Apple’s earnings call for Q3 2023 reveals some interesting numbers. While over all revenue is almost the same as the same period last year, hardware sales are not faring so well. Apple now has over a billion paying subscribers to its services, with services now the company’s second largest revenue stream.
Let’s break down where the money is coming from.
| Segment | Revenue (USD) | Change from Q3 2022 |
|---|---|---|
| iPhone | $39.7B | -2% |
| iPad | $5.8B | -20% |
| Mac | $6.8B | -7% |
| Wearables/Home | $8.3B | +2% |
| Services | $21.2B | +8% |
Profit for the quarter was booked at just under USD$20B.
When we look at the numbers, we need to remember that last year’s Mac and iPad sales were likely boosted by the shift to work-from-home created by the COVID pandemic. So a dip in this is not surprising. And while iPhone sales took a small drop, Apple CEO Tim Cook said that the number of iPhone switchers was an all-time record. Cook also said “the timing of the iPad Air launch last year” was the main cause of the year-over-year dip for that market segment.
Apple’s CFO Luca Maestri said that the Mac, iPad, and Watch had “high new-to” rates, suggesting existing customers skipped an upgrade cycle with new customers coming to the fold. This possibly explains the increase in Services as new users add some extra iCloud storage, at the very least. Apple’s meagre 5GB allocation is inadequate given most of use are holding many gigabytes of photos and other data on our iPhones are want backed up.
With Apple TV+, Apple Fitness+ and the need for boosted online storage are taken into account, it’s no surprise that the Services business is looking up.
In an interview following the earnings call with Reuters, Cook discussed Apple’s plans for AI. The company’s USD$22.61B investment in research and development increased by over USD$3B in the quarter. In that interview, Cook said:
We’ve been doing research across a wide range of AI technologies, including generative AI, for years. We’re going to continue investing and innovating and responsibly advancing our products with these technologies to help enrich people’s lives.
Obviously, we’re investing a lot, and it is showing up in the R&D spending that you’re looking at.
Tim Cook to Reuters
Previous reports have suggested Apple is testing its own generative AI tool, a la ChatGPT, internally. While that’s highly unlikely to be seen in the upcoming releases of macOS Sonoma, iPadOS, iOS or watchOS, it’s possible we’ll start to see Siri get a little smarter and perhaps something in the 2024 releases of Apple’s operating platforms.
Anthony is the founder of Australian Apple News. He is a long-time Apple user and former editor of Australian Macworld. He has contributed to many technology magazines and newspapers as well as appearing regularly on radio and occasionally on TV.