For Apple, the supply chain is a wild card — and will hit sales by as much as $8 billion, as management relayed on the most recent earnings call.
Consumer demand for hardware that keeps us all connected remained robust. However, the second fiscal quarter also showed evidence that the company is continuing its push to pivot beyond hardware and gain subscribers with the lure of content and apps.
As Chief Financial Officer Luca Maestri said, the company is seeing “all time records” for the App Store, for music and for video advertising and payment services.
“We now have more than 825 million paid subscriptions across the services on our platform, which is up more than 165 million during the last 12 months alone,” Maestri said.
Management noted on the call that the installed base of active devices offers a “big engine” for the company’s services business. The level of engagement on the platform is continuing to grow, Maestri and CEO Tim Cook said on the call.
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The Services Segment
That activity helped drive services revenues up 17% year over year to $19.8 billion. As for the hardware, Cook said that the company’s M1-powered Macs helped propel a 15% year over year increase in revenue, despite supply constraints.
In the March quarter, iPhone revenue grew 5% over the previous year to $50.6 billion. Meanwhile, Wearables, Home and Accessories grew 12% year over year to $8.8 billion.
“Customers are enthusiastically taking charge of their health with Apple Watch Series 7 and Apple Watch SE,” Cook said.
iPad revenue was $7.6 billion down 2% year over year due to continued supply constraints (which are focused in China).
During the question and answer session, when asked about inflation, Cook said that in reference to consumer spending, “We’re monitoring that closely, but right now our main focus, frankly speaking, is on the supply side.”
The devices and the services, of course, are part of the building blocks of the connected economy — though there are still pockets of seeming resistance. Though Apple Pay was not much discussed on the call, as we noted in this space earlier this month, seven years after the launch of Apple Pay, PYMNTS analysis shows that 94% of U.S. consumers who could use Apple Pay to check out in the physical store still don’t. PYMNTS’ data show that Apple Pay accounts for roughly 2% of overall retail sales in the U.S.
See also: The One Big Thing Apple’s Project Breakout Needs but Doesn’t Have
