iPhone mania
Booming smartphone sales are still swelling Apple's profits
WHO said that smartphones were past their prime? That certainly does not seem the case at the top end of the market. Apple proved even optimists wrong when it announced on October 20th that it had sold a record 39m iPhones in the fourth quarter of the firm's accounting year. Demand for Apple's two new devices, the iPhone 6 and the bigger iPhone 6 Plus, both launched last month, largely explains why Apple had such bumper profits last quarter. It reported more than $41 billion in revenues, beating analysts’ expectations by $2 billion. The firm’s net income reached $8.5 billion, about $1 billion more than in the same period a year ago. Earnings per share increased even more sharply, from $1.18 to $1.42, because of the firm's big share buy-back programme.
Apple’s results shine even more brightly because its rivals are currently underperforming. Earlier this month Samsung Electronics, Apple’s main competitor in smartphones, warned that its operating profit in the third quarter would come in at less than half the level it was a year earlier. Last week Google announced that it had missed its forecasts. And just few hours before Apple's results were released, IBM had released disappointing results: the company’s operating profits for its fiscal third quarter fell by 10%, a figure well below analysts’ estimates.
The only bad news in Apple’s results was a drop in sales of iPads. The firm sold 12.3m of the devices in the past quarter, down from 14m in the same period a year ago, continuing a trend that started in early 2013. That may change in the next quarter since Apple last week introduced thinner and cheaper iPad models. But the drop may be a sign that tablets are getting squeezed between smartphones, which are getting bigger, and laptops, which are getting lighter. What is more, many users seem to treat their tablets more like television sets, meaning they do not replace them very often.
The other big question is whether Apple can continue to sell ever more iPhones. On the positive side, the new iPhone models have just started selling in China, where the devices are very popular. On the other hand, some analysts say that many of the iPhone 6s sold were of the bigger variety—a part of the smartphone market which Apple had hitherto ignored. And growth of the total smartphone market is slowing; in mature markets, such as Britain, it is already shrinking. At any rate, Apple’s most recent quarter shows that the firm, despite its size, has not lost the ability to surprise.