
Apple Reports Record First Quarter Results - antr
https://www.apple.com/pr/library/2015/01/27Apple-Reports-Record-First-Quarter-Results.html
======
ykl
Sometimes just to wrap my head around really large numbers like this, I like
to put things in units of aircraft carriers. The US Navy's last finished
carrier cost $6.2 billion[1], meaning that $74.6 billion[2] is enough to buy
Apple 12 nuclear carriers, a.k.a. a nuclear carrier fleet larger than that of
the US Navy.

Of course this is an inaccurate and very silly comparison[3], but at least for
me it does give some sense of scale. That is a preposterous number of iPhones.

[1][http://en.wikipedia.org/wiki/USS_George_H.W._Bush_(CVN-77)](http://en.wikipedia.org/wiki/USS_George_H.W._Bush_\(CVN-77\))

[2] Yes, I know that number is revenue and not profit. As long as I'm making a
silly mental comparison though, why not have more fun by using the bigger
number?

[3] Maintaining/staffing carriers is astronomically expensive, $74.6 billion
is actually only enough for 12 empty carrier-shaped hunks of steel.

~~~
mrb
_" Sometimes just to wrap my head around really large numbers like this..."_

Personally I like to divide profits and revenues by the number of employees.
They have 98 000 employees so they generated revenues of $761 000 and net
profits of $184 000 per employee in Q4 2014.

Think about this: if you work for Apple, on average you helped the company
generate $0.76 million dollars in sales in the last 3 months.

Edit: @smackfu: I do not think it is weird to consider these metrics. They
show what Apple, as a business entity taking its own decisions, manage to
extract from their suppliers (expenses) and customers (revenues).

~~~
smackfu
It's a weird metric, because 1 guy at Apple can hire a firm of 100,000
employees at FoxConn in China to do the actual work for Apple. If those
employees instead worked for Apple directly, the end result would be the same
but the amount per employee would be far less.

~~~
sosborn
If you include FoxConn employees do you also include FoxConn revenue from
Apple?

------
fidotron
Truly phenomenal.

But then when no one else is making decent laptops this is what happens. If
anything the gap has grown thanks to Windows 8. I'm not a fan of Yosemite by
any stretch, but it is very much the least bad of the available options.

And on mobile, iOS is very clearly in for the long haul now. There was a time
a couple of years ago when Android looked like it might gain enough momentum
to sweep them away, but it now looks like the iOS market share in developed
markets is going to remain fairly solid.

I can't be the only one that has noticed the rise of the Mac-based business
but all running on Office 365. It seems to be the new default.

~~~
puranjay
Google's lack of oversight in the Play store (which is actually a core
philosophy) is really holding back Android.

There are countless really, really crappy apps and clones crowding the app
store. Plus, since most people pirate, developers can't make money (Monument
Valley saw around 95% piracy rate and just $250k in revenue from Android, vs.
$5.5M from iOS).

This sunk Windows Mobile, which I still believe has the best UI of the bunch
(sadly, it also had a shit app store and tons of bugs).

~~~
redler
Do you know where we might read more about those Monument Valley numbers?
That's an interesting statistic.

~~~
Htsthbjig
I believe I heard those numbers in one of those videos:

[http://blog.monumentvalleygame.com/blog/2014/12/3/eight-
vide...](http://blog.monumentvalleygame.com/blog/2014/12/3/eight-videos-about-
the-making-of-monument-valley)

But I can't remember exactly when I heard it.

------
Cookingboy
This is pretty insane, I think $18 billion in quarterly profit is the largest
ever for any corporations. Also the revenue from iPhone business alone now
exceeds Microsoft and Google combined.

~~~
aaronbrethorst
Yep:
[http://en.wikipedia.org/wiki/List_of_largest_corporate_profi...](http://en.wikipedia.org/wiki/List_of_largest_corporate_profits_and_losses#Largest_Corporate_Quarterly_Earnings_of_All_Time)

~~~
liquidise
Always amazed by the lists one can find on Wikipedia. The largest losses also
tell an interesting tale.

~~~
jballanc
[http://en.wikipedia.org/wiki/List_of_lists_of_lists](http://en.wikipedia.org/wiki/List_of_lists_of_lists)

------
aaronbrethorst
Some interesting tidbits in the earnings call
([http://www.macrumors.com/2015/01/27/apple-
earnings-1q15/](http://www.macrumors.com/2015/01/27/apple-earnings-1q15/))

* Apple Watch is coming in April

* 39.9% gross margins

* 1 billion iOS devices sold since 2007

* 97% csat for iPhone as measured by Changewave

* Mac revenue was $6.9 billion

~~~
dude_abides
>>1 billion iOS devices sold since 2007

That's an insane stat. Assuming average cost of an iphone as 500$, and 70%
profit margin for an iphone, Apple has made 350 billion in profits on selling
iPhones since 2007!!

