Today, Apple reported its Q3 earnings to investors. Total sales increased by 1% compared to the same quarter last year, reaching $ 53.8 billion. Apple CEO Tim Cook framed the report to investors as "a blowout quarter" for wearables, citing strong demand for Apple Watch and AirPods, as well as growth in services as a counterweight to a small dip in iPhone sales.
iPhone sales dropped from $ 26.5 billion to $ 26 billion last year (YOY), and iPhones now account for less than half of Apple's revenue. Cook tried to smooth the response to the fall, saying: "Although this is down 1
iPad revenue was just over $ 5 billion, and the Mac saw $ 5.82 billion in strong sales of the recently revised MacBook Air and MacBook Pro. Wearables reached $ 5.52 billion, while services hit $ 11.45 billion. Services increased by 13% YYY, Apple's biggest positive business story for another quarter. Apple claimed 420 million paid subscribers across its various services, indicated that services grew in all regions the company tracks, and reiterated that it is on track to reach its goal of double service revenue by 2020.
While Apple Music and iCloud was not discussed for a long time during the conversation with investors, Apple executives boast a 50% increase in monthly users of the Apple TV app YOY. They also confirmed that Apple Pay now completes just one billion transactions per month – twice as many as a year ago. In August, the company will introduce the Apple card, which is likely to increase the use of Apple Pay even more.
Apple more or less suggested to investors that this was a strong quarter because the numbers undermine pundits & # 39; claims that Apple will not be able to compensate for slowing iPhone sales with wearables and services. The problem, however, is that the long-term health of portable and service businesses is linked to the success of the iPhone.
To undermine this argument, Cook said that the active install base for Apple devices is higher than it has ever been this quarter. Asked about how the company explains that in the midst of lowering its flagship hardware product sales, Cook referred to customer loyalty (ie, relatively few users switching to competing platforms) and aftermarket users – consumers who bought iPhones used from anyone other than Apple. Cook said the company is seeking to encourage the aftermarket because it helps Apple bring its services to customers it may not come up with for its expensive premium products.
Apple shares rose 4% in afternoon trading after the call. While this quarter saw a continuation of the story from the previous quarter – the iPhone slumping towards services and portable growth – expect much more interesting news next quarter. It will be the first to include revenue from the new iPhone models to be unveiled later this year, in addition to the launch of two new services: Apple TV + and Apple Arcade.