Despite record Mac sales, 70% of Apple's revenue comes from iOS

Despite record Mac sales, 70% of Apple’s revenue comes from iOS

Apple posted record revenue and profits for the September quarter, but the …

Chris Foresman – Oct 18, 2011 8:30 pm | 77

Apple announced its financial results for the fiscal fourth quarter of 2011 on Tuesday, posting another quarter of impressive results. Though iPhone sales had a noticeable dip compared to the third quarter, record Mac and iPad sales kept Apple’s revenue in record territory at $28.27 billion. That’s a record for the September quarter and just shy of its overall record of $28.57 billion last quarter. Apple is betting on record iPhone sales for the December quarter, and new CEO Tim Cook predicts that sales in China will increasingly fuel the company’s growth.

We’ll break down the numbers along with some handy charts, and try and put that in context with some comments from Tuesday’s conference call.

As noted, Apple pulled in $28.27 billion in revenue for the quarter, up 39 percent year-over-year. The company turned $6.62 billion of that into profit, a 54 percent increase over last year. That’s not quite as impressive as the year-over-year growth it posted for the third quarter (82 and 125 percent, respectively), but extremely healthy nonetheless. Apple expects to maintain similar growth for the holiday quarter, predicting revenue of about $37 billion.

Mac sales totaled 4.89 million, up 26 percent year-over-year and the highest number of Macs ever sold in a single quarter. Most of those—74 percent—were MacBook Pros and MacBook Airs, with Apple suggesting that the MacBook Air was again a strong seller without giving an actual breakdown. Desktops are being essentially propped up by the iMac. From the sound of it, it doesn’t seem as though the Mac mini or Mac Pro figure very much in the figures for this past quarter.

Despite the record number of Macs sold, however, the big money is still coming from iPhones and iPads. iPhones were up 21 percent year-over-year to 17.07 million units. That’s down sequentially from last quarter’s record 20.34 million—an expected dip predicated on rumors and expectations of a new (or possibly two) iPhone model coming, according to Apple. The iPhone 4S has already sold over 4 million units, though, and Cook said he is “confident we’ll set an all-time record for iPhone this quarter.”

iPad sales are still growing, up 165 percent over the same quarter last year to 11.12 million. That number is especially impressive given the number of competing tablets being released by RIM, HP, Samsung, Acer, HTC, and others. Apple continues to dominate the space, and Cook asserted that Apple’s share of the nascent market has actually increased despite the increased competition. “I think it’s reasonable to say that none of these [other tablets] have gained traction thus far,” Cook said.

When asked about the potential size of the tablet market, Cook said it has so far been far larger than even Apple’s original high expectations. “We’ve now sold 40 million [iPads] on a cumulative basis,” he told analysts. “It’s pretty clear to me that if you forecast out in time, the tablet market will be larger than the PC market.”

iPod sales predictably declined, over 26 percent year-over-year. Still, that decline was apparently less than Apple’s expectations. Given the significant decline in sales over the past several quarter, it’s no surprise Apple didn’t bother updating any iPod hardware this year. All told, iPods only account for about 6 percent of Apple’s revenue.

Breaking down Apple’s revenue by product segment, the largest chunk is still coming from iPhones (41 percent) and iPads (26 percent). Macs, especially laptops, still account for 22 percent of the revenue stream. iPods are an ever smaller slice of revenue.

Looking at the numbers a little differently, iOS devices and related products account for 70 percent of Apple’s revenue, 22 percent from Macs, and 8 percent from everything else.

One particular area of focus for Apple continues to be expanding its sales internationally. Apple plans to open 40 new retail stores next year, and Cook said that three-quarters will be outside the US. He noted that Brazil, Russia, and the Middle East, areas where Apple hasn’t transitionally performed well, now appear to be very promising areas for growth.

China, however, still represents Apple’s largest growth opportunity outside of the US. Cook called progress there “amazing,” and that sales were growing at a “feverish pace.” Revenues from the area are up 270 percent year-over-year, and in the last quarter accounted for 16 percent of total revenue.

“Certainly in my lifetime I’ve never seen a country with as many people rising into the middle class who aspire to buy products that Apple makes,” Cook said. “It’s an area of enormous opportunity—the sky is the limit there.”