Any idea what would the equivalent figure in Android profits for Samsung be?
Android crossed 1 billion devices sold in 2013, but my guess is the number is
going to be much smaller.

~~~
macintux
To be precise, that 1 billion tally includes iPads, iPod touches, and Apple
TVs. Still obscene profit.

~~~
coob
Although it runs a variant of iOS AppleTV is not counted by Apple as an iOS
device.

------
freshyill
Remember, Apple needs to target the low end to succeed in China. They need to
put out the crappiest, cheapest phone they possibly can otherwise Samsung and
Xiaomi will eat their lunch.

Edit: Obvious sarcasm is apparently not obvious enough.

~~~
Alterlife
I know you said sarcasm, but Apple is selling the last gen iphones at a
competitive price against Samsung mid range in India.

For example: the iPhone 4S, 5c and 5s are 17,500 and 23,000 37500 Indian
Rupees respectively. Compare that to the Galaxy S4 at ~26000 grand 2 at 17000,
galaxy note 3 at 34000.

Atleast in India, the last gen Apple phones seem to be priced competitively
with the last gen Samsung phones. This is just comparing the lowest models,
and not getting into the specs, ofcourse.

~~~
desdiv
Are you sure you didn't mix up the model numbers? These sites [0][1] are
saying it's the iPhone 5c that's 37500 Indian Rupees, which is 609 USD. In
comparison, Walmart is offering the 5c, contract-free, at $549.[2]

[0] [http://gadgets.ndtv.com/mobiles/news/iphone-5c-8gb-
variant-l...](http://gadgets.ndtv.com/mobiles/news/iphone-5c-8gb-variant-
launched-in-india-at-rs-37500-529611)

[1] [http://tech.firstpost.com/news-analysis/priced-at-
rs-37500-w...](http://tech.firstpost.com/news-analysis/priced-at-
rs-37500-will-apples-8-gb-iphone-5c-win-any-hearts-224381.html)

[2]
[http://www.pcmag.com/article2/0,2817,2428171,00.asp](http://www.pcmag.com/article2/0,2817,2428171,00.asp)

------
rtpg
This is about revenue, but every time I see Apple's financial statements, I
remember that Apple (as of June 2014) has 160 billion dollars in cash. 2 years
of _revenue_ (not operating expenses, mind you, but quite a bit more). I think
Bill Gates was all about having enough cash to run the company without a
single sale for a year, but apparently they have a 20% profit margin, so we're
looking at almost 30 months where they could continue to spend everything, not
get a single dime, and be "fine".

If that's not an example of the absolute failure of trickle-down economics, I
don't know what is.

~~~
john_b
If you want to argue general economic principles, then do so [1]. Just don't
cherry pick examples to prop up your perspective. I don't think anyone, even
Reagan or Thatcher, would have stood behind the assertion that a luxury phone
and computer maker with a hoard of cash would benefit the poor. You're
attacking a strawman here.

[1] Just keep in mind that "trickle-down economics" is a political philosophy,
not an economic one:
[http://www.tsowell.com/images/Hoover%20Proof.pdf](http://www.tsowell.com/images/Hoover%20Proof.pdf)
(footnote on page 2)

~~~
hnnewguy
> _that a luxury phone and computer maker with a hoard of cash would benefit
> the poor._

If they were forced to re-patriate and pay taxes on that cash, how could that
not "help the poor"?

~~~
djrogers
>If they were forced to re-patriate and pay taxes on that cash, how could that
not "help the poor"?

That would mostly benefit politicians and their beneficiaries, not exactly
'the poor'. Very little of the $$ spent by the government helps 'the poor',
unless you're counting our severely underpaid military.

~~~
hnnewguy
> _Very little of the $$ spent by the government helps 'the poor_

Do you have any idea what the aggregate size of transfer payments are in the
US? Yes, you can point to inefficiencies all over the place, but it doesn't
change the fact that there is a massive social net for the poor in the US.

------
femto
Does the "tax rate of 26.3 percent" mentioned refer to how much tax Apple
actually paid, or its notional tax rate?

