Yesterday, Apple released the results for its 2015 fiscal third quarter (which ran from March 29, 2015 to June 27, 2015) and held a call with analysts to discuss the results. This is typically not a big fiscal quarter for Apple; the important quarter for Apple every year is the first fiscal quarter containing the holiday sales season, and during the fiscal third quarter, most potential Apple customers wait to see what new products Apple will introduce in the Fall. Even so, Apple reported record results for a third fiscal quarter: revenue of $49.6 billion and net profits of $10.7 billion. Apple CFO Luca Maestri said that "growth was driven by the tremendous performance of iPhone, the introduction of Apple Watch and the continued strength of Mac and App Store sales." 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. Apple's official press release is here.
As always, I'm not as interested in the financial details as I am the statements of Apple executives during the call, including Apple's CEO Tim Cook, that are of interest to iPhone and iPad users. Here are the items that stood out to me as of interest to iPhone and iPad owners:
iPhone
- During the past quarter, Apple sold 47.5 million iPhones, the most that Apple has ever sold in a fiscal third quarter. By my count, as of June 27, 2015, Apple had sold over 773 million iPhones
- Cook said that iPhone unit sales grew 35% since the 2014 fiscal third quarter, which he said was almost three times the growth rate in the overall smartphone market.
- Apple did particularly well in China, with iPhone unit growth of 87% — which is particularly remarkable when compared to the overall growth in the China smartphone market of only 5%.
- Cook said that 27% of the people who used an iPhone before the iPhone 6 and iPhone 6 Plus went on sale in September of 2014 upgraded to an iPhone 6 or iPhone 6 Plus. Apple sees that as a market of 73% of iPhone owners who have yet to upgrade, which Cook said makes him bullish on future iPhone sales.
- Cook announced that in this latest financial quarter, Apple saw the highest ever rate of switchers from Android smartphones to the iPhone. I suspect that this is because a lot of folks who prefer larger smartphones now have a reason to switch thanks to the larger iPhone 6 and iPhone 6 Plus. But Cook said that the increase in sales was not just due to switchers and was also because of a large number of first-time iPhone buyers around the world.
iPad
- Apple sold 10.9 million iPads. That's the smallest number of iPads that Apple has sold in a fiscal third quarter since 2011. Apple still sells a lot of iPads — by my count, as of June 27, 2015, Apple had sold over 282 million iPads — but clearly people do not buy new iPads as frequently as they buy new iPhones.
- Even so, Cook said that he is bullish on the future of the iPad, especially in light of the iPad productivity enhancements coming in iOS 9 such as split view, slide over, and picture-in-picture (which I discussed last month).
Apple Watch
- Apple told the world last year that it would treat the Apple Watch differently than the iPhone and iPad and would not announce the number of units sold every quarter. Cook did say that June sales were higher than April and May, dispelling rumors that there had been a huge demand in the beginning and then decreasing sales after that.
- Apple groups Apple Watch revenue in the same category on its quarterly report as revenue from Apple TV, Beats Electronics, iPod, Apple-branded and third-party accessories, and a few other items. In Apple's 2015 fiscal second quarter, Apple reported $1.689 billion in revenue in the Other category. In the fiscal third quarter, Apple reported $2.641 billion in that same Other category. Just comparing those two numbers, and assuming that everything else in that category sold the same from quarter-to-quarter, that suggests perhaps that the Apple Watch brought in $952 million. But it's actually more than that because we know that we cannot assume that everything else in "Other" stayed the same; Cook specifically said that the rest of the items in that category (such as iPods) are selling less. So it seems fair to guess that Apple sold over $1 billion in Apple Watch devices and accessories (such as watch bands) last quarter, although we still don't know precisely how that corresponds to a specific number of Apple Watches sold.
- Apple started taking pre-orders for the Apple Watch on April 10, 2015, and for most of the time since then, demand has outstripped supply. But Cook announced that, in just the last few days, Apple has finally been able to catch up with demand, and thus Apple will soon be ready to expand Apple Watch sales to additional countries.
- Cook said that the most popular uses of the Apple Watch are text messaging and monitoring activity (e.g. when exercising). He said that the most popular third party apps are social messaging apps such as Twitter. Cook said that Apple Watch owners are "tracking their fitness, getting breaking news alerts, following their investments, connecting with friends, and living a healthier day."
