Apple Services, Wearables, 5G Devices Drive Record Quarter That Defied Supply Chain Woes

For most businesses, the thought of doing $124 billion in sales in a year — or even a decade for that matter — would be considered a lofty achievement. For Apple, that feat took just 90 days. 

But in that brief 3-month window from October through December, the world’s most valuable company also did something even more important than delivering a set of record results that defied numerous headwinds and exceeded even rosy-eyed expectations.  

What the $2.6 Trillion titan of technology did was to prove that the pandemic era’s digital shift is more than a phase or fad that can be derailed by disease, double-digit inflation or a dearth of computer chips. 

In short, what Apple did last quarter was about more than just money, it was about truth and reality and the fact the progression of the connected economy is unstoppable, and people and businesses refuse to go backward. 

“What I would say is that iPhone has become an integral part of so many people’s lives now more than ever,” CEO Tim Cook told analysts and investors on the company’s earnings call Thursday (Jan. 27) evening, noting the record active installed base of 1.8 billion devices and a 98% satisfaction rate. 

Although the launch of long-awaited and much-touted 5G service has been hindered by problems and delays, Apple’s experience on the next-gen device front suggests that consumers want better service and will be there when it’s ready.  

“During December, we had a record number of upgraders and grew ‘switchers’ [to 5G service]  strong double-digit,” Cook said of the underlying strength of demand.  

But even though the iPhone 13 is the second product announcement that has 5G in it, Cook said “we’re still really in the early innings of 5G.”

“If you look at the installed base and look at how many people are on 5G versus not — and we don’t release those exact numbers but you can do some math and estimate them — we maintain a very optimistic view on iPhone long term,” the 61-year-old CEO who has led the company since 2011 and worked there since 1998 said. 

The Mojo  

While analysts parse the details, the big picture on Apple, and what it says broadly about the digital revolution, remains intact. Whether it’s music, video, advertising, platform payments, or wearable or mobile devices, Apple’s record quarter defied a web of worries, leaving itself — as well as the psyche of the markets — a little better than they found them. 

But beyond iPhones and MacBooks, Cook took time to shed light on other digital trends that are more reliant on data and software than chips, glass and steel. 

Take the App Store for example, which Cook called “an economic miracle for developers around the world and a safe and trusted place for consumers to discover their favorite apps,” that has paid developers selling digital goods and services through its platform more than $260 billion, with 2021 setting its own new record. 

See also: Apple’s Latest Payments Move May Be Too Little, Too Late

Apple Fitness+ takes its data from Apple Watch, the newest of which, Apple Watch 7, is the most successful to date, with Apple Chief Financial Officer Luca Maestri saying “wearables, home and accessories saw a new all-time record of $14.7 billion up 13% year over year.” 

Over two-thirds of customers buying Apple Watch 7 in Q1 “were new to the product.” 

Apple’s services ecosystem grew 24% in the quarter to $19.5 billion.  

“Paid subscriptions continue to show very strong growth. We now have more than 785 million paid subscriptions across the services on our platform, which is 165 million during the last 12 months alone” Maestri said. 

Additionally, he noted that enterprise clients including Shopify and Deloitte Consulting are upgrading their entire networks to the new MacBook Pro and MacBook Air M1 computers.  

While Apple Pay and Apple Card performance were not broken out in results, during Q&A with analysts Cook said, “Putting aside anything on our roadmap we wouldn’t talk about, I think Apple Card has a great runway ahead of it,” adding that “The growth of Apple Pay has been stunning. There’s still a lot more there to go, and a lot of cash in the environment.”

See also: Apple Pay At Seven