For example, here in Australia, Apple had $6 billion revenue and paid $80
million tax. Assuming the margins are at least as good as the US, the profit
would be $2.4 billion, so Apple's actual tax rate in Australia is 3.4%.
Compare that with the theoretical Australian corporate tax rate of 30%, which
would put Apple's tax bill closer to $700 million.

[http://www.smh.com.au/business/apples-803-million-
australian...](http://www.smh.com.au/business/apples-803-million-australian-
tax-bill-revealed-20150127-12yrqq.html)

~~~
seanmcdirmid
Apple wouldn't be able to book all the profit in Australia; R&D is done in the
states obviously so that value add could be booked over there taxed at US
rates. So say an iPhone costs $300 to produce and sells for $600, it might be
exported to Australia at $400 or $500, with tax on the difference going to the
US.

------
akrymski
Having bought the iPhone 6, I have to say I miss the size of iPhone 5, being
able to use it with one hand, being less slippery, and the sturdy design. Many
months passed by and I still miss it - this has never happened before.

I won't be buying the Apple Watch because I have a real watch. And I simply
don't see the point in having a watch that does a fraction of what my phone
already does.

I have just bought some PUT options on AAPL, because I don't see the revenue
driver for the future. There's no need for a more powerful or slimmer phone at
this stage, any advancement will be increasingly marginal. All the possible
sizes are already out. Desperate people have got their hands on the latest
gadget. What's next for Apple? How can they continue to grow phone sales at
this rate? I simply don't see it, nor do I see another product category being
as big as the truly personal computer that is the smartphone.

~~~
Gustomaximus
> nor do I see another product category being as big as the truly personal
> computer that is the smartphone

I think these sectors will merge with solutions like Ubuntu Touch (though
probably a MS/iOS/android version) creating a bigger smartphone sector but
smaller overall combined sector.

Also re: apple sales growth, they just have to maintain market-share as the
developing world becomes wealthier the volume growth is there. The big risk is
margin. As the $200 almost flagship phones proliferate its increasing
difficult to justify spending $800 on a phone. At some point Apple will have
to take a smaller premium.

~~~
akrymski
Indeed, how many people in the world are rich enough to buy an Apple product
with its associated high margin? A billion? That's about how many iOS devices
Apple sold to date. Can it keep growing at 30% a year? I think it will simply
run out of new customers and out of new products that will sell like hot-
cakes.

------
oliyoung
Apple now has more cash at hand (AU$178bn) than the Australian government
(AU$136bn)

------
jusben1369
I think these results are amazing. Kudos to Apple. And now I'm going to be
"that guy" on HN. iPad is off 18%. So now Apple really is living and dying by
a single product? I mean it's amazing how well they are doing with "just" one
product but technology tastes seem so fickle that it's an interesting
predicament to be in.

~~~
SG-
I think the bigger iPhones just ate into iPad sales. Have you seen how big the
6 Plus is in person?

~~~
prawn
I have an iPad 2. Since upgrading my iPhone 4 to an iPhone 6 Plus, I barely
use my iPad. I doubt I'd bother taking the iPad on trips either, as the larger
iPhone screen is fine using hotel booking sites or for general research.

They'll need to reinvent the iPad for me to buy another one.

------
mythz
Wow $74.6 Billion Revenue and $18 Billion profit on 74.5M iPhones in a quarter
is nuts.

Apple also mentioned in the Conference call that the volatile exchange rate
also hurt sales numbers by 4% (vs a constant exchange rate) which they're more
susceptible to now that over 65% of their sales are outside of the US.

~~~
avar
That's happening to a lot of US companies that do a lot of their business in
the EU/EUR zone and other currencies that are weakening relative to the strong
USD.

------
dba7dba
Obviously larger screen iPhones helped a lot. Samsung supposedly copied Apple
with rounded edges. And Apple copied Samsung with phablet sized device. I
still remember reading the negative reviews when Samsung first came out with
phablets.

I wonder who will copy what next...

------
wclax04
Apparently people really like iPhones...

~~~
Tarang
Well yes but its more than that. Apple's iPhones when it comes to the
smartphone industry make up a large proportion of the entire industry's
profits even though they don't sell as many phones or have as much sales in
proportion to the industry. [1]

[1] [http://appleinsider.com/articles/14/11/04/apple-continues-
to...](http://appleinsider.com/articles/14/11/04/apple-continues-to-dominate-
with-massive-86-share-of-handset-industry-profits)

------
MaysonL
Research and development spending rose 50% YoY!

