Yesterday, Apple released the results for its 2016 fiscal second quarter (which ran from December 27, 2015 to March 26, 2016) and held a call with analysts to discuss the results. Apple always sees a big decrease in revenue from its first to its second fiscal quarter because Q2 comes right after the holiday quarter. But this year, Apple's fiscal second quarter was noteworthy for an unfortunate reason. For the first time since Apple's 2003 third quarter, Apple has brought in less money in a fiscal quarter than Apple saw in the year-ago quarter. Apple's revenue was $50.6 billion in 2016 Q2, down from $58 billion in 2015 Q2. 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 a transcript prepared by Rene Ritchie and Jason Snell over at iMore. Apple's official press release is here.
For many news outlets, the drop in revenue is the big story, and I'm sure that Apple's stock price will take a hit. But as always, I'm not as interested in 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 51.2 million iPhones. That's down from the 61.2 million iPhones that Apple sold a year ago. (Apple's all-time record was three months ago in the 2016 fiscal first quarter, when Apple sold 74.779 million iPhones.) Apple CEO Tim Cook said that the 51.2 million was consistent with Apple's own expectations, but lower than the "exceptional" 2015 Q2 when Apple saw an acceleration in iPhone upgrades and 40% iPhone sales growth from 2014 Q2.
- The new iPhone SE went on sale March 31, just after 2016 Q2 ended, so the 51.2 million number doesn't include any iPhone SE sales.
- Cook noted that looking at both 2016 Q1 and Q2, Apple has seen more people switching from Android to iPhone than any other six month period in history.
- Cook noted that only 42% of the global handset market is currently using smartphones, which he sees as an opportunity for future iPhone sales growth. For example, in India, iPhone sales were up 56% from a year ago. Thus, although Cook noted that the overall smartphone market is currently not growing, he sees opportunities for growth in the future.
- By my count, as of March 26, 2016, Apple has sold over 947 million iPhones since they first went on sale in 2007.
- Looking to the future, it occurs to me that it is possible that Apple will sell its one billionth iPhone in the current 2016 Q3 quarter, which will end in late June of this year. In 2015 Q3, Apple sold 47.5 million iPhones, so Apple would need to do better than that this year to cross over that threshold before the end of June, but it is possible considering that the new iPhone SE is now on sale and seem to be doing well.
- Apple sold 10.3 million iPads, compared to 12.6 million in the year-ago quarter.
- Cook noted that the new 9.7" iPad Pro just went on sale, and predicted that next quarter Apple will see the best iPad revenue that it has seen in over two years — although Apple CFO Luca Maestri said that Apple expects to see seasonal declines in number of iPads sold.
- Cook noted that the tablet market is very different from the smartphone market because people tend to hold on to tablets for a long time before upgrading.
- By my count, as of March 26, 2016, Apple has sold over 318 million iPads since they first went on sale in 2010.
- The App Store saw record revenue in 2016 Q2.
- Apple Music now has 13 million paying customers. (Spotify has about 30 million paying subscribers.)
- Unlike the iPhone and iPad, Apple doesn't report Apple Watch unit sales. But Cook did note that there were more Apple Watch sales in the first year than iPhone sales in the first year. We know that Apple sold 5.4 million iPhones during the first year that the iPhone was on sale. The Wall Street Journal reported earlier this week that, according to analysts (who, of course, may be wrong), Apple sold 12 million Apple Watches in the first year.