Apple’s Q1 2017: Records for the iPhone and services, but the iPad still struggles – Macworld

It’s fair to say that, from a financial-results perspective, 2016 was rough for Apple. Sure, the company still made billions in profit on massive revenues, but Wall Street wants to see growth and the massive iPhone sales of 2015—when the company introduced the larger-sized iPhone 6 and iPhone 6 Plus—were just too big for 2016 to match.

But it’s a new fiscal year, and Apple’s latest financial results, announced Tuesday, suggest that the story of Apple in 2017 will be different. The company took a page out of its 2015 playbook, setting an all-time record for revenue, and provided guidance that it will likely show year-over-year revenue growth again next quarter. The company broke a bunch of other records, too–for Apple Watch, Services, and the Mac.

To be fair, Apple really does holiday quarters right. (Even the year-ago holiday quarter was a record.) It’s the company’s biggest quarter of the year by far, but that means there’s than much more at stake. Bottom line: Apple’s 2016 holidays were good. Here’s a deeper dive into some of the other interesting things we learned as a part of Apple’s regular disclosure of numbers and give-and-take with financial analysts about Q1 2017.

The iPhone might be unstoppable after all

Most of the sturm und drang about Apple’s 2016 involved a fall-off in iPhone sales from the prior year. But the iPhone is still huge. In the holiday quarter of 2016, Apple sold more iPhones than ever before, and iPhone revenue comprised a whopping 69 percent of Apple’s total revenue. (No other budget line could even manage 10 percent of the total.)

According to Apple CEO Tim Cook, iPhone 7 sales were greater than Apple’s own internal expectations, and the company wasn’t able to make the iPhone 7 Plus fast enough to meet demand until January, after the quarter had ended. According to Apple, the plus model saw “exceptionally strong demand,” higher than in previous years as a part of the overall product mix, and set a record for the most Plus models sold in a quarter.

q1 17 iphone 6c Six Colors

Apple sells a lot of iPhones every holiday quarter, but Q1 2017 was a record. 

Perhaps buyers were motivated by the phone’s two-camera system to step up from the smaller model. Regardless, it’s a phone that costs more–and the average selling price of the iPhone went up last quarter.

With great success comes great fear about what comes next for the iPhone, of course. Apple suggests that year-over-year performance for the iPhone will be similar next quarter as it was for this one, which would suggest that iPhone sales will slightly improve year-over-year, but it won’t be dramatic.

Services is a monster in waiting

Apple has been promoting its Services budget line, which includes the App Store, iTunes, Apple Music, Apple Pay, and iCloud, for a few years now, and given its impressive and consistent growth, that makes a lot of sense. The Services line set a revenue record during the holiday quarter, led by the biggest quarter for the App Store ever.

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