Yesterday, Apple released the results for its 2015 fiscal first quarter (which ran from September 28, 2014 to December 27, 2014, and did not actually include any days from calendar year 2015) and held a call with analysts to discuss the results. This is typically Apple's best quarter of the year because of holiday sales. It turned out to be Apple's best fiscal quarter ever, with revenue of $74.6 billion (compared to $57.6 billion this time last year) and record quarterly net profit of $18 billion (compared to $13.1 billion this time last year). Apple also set new a new record for iPhone sales. It was a heck of a quarter for Apple, and according to Greg Kumparak of TechCrunch, it was the most profitable quarter for any company, ever.
If you want to get all of the nitty gritty details, you can download the audio from the announcement conference call from iTunes, or you can read a rough transcript of the call prepared by Seeking Alpha, or Jason Snell of Six Colors prepared an almost verbatim transcript of many parts of the call. Apple's official press release is here. As always, however, I'm not as concerned about the financial details as I am the statements of Apple executives during the call that are of interest to iPhone and iPad users. Here are the items that stood out to me:
- During the past quarter, Apple sold 74.5 million iPhones, the most that Apple has ever sold in a fiscal quarter. The previous record was the 2014 fiscal fourth quarter, in which 51 million iPhones sold during the late 2013 holiday buying season. To not just beat that record but to do so by almost another 50% is impressive, and shows an incredible demand for the iPhone 6 and the iPhone 6 Plus. It wasn't that long ago (fiscal 2011) that Apple sold 72.21 million iPhones in a full year, and now the company is selling more than that in a single quarter.
- Apple CEO Tim Cook said that demand for new iPhones has been "staggering, shattering our high expectations, with sales over 74 million units, driven by the unprecedented popularity of iPhone 6 and iPhone 6 Plus. This volume is hard to comprehend. On average, we sold over 34,000 iPhones every hour, 24 hours a day, every day of the quarter." Wow.
- Apple didn't reveal the iPhone 6 sales versus iPhone 6 Plus sales, but Cook did say that the iPhone 6 was the most popular phone overall that Apple sold last quarter, although Cook did note that in some parts of the world, the iPhone 6 Plus was far more popular than in other parts of the world.
- Obviously Apple sells a lot of iPhones to people who want to upgrade an older iPhone, but Cook said that only a small percentage of current iPhone owners — "a number that's in the mid-teens or barely in the teens" — have upgraded to an iPhone 6 or iPhone 6 Plus as of yet. New iPhone sales were also a big part of the 74.5 million iPhones sold. Cook also noted that after the iPhone 6 and iPhone 6 Plus launch, there were more people buying an iPhone for the first time than Apple had seen after any other iPhone launch.
- Cook said that he sees even more new potential iPhone buyers noting that, "given there are a fair amount of Android units out there, there is also an enormous amount of Android customers that could switch. And I’d also remind you that there is a lot of people that have not yet bought a smartphone. And I know it doesn’t feel like that when you’re sitting in the United States, but from a worldwide point of view, there's still lots of them."
- By my count, as of December 27, 2014, Apple had sold over 664 million iPhones since they first went on sale in 2007.
- As Apple sells more and more iPhones, they become a larger part of Apple's overall financial success. iPhones accounted for $51.18 billion of Apple's $74.6 billion in revenue for the quarter, which means that iPhones accounted for almost 69% of Apple's total revenue last quarter.
- Apple introduced Apple Pay a few months ago (the system that lets you pay for items at stores using your iPhone and your fingerprint), and it is off to a strong start. Cook said that around 750 banks and credit unions are now supporting Apple Pay. Cook predicted: "With all of this momentum in the early days, we are more convinced than ever that 2015 will be the year of Apple Pay."
- Cook also mentioned that a company called USA Technologies announced yesterday that it had added Apple Pay support to 200,000 vending machines. I actually used Apple Pay when I didn't have exact change at a vending machine at a train station in New York over the Christmas holiday, and it worked great. I was really surprised to see the wireless payment logo on a Coke machine, but there it was. I simply put my finger on my iPhone and held it up to the machine, and out popped my beverage. And because of the security built-in to Apple Pay, I didn't have to worry about some random vending machine having my credit card number:
- While Tim Cook talked about the tremendous iPhone sales, he let Apple CFO Luca Maestri discuss iPad sales, which were down. During the past quarter, Apple sold 21.4 million iPads. Apple had sold 26 million iPads this time last year, and 22.9 million iPads this time two years ago, so iPad sales are not on the same trajectory as iPhone sales.
- Cook said that he still thinks that the iPad has a "very bright future," but part of the reason for the lower sales is that people upgrade an iPad less frequently than they upgrade an iPhone. He said that there are also some people who upgrade from an iPad not to another iPad but instead to an iPhone (which makes sense with the larger iPhone 6 Plus) or to a Mac.
- Cook also mentioned the recent partnership with IBM in the enterprise market and other enterprise developments, and noted that with the iPad, "I think we’re really going to change the way people work."
- By my count, as of December 27, 2014, Apple had sold over 258 million iPad since they first went on sale in 2010.
- If you put iPhones and iPads together, that is a total of 923 million sold to date. But Apple sells another iOS device too — the iPod touch — and if you add all iOS devices together, Apple crossed over the 1 billion mark this quarter. Cook said: "On November 22nd, we shipped our one billionth iOS device. It was a Space Gray 64GB iPhone 6 Plus, which we’ve saved here at Apple. One billion devices is an almost unfathomable milestone, and we are all incredibly proud to be a part of it."
- The Apple Watch could one day be the ultimate accessory for the iPhone. Apple previously announced that it would start to ship in early 2015, and yesterday Cook clarified that this means April. Thus, you could be only three months from wearing a new Apple product on your wrist.