Last week, Apple released the results for its 2018 fiscal first quarter (which ran from October 1, 2017 to December 30, 2017, and did not actually include any days from calendar year 2018) 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 was actually Apple's best quarter ever in terms of revenue, with revenue of $88.3 billion (compared to $78.4 billion a year ago, which was the previous all-time record). 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. Jason Snell of Six Colors also prepared a transcript. Apple's official press release is here.
It is interesting that Apple has, once again, had a record quarter in revenue. But as always, I'm not particularly interested in the financial aspects of this call. Instead, I'm interested in the statements of Apple executives that pertain to the use of the iPhone and iPad. Here are the items that stood out to me:
- Apple sold 77.3 million iPhones in the last fiscal quarter. That is slightly less than it sold in the 2016 calendar year holiday quarter one year earlier, when Apple sold 78.3 million iPhones. However, note that Apple's fiscal quarters are usually 14 weeks long, but 2018 Q1 was only 13 weeks long. If there had been 14 weeks in this fiscal quarter like there was in 2017 Q1, I'm sure that Apple would have sold a record number of iPhones.
- While sales were slightly down, revenue was up. A year ago, iPhone revenue was $54.4 billion; this time it was $61.6 billion. Why did Apple make more money selling fewer iPhones? The explanation is that in the last fiscal quarter, Apple started selling the iPhone X, the most impressive — and most expensive — iPhone ever sold. Apple CEO Tim Cook said that the iPhone was a "key driver" in Apple seeing the highest-ever revenue last quarter.
- Apple said during the call that the iPhone X was the top selling iPhone every week that it was on sale. That makes it sound like there was more interest in the new iPhone X than the new iPhone 8 and iPhone 8 Plus, but keep in mind that the two iPhone 8 models went on sale September 15, 2017 and the iPhone X didn't go on sale until November 3, 2017. Thus, a lot of folks interested in buying an iPhone 8 had six weeks to get one when it was the only brand new iPhone, and this may be part of the reason that the iPhone X was the most in-demand iPhone during the weeks that it was on sale.
- Tim Cook said that with the iPhone X, "[o]ur team has put the technology of tomorrow in our customers’ hands today, [and] set a standard for the next decade of smartphones."
- By my count, Apple has now sold over 1.3 billion iPhones.
- Apple sold 13.2 million iPads in the last fiscal quarter. By my count, Apple has now sold over 394 million iPads.
- Who bought those iPads last quarter? Apple says that just over half were sold to folks upgrading from another iPad, and just under half were sold to folks who were first-time tablet buyers or who were switching to an iPad from a different tablet.
- Four years ago, in the 2014 fiscal first quarter, Apple sold almost twice as many iPads (26 million). But the 13.2 million number this quarter is good news for Apple in terms of iPad sales. For three and a half years, fewer iPads were sold every quarter. Apple started to reverse the trend in its 2017 fiscal third quarter, and sales went up again this quarter, marking three quarters in a row that Apple has seen a year-over-year increase in iPad sales. The easiest way to see this is to look at a chart that shows the average of four quarters of iPad sales over time. In the following chart, the blue line shows the actual iPad sales each quarter (in millions), and you can see the peaks every year in Apple's fiscal first quarter — the holiday quarter, when folks buy lots of iPads as presents. The green bars show the average of the current quarter and the prior three quarters, which gives you a better sense of iPad sales over time. As this chart shows, the iPad was introduced in 2010 and saw a sharp rise in sales until the end of calendar year 2013 (the beginning of Apple's fiscal year 2014), followed by a decrease in iPad sales over time, and then finally a slight increase in the past three quarters.
- Apple said that the App Store set a new all-time revenue record. During the week of Christmas, folks spent $890 million at the App Store. On New Year's day, App Store revenue was $300 million.