Apple squeezes more from each iPhone as holiday shipments flatten

Apple released its fiscal 2018 first-quarter results today. Amid concerns about soft iPhone demand over the holiday season, the company posted what it calls all-time record revenue of $88.3 billion, a 13% improvement year-on-year, and operating income of $26.3 billion, up 12.5% on the year. Net income continued the trend with a 12% increase to $20 billion. The company's 38.4% gross margin for the quarter shrank about one-tenth of a percentage point from a year ago.

Apple moved a whopping 77.3 million iPhones, down 1% from a year ago, but the company's most important product still brought in 13% more revenue than it did a year ago, at $61.6 billion compared to $54.4 billion. The introduction of the range-topping iPhone X doubtless helped to move average selling prices northward.

The company moved 13.2 million iPads, up 1% from a year ago, and the $5.9 billion those tablets raked in was up 6% from a year ago. Mac sales of 5.1 million units brought in $6.9 billion in revenue, but both Mac unit sales and revenues declined 5% from a year ago.

Apple's services revenue continues to grow at a vigorous clip. The company's various software and entertainment offerings brought in $8.5 billion, up 18% from a year ago. Other Products revenue, which includes the Apple Watch, grew an eyebrow-raising 36% on the year to $5.5 billion.

For the second quarter of Apple's fiscal 2018, the company expects revenue between $60 billion and $62 billion and gross margins between 38% and 38.5%.

Comments closed
    • HERETIC
    • 2 years ago

    And more problems for your fruity phones-
    [url<]https://www.theverge.com/2018/2/3/16968092/apple-iphone-7-no-service-bug-free-repair-program[/url<]

    • ronch
    • 2 years ago

    [quote<]Apple squeezes more from each iFan as holiday shipments flatten[/quote<] FTFY

    • Chrispy_
    • 2 years ago

    Higher margin = more profit, despite fewer sales?

    If Apple made the next iPhone $100,000 so that they made their profit from just 0.77 million phones instead of $77 million, that would be 76 million fewer pieces of disposable electronics ending up in landfills in two years from now.

    Heh, that would be 76 million fewer phones using our precious graphics card DRAM too!

    • End User
    • 2 years ago

    “So that whole narrative about iPhone X being less popular than expected? Never mind.

    On the iPhone, unit sales were down about 1 percent year-over-year, but revenue was up about 6 percent. And this year’s holiday quarter was one week shorter than last years — and the much-anticipated iPhone X didn’t get into customers’ hands until November 3, over a month into the quarter. The average selling price for all iPhones went up $102 year-over-year. Seems like proof that the iPhone X strategy is working.”

    [url<]https://daringfireball.net/linked/2018/02/01/aapl-q1-2018-results[/url<]

      • strangerguy
      • 2 years ago

      Apple is the very reason why the entire industry is abandoning worthless marketshare/unit sales numbers for overall profit.

      • kvndoom
      • 2 years ago

      They’ll keep raising the price until people stop buying. The $1000 barrier didn’t slow them down so it’s only a matter of time before they test the water with $1200… then $1500…

      I can’t criticize but I can sure roll my eyes….

        • blastdoor
        • 2 years ago

        Perhaps they decided that the mistake with the original gold Apple Watch Edition was that they jumped out of hyperspace too close to $20k. That was as clumsy as it was stupid. Now perhaps they will more slowly sneak up on the nose-bleed price points.

          • tipoo
          • 2 years ago

          I wonder what became of the OG 20K gold Apple Watch buyers, lol. The series 0 is pretty pokey these days. Not like anyone who bought that would be hurting for cash, but any update would be a material (worth) downgrade.

          • kvndoom
          • 2 years ago

          Yes, you must bring your toad to a slow boil! Do not just drop it in a pot of hot water! 😀

        • tipoo
        • 2 years ago

        Ya know, I’d be fine with that. The X showed what they can do in a 1K price point, and it’s pretty cool. I’d wonder what we could get for 1.5, or 2…So long as the regular price tiers aren’t going away, and they aren’t, and the X’s edge to edge-ish screen is also trickling down to cheaper models next refresh.

    • soccergenius
    • 2 years ago

    For what it’s worth, last fiscal year’s first quarter had 14 weeks compared to this year’s 13. When you account for that, Apple’s product shipments all grew:
    – iPhone: up 6.3%
    – iPad: up 8.4%
    – Mac: up 2.4%

    [url<]https://twitter.com/BenedictEvans/status/959515460843618304[/url<]

      • derFunkenstein
      • 2 years ago

      Are those numbers assuming just an extra 7.7% sales, or is that actual sales for the week that went missing?

        • soccergenius
        • 2 years ago

        Those #s are unit shipments, taking FY17Q1 dividing by 14 and multiplying by 13 to get a more apples to apples comparison (using average units shipped per week).

