In the quarter ending 30 June 2011 Apple achieved revenues of $28.6bn - the highest quarterly revenues in the company's history - representing 82 per cent year-on-year growth. For the most part this was driven by the sale of 33m iOS devices, and particularly the iPhone and iPad:
- iPhone sales reached all-time quarterly high with 20.3m iPhones sold this quarter (142 per cent compared to 8.4m iPhones shipped in calendar Q2 2010). The company attributed much of this growth to emerging markets (like China, Brazil and Mexico), as well as adding 42 new carriers and 15 new countries during the quarter.
- iPad sales reached the quarterly record of 9.2m iPads sold against 3.3m iPads sold last June quarter (183 per cent year-on-year growth). This was the first full quarter of iPad 2 availability and saw the device launch in 36 additional countries during the quarter expanded iPad distribution to the total of 64 countries.
- By contrast iPod sales fell 20 per cent year-on-year to reach 7.5m units compared to 9.4m in Q2 2010. This decline happened despite the popularity of the iPod Touch, which now accounts for over 50 per cent of iPod sales.
By contrast, the Mac continued to grow quietly, selling 3.95m units in the quarter up 14 per cent on the previous year.
For Apple, successive growth quarters are becoming a regular occurrence. The quarter ending 30 June was no exception and confirmed iOS as the core growth driver for Apple: over 70 per cent ($20bn) of Apple's $28bn quarterly revenue was attributable to iOS hardware (iPhone, iPad, iPod Touch). The iPad alone sold more than double the number of units than the Mac in the quarter. Although Mac computers growth remained steady and kept outperforming the PC industry. Nevertheless, Apple's historic product line now only accounts for 18 per cent of its revenues.
With over $70bn in cash and near-cash assets, Apple has more than enough resources to work on the remaining bottlenecks that are supply chain constraints (component sourcing and manufacturing) and its retail presence outside the US. By way of a comparison, the European Central Bank had a little over $80bn in foreign exchange reserves in April 2011. However, IHS Screen Digest doesn't expect these reserves to be used for any spectacular acquisitions, Apple preferring to use its cash to secure component supply at highly competitive price points and for smaller acquisition targets to augment the products and services it develops internally.
This trend is set to be sustained, as Apple seeks to secure its early lead in tablets and compete more aggressively in smartphones, both geographically (new operator partnerships) and with lower price points (targeting the pre-paid market).
The iPhone appears to be oblivious to the same seasonality that affected iPod sales (spikes in Christmas quarters), in great part thanks to sales being linked to phone contract renewals. This significantly eases supply constraints, and proves the iPhone's mass appeal in the absence of any new model since June 2010 (if we exclude the white variant). Said seasonality could however come back when Apple lowers the entry price-point of the iPhone, resulting in a sales pattern separate from phone contract renewals. IHS Screen Digest expects Apple to refresh its iPhone line shortly, with broad global availability in calendar Q4 2011.
The other pillar of Apple's results, the iPad was supply constrained throughout much of the quarter as the iPad 2 launched in 32 additional countries. However the 183 per cent year-on-year growth needs to be seen in the context of the device's limited availability in just 10 territories in the same quarter in 2010; coupled with the fact that the device continued to enjoy the market pretty much to itself, with no widespread international availability of any significant competitor.