Apple released its third-quarter earnings today, providing our first look at the performance of the Apple Watch and an ongoing glance at the staggering success of the iPhone — essentially the most popular and commercially successful product ever made.
1) Apple is the iPhone company
Apple earned $31 billion (yes, that's a "b") selling iPhones in the quarter — which, due to its place in the life cycle of the profit, is not traditionally that strong a quarter — representing a staggering 59 percent increase on the previous year. In terms of units, sales went up "only" 35 percent, which is extremely impressive on its own merits. Basically Apple succeeded in getting many more people to buy iPhones, while also increasing the average price of the phones sold.
That would be a notable achievement under any circumstances, but it's doubly impressive because the iPhone was already an extremely popular product a year ago and already occupied the high end of the smartphone niche. The iPhone is so huge that it accounts for more than 60 percent of the revenue of the biggest company on the planet.
2) Apple's growth is fueled by China
The company's overall revenue was up 33 percent year on year, which is impressive. And the big driving force behind that 33 percent increase was a mind-blowing 112 percent increase in revenue deriving from Greater China, of which the People's Republic of China is far and away the largest part.
Greater China was so big that the company's four other regions were all below average. It's now blown past Europe to be Apple's No. 2 regional market behind the Americas, though there's still a substantial gap there.
3) The Apple Watch is not yet a hit
Apple's "other" revenue, which includes the Apple Watch, Beats by Dre headphones, Apple TV, and sundry accessories, was up a relatively modest 49 percent. That would be a great increase, of course, in a genuinely static category.
But a year ago, there was no Apple Watch at all. If the watch had been an enormous hit product, we would have seen an enormous increase in "other" revenue. Instead the total "other" category remains smaller than Macs, smaller than iPads, and smaller even than the iTunes and App Store groups.
And yet even this modest product is bigger than the original launch quarters for the iPad or iPhone. The question for Apple is whether further iterations of the watch that add power and capacity broaden its appeal to people beyond the hardcore early adopters.
4) The Mac's market share keeps rising
The 9 percent year-on-year growth in Mac revenue is not huge compared with the overall scale of Apple's operations. But in a world in which the overall market for personal computers is shrinking, the fact that the Mac continues to grow at all is impressive.
Apple long ago lost the war for PC market share, but as the industry enters its senescent phase it's staging a surprisingly robust comeback.
5) Nobody wants tablets
Sales of the iPad fell 23 percent year on year. What's striking is that nobody else in the tablet market appears to be doing particularly well, either. After launching to great fanfare and acclaim in 2010, the entire tablet segment appears to be slumping as people decide that big-screen smartphones are all the mobile device they need.