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Profits dip again for Apple, while iPhone sales beat record

Lex Friedman | July 24, 2013
Apple's profits fell for a second consecutive quarter, even as the company enjoyed record iPhone sales for the April-to-June time period.

With government, business, and education, iPhone holds a 62.5 percent share of the U.S. commercial market.

Cook suggested that Apple is at least open to the notion of trade-ins for smartphones. "I like the environmental aspect of it," he said, though he stressed that Apple hasn't announced any plans on that front. Cook pointed out that "residual value of iPhone stays high, and there's so much demand around it. So that makes the trade-in program very lucrative."

iPad declines
The picture was less rosy for iPad sales, but Apple has a perfectly reasonable explanation for the 14 percent drop in tablet sales from last year's third quarter. A year ago, Apple introduced the third-generation iPad and enjoyed a full quarter's worth of sales to the tune of 17 million units. This quarter, sales fell to 14.6 million iPads.

Still, Apple has plenty of reason to remain bullish on the iPad. Oppenheimer said that the iPad ranked tops in a 2013 U.S. tablet satisfaction survey by JD Power and Associates. And during the quarter, the company inked a deal with the Los Angeles Unified School District, the second largest district in the U.S., to roll out iPads to 640,000 students.

In fact, the iPad got the bulk of the credit for a strong quarter of sales to U.S. schools. According to Oppenheimer, the last three months generated the highest quarterly revenue ever for Apple's U.S. education institution business.

The Mac beats the market
Mac sales also fell in the quarter, down 7 percent from last year to 3.8 million units. Still, Oppenheimer pointed out that the 3.8 million Macs sold beat Apple's own expectations. And Apple's sales still were ahead of the total PC market, which saw sales contract by 11 percent according to estimates from research firm IDC (which is owned by the same company that owns Macworld). By Apple's math, the Mac gained market share during the quarter.

The Mac was one of the few product lines to see any changes during the quarter, with Apple updating its MacBook Air lineup at the beginning of June by adding new Intel processors. Company executives had little to say about any impact those new laptops had on overall Mac sales, but Oppenheimer did call it the most successful MacBook Air launch to date, adding that customer response was great.

But during the call, executives implied that there were better things to come. Oppenheimer noted that June's Worldwide Developers Conference included previews of both the Mac Pro and the next version of OS X, code-named Mavericks.

The sweet sound of retail success
The iTunes Stores--which includes the App Store, Mac App Store, iBookstore, and the music, movies, and TV sections of iTunes--generated $4.3 billion in billings, Oppenheimer said, culminating in the best week and best month ever for App Store. That translated to quarterly revenue of $2.4 billion, up 29 percent year over year. Total quarterly revenue from iTunes, software, and services generated $4 billion in revenue.

 

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