Apple Q1 results explained: As iPhone and Mac sales jump, iPad is going down

Yesterday, Apple announced its Q1 2015 results, which smashed Wall Street Expectations. The company sold over 74.5 million iPhones, revenue rose to $74.6 billion from $57.6 billion a year earlier and the profit for Apple stood at $18 billion. A  _Reuters_ report  quoted S&P analyst Howard Silverblatt as saying that $18 billion is the biggest ever profit reported by a public company worldwide. Apple’s cash pile is now $178 billion, enough to buy IBM. In fact as we noted in this post , Apple’s iPhone 6 and iPhone 6 Plus were the biggest success stories of the quarter. Apple CEO Tim Cook spoke about how the new iPhone 6 models are responsible for bringing the highest Android switcher rate in the last three years. Cook further disclosed that the new devices have been getting a great feedback for their quality and the iPhone growth in emerging markets has been “stunning”. He expects more people to buy the iPhone 6 in the second quarter of 2015. But how did Apple’s other devices fare when it came to revenue and growth? iPad Apple’s famed tablet continues to slump. In the Q3 report , while iPhone and Mac sales had jumped, iPad sales had fallen to 13.2 million. In Q4 of 2014, Apple sold only 12.3 million iPads, which was a negative 13% year-on-year growth for the iPad. [caption id=“attachment_252024” align=“alignnone” width=“640”] Data from Apple website[/caption] In this quarter iPad sales dropped to 21 million which is down from the 26 million iPads sold in Q1 of 2014. The year-on-year change has been a negative 18 percent growth for iPad as far as sales are concerned and a negative 22 percent decline in revenue. The iPad doing this badly in the holiday quarter highlights the problems that Apple faces with its tablet. Let’s not forget that the iPad Air 2 and iPad mini 3 were released in October 2014 and technically this is the one quarter that Apple expects its iPads to do well. As far as the tablet market is concerned, it has been on the decline. IDC reports have noted how the rise of phablets, (ironically even the iPhone 6 Plus would come in this category) has meant the users are just buying a smartphone with a bigger screen instead of going for a separate tablet. With the iPads, the incentive to upgrade is anyway minimal, unless you break the tablet. As far as the iPad Air 2 goes, Apple didn’t really show anything new other than a faster processor, lighter and thinner body for the 10-inch tablet. The iPad mini 3 was barely given any new specs and other than the gold colour and Touch ID fingerprint scanner with key specs  - the A7 processor, 5 megapixel camera and screen resolution - remaining the same. We had noted earlier , essentially there’s no ‘wow’ factor in the new iPad Air 2 unless you count the fact that it has a sharper camera and Touch ID. Apple didn’t bump up the screen resolution drastically, and the front camera is still 1.2 megapixels. Sure there’s anti-reflective coating on the screen, but seriously this wasn’t something that would get people rushing to upgrade. Macs While iPads continue to bring bad news for Apple, the growth of Macs in the holiday quarter should come as a good news for the company. Apple sold over 5.5 million macs in Q4 of 2014, which was a 21 percent year-on-year rise as far as sales were concerned and an 18 percent increase in revenue for Macs. In Q1 of 2015, Apple sold close to 5.5 million Macs again, thus maintaining the quarter-on-quarter sales number. As far as year-on-year growth was concerned, Macs saw a 14 percent rise in sales units, while a modest 9 percent rise in revenue. Given that the PC market has been declining for years now, the fact that Apple has managed to maintain some growth for the Mac this should come as good news for the company. In fact if you look at results from Q1 of 2013, Macs have managed quite a turn-around for Apple. In Q1 of 2013, Mac sales declined to 4 million, which was a negative growth of 22 percent as far as sales were concerned. Now the sales and revenue numbers are back in the green. In conclusion, it’s fair to say that iPhones are one of the most important devices for Apple’s success, something that needs to be appreciated given how saturated the market has become when it comes to smartphones. Apple might have been late to the phablet party, but it has managed to win on that front for now.