We didn’t get Apple Watch numbers, but Tim Cook and Luca Maestri delivered plenty of good news about Apple’s current financials and future prospects during Tuesday’s earnings call. Amid all the canned statements and bewildering biz speak, they dropped some tantalizing tidbits.
Cook and Maestri teased us with plenty of bullishness — and a little debunking — about impressive Apple Watch sales and consumer responses to the new device. And that’s just the tip of the iceberg: Apple hit record numbers again this quarter, with massive sales of both iPhone 6 and Macs across the globe.
Here are the highlights from today’s third-quarter 2015 Apple earnings call.
The iPhone continues to shine
iPhone revenues are up 59 percent year over year, says Cook, which is a June quarter record. The customer-satisfaction indexes Apple looks at show iPhone is the highest-rated of any smartphone brand, with the highest switcher rate (from Android) they’ve ever measured: 86% of those interested in a new smartphone plan to purchase an iPhone.
Mac makes waves as PCs sink
In an industry that IDC says is contracting by 12 percent, the Mac is beating the trend with a 9 percent growth rate year over year. Cook and Apple CFO Luca Maestri both reminded investors that the new MacBook is still facing huge demand: Apple continues to catch up with the strong interest in the svelte laptop. There’s been a 33 percent increase in market share for Macs over last year’s third quarter.
Apple Watch is doing awesome
Despite an unwillingness to give competitors any advantage by releasing specific Apple Watch numbers, Tim Cook gave some indicators that the wearable is doing amazingly well, including the fact that Apple Watch sold far better than the original iPhone or iPad did initially.
The Other Products category, which is where Apple Watch numbers get lumped in, is deceiving, says Cook. Sales of products in that category that are not Apple Watch are actually shrinking, so any math whiz that simply subtracts last quarter’s numbers from this quarter’s isn’t getting an accurate take on Apple Watch sales. Take that, naysayers.
And that Slice data positing that Apple Watch sales dropped 90 percent after launch week last April? Cook laid those concerns to rest, saying “our June [Apple Watch] sales were higher than April or May.” (Maestri also said Apple Watch sales topped internal expectations.)
Cook made the point that launching the Apple Watch wasn’t solely for sales alone. Sure, they’re glad it’s selling, but they’ve positioned a new product category based on a constrained initial supply in less-than-optimum sales environments (online versus in-store). Cook is so attached to his Apple Watch, he never goes anywhere with out it.
“I feel fantastic about what the team has done and delivered,” he said, and watchOS 2 — which will bring native apps and other goodies to Apple Watch this fall — will only make the device better.
Services are massive
Apple brought in $5 billion in services revenue this quarter, with record App Store growth of 24 percent, the best seen in any quarter since it launched. App Store revenues doubled in the past quarter.
China is huge
Tim Cook said China was Apple’s next big market, as the developing nation continues to become Apple-centric. The iPhone is selling amazingly well — to the tune of 87 percent growth in greater China — and the Chinese App Store showed a staggering 112 percent increase in sales, with 250,000 apps available.
Maestri chimed in on China, saying revenue from the large country doubled to $13 billion from $18 billion in sales. That’s a lot of cash right there.
Apple remains a force
Apple had a great Worldwide Developers Conference, where it was able to announce big operating system initiatives and get betas into the hands of developers everywhere. With such massive revenue coming from various App Stores across the globe, it makes sense for Apple to connect with and nurture its third-party app developers.
Apple News rated a special mention today, with Cook saying Cupertino had signed 25 percent of the major publishing concerns for the upcoming news app. More than 75 news outlets are signed on to feed the Apple News app with fresh daily content.
“We believe it will be the best news reading experience on any mobile device,” Cook said.
Apple Music is doing very well, too, with “millions and millions of customers” taking advantage of the three-month trial period to check out the service, which includes one-of-a-kind worldwide radio station Beats 1. More than 15,000 artists are using Connect to get in touch with fans.
Big growth for Apple Pay
Apple recently launched Apple Pay in the U.K., with more than 25 million locations in the country and most of the major banks and credit/debit card providers represented. Heck, you can even ride the Underground with Apple Pay.
In the U.S., Apple Pay continues to expand, with a new Square reader coming this fall to bring Apple Pay support to local businesses. Apple Pay is seeing 80,000 new additions per day, and American Express Corporate is adding its cards to Apple’s retail processing system. Cook hopes to see more than 1.5 million total U.S. locations by the end of the year.
iPad sales are down but Cook still ‘bullish’
Apple sold about 3 million fewer iPads last quarter than in the equivalent time frame in 2014 (10.9 million units this year versus 13.3 million last year). But Cook reminded investors to remain calm. iPads are still used by a staggering number of people; the iPad is not going anywhere.
Customers love them, and new features coming in iOS 9, including Split View multitasking and new QuickType text-input systems, will help sell plenty more of the ubiquitous tablet computing devices.
Additional reporting by Lewis Wallace.