          • derFunkenstein
          • 2 years ago

          Not a great comparison during the quarter with a holiday shopping season in it. Or any quarter for that matter. Shipments are not necessarily static

            • soccergenius
            • 2 years ago

            I think the point is that iPhone shipments this fiscal year’s first quarter would absolutely have been more than last year’s had this year similarly had 14 weeks. By how much can’t be known, but using a weekly shipment average is a good guess.

            [url<]https://twitter.com/BenedictEvans/status/959515460843618304[/url<]

    • End User
    • 2 years ago

    iPad revenue was 4.5x that of Surface revenue – $5.9 billion vs $1.3 billion

      • Chrispy_
      • 2 years ago

      iPad accounts for 100% of Apple tablets.
      Surace accounts for <10% of Windows tablets.

        • tipoo
        • 2 years ago

        Woah, where did Surace come out of with 10% of the market?!

          • Chrispy_
          • 2 years ago

          Surface is actually doing pretty well according to Gartner.

          Also, note that 10% of the [b<]Windows tablet market[/b<] is only a small fraction of the whole PC market.

            • tipoo
            • 2 years ago

            (it was a Surace typo joke 😛 )

    • tipoo
    • 2 years ago

    Moving up the average selling price is definitely the name of the game for them right now. The Macbook Pros are still riding higher than usual two years after the major refresh, longer than they’d usually have a bump. I hope that’s not permanent.

    The current pricing plus conversion is particularly brutal, but that part’s out of their control (apart from being faster on updating prices for strengthening currencies…).

      • End User
      • 2 years ago

      MacBook Pros are riding high? Where did you get that from?

        • tipoo
        • 2 years ago

        The average selling price is. Both the 15 and 13 moved up a few hundred dollars from the last gen, not counting the later introduced half sized SSD 13″ model to compare Apple to Apple. i.e they introduced the new 15 at $2,399, compared to $1,999 before.

        Sales are down to 5.1 million vs 5.4 previous.

        Edit: Visualized

        [url<]https://twitter.com/jsnell/status/959184550084591616?ref_src=twsrc%5Etfw&ref_url=https%3A%2F%2F512pixels.net%2F2018%2F02%2Fapple-posts-q1-2018-results-88-3-billion-in-revenue%2F[/url<]

          • End User
          • 2 years ago

          Oh. The price. Got it.

          They are in dire in need of an Intel 8th Gen refresh.

            • JustAnEngineer
            • 2 years ago

            Kaby Lake G?

            • End User
            • 2 years ago

            [url<]https://www.notebookcheck.net/Intel-Core-i7-8650U-SoC-Benchmarks-and-Specs.242726.0.html[/url<] In a 13" MBP - tasty

            • derFunkenstein
            • 2 years ago

            Will they really release a 13″ retina notebook without at least the option of eDRAM? The entry-level 13″ has the 620 IGP but all the rest get the 640 with 64MB of cache.

            • tipoo
            • 2 years ago

            That’s the issue, Intel has to combine Iris Plus with the ULV Quads. Anyone see any indication of such a part yet?

            No rMBP has the 620, the base has the 640 and touchbar has the 650, both with eDRAM. I don’t think they’d do a retina model with a 620 for the scaling performance…

            • tipoo
            • 2 years ago

            Would be sweet for the 15″. GPU memory bandwidth up from 80GB/s straight to 180.

      • derFunkenstein
      • 2 years ago

      Apple figured out you can add features for $5-10 and then charge plenty extra. Don’t expect that to change any time soon. That’s the same reason the iPhone starts at 64GB now – they could jack the price up $50 to do it.

      If anything I figure they’ll raise the price of the entry level MBPs (both 13″ and 15″) and double the storage. That $1300 13″ with 128GB of storage will be $1500 with 256GB on the low end (edit: which already exists, so that $1300 option will just disappear). They might see a 3-5% drop in shipments but they’ll get 10% more revenue out of that line anyway.

      They do still have a $1999 entry-level 15″ model. It’s the previous-gen entry-level model with the Haswell CPU (the idea of which makes me want to vomit)

      • rudimentary_lathe
      • 2 years ago

      Yeah, as a MacBook Pro owner, I refuse to shell out for a new MacBook Pro. It’s not that I can’t – I just refuse to pay what I consider to be outrageous prices.

      I am willing to pay a markup for macOS and the software ecosystem, but the current markups are ridiculously high.

    • derFunkenstein
    • 2 years ago

    The fact that the base iPhone 8 ($699) and iPhone 8+ ($799) cost about $50 more than the iPhone 7 and 7+ ([url=https://everymac.com/systems/apple/iphone/specs/apple-iphone-7-verizon-sprint-hong-kong-china-a1660-specs.html<]source showing $649 and $749[/url<]) did at launch probably doesn't hurt revenue growth on flat unit sales, either.

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