Apple sold a crazy number of iPhones and Macs during the December quarter. And the result is what CEO Tim Cook called the company’s “biggest quarter ever.”
Take a deeper dive into the details to see how Apple was so very successful.
Apple set so many all-time records
Apple executives hold a conference call with investors and the press each quarter just after the earnings announcement. That always includes CFO Luca Maestri going over the financial details to add some color. The Q1 2022 results were so strong in multiple product categories that his summary contained the phrase “all-time record” about 20 times.
The company set an all-time revenue record for the quarter (an astonishing $123.9 billion). Net income set an all-time record. Revenue from iPhone, Mac, wearables and services each set all-time records. The installed base on iPhone, iPad and Mac set all-time records. And that includes all-time record highs in all geographic segments.
CEO Tim Cook got into the game too, bragging that, “we are pleased to see that our active installed base of devices is now at a new record with more than 1.8 billion devices.”
In short, Apple had a heck of a quarter. And its results solidly beat analysts’ predictions. — Ed Hardy
News of ‘peak’ iPhone growth may have been wildly exaggerated
During Apple’s record-breaking earnings call Thursday, an analyst asked about iPhone’s prospects for growth, referring to past opinions suggesting the juggernaut handset may have already hit its peak.
Well, numerous global markets may have something to say about that, especially as the world moves toward adoption of 5G.
As Luca Maestri noted, iPhone revenue grew 9% year over year to an all-time record of $71.6 billion — despite supply constraints.
And as Tim Cook added, iPhone models outsold others in various markets, “including the top five in the U.S. and Australia, the top four in urban China, two of the top three in the U.K., three of the top four in France and Germany, and four of the top six in Japan.”
Cook emphasized a positive outlook for iPhone, particularly as 5G gains ground.
“We’re still really in the early innings of 5G,” he said. “I mean, if you look at the install base and look at how many people are on 5G versus not, and you know we don’t release those exact numbers, but you can do some math and estimate those. We maintain a very optimistic view on iPhone long term.” — David Snow
M1 Macs to the max
The Apple silicon powering the latest Macs is fueling a surge in computer sales. Mac revenue hit $10.9 billion in the holiday quarter (once again, as Maestri said, “an all-time record”).
Consumers just can’t seem to get enough of Cupertino’s custom chips, which deliver a potent mix of power and efficiency.
“The vast majority of our Mac sales are from M1-powered devices, which helped drive a record number of upgraders during the December quarter,” said Maestri. “Our momentum in this category is very impressive, as the last six quarters have been the best six quarters ever for Mac.”
Cook also touted Apple silicon as the factor driving the impressive sales.
“The response is very much because of M1,” he said, adding that the latest Macs are wooing both upgraders and switchers. “Six out of 10 sales are to people new to the Mac.”
And those new M1 Mac owners? They’re thrilled, according to Cook.
“Customer satisfaction is off the charts,” he said. — Lewis Wallace
But component constraints hit iPad hard
If you were paying close attention when the list of “all-time records” was going on, you might have noticed that iPad did not set an all-time revenue record. It was actually down — Apple’s only product category that didn’t show year-over-year grow in the December quarter.
But Apple execs were quick to point out during the conference call that this wasn’t because of low demand for tablets. Tim Cook said, “The issue with iPad — and it was a very significant constraint in the December quarter — was very much on these legacy nodes that that I had talked about. Virtually all the problem was in that area.”
When he says “legacy nodes,” Cook means processors that go into iPad other than the primary one. Computers use a collection of these, and the global chip shortage has put some of the ones that iPad needs in short supply. That means that some people who wanted to buy tablets just couldn’t because they weren’t available.
And it hurt Apple: While iPad revenue hit $7.2 billion, that’s down 14% year over year. For comparison, Mac revenue was up 25% and iPhone revenue grew 9%. — Ed Hardy
Apple R&D and the metaverse
Shockingly, Cook would not divulge what types of new products will pop out of Apple’s pipeline next. So we got no confirmation of long-rumored projects like a mixed-reality headset or a self-driving car during Thursday’s conference call.
When asked about the metaverse, which companies like Meta focus so keenly (and publicly) on, Cook definitely wants you to know that Apple is looking toward the future.
“We’re a company in the business of innovation, so we’re always exploring new and emerging technologies, and I’ve spoken at length about how this area is very interesting to us,” Cook said. “Right now we have over 14,000 ARKit apps in the App Store, which provide incredible AR experiences for millions of people today. And so we see a lot of potential in the space and are investing accordingly.”
Cook also defended Apple’s secretive approach to product development.
“We have a little different model” than other companies, he said. “We try to announce things when they’re ready or close to ready, and try to maintain an element of surprise… And I think that’s proven successful for us.”
Answering a question about Apple’s research and development spending, Cook pinpointed the company’s focus on areas “at the intersection of hardware, software and services.”
“We think that that’s where the magic really happens, and it brings out the best in Apple,” he said.
“There are areas that have more than piqued our interest, and we are investing in those,” he continued, saying the company continues to ramp up its spending on R&D.
“There’s quite a bit of investment going into things that are not on the market at this point — as there always are,” he said. — Lewis Wallace