What Did Apple Say About Payments Yesterday?

Perhaps the only payments news that came out of Apple’s fiscal third quarter earnings call July 22 was perhaps analysts’ indifference on payments as a potential catalyst for company growth. Not one analyst posed a question to Apple CEO Tim Cook about whether Apple had any plans to venture into mobile payments, despite the rumors that it is.

Perhaps they were afraid of getting shot down, anticipating Cook would give only a general answer that essentially said nothing. Who knows? But not even to inquire whether Apple might have mobile-payment plans, especially through its new partnership with IBM, just seems odd.

The quarterly presentation seemed similar to Apple’s Worldwide Developers Conference on June 2, where payments similarly wasn’t discussed. There, too, Apple executives made no mention of Apple preparing for an entry into the payments space.

During the call, Cook acknowledged the recent IBM deal and its ability to bring more Enterprise business solutions to market, but he didn’t specify what might be in the works.

“We’re working together to provide companies access to the power of big data analytics, right on every employee’s iPhone or iPad,” he said, a suggestion that the deal may be more in line with improving business’ internal operations than the apps companies might take to market.

Cook later noted how much and where companies were using iPhones for internal purposes, another indicator of where the IBM deal might take the company for growth. Luca Maestri, Apple senior vice president and chief financial officer, also indicated such, noting companies have equipped millions of employees with iPhones, thereby increasing productivity, employee satisfaction and profitability. He even cited 26,000 iPhones NASA’s scientists, flight crew members and others are using as one example.

During the quarter, Apple sold 35.2 million new iPhones, a new record for third-quarter sales, 4 million more than last year, representing 13 percent growth, Maestri said. Sales grew across each of the enterprise, mid-tier and elite product categories, he said. iPhone sales were above company expectations, despite new-product rumors that might have resulted in purchase delays, he said.

In the U.S., iPhone accounts for 41.9 percent of the smartphone subscriber base, up from 41.3 percent in the previous measured period, according to the latest data from comScore, Maestri noted.

The App Store also performed strongly during the quarter. Moreover, during the first nine months of the fiscal year, iTunes Software and Services was the fastest growing part of the company’s business, Cook said.

iTunes billings grew 25 percent year over year in the fiscal third quarter and reached an all-time quarterly high, “thanks to the very strong results from the App store,” Cook said.

Though iPad sales met company expectations, Cook conceded that they didn’t meet what analysts had expected. Reduction in channel inventory affected sales, as did market softness in certain parts of the world. IDC data show a 5% overall decline in the U.S. and as well as a reduction in the European tablet market during the quarter, he said.