2024-08-02
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Tencent Technology News, August 2, according to foreign media reports, on Thursday local time in the United States, Apple announced its third quarter financial report for fiscal year 2024 (the second quarter of the 2024 natural year). Although iPhone sales declined, iPad and service businesses grew rapidly.
The financial report shows that as of June 30, iPhone sales fell 1% year-on-year to $39.3 billion, and sales of service businesses including Apple Stores and Apple Music increased 14.1% to $24.2 billion, which brought the company's overall sales in the quarter to nearly 5% to $85.78 billion.
Although the iPhone is still Apple's most important revenue pillar, its share of total sales has dropped to around 46%. The service business is becoming Apple's most important growth category.
After the financial report was released, Apple CEO Tim Cook, Chief Financial Officer Luca Maestri and other executives participated in a financial report conference call to answer questions about Apple's performance, iPad sales, service business growth, and artificial intelligence plans.
The following is the key points of this call:
Earlier, at the Worldwide Developers Conference, Apple released many updates, including Apple Smart, which is based on years of innovation and investment in artificial intelligence and machine learning. Cook said Apple firmly believes that it will change the way users interact with technology.
"We are very excited about Apple intelligence and we are optimistic about the potential of artificial intelligence to enrich our users' lives," Cook said in a conference call with analysts. "We will continue to make significant investments in this technology and are committed to unlocking its full innovative potential."
As Apple smartphones go online, they may have an impact on Apple's service business and become a catalyst for the accelerated expansion of the service business.
In this regard, Cook said: "This week, we have worked with developers to launch the initial features of Apple's intelligence. We are very excited about this progress because it will provide developers with unprecedented capabilities to take their apps to new heights. We are currently in the initial stages of testing, but we are very much looking forward to seeing how developers use this technology to create excellent experiences."
Cook also gave a time frame for what consumers can expect from Apple's smart features. He said: "Our strategy is to gradually launch smart features rather than presenting a complete suite at once. We will continue to expand to non-US English language support and other features throughout the year. So this is a phased release plan."
Cook said Siri will become more natural, more useful and more personal than ever before.andChatGPTThe integration work is expected to be completed by the end of the year.。
Cook said that Apple has been increasing its R&D efforts, especially in the fields of artificial intelligence and machine learning. In addition to increasing investment, the company has also actively adjusted resource allocation to focus more talents on this cutting-edge field. Therefore, the growth in R&D expenditure is a direct reflection of Apple's continued investment and innovation, and this growth momentum will continue.
Regarding capital expenditure, Apple has adopted a flexible and diverse strategy, including both internal independent research and development and cooperation with external partners. This means that Apple's capital investment will be dispersed in different business links, including but not limited tocloud computingCapacity expansion. With the launch of new services, especially innovative features such as Apple Smart, it is foreseeable that related operating expenses and capital expenditures will increase.
but,As for whether Apple's smartphones can help boost iPhone sales, Cook believes it is "too early to draw conclusions."
Apple's Chief Financial Officer Maestri gave an explanation for the decline in iPhone sales. He said:
"iPhone generated $39.3 billion in revenue in the third quarter, which was down 1% year-over-year, but actually grew year-over-year at a constant exchange rate. We set new sales records in the third quarter in many markets, including the UK, Spain, Poland, Mexico, Indonesia and the Philippines."
The iPhone 15 series has become one of the best-selling smartphones worldwide, especially in key markets such as the United States, Greater China, the United Kingdom, Germany, Australia and Japan. According to the latest report from 451 Research, user satisfaction with the iPhone 15 series in the United States is as high as 98%.
Cook said that Apple will bring unprecedented new experiences to iPhone users through iOS 18, including major innovations in the photo app, personalized customization options for the home screen, satellite communication functions, and the introduction of Apple intelligence. Apple intelligence makes full use of the cutting-edge technology of iPhone 15 Pro and Pro Max to bring users a series of revolutionary features.
Cook pointed out: "From the perspective of activation data, the third fiscal quarter reached a record high, and we are very proud of this. Overall, the iPhone 15 series has shown strong growth at a fixed exchange rate, and its market performance is better than the previous generation of products. Although we are currently in the middle of the product cycle and the specific data of the upgrade rate is difficult to predict, we firmly believe that the addition of new features such as Apple's smart features will provide users with richer value and experience, which will become another convincing reason for upgrading."
