Apple’s earnings were released on Tuesday afternoon and were strong for this traditionally low quarter, and as of Thursday, they are also the first trillion dollar company in history. That’s a lot of (mostly) good news for one week. What does all of this mean?
Apple’s iPhone business is very steady, but isn’t growing much anymore
The perspective on this news will depend of who you are and what you do. For someone like me, I still see good news here. Apple didn’t quite meet analysts’ expectations for the number of iPhones sold, but I really don’t put much stock in what they say. Analysts are looking for eternal growth, and that just isn’t perpetually sustainable for any company, no matter who we are talking about. That is especially true for the iPhone throughout the year, as the single release window means there will be guaranteed natural ebbs and flows in sales.
However, even though the overall iPhone sales numbers didn’t blow some in the financial sector away, the fact that Apple still met their revenue targets proves that the iPhone X is still selling very well. Sales also grew 20% year over year for the quarter. Considering that new iPhones are just around the corner, that is still impressive in what is often a down part of the year.
Everything but the Mac is either steady or growing
iPhone sales are solid and revenue is up. iPad sales are growing slightly in a fast-declining overall tablet market. Their revenue was down slightly, but you have to bear in mind that Apple released two new Pros in this quarter last year, while this year’s release has been pushed later. Wearables are growing very fast. The “Other Devices” category, which includes the HomePod, is up a solid 37%. Services are up big. Again. Only the Mac is down. About that…
Apple’s current Mac strategy isn’t working
While I understand that the Mac is not a focus for Apple the way it was in the past, they need to take a step back and listen to their customers. Both revenue and sales are down year over year and quarter to quarter. That isn’t good. The complaints about the MacBook, MacBook Pro, Mac Pro, and the company’s neglect of the Mac Mini are real, and they are now consistently showing up in the numbers. This while PC and laptop sales are actually up overall.
While it can be argued that these numbers are only down due to the lack of major recent releases (before the recent MacBook Pro refresh), I can’t help but think that dissatisfaction over the problematic MacBook keyboards, the TouchBar, and increasingly high prices of all the new machines are catching up to them. The iMac Pro has received solid reviews, but it has a very small target market. The iMac still gets good reviews pretty much across the board. However, everything else in the Mac lineup meets with a lot of complaints. Even though the new MacBook Pros are powerhouses, again, the keyboards, TouchBar, and high prices are turning some customers off. The rumored inexpensive MacBook Air replacement can’t come soon enough.
The Trillion Dollar mark is wonderful news for Apple….for now
Analysts have been paying a lot of attention to this mark over the last year. Apple was going to hit it. Then the iPhone X “disaster rumors” set in and the stock plummeted. Everyone backed away from talk of a trillion, until Apple’s second quarter numbers blew all of the supply chain-based conjecture away, Just like that, Apple was back on its way. More recently there has been talk of Amazon overtaking Apple, but it was not to be. All it took was another strong quarter report, and Apple was able to plant their flat ahead of the competition.
That’s great for Apple. Everyone covered it. The story is being reported far and wide in the tech community. There is still a ton of hardware on the way. The rest of the year will probably be huge for Apple. But then what? Well, we will likely see a similar scenario to this year play out. Rumors of falling sales will get the analysts talking again, which will get the stock price moving the wrong direction. Then the click-baiters will be out in force calling Apple’s fall from a trillion dollar valuation a disaster. I’ll honestly be more surprised if this doesn’t happen than if it does.
None of this means that the trillion dollar mark is a bad thing for Apple. However, it is also nothing more than a symbol that will be talked about in a positive light for now, and then will be used against the company by some later. I guess that’s just the bullseye that comes with being the world’s largest company. However, even for those of us who are Apple fans, the trillion dollar mark does beg one question- now what? Where can Apple, or any company for that matter, go from such a high number? Where can a realistic “next goal” be set? Hopefully things will go so well for Apple over the next year that none of this will matter, and the trillion dollar label won’t become a hammer for the tech press to swing at them.