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Apple?s strong 4Q sales point to embrace of broader market


Sales of iPhones and Macs rose 16 percent and 21 percent respectively. Sales of iPods fell 24 percent and iPad sales remained mired in a slump, dropping 13 percent, but managed to beat expectations. Coming on Apple Pay?s launch day, and on the heels of Apple?s recent unveiling of a smartwatch and two different-sized iPhone models, the results reflect how the public?s embrace of mobile is changing Apple into a more broadly focused company with an ever-growing product line.

?The market has influenced the need to diversify, just by the nature of the smartphone and mobile in general,? said Ryan Martin, analyst wearable technology and Internet of Things, at Boston-based 451 Research. ?The iPhone is a good example. Apple released more than one device at a time. Also their Apple Watch will be coming out in a number of different flavors, both the actual hardware and with different colored straps and different colored cases.?

Apple?s engine
That said, the iPhone has become Apple?s engine. The company sold 39.3 million iPhones in the quarter, topping expectations of 38 million. 

Mac unit sales reached 5.52 million, above expectations of 4.6 million. Although iPod sales of 2.64 million represented a 24 decline, the figure still beat expectations for sales of 2.08 million. iPad sales came to 12.3 million, down 13 percent, versus expectations of 13 million.

Ad for slumping iPad.

Net income rose to $8.5 billion, or $1.42 a share, from $7.5 billion, or $1.18 a share a year earlier. Revenue rose 12 percent to $42.12 billion. 

International sales accounted for 60 percent of revenue. Analysts were expecting revenue of $39.85 billion.

Gross margin rose 1 percentage point to 38 percent. The average selling price for the iPhone was $602.92, up from $561.06.

Apple had announced that it sold 10 million units of the iPhone 6 and iPhone 6 Plus in the first three days after the new models were launched. The company had not updated those numbers for 30 days, raising concerns that sales were perhaps slower than expected.

?The larger device sizes of the 6 are creating consumer confusion,? Julian Zehetmayr, founder and CEO of mobile-advertising platform Mobfox, said prior to Apple?s earnings announcement. ?Which size to get? And eliminating the need for a large mobile device and an iPad mini ? do you really need a device that is 5.5 inches and also 7.5 inches? Expect iPad mini preorder sizes to suffer.?

Mr. Martin saw the choices as reflecting Apple?s evolution into a more broadly focused company. 

?The proliferation and diversity of mobile and connected devices is really been a driver in Apple?s product strategy,? Mr. Martin said. ?That?s why today we see so many different devices in each category. Now is the first time Apple has released two iPhones at the same time. 

?Meantime, they also have a number of iPads in different sizes. Also the same can be said for the iPod and their software. They?re really looking to go more horizontal now than they have in the past,? he said.  

In a conference call with analysts after the earnings release, Apple said the iPhone saw strong demand globally.

Promoting the Mac.

Downloads of mobile applications from Apple?s App Store topped 85 billion, up from 60 billion a year earlier. App Store revenue climbed 36 percent from a year earlier.

Earlier Monday, Apple, signaling its intention to own the mobile-wallet space, launched its Apple Pay mobile payments system in time for holiday shopping. With millions of consumers? credit card information already on file through iTunes, Apple Pay is set to become a force in mobile payments.

The launch date followed Apple?s unveiling last week of the iPad Air 2 with high-tech camera features and the iPad mini 3. iPad Air 2 is a more powerful and thinner version of the iPad Air with new iSight and FaceTime cameras, faster wireless and Touch ID. 

The iPad?s sales slump in the latest quarter reflects an overall cooling of tablet sales as cost-conscious consumers hang on to them longer and put money into lower-priced smartphones, laptops and wearables.

Shifting landscape

?I think we're at a major inflection point for mobile,? Mr. Zehetmayr said. ?Again, we saw Samsung struggle a bit during their last earnings and I think we'll see Apple begin to struggle on the mobile front as well. 

Apple Web site watch promo.

?The watch is an indication that Apple needs to have a multi mobile device strategy. Apple cannibalized the iPod and the touch with the iPhone. It's now cannibalizing the iPad with larger iPhones. The watch will be Apple's attempt to create another new market. It is yet to be seen whether the consumer demand will be there.?

Final Take
Michael Barris is staff reporter on Mobile Marketer, New York.