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Apple results show Mac sales hit by economic slowdown

Apple has posted quarterly revenue of $94.8bn, down 3% compared with last year.

Yet the company’s services business posted an “all-time record” revenue of $20.9bn, according to CEO Tim Cook, and March was a quarter record for iPhone, despite the challenging macroeconomic environment.

“We continue to invest for the long term and lead with our values, including making major progress toward building carbon-neutral products and supply chains by 2030,” said Cook.

While the iPhone saw a 2% increase in revenue to $51.3bn, the company’s iPad tablet experienced a decline in revenue of 13%, to $6.7bn. Its wearables business reported revenue of $8.8bn.

Although Apple remains consumer-focused, according to the transcript of the earnings call posted on Seeking Alpha, Cook has ambitions to grow its enterprise business. He said the company has focused primarily on the bring-your-own-device (BYOD) market, and as more companies offer this choice of device, Apple benefits. “I think a lot of people want to use a Mac or an iPad at work,” he said.

Chief financial officer Luca Maestri stated that Mac revenue for the quarter was $7.2bn, a 31% decline compared to the previous year. “These results were driven by the challenging macroeconomic environment coupled with a difficult comparison against last year’s launch of the completely reimagined M1 MacBook Pro,” said Maestri. “Despite this, the installed base of active Macs reached an all-time high across all geographic segments and we continue to see strong upgraded activity to Apple silicon.”

Apple is not alone in experiencing declining PC sales. According to analyst IDC, weak demand, excess inventory and a worsening macroeconomic climate were all contributing factors for a precipitous drop in shipments of traditional PCs during the first quarter of 2023.

Of the top five manufacturers of personal computers, Apple is fourth with 7.2% market share, behind Dell (16.7%), HP (12%) and Lenovo (12.7%). Its nearest rival in the PC market is Asus, according to IDC, which had a market share of 6.7% in the first quarter of 2023.

Looking beyond devices, Apple executives were asked if they had any plans relating to artificial intelligence (AI). Cook was not drawn on the company’s product roadmap, but said: “We’ve obviously made enormous progress integrating AI and machine learning throughout our ecosystem.”

When asked about Apple services, Maestri said the company had experienced “strong adoption” in its payments service, adding: “Our growth rates are very strong as the adoption of Apple Pay and Apple Card continues to increase.”

Cloud storage is an area that has continued to grow very consistently, according to Maestri. “Users want to store more photos and videos and more content on their devices, and so they adopt our cloud services,” he said. “In general, the model in the App Store around paid subscriptions continues to grow very strongly. We now have more than 975 million paid subscriptions on the platform, and that’s almost twice as much as we had only three years ago. So obviously, the growth in subscriptions is very strong.”

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