Shruti DhapolaJul 25, 2014 08:15:24 IST
On Tuesday, Apple announced its financial results for fiscal 2014 third quarter which ended on June 28 this year and once again the Cupertino giant failed to live up to Wall Street's expectations. For starters: Apple's quarterly revenue was $37.4 billion and the quarterly net profit was $7.7 billion. Overall revenue rose a meagre six percent.
Even though this was more than the $35.3 billion and net profit of $6.9 billion,in the year-ago quarter, Apple's revenue and profit was less than what it made in the last quarter. In 2014's second quarter, Apple had made a revenue of $45.6 billion and quarterly net profit of $10.2 billion.
Clearly with no new products getting launched, Apple's profit and revenue took a slump in this quarter. We take a look at how their three key products did in the market.
The iPhones were the clear winner in this quarter as Apple sold close to 35.2 million iPhones. It should be noted sales were down from last quarter of 2014, when the company sold a record 43.7 million iPhones. However the iPhones had just launched in that quarter so naturally the sales would have been higher.
iPhone sales rose close to 13 percent in terms of units sold year-on-year for Q3 2014. The company also said that the growth was helped by demand from Brazil, Russia, India, and China, which are the BRIC countries where iPhone sales rose 55 percent. The revenue from iPhone rose by 9 percent, according to Apple.
With Apple predicted to launch two new iPhones with a 4.7-inch and a 5.5-inch screen, the iPhone numbers could shoot up drastically, in the next two quarters.
While iPhone sales rise and new bigger screen devices are expected from Apple, the iPad is not doing so well. Sales of the iPad were down drastically for the company. Apple sold close to 13.2 million iPads in this quarter, which is again less than the 16.3 million sold in Q2 of 2014, and less than the 14.6 million iPads sold in Q3 of 2013.
According to Apple's own data, the iPad is seeing a negative growth of 9 percent on units and negative growth of 8 percent on revenue, year-on-year. So in essence while the iPhone numbers haven't dropped too drastically, the iPad is what is proving to be cause of worry for Apple.
Apple CEO Tim Cook tried to defend this number again. He said during the investor call, "iPad sales met our expectations, but we realise they didn't meet many of yours." He also spoke about the IBM partnership as a "catalyst for iPad sales."
Cook also cited IDC figures showing that iPad penetration among businesses stood at about 20 percent, versus 60 percent for notebook computers.
CFO Luca Maestri said that iPad sales were actually up substantially in the Middle East, China and India. In fact Tim Cook also said that iPad sales were up by 45 percent in India. But he admitted that iPad sales as “very bifurcated” and in developed countries like the United States, the “market is weaker.”
IDC reports have already noted that where the tablet market is concerned, it is missing forecasts and is declining. For the ten-inch iPad, both the iPad mini and the bigger screen phablets have meant that users aren't necessarily going for the new product.
Again Apple's new iPhone 6 with a bigger screen could cannibalise sales of the iPad further. Unless of course, Apple completely revamps the iPad to offer some drastically new.
It was not all bad news as Mac sales were up for Apple. This is particularly remarkable when you realise that Macs are part of the dying PC market. Apple's numbers show that it sold close to 4.4 million macs, which is more than the 4.1 million sold last quarter and more than the 3.7 million Macs sold in Q3 of 2013. The numbers show that Macs saw an overall unit growth of 18 percent, while a revenue growth of 13 percent on a year-on-year basis.
More interestingly Apple sold $5.44 billion worth of Macs in the quarter, compared with $5.9 billion in iPads, and shows a very close gap. The fact that Apple has achieve a positive growth for Mac shows that in markets which aren't saturated, unlike the developed ones in North America and Europe, Apple's Mac still has a chance of doing well.
Overall, it's fair to say that Apple didn't have any new products this quarter so a strong growth would have been surprising. Where the iPhone is concerned, it is clearly still the top product. On the iPad sales, Tim Cook says that they are not worried about the numbers dropping, but there's no denying the fact that this will be a cause for concern in the future as well.
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