Read the financial news and you'll hear what a terrible, awful day Apple had. In its earnings announcement for the quarter ending in December 2015 (first quarter of its fiscal year), the company offered numbers that offended the analysts and gave journalists and pundits easy fodder for a quick headline. However, let's take a moment to think.
Before going any further, please know that I am anything but an Apple fanboy. I don't use a Mac, don't use an iPhone, don't use an iPad, and forget the Apple Watch. I'm not a chum of theirs, am often been critical, and don't hold any shares of stock.
In other words, I have no vested interest in Apple and nothing to gain by disagreeing with the pundits. Except, given the company's prior and ongoing performance set in context, you might wonder why some are claiming that this is a case of "peak iPhone" and why panic has been building because of early rumors that iPhone sales would be well down (though VentureBeat did smartly call the phenomenon "overblown fears and nonsense").
Investor concern about iPhone sales is certainly understandable. That's the engine that propels the bulk of revenue and profits for the company. If iPhones don't march in an orderly fashion out the door, it's bad news. And, as is technically true, revenue and iPhone unit sales were down.
Here's why you might adopt a cavalier attitude. Look at this graph of product unit sales over time:
If you expected an enormous year-over-year jump of iPhone sales, then, yes, you were bound to be disappointed. But remember the foundation of these expectations. At the same time last year, Apple experienced its largest jump in iPhone unit sales ever because it finally broke into the Chinese market in a big way and the introduction of the iPhone 6, with the large-screen model, answered pent-up demand for something really new. Gross margins were 39.9 percent and the average sales price per iPhone unit was $687.25.
How could anyone have expected sales to hit that level again? Except, they did. Unit sales were 74.8 million this year versus 74.5 million last year. The average sales price was $690.50. And gross margin: 40.1 percent.
In that context, Apple iPhone sales absolutely crushed this quarter, at least if you look at it as a real company and not some mystical ATM machine.
Now, were there problems? Absolutely. Unit sales of iPads continued their long slide, down almost 25 percent year over year. Mac sales were off a bit as well and CEO Tim Cook expects the next quarter to be really tough -- potentially a quarter of negative year-over-year growth. Apple needs another big winner to bolster what might happen to the iPhone over time.
And yet, sales of services hit an all-time high of $6.1 billion and the other products category, which includes the Apple Watch, reached $4.4 billion. The Watch isn't doing gangbusters, but it's building significantly. So, when people sagely shake their heads and wave off Apple's results, nod and remember that the company is still incredibly impressive, whether you like it or not.