Five takeaways from the Apple earnings call

Martyn Williams
23 July, 2014
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Apple, earnings, tim cook, macworld australiaApple reported its quarterly numbers this morning, a mixed bag that saw profits rise up but sales fall short of the mark. Here are five takeaways from the Apple earnings call that followed.

Apple’s pouring more money into R&D

Apple has spent US$3.3 billion in the past nine months on research and development. That’s 3.1 percent of revenue, putting it on course to beat its R&D spending for the past several years. The last time spending reached that level was 2009, and it could still go higher yet. In the April-to-June quarter, R&D spending was 4.3 percent of revenue, a level not reached since before the iPhone launch. What’s driving the spending? Only Apple knows, but a good guess would be the iPhone, which will reportedly soon see a major overhaul and Apple’s much-rumoured wearable. It’s worth noting, however, that Apple’s R&D spending is lower as a percentage of revenue than many of Silicon Valley’s big enterprise tech firms.

Forget sales, iPad users are happy, and Apple says that’s what counts

At 13.3 million units, iPad sales were down more than a million from the same period last year. Tim Cook said that’s what he was expecting, but he acknowledged it caught most everyone else by surprise. What he’s more focused on, he said, are surveys showing how happy people are with their iPads. If only happiness could pay the bills. He did hint that while sales might be declining, Apple has got more tricks up its sleeve. “We still feel the category is in its early days and there is significant innovation we could bring to the iPad.” Of course, he didn’t say what it might be.

Apple is killing it in China

Even Cook admitted that Apple’s performance in China was “surprising.” Sales there were US$5.9 billion, just a couple of billion dollars off Apple’s total sales for all of Europe. “We thought it would be strong, but it went past what we thought,” he said. Thanks in large part to a new deal with China Mobile, iPhone sales in China jumped 48 percent, Macintosh computer sales were up 39 percent and even iPad sales rose.

The IBM deal explained

When Apple announced a big deal with IBM last week to get iPads and iPhones into corporations, some scratched their heads. On Wednesday, Cook explained it’s all about ramping up tablet sales to businesses as PC sales decline. Apple’s tablet market share among businesses is about 20 percent – way lower than it enjoys in other markets. “I think our theory since the first time we shipped iPad was that the tablet market will eventually surpass the PC market. That theory is still intact. I just think we have to do some things to get the business market moving at a faster trajectory,” he said.

We still don’t know when the iPhone 6 or the ‘iWatch’ will launch

If you were expecting even a hint about that, you really don’t know Apple. A couple of analysts tried to tease out some information about what’s coming and when, but Cook would only say that “new products and services” are on the way. Some things never change.

One Comment

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  1. MacProf Geelong says:

    Apple used to pride itself on the functionality of its products, however this did not necessarily apply to the minor details. I would like to see Apple locate all model details, serial numbers and the like in really obvious and easy to find places. I would also like the characters to be big enough to be readable without a magnifying glass in bright sunlight. The same goes for accessories such as cables, with the orientation (eg, USB and iPod 30-pin connectors) clearly marked, not with a tiny grey mark that is hard to see in poor light. I know that the lightning connector goes in either way, but the others are very poor.

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