It’s nearing the end of October, and while for many it may signal the time to break out those monster costumes and carve those pumpkins; trick-or-treating in the tech community starts with the release of the financial results at the end of the fiscal year for Apple Inc. (NASDAQ:AAPL) ! As tradition demands, Apple CEO, Tim Cook, took center stage yesterday and presented the financial result of Apple for fiscal 2015 and boy, were they big! Apple posted quarterly revenues of 51.5 billion and quarterly net profit of 11.1 billion beating the previous highest Q3 (calendar) margin by quite a bit.
However, things are not all rosy for the world’s largest tech company, as their biggest moneymaker, the iPhone fell short of analysts’ expectations by 1.6 million units. Despite the slump in sales for iPhones and the worst quarter in 4 years for the iPad, profit margins remained pretty significant mainly due to the popularity of the Apple Watch and a stellar performance from Macs. In fact, in a day and age where PC’s are considered to be going the way of the dinosaurs, this surprising turnaround by Mac, who had their best quarter in history with a sale of 5.71 million units left us scratching our heads. In this mobile-centric world of smartphones and tablets, what secret recipe does Apple pack in their Macs to showcase a growth spur in such tough times? Stick with us as we dig to the bottom of this mystery!
Apple Q4 2015 Results: By the Numbers
Apple’s revenue has always been a function of their iPhone sales numbers. So before we rave about anything else let’s first take a quick glance at the numbers. While Apple has not been very forthcoming about the numbers on the Apple Watch, we have included approximate numbers from Apple analysts into the fray.
- Apple has sold 48.046 million iPhones in Q4 2015 and made $32.209 billion in revenue from those sales.
- Apple sold the least number of iPads in Q4 in all of 4 years, coming in at just 9.883 million.
- Bundling all of the iPods, Apple TV and watches into one category, Apple announced that it has earned about $3.046 billion in revenue from these devices.
- Apple also managed to sell 5.709 million Macs, making revenue of $6.882 billion.
Tim Cook declined to divulge further numbers on the exact sales figure of the Apple Watch citing reasons of not wishing to give competitors valuable insights about the wearable industry. This has led to quite a bit of doubt among analysts with Watch sales figures of 2.5 million to 6 million units being thrown about while most stuck to a modest 3.95 million.
There was, however, no doubt in analyst’s minds about the fact that Macs have played a significant role in the final line for this quarter. Tim Cook has been quoted as saying that
Fiscal 2015 was Apple’s most successful year ever, with revenue growing 28% to nearly $234 billion.
and while the lion’s share of the revenue may not have belonged to Mac sales, they present a trend that we find far more intriguing than iPhone sales for the next quarter which we already talked about before and Apple’s projected numbers seem to coincide with ours.
Macs Are Pushing the iPad to the brink
If we do not consider the peaks in the above trend for iPad sales(seasonal variations caused due to the spike of the holiday season, as seen in Q4 of every year ), we will find that the iPad has been on a downward curve ever since the middle of 2013. While the iPad mini did look to alleviate the concern by providing a portable alternative to those looking for a smaller form factor, the introduction of the Plus model of the iPhone lineup in the last two generations has significantly hampered sales of the smaller iPad.
Although Cook, believes that the worst days of the iPad are over with the larger 12.9 inch iPad Pro launching in the next month, we can’t share his enthusiasm. The exorbitant price tag and the niche market for such a stylus enabled tablet makes us feel like it might not be the jab in the arm that the iPad lineup needs. In fact, the high price point of the iPad Pro at nearly $1,000 for the model with all the accessories may drive people towards the new MacBook and MacBook Air, which are both available at similar price points.
Which brings us nicely into our main discussion which is the emergence of Macs as the only brand of PC’s showing positive growth in this hostile environment. The reasons behind these are manifold, and they have been mentioned in great detail previously, we will go over the salient points here.
- Mac Books and iMacs appeal to a certain niche of creative professionals who are very loyal to the brand. Thus even though PC adoption rates have slowed down, Macs have kept up and even expanded their market as more people appreciate the special software and hardware features that Macs provide.
- The build quality and look of the MacBook is a notch above its competition and in an age where sleek and stylish are major factors influencing a consumer, MacBooks and desktop iMacs have an immense advantage.
- Then there is Apple’s unparalleled customer service and their Apple Care scheme that makes for a hassle-free experience.
- Finally, we see a move away from the bulky desktop to laptops and ultrabooks, and this is where the MacBook really shines.
Apple’s iMacs and MacBooks continue to grow and have shown a steady upward growth potential in the last fiscal year. With Apple continuing to innovate with features like Force Touch on the ultra sleek MacBook 2015, one can’t help but feel that Apple will soon be able to establish themselves as one of the dominant players in the PC marketplace.
Predictions For the Future
The gradual increase of the market share of Mac OS X should be one of the leading causes of concern among Windows-based PC manufacturers. Apple once considered the underdog in the PC business, is starting to take a significant share of the pie. However, one of the major hurdles that stand in the way of Apple from exerting their dominance in the PC market is the presence of Ultrabooks and ChromeBooks. With most consumers realising that they can get their job done on fairly low powered and ultra portable machine have started the trend away from cumbersome PCs to lightweight laptops or Ultrabooks.
With the increasing focus on mobility and long battery life, Ultrabooks are becoming more and more common and will be the way forward in the PC market. As such, companies like Lenovo, HP and Asus have jumped in on the bandwagon and are making ultrabooks at costs far less than the Mac Book range. Will the superior feature set and software experience of the MacBooks be enough for Apple to capture this new segment or will it again come down to a price battle to the bottom?
When laptops are concerned, Apple has held the first place for quite a few years. However, with competition heating up and a price war in the horizon one wonders if Apple can hold on to their crown.
Tim Cook has been quoted as saying,
This continued success is the result of our commitment to making the best, most innovative products on earth, and it’s a testament to the tremendous execution by our teams.
And we hope that they continue to do so with each one of their product lines including the Mac lineup. The future is exciting with lots of unique opportunities for them to cash in on. In Apple, we trust, but does the rest of the world?