On January 26, Apple reported its 2016 first quarter financial results. Apple posted a record quarterly revenue of $75.9 billion and record quarterly net profit of $18.4 billion. Compare this to one year ago, that’s up from revenue of $74.6 billion and net profit of $18 billion. Says CEO Tim Cook in a press release: “Our team delivered Apple’s biggest quarter ever, thanks to the world’s most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV. The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of one billion active devices.”
It was another “record quarter” for Apple, but there were some startling yet inevitable declines across its product sales. Let’s break it down by product category and then discuss. Apple sold 74.8 million iPhones in the quarter (compared to 74.5 million in the year-ago quarter); 16.1 million iPads (compared to 21.4 million); and 5.3 million Macs (compared to 5.5 million). As for iPod, Apple TV, and Apple Watch, the company stuffs these products into a single category called Other Products and does not disclose how many units of each were sold. However, what we do know is that this division accounted for $4.4 billion of Apple’s revenue this quarter (compared to 2.7 million in the year-ago quarter).
A quick look at those numbers and you’ll come to realize that Apple’s finally hitting a plateau with its innovative product lineup. The iPhone is the company’s most profitable product today, and yet its sales were up just 0.4 percent compared to last year’s first quarter results. The iPad and Macs didn’t fare so well either. Tablet sales dropped 25 percent compared to last year, and computer sales went south by 4 percent. Apple CFO Luca Maestri addresses these significant slumps when predicting 2016’s second fiscal quarter revenue to fall between $50-$53 billion; if that happens, it would mark a year-over-year decline in revenue for the company for the first time in 13 years.
It isn’t all bad news for (still) one of the most profitable companies in the world. Apple’s touting a 63 percent jump in sales in its Other Products category that now includes hot holiday gifts like the new-and-improved Apple TV and Apple Watch. In addition, its Internet-connected Services jumped 27 percent year-over-year; iTunes, the App Stores, and Apple Music helped rake in $6.1 billion in revenue this quarter.
Despite the declines due to “the overall [economic] malaise in virtually every country in the world” and in particular the economic “softness” in China, Tim Cook is bullish on Apple’s future. With an active install base of 1 billion devices (that is iPhone, iPad, Mac, iPod touch, Apple TV and Apple Watch devices that have been engaged in Apple’s services within the past 90 days) and strong customer service and retention rates that are “second to none” in the industry, Cook is unwavering in his belief that Apple will continue to grow as new hardware, software, and services will push his company into the future. It’s just a sad thought knowing that the next quarter will likely be the first one in awhile we won’t be calling a new record.