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Image source: Visual China

Blue Whale News, August 2 (Reporter Zhang Han)Apple's growth increasingly depends on the pace of business updates across its product lines.

On August 1, Eastern Time, Apple released data for the third quarter of fiscal year 2024 (ending June 29, 2024), with total revenue of US$85.78 billion, a year-on-year increase of 5%, exceeding analysts' expectations, mainly benefiting from iPad product revenue. However, Apple's revenue in Greater China fell 6.5% year-on-year to US$14.728 billion.

On August 1, local time, Apple's stock price opened high and then fell. As of the afternoon close, Apple closed at US$218.36 per share, down 1.68%, with a total market value of approximately US$3.35 trillion.

In the third quarter, Apple updated its iPad product line and disclosed specific progress in Apple Intelligence, which is also the core concern of the market and investors. In addition, the latest financial report also focuses on the performance of the iPhone in the Chinese market, whether the price reduction strategy has significantly improved sales, and the acceptance of Vision Pro products.

Replacing your phone with a new one can still bring revenue growth to Apple. Judging from the financial data of Apple's hardware product line, the iPad business has seen strong revenue growth, with revenue in the third fiscal quarter increasing 23.7% from the same period last year to $7.162 billion. In May of this year, Apple re-released new iPad Air, iPad Pro, Apple Pencil, and Magic Keyboard accessories after a one-year suspension in 2023. The iPad Pro skipped the M3 chip and was directly equipped with the M4 chip, and the screen also switched from LCD to OLED display. Combined with the financial report data, the market has a high degree of acceptance of the new iPad products. Apple CEO Tim Cook said, "About half of iPad buyers are first-time buyers, which shows that the tablet market is not yet saturated." In addition, the Mac business line achieved revenue of $7.009 billion in the third fiscal quarter, an increase of 2.4% over the same period last year.

However, the iPhone business, which accounts for half of Apple's revenue, did not grow. Its revenue was still as high as $39.296 billion, but it was down 1% year-on-year. At WWDC in June, Apple announced system updates and introduced "Apple Intelligence", but due to the impact of chip computing power, only the iPhone 15 Pro and iPhone 15 Pro Max models can use it.

Cook's point of view at the earnings conference was that although it is not yet possible to reveal whether its newly released "Apple Intelligence" service will have a positive impact on product sales, Apple will invest more money to prepare for its launch this fall, and the impact may not be seen until it starts shipping to customers later this fall. "What we have done is to redeploy a large number of people from other jobs to the field of AI. We have our own data centers and also cooperate with others," Cook said.

According to the plan, Apple will launch the "Apple Intelligence" function in stages. Some of the functions that will be gradually launched this year will not support languages ​​other than American English, and the cooperation with OpenAI will be completed before the end of this year. However, at the end of July before the financial report was disclosed, foreign media quoted insiders as saying that Apple plans to launch "Apple Intelligence" to customers as part of a software update before October, rather than releasing it with the iOS 18 and iPadOS 18 operating systems in September.

Vision Pro belongs to the wearable, smart home and related accessories business unit. In the third fiscal quarter, the revenue of this unit decreased by 2.3% year-on-year to US$8.097 billion from US$8.284 billion in the same period last year. In June this year, according to Silicon Valley technology media The Information, due to the slowdown in sales of Vision Pro after its launch this year, Apple has suspended the development of the next generation of top-level head-mounted display devices and is currently focusing on launching a cheaper head-mounted display product. Two months after Vision Pro was launched in the US market in February this year, well-known technology analyst Ming-Chi Kuo said that Apple has cut its shipment forecast for this year to 400,000-450,000 units, half of the earlier forecast of 800,000.

In addition to hardware, Apple's service business revenue increased 14.1% year-on-year to US$24.213 billion in the third quarter. Apple said in a statement that the number of active devices in every region is higher than ever before, but did not provide specific figures.

As for the Greater China market, which Apple values ​​very much, it is still in a downward range. According to financial report data, Apple's revenue in Greater China fell 6.5% year-on-year to US$14.728 billion. According to the Chinese smartphone sales data for the second quarter of 2024 released by market research institutions IDC and canalys at the end of July, Apple fell out of the top five smartphone manufacturers for the first time in four years. This is due to both the impact of Huawei's return and its own lack of product innovation.

Cook revealed in the earnings call that he had contacted regulators to enable the "Apple Intelligence" service in the European and Chinese markets, but when asked when it would be launched, Cook only promised that all Apple users would use "Apple Intelligence" but did not provide more details. Earlier, foreign media reported that the companies that had contacted Apple included Baidu, Alibaba, and Baichuan Intelligent, a large domestic model manufacturer.

After the financial report was released, Mark Gurman, a Bloomberg reporter who has been following Apple for a long time, said, "From a financial perspective, everything is fine with Apple, but the company's pace of innovation is not as good as before. In Apple's product line in the next two to three years, I can't see any game-changing products. Anything new and meaningful may not be launched until around 2027."