Wednesday Morning News

Apple’s Q1 2019 financial results are out, with one of the world’s largest companies recording US $20 billion in profit from $84.3 billion in revenue. No unit sales were reported by Apple this time around, so we have no idea how many iPhones, iPads, or Macs Apple sold in the company’s financial quarter from September 30 2018, though to December 29, but there’s still plenty of interesting takeaways from a quarter where Apple CEO Tim Cook had to pen a letter to investors warning of decreased earnings. We’ll get to some of those in a moment, but in the meantime, MacStories has graphs of Apple’s financial performance compared to previous quarters.

One such interesting tidbit is that if it wasn’t for Apple missing 5-9 billion in revenue thanks to various economic and product factors, this might have been Apple’s biggest quarter ever. As it stands, Apple’s Q1 2019 quarter is second only to the same quarter last year by about $4 billion in revenue and $100 million in profit. While we no longer get unit sales, revenue by product is still available, with the iPhone accounting for over 60% of Apple’s quarterly revenue. The graphs really tell the full story of Apple’s growth by product line: iPhone revenue YoY is down 15%, while everything else is up.

In particular, Apple recorded services revenue of $10.9 billion, up 28% YoY thanks to 50 million Apple Music subscribers and 1.8 billion Apple Pay transactions in the entirety of 2018. But Apple’s wearables, home, and accessories category (formerly known as "other", and now includes the Apple Watch, HomePod, Apple TV, Beats, AirPods, Beats, iPod touch, and Apple’s first-party accessories) was the biggest growth category YoY, with $7.3 billion in revenue being a 33% increase. That’s more revenue than iPads, and is almost more than Mac revenue, which was $7.4 billion in Q1 2019.

There are now 1.4 billion active Apple devices, which covers anything running one of Apple’s software platforms: iPhones, Macs, iPads, Apple TVs, iPods, and Apple Watch devices. 900 million of these are iPhones, a number that’s up 9% over the previous year. The Verge points out that this active device statistic is an important one for Apple — given the probability of declining unit sales, it’s going to become more important for Apple to keep their install base high and growing wherever possible. Even if people are buying less iPhones than before, Apple still has some services to sell you.

Which brings us to the elephant in the room: yes, iPhone sales were down 15% YoY. While some of this drop can probably be attributed to the economic factors that Tim Cook originally outlined in his letter to investors (China, for starters — Apple’s revenue from Greater China were down 27% YoY), the bigger reason is probably because of higher iPhone pricing. In an interview with Reuters, Tim Cook is quoted as saying that Apple will be investigating lowering iPhone prices in regions outside the US that were hardest hit by currency fluctuations, although which regions and by how much is currently unknown.

For further reading, Six Colors has the transcript of the post-earnings conference call with analysts. There are a few key takeaways: Tim Cook reiterated many of his original points in his letter to investors about updated revenue guidance, citing economic reasons for lowered revenue and the decrease in overall iPhone sales. Apple continues to prioritise services as a key component of the business. We’ve already seen some of these results in recent growth numbers, and it should only continue to grow once Apple decides to release its video streaming service.

Speaking of which, a paywalled article from The Information claims Apple’s video streaming service should be up and running by about mid-April, according to what Apple has been telling its content partners. No other details are readily available, but it’s said that at least some of the content will be available for free.

A major bug was discovered in Group FaceTime yesterday, which allowed you to hear your callee’s audio before they accepted the call. It involved adding yourself to the Group FaceTime call, although it’s not completely unnoticeable as the callee will still see the FaceTime call ringing on their device. Still, Apple has disabled Group FaceTime, and they have said that they will be releasing a software update later this week to fix the issue. The issue was reportedly disclosed to Apple more than a week ago, although it took widespread reporting on the issue for Apple to acknowledge and respond.

An Apple newsroom post tells us about the virtues of US manufacturing. By putting a positive job-creation spin on Apple’s US-based manufacturing operations, Apple has semi-quashed the negative press it received as part of the New York Time’s report yesterday which told us about screws in the 2013 Mac Pro.

Just before the new year, Apple released an ad showing off the range of colours on the iPhone XR. Hundreds of people running amok in brightly-coloured jumpsuits sounds like a pretty crazy ad, but I think Color Flood works well.

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