Apple starts a new fiscal year at the end of September every year. Last Thursday, amid all of the media attention on the new iPhone X, Apple released the results for its 2017 fiscal fourth quarter (which ran from July 2, 2017 to September 30, 2017) and held a call with analysts to discuss the results. This is typically a transitional quarter for Apple considering that so many sales take place in the October to December quarter that contains holiday sales. Sales of the iPhone 8 and iPhone 8 Plus started September 22, 2017, so about a week of those sales were included in the fiscal fourth quarter, but of course it did not include any iPhone X sales. Apple announced quarterly revenue of 52.6 billion (up from $46.9 billion a year ago) and quarterly net profit of $10.7 billion. 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.
As always, I'm not particularly interested in the financial aspects of this call. But I'm always 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:
iPhone
- Apple sold almost 46.7 million iPhones in the last fiscal quarter. By my count, that means that Apple has sold just over 1.25 billion iPhones as of September 30, 2017. Apple sold its 1 billionth iPhone in July 2016, and it is amazing that it didn't take much more than a year to get to 1.25 billion.
- Apple CEO Tim Cook stated in his prepared remarks that iPhone sales in the past quarter "exceeded our expectation." The iPhone 8 Plus in particular "has gotten off to the fastest start of any Plus model," according to Cook. "That, for us, was a bit of a surprise, and a positive surprise, obviously. And so we’ll see what happens next."
- Cook stated that initial demand for the iPhone X is "very strong for both direct customers and for our channel partners, which as you know are lots of carriers throughout the world."
- When asked about the price of the iPhone X, the most expensive iPhone every sold, Cook stated: "In terms of the way we price, we price to sort of the value that we're providing. We're not trying to charge the highest price we could get or anything like that. We're just trying to price it for what we're delivering. And iPhone X has a lot of great new technologies in there that are leading the industry, and it is a fabulous product and we can't wait for people to start getting it in their hands."
- Apple clearly believes that it will sell a lot of expensive iPhone X devices in the current quarter because it announced a prediction of 2018 Q1 sales (October-December) of $84 to $87 billion. That would easily be Apple's best financial quarter ever, and would be a big jump up from the $78.4 billion of 2017 Q1 and the $75.9 billion of 2016 Q1. So when I update the following chart in three months, I expect to see a very tall line at the end:
iPad
- Apple sold just over 10.3 million iPads in the last fiscal quarter. By my count, that means that Apple has sold over 381 million iPads as of September 30, 2017.
- The prior quarter (2017 Q3) was the first time in three and a half years that iPad sales started to increase. That trend continued in 2017 Q4 with more sales in this fiscal fourth quarter than last fiscal fourth quarter. I think that the best 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 two quarters. I'm sure that Apple hopes that the last two quarter are evidence that iPad sales are back on the upswing again.
