Apple Earnings Beat The Street But iPhone Sales In China Crater And iPad Pro Won't Save The Day
“We are pleased to report third quarter results that reflect stronger customer demand and business performance than we anticipated at the start of the quarter,” said Apple CEO Tim Cook. “We had a very successful launch of iPhone SE and we’re thrilled by customers’ and developers’ response to software and services we previewed at WWDC in June.”
When it comes to devices, Apple sold 40.4 million iPhones (down from 47.5 million a year ago), while iPad sales fell 7 percent to 10 million units. On the plus side, revenue from iPads increased by 9 percent year-over-year, which can mainly be attributed to a higher mix of more expensive iPad Pro tablets. Mac sales were down 11 percent to 4.3 million; that drop can at least be partially attributed to a stagnant lineup that hasn’t seen many updates over the past few years.
Apple’s sales were especially hit hard in China, where revenue declined by a hefty 33 percent, compared to a 20 percent decline in the Asia Pacific region and a 11 percent decline in North and South America. The iPhone has been especially hit hard following years of torrid growth in China. Apple’s flagships have come increasingly under attack from homegrown smartphone manufacturers like Huawei and Xiaomi, which have been pumping out top notch Android flagships at reasonable prices.
One bright spot in the company’s earnings came surprisingly from its Services business. “Our Services business grew 19 percent year-over-year and App Store revenue was the highest ever, as our installed base continued to grow and transacting customers hit an all-time record,” added Apple CFO Luca Maestri.
Another interesting takeaway from the earrings call, which followed the earnings release, is that Apple is going to invest heavily in augmented reality technology going forward. Cook stated:
It also does show that AR can be really great. We have been and continue to invest a lot in this. We are high on AR for the long run, we think there’s great things for customers and a great commercial opportunity. The number one thing is to make sure out products work well with other developer’s kind of products like Pokemon, that’s why you see so many iPhones in the wild chasing Pokemons.
Augmented reality is definitely a hot market to be in these days, but it’s going to take more than AR for Apple to get its mojo back. The iPhone 7 is just around the corner, so the company at least has that to look forward to in the coming quarters.
