Apple Posts Record Revenue, Sold 51 Million iPhones

Apple, with big plans ahead, sold 51 million iPhones—an "all-time quarterly record." In North America, however, sales were down.

Apple earnings

Apple sold 51 million iPhones—a new quarterly record for the company—during the holiday-timed quarter that ended Dec. 28, its fiscal 2014 first quarter. Those sales were well above the 33.8 million Apple sold the quarter before and the 47.8 million iPhones it sold during its holiday-timed quarter a year ago.

Apple also sold 26 million iPads—another quarterly record, and up from 22.9 million a year ago—and 4.8 million Macs, up from 4.1 million a year ago.

Still another quarterly record was set for revenue, which totaled $57.6 billion and brought in net profit of $13.1 billion. Highlighting Apple's ongoing margins issue, however, Apple's profit a year ago was also $13.1 billion, but on revenue of $54.5 billion.

"Apple's growth is becoming more expensive—the next 10 million iPhone users are harder to come by than the last ones," Jan Dawson, chief analyst at Jackdaw Research, told eWEEK. "As the market begins to saturate, you have to produce more compelling, and therefore more expensive, products to convince people to switch or to upgrade."

Dawson continued, "At the same time, Apple is investing in new product categories it hasn't launched yet, so they're costing money but not making money yet."

Another detail that wasn't obvious from Apple's record-setting sales figure was that iPhone sales in North America declined during the quarter. Apple CEO Tim Cook gave several reasons for this. One was inventory.

"We actually sold more iPhone 5S's than we predicted. It took some time to build the mix that customers were demanding," said Cook. He also blamed changes to several carriers' upgrade policies.

"As I zoom out [to the big picture]," Cook added, "one of the most important things for us in our iPhone business was to do well in emerging markets, and we had our best quarter ever in that respect."

Apple launched its new iPhones in China alongside its U.S. launches—a first for the company—and in December, Apple announced that it had finally penned a deal with China Mobile, the largest carrier in the world. China Mobile began selling the iPhone Jan. 17, and days before the launch announced that it had received more than 1.2 million preorders.

"Last week was the best week for activations that we've ever had in China," said Cook. "It's been an incredible start."

Apple is currently selling the iPhone in only a few dozen Chinese cities but has plans to expand to more than 300 cities by the end of the year.

Growth was also strong, Cook said, in Central and Eastern Europe (up 115 percent), in Africa (up 65 percent) and in Japan (up 40 percent), thanks to a new deal with DoCoMo.

When asked about Apple's plan for the iPhone 5C—the budget-friendly iPhone Apple launched alongside the flagship 5S and which is generally thought to have sold only modestly—Cook declined to comment, saying the question fell under the topic of new products. However, he did say that the 5C has helped to bring new customers to Apple.

"We saw significant new-to-iPhone numbers [during the quarter]. It's not a number we throw out, but we particularly saw that with the 5C, which is what we wanted to see," said Cook.

Beyond the iPhone

While Apple continues to prove it can sell iPhones, the world is growing a bit impatient for its next brand-new form factor. It is widely rumored that Apple will this year introduce a smartwatch and a television set (or an iWatch and iTV, as the media has already dubbed them), as well as possibly an "iRing."

Apple is also said to be working on an in-store mobile payments solution, which would be a game-changer for that industry.

"It has never been stronger," Cook said of Apple's innovation cycle. "I think our customers are going to love what we're going to do."

When pressed to further expand on the topic, Cook offered, "We have zero issues coming up with things we want to do and things we think that can disrupt [industries]. … The challenge is to focus on the things that deserve our energy."

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