~~~
nielsbot
Apple Watch is probably part of that

------
espitia
Where would I be able to see app revenue alone? On the Summary Data PDF it
says services did 4.8B and that includes "revenue from the iTunes Store, the
App Store, the Mac App Store, the iBooks Store, AppleCare, Apple Pay,
licensing and other service". Is it possible to see only App Store revenue?

~~~
kunaalarya
Asymco did a look into this last week
[http://www.asymco.com/2015/01/22/bigger-than-
hollywood/](http://www.asymco.com/2015/01/22/bigger-than-hollywood/)

------
PhoenixWright
Truly amazing quarter.

------
gchokov
So far, following the Law of Large Numbers[1] pretty well. Also 1B iOS
devices.. huge markets for iOS devs! \--
[1][http://en.wikipedia.org/wiki/Law_of_large_numbers](http://en.wikipedia.org/wiki/Law_of_large_numbers)

~~~
Simp
How is that even possible when Android has a 84.4% market share?

------
jacquesm
Samsung will do their earnings announcements on the 29th, it will be
interesting to compare those two side-by-side.

Apple is doing extremely well on the margins but they have actually lost
ground when going by the numbers (~30% market share now vs ~70% android).

~~~
Cookingboy
That number is old, in the most recent quarter Apple just rose to be the
number 1 OEM in China, and took 55% marketshare in Japan, even took 30%
marketshare in S.Korea, Samsung's home turf.

Sure, globally Android will remain larger, but the trend is stabilizing if not
reversing a little for now.

~~~
Simp
That's incorrect:

As of the end of Q3 2014, Android was the most popular operating system, with
a 84.4% market share, followed by iOS with 11.7%

------
tuananh
I found the email of the contact info the the end of the report very annoying.

>paxton1@apple.com >hoover1@apple.com

Does Apple forcing everyone to use name only (prohibit use of dash and
underscore? ) and keep addning number if the username is used?

~~~
georgespencer
There isn't a hard and fast rule.

------
hyp0
Apple has the technology headroom to keep making more powerful iphones for
several more generations... but will it reach a point where people don't need
a more powerful phone? (that they don't get any benefit from it, so that power
is not utilized). I would have thought they were more powerful than a phone
needs to be already, but obviously not! One view is that they are still
replacing desktops, suggesting users will value increases in power until they
are as powerful as a desktop. Of course, gaming use is unlimited, but I'm not
sure that's a key usage.

I would expect something like the Apple watch is essential for Apple, because
that small form factor has lots of runway, as each increase in power would be
a benefit to users.

~~~
far33d
Never underestimate the human ability to consume power / CPU / memory /
sensors / etc. So far we've never had "enough" of any of these.

~~~
hyp0
And yet, people buy SSDs even though they could get more memory in a HDD.
Because they value speed over capacity.

"The Innovator's Dilemma" traces back the disk drive industry, and in each
generation, people choose smaller memory capacity, for the sake of a smaller
package (there used to be 8 inch drives, for example). The theoretical idea is
that once users' need for performance is satisfied (it's "good enough"), they
turn their attention to other issues - such as price, convenience/ease-of-use,
customization etc.

It has happened with desktops: that's what caused the brief "netbook"
popularity, and what made smartphones successful. Desktops had overshot what
was needed for many tasks (browsing, email); but the smaller devices were just
becoming powerful enough to manage. So although desktops were more powerful,
that extra power didn't matter to many users.

The underlying idea is twofold: (1) all technologies improve over time, as
engineers find better ways to do things (Moore's law is just one example); (2)
what users demand also increases over time, but at a slower rate

Therefore, if you start with new approach that really struggles with many
tasks, eventually it will become powerful enough for what users need; during
the same period, the old technology started off powerful enough, and became
even more powerful - but users didn't care, because it was more than they
needed (or, at least, they didn't want it as much as they wanted other
qualities, like convenience etc).

------
crazychrome
Apple does hire a great PR team. imagine they announce the agreement with
Chinese government over iPhone inspection after the 1Q report...

------
dba7dba
And how much of the revenue will actually be paid to US treasury as tax? Just
wondering...

------
davidgerard
What are the results like corrected for inflation?

------
eyeareque
I wonder how much profit they would have made if all of their offshore and
manufacturing jobs were moved to the US.

~~~
mrcwinn
I think that's impossible to answer, since the U.S. lacks the infrastructure,
workers, regulations to make that possible today. Hopefully over time we can
improve that situation. In other words, it's more complicated than a simple
business choice.

