It was a mixed bag in the hardware world as Apple reports third-quarter earnings today. Despite lower expectations, iPhone revenue edged up slightly year-over-year from $39.5 billion to $40.7 billion, a 3% jump from the same period in 2021. But while the company’s overall situation has exceeded Wall Street’s expectations, things have gone less well. well in the other categories. Mac, iPad and the combined wearables/home category all took a hit for the quarter.
Mac took the biggest hit by about 10%, as revenue fell from $8.2 billion to $7.4 billion. Wearables/Home/Accessories, which include Apple Watch, AirPods and HomePods, fell about 8% from $8.8 billion to $8.1 billion, while iPad fell slightly from $7.3 billion to $7.2 billion. The weak numbers are certainly no surprise, given the strong economic headwinds. Ongoing supply chain issues, coupled with inflation, have impacted both buying habits and the ability of companies to present their products to consumers.
Apple’s products have long been seen as a bellwether for luxury shopping, and the company’s performance in one word (or three) can easily be summed up as, “could be worse.” Not banner growth for the company, but an increase in iPhone revenue (however slight) amid much bleaker macro trends for the smartphone industry is a vote of confidence for the company.
Apple Chief Financial Officer Luca Maestri referenced some of the broader challenges in a press release, noting,
Our June quarter results continued to demonstrate our ability to effectively manage our business despite a challenging operating environment. We set a revenue record for the June quarter and our installed base of active devices reached an all-time high in every geographic segment and product category. During the quarter, we generated nearly $23 billion in operating cash flow, returned more than $28 billion to our shareholders, and continued to invest in our long-term growth plans.
In total, Apple saw a 2% year-over-year increase in revenue, driven in part by a 12% increase in services revenue. The hardware maker has increasingly relied on the performance of content offerings like TV+ and Music, coupled with other software offerings, including iCloud. This is clearly proving to be a savvy mood, as hardware sales have slowed across many categories, amid a confluence of external factors.
As the company continued to upgrade the Mac lineup, Apple computer purchases may also have fallen in part after an initial boost from the M1 chip rollout. The company is said to have high expectations for iPhone 14 sales, coupled with rumors of a redesign of its popular wearable Apple Watch.