Saturday, September 23, 2023

Apple’s iPhone 14 Pro delivery issues drove holiday earnings down

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Apple announced its earnings for the first quarter of 2023 this afternoon. During the holiday quarter, the company posted $117.2 billion in revenue and earnings per share of $1.88. Most of the curiosity about this quarter’s numbers was tied to iPhone sales; in early November, Apple warned of “longer wait times” for its flagship iPhone 14 Pro and Pro Max. Both phones were hard to come by during the height of the holiday shopping season, though stocks have since leveled out.

But the supply problems, coupled with consumers’ increased focus on their spending in the face of an uncertain economic outlook, led to a 5 percent year-on-year decline in sales. iPhone sales in particular fell by 8 percent. “As we all continue to navigate a challenging environment, we are proud to have our best lineup of products and services ever, and as always, we remain focused on the long term and lead by our values ​​in everything we do. do,” CEO Tim Cook said in Apple’s earnings press release.

The iPhone 14 Pro/Pro Max delays were related to strict restrictions on Foxconn, the China-based factory Apple uses to assemble iPhones. Workers clashed with police during protests in the weeks that followed, with workers angry over delayed payments and deteriorating working conditions due to covid containment measures.

Apple also predicted that sales of Macs would “drop significantly” compared to the same quarter a year ago. And they certainly did, with a 29 percent drop. The company introduced completely redesigned MacBook Pros in October 2021 that received rave reviews and caused a stir in the laptop industry. This spurred excitement and sales far beyond typical Mac performance. By comparison, the 2022 holiday lineup was already well established – and the M2 MacBook Air and Mac Studio had been on the market for a few months.

However, Apple did introduce new iPad models in its fiscal first quarter. The updated entry-level iPad now has a design reminiscent of the iPad Pro and iPad Air. The Pro tablets also got a spec bump to the M2 chip and added a new “hover” feature for the Apple Pencil. iPad revenues were up 30 percent, indicating that the new models were well received. Wearables, however, fell 8 percent.

“During the December quarter, we reached an important milestone and we are pleased to report that we now have more than 2 billion active devices as part of our growing installed base,” said Cook. Sales for Apple’s all-important services division were also up 6 percent. On the software side, Apple rolled out its Emergency SOS via satellite feature for the iPhone 14 range in November. And macOS Ventura was released at the end of October with a number of useful features, such as Continuity Camera, although the overhauled settings interface wasn’t well received by all users.

Apple is widely expected to introduce a virtual reality headset sometime this spring. The device, rumored to be called Reality One, marks Apple’s debut in a new product category hitherto dominated by Meta. There’s a lot on the headset after years of development and frequent rumours. Looking further, the iPhone 15 Pro line is expected to switch to USB-C, and Apple could finally bow to regulatory pressure and allow third-party app stores on iOS starting with iOS 17 this fall.

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