Thursday Morning News

A different set of graphs of Apple’s Q3 2018 financial results from MacStories tells us a slightly different story to what we saw yesterday. I’m looking at the numbers and wondering why there’s a minor difference between Six Color’s graph of revenue by category and the one by MacStories, given that they should be drawing from the same data. Anyway, at 46%, almost half of Apple’s revenue came from the Americas, with Europe at 23% and Greater China at 18%. The Mac saw a 13% revenue change compared to the same quarter from last year, but more on this in a sec.

If you put aside the fact that Apple continues to generate and make incomprehensible amounts of money, further analysis on Apple’s quarter reveals some insights worth pointing out. For example, revenue from iPhone sales is now as high as it has ever been, despite iPhone unit sales being comparatively low. The reason is a way higher average selling price, which I’m sure matters to some bean-counter somewhere. There’s still no hard numbers on Apple Watch sales, but the future is clearly services anyway.

The full transcript of the post-results earnings call is over at Seeking Alpha, if you want to read everything said between Apple CEO Tim Cook, Apple CFO Luca Maestri, and the analysts present. We’ll be including some related commentary below.

For starters, Cook explained why Apple is going ahead with making original TV shows. He talked about this cord-cutting idea, which I presume is the idea that less and less consumers subscribe to cable TV services in light of Netflix and co. Anyway, because Cook thinks cord-cutting is only going to increase and at a much faster rate than we previously thought, Apple’s taking a bet and getting ready for that.

Cook also had words about the smartphone market given that smartphone sales aren’t just what they used to be, now that everyone has a smartphone. Cook believes the smartphone market is still “very healthy”, saying that “whether it grows one percent or two percent or five percent or six percent or 10 percent or shrinks one or two percent, it’s a great market because it’s just huge”. Cook also said that Apple has never performed analysis on how the iPhone battery replacement program has affected sales of new devices, because they don’t care, and it’s about doing something for users.

When it comes to the Mac, things aren’t looking great. Mac sales were the lowest of any quarter since 2010 and the first time less than four million Macs were sold in a quarter since 2013. MacRumors attributes this slump to the fact that almost the entire Mac lineup was outdated, but if recent rumours are anything to go by, we should start seeing updated Macs just around the corner.

Both MacRumors and 9to5Mac point out analyst Neil Cybart’s reasoning that new Macs were released at WWDC last year, as well as this year’s MacBook Pro refresh, as possible reasons for the 13% drop in revenue. It’s entirely possible Apple could do the same thing with Macs that it has done with iPhones; suffer decreased unit sales, but increase the average selling price to increase revenue that way. With Macs being as expensive as they have ever been, maybe that’s an option.

Meanwhile, AppleInsider highlights that Apple’s R&D spend is higher than ever before. Apple spent US $3.7 billion on R&D in the last quarter, with the year total coming in at $760 million more than last year. The increase in R&D spending for the 15th consecutive year doesn’t necessarily correlate to anything in particular, but if it did, it could mean that that Apple knows the iPhone won’t remain their cash cow forever.

Continual monitoring of heart rate by the Apple Watch continues to save lives, with the latest case being that of 24 year old Australian Adam Love. After receiving a notification that his sleeping heart rate was between 130 and 140 beats per minute, Love visited a doctor and was diagnosed with a hole in his heart, a condition he had apparently had since birth.

Four million people are using Apple’s public beta program and currently running a beta version of either iOS or macOS. I think that’s kinda cool.

Notable Replies

  1. They’ve already done this with the new MacBook Pros haven’t they? I don’t recall the previous models being as expensive as the new ones. And lets face it - it’s not like Apple’s markup on items is overly small!

  2. It is my experience that whilst the majority of households have a computer that many of them are (more recently) education purchases or work related and that households are more likely to have multiple phones (and replace them more often) than they are computers.

    Of course that is biased by my experience and there will be exceptions.

  3. macOS or Linux Mint

    Death before Windows.

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