yesMike MurphyNone
×

Get access to Protocol

Will be used in accordance with our Privacy Policy

I’m already a subscriber
Earnings

Apple earnings: Not just the iPhone company anymore

Apple logo
Apple
  • Q2 revenue: $58.3 billion (+0.5% YoY, -36.5% QoQ, vs. $54.5 billion expected)
  • Q2 earnings: $11.2 billion (-2.7% YoY, -49.4% QoQ, above expectations)
  • Q3 guidance: None given

The big number: Apple's cash cow has been the iPhone for more than a decade, generating up to three quarters of revenue for a given quarter. But the trend is shifting: Compared to the same quarter last year, iPhone sales were down nearly 7% in the last three months, to $28.9 billion. That's roughly 49% of Apple's total revenue. Total revenue was effectively flat year over year, and profits, of which the iPhone often makes up a considerable chunk, were down nearly 3%.

People are talking: "Despite COVID-19's unprecedented global impact, we're proud to report that Apple grew for the quarter, driven by an all-time record in Services and a quarterly record for Wearables," CEO Tim Cook said in a statement.

Opportunities: Despite the softness in Apple's iPhone business, the company still managed to grow a tiny bit over the same period last year, which is traditionally a slow quarter for the company. Much of that growth comes from a buffer that Apple has been steadily building over the last few years. Even as smartphone upgrade cycles have elongated, Apple has found a way to eke out more money from consumers, through a combination of new popular service offerings and hardware accessories.

Apple's services business, which includes sales of apps, games, movies and music, as well as TV, gaming and music subscriptions and Apple Pay fees, has ballooned in recent years. It's now easily the size of a Fortune 100 company on its own. The segment grew by nearly $2 billion over the same period last year, and there doesn't seem to be any indication of it slowing down. Similarly, increased sales of Apple AirPods and Apple Watches have helped offset some of the slack in iPhone sales. They're also helping spackle over the drops in Apple's other longtime businesses — the iPad and Mac — which saw drops over the same period a year ago, even as so many people move to working from home.

Threats: Apple has had to shutter all of its stores around the world as the pandemic has taken hold. Some in China have started to reopen, but most of the rest are still locked up. While Apple has made concerted efforts to push consumers onto online retail channels, some sales, such as people coming into a store for customer support and buying something while they're there, just can't be made up online. Apple actually saw a slight drop in sales for its Americas region in the quarter — its largest sales region by far — and if stay-at-home orders persist in the U.S. over the summer, it doesn't seem like much would change for next quarter.

The power struggle: Tim Cook has long been seen as the supply chain master, marshaling Apple's considerable global reach over the last two decades, but some things are just out of his control. Apple's manufacturing partners like Foxconn and Pegatron are ramping back up in China now, but even with facilities in other countries like Brazil and India, Apple's supply chain is still heavily reliant on China. The company is reportedly pushing back its production cycle for its next flagship iPhone by about a month. But Apple is still one of the richest companies on the planet, and will likely have few issues moving forward, even if its holiday sales are truncated by lengthened lead times. On the call, however, Cook said the company's supply chain was "back to typical levels" of production by the end of March after disruptions in February.

App store laws, Microsoft AR and Square buys Tidal

Welcome to this weekend's Source Code podcast.

Cole Burston/Bloomberg

This week on the Source Code podcast: First, an update on Google's user-tracking change. Then, Ben Pimentel joins the show to discuss Square buying Tidal, and what it means for the fintech and music worlds. Later, Emily Birnbaum explains the bill moving through the Arizona legislature that has Google and Apple worried about the future of app stores. And finally, Janko Roettgers discusses Microsoft Mesh, the state of AR and VR headsets, and when we're all going to be doing meetings as holograms.

For more on the topics in this episode:

Keep Reading Show less
David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

Sponsored Content

The future of computing at the edge: an interview with Intel’s Tom Lantzsch

An interview with Tom Lantzsch, SVP and GM, Internet of Things Group at Intel

An interview with Tom Lantzsch

Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corporation

Edge computing had been on the rise in the last 18 months – and accelerated amid the need for new applications to solve challenges created by the Covid-19 pandemic. Tom Lantzsch, Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corp., thinks there are more innovations to come – and wants technology leaders to think equally about data and the algorithms as critical differentiators.

