Apple’s iPhone and services businesses impress as the iPad turns 10

BYDon Reisinger

While much of the talk surrounding Apple in recent months has centered on services, the iPhone and iPad made the biggest splash this week.

Over the past several days, the company marked the 10th anniversary of the iPad and also reported 9% revenue growth to $91.8 billion in its latest quarter. The gain was led by the iPhone, which after a couple of years of declining sales, roared back to life.

But Apple couldn’t end the week without a bit of bad news. In a court ruling this week, a jury ordered Apple to pay $838 million to the California Institute of Technology for violating the university’s patents.

Below are the major headlines about Apple this week:

A big holiday season

Apple’s first fiscal quarter, which ended December 28, was a big one. The company’s $91.8 billion in sales topped Wall Street’s expectations of $88.4 billion and easily exceeded the $84.3 billion in revenue during the same period last year. Profits were also up, to $4.99 per share from $4.18 in the year-ago period.

The resurgent iPhone

The sales gain in Apple’s latest quarter was driven in large part by a resurgent iPhone division that generated a record $56 billion in revenue. The performance stood in stark contrast to the same period last year, when iPhone sales fell 16% to $52 billion. Apple said its latest quarter was bolstered by strong demand for the iPhone 11 and iPhone 11 Pro models, but it didn’t share unit sales data.

An eye on services

Earlier this week, I spoke to analysts and industry experts who dissected Apple’s services business, which includes iCloud, Apple Music, and other digital tools. They said Apple’s services business is a likely source of future growth that could help offset any declines in iPhone sales. During Apple’s fiscal first quarter, Apple’s services revenue topped $12.7 billion, up from $10.9 billion in the prior year.

The iPad enters a new decade

It’s hard to believe, but late Apple co-founder Steve Jobs unveiled the iPad 10 years ago this past week. To mark the occasion, I spoke to several analysts who looked back on the first 10 years of the iPad, and discussed where they think the iPad is headed in its second decade.

Apple tops Q4

Apple shipped 70.7 million iPhones worldwide during the fourth quarter, according to market researcher Strategy Analytics. That was enough to top China-based Huawei’s 68.8 million shipments and Samsung’s 56 million shipments during the period, the researcher said. While Apple doesn’t disclose iPhone unit shipments, which means the Strategy Analytics data can’t be verified, the researcher said Apple shipped a total of 197.4 million phones worldwide last year. Huawei and Samsung shipped 295.1 million and 240.5 million phones, respectively.

Caltech’s (possible) payday

A jury in California this week ordered Apple and Broadcom to pay a combined $1.1 billion to Caltech this week for violating Wi-Fi-related patents owned by the university. Apple is responsible for $838 million of that amount, and Broadcom has been ordered to pay $270 million. Both companies argued that they didn’t violate the patents, which center on technology that corrects data transmission errors over Wi-Fi networks. Apple and Broadcom are likely to appeal the verdict, according to Bloomberg.

The Apple Maps facelift

Apple rolled out the new Apple Maps this week. In a statement, the company said all U.S. users should now have access to the new version, which includes redesigned maps and more accurate navigation. Apple also said that it has enhanced the privacy features in Apple Maps, so Apple won’t be able to track users’ locations or destination, or see when they search for a location.

One more thing…

There are plenty of new and updated devices ahead for Apple, according to TF International Securities analyst Ming-Chi Kuo. He told investors that Apple will release in the first half of this year a new budget-friendly iPhone SE 2, an iPad Pro, and new MacBooks. Location trackers called AirTag might also be planned.