 2012 to 2022 percent between 14 and 54.
The Mac continues to grow in a declining PC market
Apple sold an additional 4,8 million Macs last quarter, which may not be a staggering number, but given the circumstances, it's an achievement worth noting. The Mac is growing by 9 percent in a market that, according to the analyst firm IDC, has fallen by 12 percent. Apple's computers will probably never be a blockbuster like the iPhone, but they have shown admirably consistent results and are a profitable business for Apple in an otherwise struggling industry.
iPad sales continue to slide, but Cook still has faith
Apple sold 11 million iPads in the last quarter and earned $4,5 billion from them. That in itself doesn't seem like a bad result, but iPad sales have been falling (down 18% year-on-year) and it doesn't look like the situation is going to improve anytime soon.
But Tim Cook still believes in the potential of the iPad. Its sales should be helped by the news in iOS 9, which raise productivity on the iPad to a higher level, and in addition to partnership with IBM, thanks to which Apple wants to establish itself in the corporate sphere. As part of the cooperation between these two technological giants, a number of professional applications have already been created, which are designed for use in the aviation industry, wholesale and retail sales, insurance, banking and a number of other fields.
In addition, Tim Cook is protecting himself by the fact that people still use the iPad and the device is doing great in the usage statistics. In particular, it is said to be six times better than the closest iPad competitor. The long life cycle of Apple's tablet is to blame for weaker sales. In short, people don't change iPads nearly as often as, for example, iPhones.
Investments in development exceeded 2 billion dollars
This year was the first time Apple's quarterly science and research spending exceeded $2 billion, an increase of $116 million from the second quarter. Year-on-year growth is really rapid. A year ago, research spending was $1,6 billion, down a fifth. Apple first conquered the goal of one billion dollars invested in research in 2012.