------
datashovel
Apple's profits definitely seem to be outpacing their contributions to open
source.

------
Tetraviolator
This is great to see. As an Apple fan, it was fun to watch Google's Android
quickly steal everything from the iPhone, and then fail to make as much money
as Apple on the endeavor. Apple has been a great leader in consumer-ready
touch devices.

~~~
zak_mc_kracken
Thanks for the clarification, I would never have guessed you're an Apple fan.

~~~
skyboxone
Google steals web content and brands it as their own (Google search Google
News), it's not just stealing mobile phone ideas.

Their execution and customer service at Google are also a joke.

------
norenjr
_drops mic_

------
kryptiskt
The best part of the report is that iPad sales are plunging. It's a victory
for general purpose computing that that segment of the walled garden is in
decline. Let's hope that open systems can gain a toehold in phones sometime
too.

~~~
GoofballJones
Sorry, I've been on "open systems" and walled gardens and at this point in my
life, I prefer the walled garden.

Whenever I wanted to do something in an "open system", it usually turned into
a giant pain-in-the-ass or I got preached/yelled at by everyone. "oh, sorry,
you don't have a driver for that yet. Maybe write one yourself and put it on
github? Oh sorry, this system doesn't support that format because that format
is bad and it kills baby seals and blah blah blah. Oh, don't use _that_
distribution because _that_ Linux distro spies on you and they're in bed with
Amazon and they're literally Hitler. Oh, want to run this piece of software?
Sorry, that's not available on this "open system", but here's a hacked-
together piece of crap that's just as powerful...so I hear..."

I'm old and tired and just want to sit down to something that works. Is that
asking too much?

~~~
72deluxe
I think there is a balance - with the walled garden you can walk around inside
it until they decide that your favourite fruit tree is a bit old and they dig
it up, and you are left with alternatives like shrubs and flowers, but no
useful fruit tree. That's where the open systems help, such as the other
replier stated where being able to run web servers and systems for development
can be benefitted by open systems.

But you're right about many of those statements on open systems. I think the
fact that stuff is only half-finished is the one that really annoyed me when I
wanted to get stuff done. I could have written more and contributed but I had
finite time and didn't want to have to do more stuff in order to do the stuff
I wanted to do in the first place.

Plus, the endless CADT model of development in Linux land ("I'm NEW AROUND
HERE. Let's bin this old nonsense that I've not used for long and START AGAIN!
It'll be MUCH better than the old stuff. I will be because I SAID SO, plus I'm
NEW AROUND HERE") got wearisome.

------
ncza
After all the surveillance revelations it fills me with confusion and dread
how instead of valuing freedom and control people run into the golden cages
like there is no tomorrow. Well, maybe there won't...

------
pdknsk
It shows that margin on Apple products is too high. This leaves plenty of room
for some company to come into the market and steal their customers. That it
hasn't happened shows the strength of Apple. They make products people will
pay premium for.

~~~
okibeogezi
Apple makes luxury products. People like luxury products. Luxury products have
strong brand appeal so they can comfortably ask people to pay more for
products. Any other company that sells like phones at Apple's price range will
FAIL. You either make something extremely better for the same price or just as
good at a lower price. Neither is a guaranty for success though.

~~~
hyperbovine
They make luxury products and yet everyone owns one. _That_ is the real
genius.

~~~
dingaling
> Any other company that sells like phones at Apple's price range will FAIL.

Vivo and Oppo ( subsidiaries of the same parent ) dominate the high-end on
China and maintain their image by selling at ' Apple Prices'. Their Western
models are often more expensive...

~~~
seanmcdirmid
No they don't. The apple of china is of course...apple. Vivo and oppo don't
come close to iPhone market share in the high end PRC market.

~~~
dingaling
November 2014 China smartphone marketshares: Vivo 6%, Apple 5%

Vivo don't do low-end models either.

~~~
jhou2
Weird. I've never even heard of Vivo. All the wealthy Chinese people I know
have an iPhone. I genuinely believe that they would be embarrassed to have
anything other than an iPhone. They shake their head when I tell them how
great an Android is. Even on TV, in the dramas, the rich characters always use
iPhone and Macs. I've never seen anyone use a Lenovo or Vivo phone on chinese
TV drama.

~~~
seanmcdirmid
To be fair, Samsung is also considered kind of high end. They won't let you
into starbucks unless you have an iPhone or Samsung something (just joking,
sort of).

