Has any tech company ever been so overwhelming and dominant as Apple is today? You would probably have to look back to IBM in the '60s to find anything comparable, and that was, of course, a very different time. Not even Microsoft in the '90s cast so huge a shadow over all things tech-related as Apple does today.
That dominance was reflected once again in Apple’s latest earnings report, where Apple, for the umpteenth time, blew past analyst expectations, reporting record sales and earnings based on strong sales of almost all of its products, most notably the new iPhone 4S.
The numbers: Apple reported sales of $46.3 billion, and net income of $13.1 billion—gains of 73 percent and 117 percent, respectively, from the same period last year.
Apple’s stock, which had dipped slightly yesterday before results were announced, soared in after-hours trading, jumping 7 percent, to $452, from $420 at the close.
The earnings results stunned Wall Street, where analysts had been nowhere close to calling the real numbers, even in their wildest projections and “whisper numbers.”
“We could not be happier,” CEO Tim Cook said in a conference call. “We feel very good about where we are.”
Better yet, there is no sign of Apple slowing down. Indeed, in a conference call, Cook said sales of iPhones were actually held back because of supply shortages, and that while it was amazing to have sold 37 million iPhones, “We could have sold more.”
Looking ahead, for the current fiscal year analysts had been projecting that Apple would generate $141 billion in sales. After this quarter’s blowout, it’s likely Apple’s revenues could reach $150 billion, which would represent growth of nearly 40 percent from $108 billion in the last fiscal year.
No company that big should be growing this fast. Yet Apple is doing it.
In this most recent quarter, Apple generated more revenue than in its entire 2009 fiscal year, when sales were $42 billion.
Indeed, at this point Apple has gone beyond being a company—it is now a cultural phenomenon. Its products are so iconic that in 10 or 20 years when we look back on this decade, Apple might be the main thing we remember.
This is no longer about dominating an industry. It’s now about defining an era. Even more remarkable is that Apple’s run has taken place against the backdrop of the worst economy in decades.
In the last quarter, Apple generated more revenue than in its entire 2009 fiscal year, against the backdrop of the worst economy in decades.
Some details from the latest quarter:
- Apple sold 37 million iPhones, up 128 percent from last year. Sales got a boost from the iPhone 4S, which was released in October and “has been our fastest iPhone roll-out ever,” CFO Peter Oppenheimer said during the earnings call. In previous years, Apple released new iPhone models during the summer, so in this year’s holiday quarter there was extra pent-up demand for the new model. At Verizon, sales of iPhones represented more than half of all smartphones sold during the quarter. (4.3 million iPhones out of 7.7 million smartphones.)
- Apple sold 15.4 million iPads, up 111 percent from last year, driven in part by growing demand from corporate customers. While other tablets have entered the market, including Amazon’s Kindle Fire, the iPad “is in a class by itself,” Cook said. Basically, Apple has this market to itself, and the market is going to be huge. “There will come a time when the tablet market in units is bigger than the PC market,” Cook said.
- Sales of Macs grew 26 percent, to 5.2 million units, which is especially mind-blowing considering that the overall PC industry shrank by 8 percent.
Truth is, Apple deserves every bit of its success. Apple is winning for a very simple reason—it is making terrific products that no other competitor can match.
This is not just about iPhones, iPads and Macs, though all of these devices are wonderfully well built and best in their class—“the strongest product lineup in Apple’s history,” as Oppenheimer said in the conference call.
Apple has spent the past decade building an entire ecosystem of hardware, software, and online content stores that gives it a huge advantage over everyone else.
Indeed it is difficult to think of an area where Apple does not excel. Apple builds beautiful stores, and delivers the best customer service I’ve ever experienced. Its advertising and marketing are the best in the business. On back-end stuff, like managing a supply chain, Apple’s efficiency and operational expertise are unmatched.
As amazing as this quarter was, Apple still could have even brighter days ahead.
“The products sold in the last quarter were actually designed at least three years ago. So they should have a very strong pipeline of new products for many years ahead,” says Tim Bajarin, president of Creative Strategies, a tech consultancy in Campbell, Calif.
What could possibly stop this freight train? Right now it’s hard to imagine anything that could get in Apple’s way.