The iPad business performed well in the quarter, achieving revenue of $7.2 billion, a year-on-year increase of 24%. In the quarter, Apple launched two new iPad Airs - the M4 iPad Pro and the M2 iPad Air, both of which are available in 11-inch and 13-inch versions. These two devices have become ideal choices in education and entertainment with their excellent performance and versatility.
Maestri said:
“We’ve made a major breakthrough in the upgrade of iPad Pro, equipped with the advanced M4 chip. This innovation not only takes energy saving and performance to a new level, but also makes this ultra-thin device a powerful productivity tool. The addition of the M4 chip enables video editors and musicians to seamlessly use cutting-edge artificial intelligence features in professional software such as Final Cut Pro and Logic Pro. In addition, iPad Pro and iPad Air equipped with Apple’s M-series chips will unlock the infinite possibilities of Apple intelligence and bring users a smarter and more convenient experience.”
The number of iPad activations continued to rise, reaching a record high in the third quarter, with new users accounting for half of the total. In addition, according to the latest customer satisfaction survey conducted in the United States, the iPad received a satisfaction score of 97%.
Apple's services revenue increased to $24.2 billion, setting a new record, with paid subscriptions also reaching an all-time high. Apple set new revenue records in most service categories, and also set all-time highs in advertising, cloud and payment services.
Maestri said:
“We continue to have strong momentum in Services as our base of active device activations grows, laying a solid foundation for future expansion of our ecosystem. We are seeing increasing customer engagement across the services we offer. Both transactional and paid accounts reached all-time highs, with paid accounts growing double-digit year-over-year. Additionally, paid subscriptions also saw strong double-digit growth. We have over 1 billion paid subscriptions on our platform, more than double the number four years ago.
I think we're also doing a good job of improving the quality of those services and increasing the amount of content. We're continuing to invest heavily in TV+ and Apple Arcade and continue to launch new shows and new games."
Cook remains confident in the long-term growth opportunities in the Chinese market. He explained:
“In the third quarter, our sales in Greater China decreased by 6.5% year-on-year, but the decline narrowed to less than 3% at constant exchange rates.Half of the impact is related to exchange rate fluctuationsWe are encouraged to see a pickup in growth momentum compared to the first half of this fiscal year.
The activation volume of iPhone in Greater China has hit a new high, and the replacement rate of mobile phones has also set a new record. These are strong market signals. The latest survey shows that the popularity of iPhone in Greater China ranks among the top three. At the same time, compared with the same period last year, the market performance of the iPhone 15 series in the same period after its launch is better than that of the iPhone 14 series. This comparison result has continued to appear since September 2023, which brings us confidence.
In addition, we closely monitor the acquisition of new customers. For Mac and iPad, most consumers in the Chinese mainland market are first-time buyers, and this phenomenon is also evident in watch products. At the same time, the iPad business achieved growth recovery in Greater China in the quarter, echoing the strong performance of the global market.
Therefore, we remain confident in the long-term development opportunities in the Chinese market."
Regarding the application prospects of Apple's smart phones, Cook said:
“Apple intelligence is being integrated into the various applications that users use every day, from notes, emails to messaging, and we have carefully considered how it is integrated. This strategy aims to allow users to experience the convenience and intelligence of Apple intelligence in their daily operations in a natural and smooth way, which we believe will greatly stimulate user interest and promote its widespread adoption.
Similarly, we expect developers to build on this foundation and explore the integration of Apple intelligence with their applications extensively and deeply. Whether it is iterating existing applications or innovating new products, we believe that developers will demonstrate impressive creativity and results. This week, with the distribution of the first batch of experience seeds, we are looking forward to how developers will use Apple intelligence, which I think will be quite exciting. "
AboutOpenAIAs for whether there will be more collaborations and how to make profits from such collaborations, Cook said:
“I think Apple is combining on-device processing withPrivate CloudThe advantages of computing, many of which are deeply rooted in personalized experiences. In terms of introducing world knowledge, we initially chose to integrate with ChatGPT to focus on enhancing users' ability to access global information. As for the profit model, I respect the confidentiality of the commercial agreement and cannot disclose the specific terms, but I believe that the integration of device-side processing and world knowledge is crucial to the user experience. " (Compiled by Jinlu)
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