Apple just reported yet another gangbusters financial quarter. This time around, Cupertino is reporting a 33% quarterly surge in profits, thanks in large part to the iPhone 6 and 6 Plus, as well as Apple’s growth in newer markets like China. Today’s earnings report gives Apple plenty to brag about, but it also raises some interesting questions about some of its younger product lines.
All told, Apple made $13.6 billion in profit on $58 billion in revenue during the second quarter of 2015. By comparison, the company raked in $10.2 billion on $45.6 billion during the same quarter last year. So much for Apple’s post-Steve Jobs decline.
As usual, this growth was driven by iPhone sales. The company also proudly touted an increase in Mac sales (despite a broader trend away from personal computer adoption) and what CEO Tim Cook called “the best quarter ever” for the iOS App Store.
But one product category that Apple did not brag much about today is one that launched to much lofty, industry-shaking rhetoric just five years ago: the iPad. In the second quarter of the year, Apple’s line of tablets sold 12.62 million units (compared to 61.2 million iPhones). That is a 22% drop from the second quarter of last year, when Apple sold 16.35 million iPads–and it is the fifth consecutive quarter of year-over-year declines, .
The cause of the iPad’s decline is obvious: The iPhone is getting bigger–the iPhone 6 Plus is not that much smaller than an iPad Mini–and the iPad has not seen dramatic enough product iterations in recent years to set itself apart and keep sales growing. “We’re clearly seeing cannibalization from the iPhone and, on the other side, the Mac,” admitted Cook on today’s earnings call. “We were never worried about that. It is what it is.”
At some point, the iPad product line will likely need a significant overhaul to keep consumer’s attention in the age of giant smartphones, or perhaps the iPad is destined to merge with the MacBook Air. That might seem like an ironic shift for Apple’s so-called “post-PC” device, but right now Mac sales are growing more than the iPad’s. Whatever happens, it will be interesting to see how the product evolves beyond this awkward stage of its youth.
Today’s earnings come a few days after the Apple Watch started shipping, so it is a bit too early to judge how wearables fit into the future of Apple’s business. Although we suspect that if pre-sale orders and early sales were something to brag about, we would have heard about it on today’s call.