I like to call it like I see it, but sometimes I get things wrong. Case in point: late last year I wrote an editorial titled “Apple is lost.” I believed it. A lot of our readers agreed, though some (fairly) did not.
Last night, Apple proved me wrong.
If you missed it, Apple published its fiscal first quarter 2017 earnings after the bell on Tuesday afternoon. It was a gang-buster quarter, “dynamite” in Tim Cook’s words.
The company is generating so much revenue from its services department, which includes iTunes, the App Store and Apple Music, that the Services department is expected to generate as much as a Fortune 100 company sometime this year. Let that sink in.
Apple also announced that it was a record quarter for iPhone sales, surpassing last year’s record. I suppose that’s not too surprising given that we received a new iPhone 7 and iPhone 7 Plus this year, though I didn’t see it coming. Apple played it safe this year with a really conservative upgrade and I didn’t think it was going to be able to top records, new iPhone or not.
Another surprising fact from the earnings call: Cook said that Apple earned record revenue from the Apple Watch. Apple still hasn’t revealed sales figures but said it couldn’t make enough to keep Apple Watch units in stock during the holidays.
Of note, though: Apple Watch earnings are reported under “Other revenue” in Apple’s filings. “Other revenue” also includes cash generated from Apple TV, Beats products, the iPod and other Apple-branded accessories and third-party products sales. Other revenue actually dropped, which means one of those other categories — my guess is Apple TV — saw such a large decrease in sales that it offset the record revenue generated by Apple Watch. Good thing Apple entered the wearable market.
Even Mac sales generated record revenue
Mac sales increased a hair over the year-ago quarter to 5.4 million units sold (from 5.3 million), likely driven by the new MacBook Pro with Touch Bar.
While that doesn’t seem like much, Cook said Apple set “all-time revenue records for iPhone, Services, Mac and Apple Watch,” which suggests Apple’s Mac strategy is working, even if units don’t appear to be flying off shelves. That also quiets my concerns in regards to Apple’s decision to drag its feet on Mac Pro and iMac refreshes; clearly, the product category is doing just fine without them… for now.
Apple crushed Wall Street’s estimates with $77.38 billion in revenue for the quarter. And while I do think Apple needs to consider making a play in AR/VR and showing consumers that it’s working to develop new technologies that will blow us away as much as the iPhone and iPad did when they initially debuted, it’s clear that Apple isn’t lost… maybe just a hair boring. Consumers are still buying its products, though, which means it should keep playing to its strengths… even if its strategy sometimes boggles my mind.