Apple’s Macs, iPads and services offset weak quarterly iPhone sales

Apple’s fourth quarter typically sees flatter phone sales because it encompasses the period just before the company’s annual iPhone release, and that’s been true this time too. The company reported $26.4 million in iPhone revenue, down from $33.4 million in the year-ago quarter and hardly up compared to the three months prior. We’ll update this story if Apple offers any specific guidance during its customary earnings call, but it’s very likely that these stagnant iPhone sales numbers are due in large part to people waiting for the company’s latest high-profile smartphone releases.

Because Apple’s iPhones were delayed this year, the window for Q4’s earnings closed before Apple could even announced its new iPhone 12 series. We’ll have to wait until the next release to get our first look at what the company’s first 5G phones have done for its bottom line. Meanwhile, as expected, some of Apple’s other hardware segments have helped to make up for the iPhone’s shortfalls.

Macs tend to see a lift in Q4 as parents and students start gearing up in earnest for the back-to-school period, but that boost started earlier than usual this year because of COVID-related shifts to distance learning and working from home. For now, the momentum continues — Apple reported $9.03 billion in Mac revenue, up significantly from last year’s roughly $7 billion. Meanwhile, iPads accounted for about $6.8 billion of Apple’s total revenue this quarter, up from $4.7 billion last year.

(Reminder: As of this time two years ago, Apple stopped breaking out the number of iPhones, iPads and Macs it sells in a given quarter.)

More than anything though, Apple has its booming services business to thank for what CEO Tim Cook calls “a September quarter record”. While the company’s overall product revenue slumped slightly compared to its performance in the year-ago quarter, services revenue surged to $14.5 billion, a new high for Apple. We’ll likely see some further growth in this segment in the short term, too. That’s partially because the first wave of Apple’s free, year-long trials of Apple TV+ trials are about to convert into paid accounts, and also because it’s gearing up to offer new subscriptions services like a Peloton-style guided workout plan and bundles that encompass Apple News, Apple Arcade, iCloud and more.

This is a developing story…