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Apple’s Q1 2015: Ridiculously high iPhone sales, 18% drop in iPad sales [Updated]

Apple sold over 74 million iPhones in Q1, but its tablet remains a sore spot.

Big iPhones led Apple to big sales in Q1 of 2015.
Enlarge / Big iPhones led Apple to big sales in Q1 of 2015.
Andrew Cunningham

Apple's earnings report for the first quarter of fiscal 2015 is here, and as usual the numbers for the holiday quarter are looking pretty good. iPhone sales are way up, and account for over two-thirds of Apple's revenue. Macs continue their more modest but still impressive growth, while iPads have seen their sharpest year-over-year decline.

Let's get the numbers out of the way first. Apple broke quarterly records with $18 billion in profit and $74.6 billion in revenue, compared to $13.1 billion in profit and $57.6 billion in revenue in Q1 of 2014. It maintained a healthy profit margin of 39.9 percent. These results firmly beat Apple's guidance for the quarter, which predicted revenue between $63.5 billion and $66.5 billion and profit margins between 37.5 and 38.5 percent.

Apple managed to increase revenues across the board in all territories, and the Americas continue to account for the bulk of that revenue. However, China is clearly Apple's fastest growing market—revenue increased from $9.5 billion to $16.14 billion, a year-over-year increase of nearly 70 percent. Apple's deals with Chinese carriers and increasing focus on the Chinese market appear to be paying off.

Andrew Cunningham
Andrew Cunningham

This was the first full quarter of availability for the iPhone 6 and 6 Plus, and it's when Apple's supply began to catch up with demand for the new phones. The company sold 74.47 million units in Q1, compared to 51 million phones a year ago—all told, the iPhone line generated $51.18 billion for Apple in Q1, 68.61 percent of total revenue.

Though Apple has released few new Macs (and no new laptops) since late 2013, Mac numbers also continue to impress. The company sold 5.52 million Macs in Q1 of 2015, a 14.05 percent increase from the 4.84 million sold last year. The Mac is Apple's third-best selling product by unit sales and continues to be the third-largest piece of Apple's revenue pie—at $6.94 billion, they're responsible for 9.31 percent of total revenue.

Despite the introduction of the new iPad Air 2 and iPad Mini 3 (and price drops for the iPad Air, iPad Mini, and iPad Mini 2) in October, iPad sales still took a tumble from last year. Apple sold 21.42 million tablets in Q1 2015, compared to 26.04 million a year ago, and the iPad's $8.99 billion in revenue accounts for 12.04 percent of the company. Though the iPad line is still selling pretty well by most companies' standards, it has now been a full year since it posted year-over-year growth in unit sales, and its 17.74 percent drop in unit sales from last year is the largest year-over-year decrease that we've seen so far.

Update: Cook says he's still "bullish" on the iPad's long-term prospects—he pointed to the large number of first-time buyers the company is seeing, and noted that customer satisfaction remains high. However, the company believes the upgrade cycles are longer (somewhere in between a phone and a PC), and that the iPad is being affected by some degree of cannibalization from the iPhone on one end and the Mac on the other.

Andrew Cunningham
Andrew Cunningham
Andrew Cunningham

The rest of Apple's results sheet has changed a bit. The old "iTunes, software, and services" category, which has been relabeled "Services," made $4.8 billion in Q1 2015 compared to $4.4 billion a year ago, and it represents 6.43 percent of total revenue. Aside from App Store, iTunes Store, and iCloud revenue, that line item now also includes any money made from Apple Pay, which launched in late-October. Whatever Apple is making from apps, services, and Apple Pay has apparently been enough to offset an ongoing decline in digital music sales. It's also worth noting that, after this quarter, Apple's revenue in this category should no longer be affected by the decision to make OS X and its iLife and iWork apps free—that happened in late October of 2013, so it's been nearly an entire fiscal year since Apple charged most users for any of that software.

The iPod's long, slow decline accelerated in 2014, and rather than breaking it out into its own separate line item Apple has rolled it into a new category called "Other products." This section also absorbs the Accessories category—the place where Apple would report sales for things like cases, speakers, Apple TVs, and AirPorts—and it's where revenue from Beats headphones and (eventually) the Apple Watch will also be reported. Adding the iPod and Accessories revenue from Q1 of 2014 gets us $2.84 billion in revenue, which declined slightly to $2.68 billion in Q1 of 2015. Though we can no longer track its decline, we'd blame the iPod for the decrease—the Apple Watch should help to offset the iPod's decline starting sometime this year.

Andrew Cunningham

Apple's guidance for the second quarter predicts revenue between $52 billion and $55 billion and profit margins between 38.5 and 39.5 percent. Whether Apple will launch new products between now and the end of March remains to be seen, but we know the Apple Watch isn't coming until April and that Intel has released new processors suitable for MacBook Airs and the 13-inch MacBook Pro.

Channel Ars Technica