Apple, the world’s largest public company, has beaten Wall Street expectations despite supply chain disruption.
Its sales rose 11 per cent year-on-year to $123.9 billion in the three months to December, quarterly earnings released late last night revealed.
“Apple has smashed it out of the park once again. It has defied a global computer chip shortage to keep its shelves (physical and virtual) stocked with iPhones and more, and customers have merrily lapped up these devices,” AJ Bell’s Russ Mould said.
“About half of Apple’s overall sales come from devices such as phones, tablets and laptops. The more pieces of kit it sells, the more people it can hook into its ecosystem.
“Apple’s strategy is not simply to sell an electronic device – that’s merely the first in a series of money-making opportunities. Service income has become a valuable source of recurring revenue, meaning it collects cash on a regular basis from the same customer.
“People are paying for iCloud storage to hold photos and videos, and they’re also paying subscriptions for music, TV and film streaming and for fitness services.
“Not only do customers become accustomed to using Apple’s devices, having spent a pretty penny to acquire them, but they also become dependent on these extra services and so the company commands very good loyalty from its users.
“While everything looks good with Apple at present, and it certainly had a bumper Christmas, you still must ask if it can sustain such strong levels of product sales growth. Has the pandemic simply brought forward a lot of growth for the business?
“A key sales driver over the years has been product innovation – customers seemingly eager to always upgrade to the latest device. But it feels as if Apple hasn’t been as creative in recent years.
“With pressure on family finances from the rising cost of living, particularly soaring energy costs, a lot of Apple users might simply stick with the product they’ve already got for longer than they did historically.
“Apple needs to give people a reason to dig deep and buy the latest gadget, and that must come from new functionality or even a device which is totally new to the market. Unless it already has something very special up its sleeve, it needs to find a new spark of creativity to stay on top.”