Apple sees first quarter revenue increase in a year
Apple faced a lot of challenges to start the year. The Apple Watch has been dogged by patent lawsuits, the App Store has come under fire from developers, and the iPhone faces renewed competition in China.
On top of that, the company was recently dethroned as the undisputed king of the stock market when Microsoft replaced it as the world's most valuable public company.
But on Thursday, the tech giant showed the versatility and strength of its business, reporting that sales rose 2 percent to $119.58 billion during the three months ended in December. This was the first quarterly revenue growth for Apple in a year and helped the company post a profit of $33.92 billion during the period, an increase of 13 percent. From a year ago.
The results showed that Apple was able to overcome the slowdown in device sales by motivating its huge customer base to buy more apps and services like Apple Music. The company said software and services sales rose 11 percent to $23.12 billion during the period.
Apple shares fell nearly 1% percent in after-hours trading, even as the company beat analysts' expectations for sales of $117.99 billion.
Although its signature products, the iPhone and iPad, are more than a decade old, Apple said the number of its devices in use worldwide last year increased by 200 million from the two billion reported a year earlier. Investors watch that figure closely because as iPhones, iPads and Apple Watches proliferate, more people are willing to pay Apple for things like cloud-computing storage.
The iPhone, which accounts for more than half of Apple's annual revenue, was the only Apple device to record sales growth during the quarter. According to market research firm Canalys, Apple's release of a new, titanium version of the device last year helped it increase the number of smartphones it sold by five million. This increase pushed iPhone sales up 6 percent to $69.7 billion.
But sales of wearables like the iPad and Apple Watch declined and Mac sales remained flat, reducing the company's total device sales to $96.46 billion, nearly the same as a year earlier.
Apple warned customers days before Christmas that it would have to suspend sales of its Apple Watch because it lost a patent case over the device's pulse oximetry feature. To continue sales, it improved the software of its new watches and removed the feature.
In China, Apple's second-largest market, the company is struggling with a slowing economy and increasing competition. Chinese consumers are cutting back on spending, while China's cellphone giant Huawei has released smartphones with higher quality cameras and lower prices than Apple. To keep up the momentum, Apple has started discounting iPhones in China.
Apple's growth lagged behind that recorded by other tech giants. On Tuesday, Microsoft said its quarterly revenue rose 18 percent to $62 billion, while Google's parent company Alphabet reported a 13 percent increase in sales.
The value of those companies has increased because they have embraced generative artificial intelligence, which Apple has been slow to pick up. The company's chief executive, Tim Cook, said last year that AI-related work was “underway,” but he declined to elaborate.
Apple has instead focused on the release of the Vision Pro, an augmented reality headset. The company put the device, which costs $3,500, on sale in mid-January and the first batch of about 200,000 headsets were sold, according to analysts' estimates. It will start shipping the device from Friday.