Updated quote with WSJ correction:
While few would expect the record-breaking surge in iPhone sales generated by the larger-screened models to continue into subsequent quarters, Tim Cook argued in a WSJ interview that the potential is there.
In an interview, Apple Chief Executive Tim Cook, not surprisingly, argued that the demand is more than temporary. He said fewer than 15% of older iPhone owners upgraded to the iPhone 6 and 6 Plus and that the majority of switchers to iPhone came from smartphones running Google Inc.’s Android operating system.
“We certainly believe there are legs to it,” said Mr. Cook of the iPhone sales surge.
Cook noted during the Q1 earnings call that the current iPhone lineup had experienced “the highest Android switcher rate in any of the last three launches.” With CIRP data suggesting that the US rate of switching from Android to iOS has remained broadly constant, that suggests the bulk of switchers have been outside the US–China in particular …
Not even Cook would suggest that a company of Apple’s size could enjoy a 30% jump in year-on-year revenue two quarters running, but the company has issued guidance suggesting growth of between 14% and 20% this quarter.
Cook’s optimism stems from the fact that most iPhone owners have not yet upgraded. Add late upgraders to a continual stream of switchers, and you have, he believes, a recipe for continued strong growth. The Apple CEO also insisted that there remained upside potential for the iPad, despite a 22% drop in revenue.
Analysts are not so sure. While a Thomson Reuters poll of analysts found that the consensus view was for 22% revenue growth over the full financial year ending this September, they expect the bubble effect of the switch to larger displays to end by then, with growth dropping back to just 4% the following year.
Cook would argue that slowing growth in iPhone sales will be compensated for by other revenue streams, including the Apple Watch–launching in April–and both domestic growth and international expansion for Apple Pay. The App Store, too, is growing at a rate that would see it become a significant contributor to Apple’s total earnings. One thing for sure: it’s going to be an interesting ride …
Filed under: AAPL Company, iOS Devices Tagged: AAPL, Android, Android (operating system), Android switchers, App Store, App Store (iOS), Apple Inc, Apple watch, china, CIRP, earnings, iOS, iPad, iPhone 6, iphone 6 plus, Revenue, switchers, Thomson Reuters, Tim Cook, upgrades
The difference between Android and iOS hardware–Android having the market share, Apple making most of the profits–was mirrored in last year’s app downloads, reports mobile analytics firm App Annie. Its 2014 retrospective revealed that the Google Play Store saw 60% more downloads than the iOS App Store, but iOS apps made around 70% more money.
Re/code notes that this reflects data recently shared by Ustwogames for its best-selling Monument Valley game, which showed that of the $5.8M revenue generated by the game, 81.7% of it came from the iOS app.
App Annie’s data, which is generated by analytics from more than 700,000 apps, showed that just three countries generated more app revenue than the rest of the world combined–the USA, Japan and Korea–while the so-called BRIC nations (Brazil, Russia, China and India) were not surprisingly the fastest-growing regions.
Apple recently announced that developers last year earned over $10B from the App Store, with a further $500M spent in the first week of this year. The company recently increased European app prices to reflect recent currency movements.
Filed under: AAPL Company, iOS Tagged: Android, App Store, Google, Google Play Store, iOS, iTunes