Compared with a year ago, Apple is obviously facing a more severe operating environment. With the repeated outbreaks in the country, Apple's supply chain crisis has never been resolved. Cook also pointed out in the financial report meeting last quarter that the negative impact of supply chain restrictions will continue until the second fiscal quarter of this year, and the situation is not optimistic.
At the same time, multiple factors such as the continued conflict between Russia and Ukraine and the continued decline in US economic data have caused a general decline in performance of US technology giants in the first quarter, and investors have accelerated the sale of risky assets. The once glorious technology stock underperformed the market . In this case, investors have placed their hopes on Apple's financial report, hoping that Apple can deliver a satisfactory answer to the market and revitalize market confidence.
So can Apple stand the test? Last night, Apple released the company's second quarter financial report for fiscal year 2022. The report shows that Apple's total net revenue in the second quarter was US$97.278 billion, a 9% increase from US$89.584 billion in the same period last year; net profit was US$25.01 billion, a 6% increase from US$23.63 billion in the same period last year. Apple's revenue in Greater China was US$18.343 billion in the second quarter, an increase of 3% from US$17.728 billion in the same period last year.
Judging from the book numbers, Apple's second-quarter financial report data is still booming. In addition to the iPad series that is out of stock due to "very serious supply chain restrictions", Apple's entire hardware products have basically ushered in growth. In addition to the revenue of iPhone 2, which has repeatedly set new highs, service revenue growth has also increased, helping Apple continue to maintain a strong revenue trend in the turbulent macro environment.
is still an excellent hardware business
When it comes to Apple, it is impossible to avoid iPhone. Although the proportion of revenue has declined in recent years, the iPhone is still Apple's most important business.
According to Morgan Stanley analyst Katy Huberty, driven by strong demand for the iPhone 13 series, iPhone shipments in the second quarter will increase by 210% year-on-year. Affected by this, despite the weak performance of the iPhone SE series, iPhone revenue still increased from US$47.88 billion in the same period last year to US$50.57 billion in the second quarter of fiscal 2022, a year-on-year increase of 5.5%, accounting for 51.97% of the total revenue this quarter.
According to foreign media 9to5mac, Apple CEO Tim Cook accepted an interview with CNBC after Apple released its second quarter financial report for fiscal year 2022. In an interview, Cook said that the iPhone business achieved significant success in "attracting users to change phones" this quarter, and the number of users who switched from Android to iPhone achieved double-digit growth. If Android manufacturers continue to sink, this number is expected to grow further.
Let’s take a look at other businesses. As Apple’s longest-running hardware business, the revenue of the Mac business in the past few years is actually not very optimistic. However, after Apple launched the M1 chip , the Mac business continued to recover, with revenue this quarter increasing by 14% year-on-year to US$10.435 billion. The M1 chip has successfully won market recognition. Apple is expected to strike while the iron is hot and launch a new Macbook product equipped with iterative M2 chip this year.
is different from the stable performance of the Mac business and the strong performance of the iPhone business. The iPad business became the only business with a decline in sales in the quarter. Although Apple released the iPad Air 5 at the spring new product launch conference in March this year, the sales of this product were not as good as expected. One and a half months after its release, the sales of JD.com were only more than 10,000 units. The unbalanced product configuration makes the phone even less popular than the iPad Pro 2018 model.
In addition to the problems existing in iPad Air 5 itself, supply chain restrictions and intensified competition in external markets are also the reasons why iPad business performance is not as good as expected.In the past six months, major domestic manufacturers have launched many cost-effective products, such as Huawei MatePad 11, Xiaomi Tablet 5 Pro, OPPO Pad, Honor V7 Pro, vivo Pad and other products. These products are generally priced around 2,500 yuan, all of which have good quality speakers + high-reflash screen configurations, and the software ecosystem is much better than before, which will obviously have a significant impact on iPad sales.
service is the pillar of Apple's future
When it comes to Apple, many people's first impression is that it has various powerful hardware, including iPhone, iPad and Mac, etc., but in fact, Apple's service business has become an important part of its revenue.
According to Apple's financial report, Apple's service revenue in the second fiscal quarter was US$19.821 billion, and the year-on-year growth rate of reached 17%, far higher than all businesses except iPhone. In addition, the revenue growth rate of this business department is also very rapid. Since Apple's financial report statistics, in 2021, the revenue growth rate of Apple's service business has basically increased by in the product business in every quarter.
The strong momentum of Apple's service business has made many Internet giants look at each other.
In fact, since the growth of iPhone sales slowed down in 2015, Apple has begun to shift its focus to service business. Today, the service business has become Apple's second most important product group, and its growth prospects are more exciting than those of a number of hardware such as the iPhone. In addition, in the strategy of the entire Apple group, we can also see that Apple is shifting its focus to software services.
In recent years, Apple has successively announced a number of subscription services including Apple Unified Subscription (Apple One), Apple Fitness (Apple Fitness+) and Self service repair. At the same time, it is also continuing to enrich the content of existing subscription services such as Apple Games (Apple Arcade), Apple TV (Apple TV+), Apple News (Apple News+).
Thanks to the rich content of the service, the growth of device sales and the increase in user participation, Apple CFO revealed on an analyst conference call yesterday evening that the number of users Apple served increased by 165 million this quarter, an increase of 25% over last year. Considering that Apple relies on hardware sales, it has a huge user base around the world, it can be predicted that Apple's paid services will still have a lot of room for explosion in the future.
Because of this, according to foreign media reports, Apple is planning to launch a subscription model involving iPhone and other Apple hardware products. As long as users pay a fixed fee every month, they can use the latest iPhone, iPad and other Apple hardware, and also enjoy Apple One's paid services, including more iCloud cloud disk space, etc.
Why does a company like Apple that does not worry about not being able to sell products need to develop a hardware subscription service? In fact, Apple's product sales are facing increasingly difficult bottlenecks to find growth points. Especially as the old market is gradually approaching saturation and new markets are becoming increasingly difficult to open, how to promote iPhone users with a long replacement cycle to replace new products naturally becomes a big problem.
In this context, the launch of hardware subscription services may be a strategic change for this international giant. Internal employees of Apple said that the emergence of this subscription service can lower the entry threshold for users, allowing more Android users to join the ranks of replacement phones, and at the same time, they can bind users through subscription services, changing the current situation where only loyal Apple fans will replace new iPhones every year.
For a company that mainly engages in hardware business, the launch of this subscription service is undoubtedly a huge change and a key node for a hardware company to transform into a service company.At a time when the industry is collectively trapped in the update of mobile phone hardware products without major innovations, can this subscription plan that uses first and pays later and continues to upgrade improve Apple's long-standing weak cycle and strengthen the user stickiness of Apple's services? The answer is worth looking forward to.
