Monday, November 5, 2018

Apple’s Q4 2018 Results

Apple (MacRumors):

The Company posted quarterly revenue of $62.9 billion, an increase of 20 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.91, up 41 percent. International sales accounted for 61 percent of the quarter’s revenue.

Services revenue reached an all-time high of $10 billion.

Jason Snell:

iPhone sales were up slightly over the same quarter last year, but iPhone revenue during the same period was up 29 percent. Mac sales dropped 2 percent but Mac revenues rose 3 percent. iPad unit sales fell 6 percent and iPad revenues dropped 19 percent.

Neil Cybart:

Apple will stop providing iPhone, Mac, and iPad unit sales data.

 Observer:

I remember hearing Steve Jobs saying something along this line: if you are proud of your numbers, tell the world. Or something like this.


Funny comment on the Verge[…]

Luca also announced earlier, but we didn’t get it entered, that Apple will start providing both cost of sales and revenue for all product categories, including services.

Bob Burrough:

All product categories are flat or down. Apple will continue to increase markup through 2019, to the degree that unit sales will drop although revenue increases. Making more money from fewer people.

Dan Masters:

I think that everyone is raising prices simply because Apple is doing it. Apple paves the path for most everything in the industry.

Tom Warren:

Apple’s financial report is out.

Apple’s iPhone is now 59% of its earnings

iPad is 6%

Mac is 11.7%

Services is 15%

Apple Watch, beats, everything else 6%

Apple makes more money milking iPhone services than selling Macs. That’s the future of Apple


Speaking of unreportable units: iPod, iPad, Watch, AirPods, etc have all come to dominate their respective segments at 50-70% in market share and 70-90% in profits. I’d love to be in trouble like that any day.

Mark Gurman:

Apple Inc. shares had their worst day since 2014 amid concerns that growth in its powerhouse product, the iPhone, is slowing.

Ben Thompson (Hacker News):

Apple has long been an exception in the smartphone space when it comes to reporting unit sales, so deciding not to is not that out of the ordinary; Apple, though, has always positioned itself as the extraordinary alternative — the best — and that approach paid off for years with sales numbers that were worth bragging about.

The reality, though, is that unit sales in isolation have indeed misrepresented Apple’s business for the last several years; specifically, they have underestimated it.


What the reports are right about, though, is that unit sales going forward are absolutely a story Apple would prefer to avoid: it is very unlikely that units will grow, and while Apple pushed pricing even higher with the iPhone XS Max, it probably can’t go much further, which means it is likely that the average selling price-based revenue growth story is drawing to an end as well.


This, though, is why Today at Apple is compelling, particular Ahrendts’ reference to bringing people together in a “real social way” — and she could not have emphasized the word “real” more strongly. Apple is in effect trying to build a social network in the real world, facilitated and controlled by Apple, and betting that customers will continue to pay to gain access.


Now Apple is arguing that unit sales is the wrong way to understand its business, but refuses to provide the numbers that underly the story it wants to tell.

Previously: October 2018 Apple Event.

Update (2018-11-06): Charles Arthur:

On with the graphs.

Jason Snell:

Here’s a complete transcript of Thursday’s Apple call with analysts.]

Benjamin Mayo:

Moreover, I expect a lot of turbulence in the Mac and iPad businesses in the near future, as each of those products go through major transitions. It’s a lot easier to make those changes when there is less focus on financials.

Update (2018-11-12): John Gruber:

For all the fretting for the future of the Mac — the widely held notion that Apple wants everyone to move from the Mac to iPad, that these totally shitty Marzipan apps in Mojave are the future, that the Mac is “legacy” — here is some cold, hard, financial proof that the Mac is doing as well as ever. Not only was the Mac far ahead of the iPad in terms of revenue, it’s downright amazing that it amounted to one-fifth the revenue from the iPhone.


I wish it weren’t so, but I don’t blame Apple for making this change. I also don’t think it has anything to do with Apple expecting bad unit sale numbers in the near future. Apple doesn’t make policy changes like this with the near term in mind. This change will affect what they announce in all quarters, for years to come, whether unit sales are good, bad, or middling. Apple is a long-term company, not a short-term one.

Ryan Jones:

Not so sure about your Mac comments. Lowest Q4, lowest Q3, and second-lowest Q2 in years. Higher prices is the “good news”.

cremnob (via Zac Cichy):

Apple’s gross margins haven’t changed at all in recent years. And that’s with the higher-than-corporate-average gross margin from Services becoming a bigger part of the business. That implies that component prices have risen, and Apple has passed the cost on

Update (2018-11-15): Aaron Tilley:

But what’s less understood is that as iPhones have increased in hardware complexity, the gross profit margins on Apple smartphones have actually gone down over the past decade, from a high of nearly 74% to around 60% for most of the latest entry-level models, according to an analysis of iPhone component costs provided by TechInsights, a firm that analyzes hardware costs. That is true even as Apple has pushed the price of its smartphones to new altitudes, starting with the $999 iPhone X in 2017.

4 Comments RSS · Twitter

Adrian O'Connor

Although it's a bit cringe-worthy to use Steve Jobs' quotes to compare to modern Apple to Apple of the past, I keep thinking about this one: "My passion has been to build an enduring company where people were motivated to make great products. The products, not the profits, were the motivation. Sculley flipped these priorities to where the goal was to make money. It's a subtle difference, but it ends up meaning everything."

It feels like Apple may have done the same thing again. They certainly believe they're focused on trying to build great products, and the products are certainly still pretty good by industry standards, but it somehow feels very different now to 10, 15, even 20 years ago. I don't know. Maybe it's nostalgia. Maybe it's just that I'm bitter that they didn't update the iPhone SE and I can't bring myself to buy a laptop with the new keyboards.

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