In his role at Intel, Lantzsch leads the worldwide group of solutions architects across IoT market segments, including retail, banking, hospitality, education, industrial, transportation, smart cities and healthcare. And he's seen first-hand how artificial intelligence run at the edge can have a big impact on customers' success.

Protocol sat down with Lantzsch to talk about the challenges faced by companies seeking to move from the cloud to the edge; some of the surprising ways that Intel has found to help customers and the next big breakthrough in this space.

What are the biggest trends you are seeing with edge computing and IoT?

A few years ago, there was a notion that the edge was going to be a simplistic model, where we were going to have everything connected up into the cloud and all the compute was going to happen in the cloud. At Intel, we had a bit of a contrarian view. We thought much of the interesting compute was going to happen closer to where data was created. And we believed, at that time, that camera technology was going to be the driving force – that just the sheer amount of content that was created would be overwhelming to ship to the cloud – so we'd have to do compute at the edge. A few years later – that hypothesis is in action and we're seeing edge compute happen in a big way.

Keep Reading Show less
Saul Hudson
Saul Hudson has a deep knowledge of creating brand voice identity, especially in understanding and targeting messages in cutting-edge technologies. He enjoys commissioning, editing, writing, and business development, in helping companies to build passionate audiences and accelerate their growth. Hudson has reported from more than 30 countries, from war zones to boardrooms to presidential palaces. He has led multinational, multi-lingual teams and managed operations for hundreds of journalists. Hudson is a Managing Partner at Angle42, a strategic communications consultancy.
Power

Google wants to help you get a life

Digital car windows, curved AR glasses, automatic presentations and other patents from Big Tech.

A new patent from Google offers a few suggestions.

Image: USPTO

Another week has come to pass, meaning it's time again for Big Tech patents! You've hopefully been busy reading all the new Manual Series stories that have come out this week and are now looking forward to hearing what comes after what comes next. Google wants to get rid of your double-chin selfie videos and find things for you as you sit bored at home; Apple wants to bring translucent displays to car windows; and Microsoft is exploring how much you can stress out a virtual assistant.

And remember: The big tech companies file all kinds of crazy patents for things, and though most never amount to anything, some end up defining the future.

Keep Reading Show less
Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

Transforming 2021

Blockchain, QR codes and your phone: the race to build vaccine passports

Digital verification systems could give people the freedom to work and travel. Here's how they could actually happen.

One day, you might not need to carry that physical passport around, either.

Photo: CommonPass

There will come a time, hopefully in the near future, when you'll feel comfortable getting on a plane again. You might even stop at the lounge at the airport, head to the regional office when you land and maybe even see a concert that evening. This seemingly distant reality will depend upon vaccine rollouts continuing on schedule, an open-sourced digital verification system and, amazingly, the blockchain.

Several countries around the world have begun to prepare for what comes after vaccinations. Swaths of the population will be vaccinated before others, but that hasn't stopped industries decimated by the pandemic from pioneering ways to get some people back to work and play. One of the most promising efforts is the idea of a "vaccine passport," which would allow individuals to show proof that they've been vaccinated against COVID-19 in a way that could be verified by businesses to allow them to travel, work or relax in public without a great fear of spreading the virus.

Keep Reading Show less
Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

Google wants to connect everything you own to the internet

Surveilling older adults, connected helmets, wearables talking to doctors and other patents from Big Tech.

Make all the things smart!

Image: Google/USPTO

Hello and welcome back to the world of zany patents from Big Tech! While 2020 is still dragging on (I know it's 2021, but you can't tell me 2020 is over until I can go anywhere other than the grocery store), at least there are still great new patents to uncover. And there's some fascinating ones this week, including Facebook wanting to make clothes like real in games, Microsoft trying to make sports more inclusive and Google wanting to make it easier to spy on your parents. If that's something you want to do.

And remember: The big tech companies file all kinds of crazy patents for things, and though most never amount to anything, some end up defining the future.

Keep Reading Show less
Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

Latest Stories