Apple talked up growth in its iPad and wearables segments in its latest financials, shifting focus away from iPhone revenue which continued to slide despite aggressive implementation of trade-in offers and other incentives.
CEO Tim Cook (pictured) said Apple recorded its strongest iPad growth in six years in its fiscal Q2 (the three months to 30 March): revenue from the tablets jumped nearly 22 per cent year-on-year from $4 billion to $4.9 billion. CFO Luca Maestri noted more than half of customers purchasing an iPad were new to the device, with the iPad Pro a key driver of sales.
Cook said wearables similarly had a “blockbuster quarter,” posting nearly 50 per cent growth. Maestri added 75 per cent of Apple Watch sales were made to customers who never owned one before.
All told, revenue in the Wearables, Home and Accessories segment grew 30 per cent year-on-year to $5.1 billion. Services also returned strong results for the company, with revenue up 16 per cent to $11.5 billion.
Total revenue of $58 billion, however, was down 5 per cent year-on-year and net income of $11.6 billion dropped from $13.8 billion in the prior-year period.
Sales of the company’s iPhone continued to be its primary financial driver, though revenue was down 17 per cent to $31.1 billion.
Cook insisted the worst is behind the company, pointing to November and December as the lowest point for iPhone sales and noting that trade-in programmes implemented in several countries began to bear fruit toward the close of the recent quarter. He said trade-in volumes for the March quarter were four-times what they were in fiscal Q2 2018.
“Clearly what we’ve learned here, and it’s not a surprise really, is that many, many people do want to trade in their current phone. From a customer point of view the trade-in looks like a subsidy, and so it is a way to offset device cost.”
Though year-on-year revenue in Greater China declined to $10.2 billion from $13 billion in fiscal Q2 2018, Cook said the company remains “positive about our trajectory” and believes “strongly in our long term opportunity” in the country.
The CEO said Apple’s performance improved sequentially, which he attributed to price adjustments, trade-in schemes, stimulus programmes enacted by the Chinese government, and improved trade dialogue between China and the US, which positively impacted consumer confidence.