Apple Reports Third Quarter Results
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700,000,000 paid subscriptions is the craziest metric in tech. That’s an absolutely insane amount of people paying Apple one way or another as opposed to being free users and just seeing ads
The comparison is certainly apples to oranges; just throwing it out there that 700M across a range of consumer offerings isn’t that crazy when a single business product can reach 300M.
There is no program called Office.exe. Microsoft Office is not a single business product; it is a suite of products.
A product is not necessarily a program (an executable).
A suite can be a product too, and you can absolutely sell a suite as a single SKU.
In fact that's exactly what MS does 90% of the time, and it even used to sell it in shrink-wrapped box form.
Whereas Apple built their 700M from nowhere (near bankcrupt sub-2% market share in 1997, starting building their subscription offering past 2007, and more seriously, past 2012 or so).
Word is more debatable. Yes, if you use it just for taking notes or something, the alternatives are fine.
But if you want to make a nice-looking document, Word is still just a lot better. I've never seen a fantastic Google Doc, for example, even that my company's designers have worked on.
And LibreOffice is another, older generation of UI/UX that is far behind Office at this point.
If you really drill into all the different numbers they release over time as investment / corporate strategy analyst you can get a pretty reasonable mix on revenue streams this size.
I don't dig in on Apple as I'm a B2B focused person so speculating a bit here based on parallel experience.
I wonder how Apple counts family subscriptions. I have several accounts, but only one subscription...
No wonder why they are creating Apple One, they want to convert those 700M subscribers into higher paying account.
- Apple Music is the only streaming service that has lossless, high sample rate music and international radio stations.
- Apple News is the only service providing "all you can eat" magazine subscriptions.
- Apple TV is the only service that has its unique style of content i.e. movie quality production values.
They do have unique offerings that other companies aren't providing whether advertising supported or not.
Am I missing something? What about Disney+ and (some) Netflix shows? The Mandalorian and the Marvel shows have movie budgets.
I have't tried other services, so I cannot comment. Although, Apple Music seems to be a disaster: https://www.youtube.com/watch?v=gE8ZikfrpFU
Not true. I've personally worked on the Gymkit integration another very well known at-home service uses and they're not alone.
> Apple Music is the only streaming service that has lossless, high sample rate music and international radio stations.
That's a strange specific qualification... Like saying it's the only red car with exactly 23.4034 gallons of fuel in it in the parking lot.
By that logic Tidal is the only streaming service that has lossless, high sample rate music and supports MQA?
> Apple News is the only service providing "all you can eat" magazine subscriptions
Nope. https://www.magzter.com/magztergold https://us.readly.com/
> Apple TV is the only service that has its unique style of content i.e. movie quality production values.
W... what? I don't even know how/why you'd quantify this, but Apple TV is not the only Apple TV. Or rather, Apple TV is not the only Netflix...
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If anything what your comment is doing is exposing why Apple is so ridiculously dominant when they dip their toes in anything.
Apple Music for example, had features no other app could have for years, like Siri integration (which didn't open up until Apple Music was well cemented)
So it didn't matter if the selection sucked, they could shove it down people's throats until it had traction.
Likewise, Gymkit is an absolute bear to integrate. It's not like integrating an SDK, Apple is practically entering a business agreement with you, and they have full power to stop your launch over icons not looking the way they want.
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All that being said, I use an iPhone, I accept the Faustian bargain, but let's call a spade a spade. Nothing about Apple's subscriptions is unique, if anything they're all kind of second place to other services... until you sprinkle in the insanely tight integration they have with the OS.
Apple Fitness+ is a service that provides videos about exercises you can do without equipment, synced to and from HealthKit.
These are not one and the same.
I said what I said.
An in-home fitness service using Gymkit to provide deep integration with streamed workouts.
Their non-equipment workouts work with Healthkit, but to have parity you need Gymkit too since Apple Fitness is not just about equipment-less workouts:
https://www.apple.com/apple-fitness-plus/equipment/
To that end it's more deeply integrated than Apple Fitness since Apple Fitness streaming content needs to target any Gymkit enabled (or really any hardware period) hardware of a given type with all the variation that entails.
This company is customizing the stream for a handful of Gymkit enabled devices which gives them more control over the workout experience
Nuts. Margin growth too. So revenue and margin both going up.
Apple can afford to invest / pay for almost anything at this point (supply chain / chips / screens etc).
I'm interested in where they land on the car - if it's going to be an electric box with a flat screen, give me a big carplay that works with the iphone.
This would be a huge sell for all of us driving cars that are just a bit too old to have a stereo with Carplay, and/or whose head units can't be replaced for technical reasons.
However, that doesn't give Apple a cut of the new vehicle margin.
Technology likes the environment to stay the same, which is impossible in a car.
(I also pointed this out originally but I have now owned two cars in the last ten years with head units that couldn't be replaced because the vehicle integration was too tightly coupled.)
I wonder if the new widgets capability in iOS 15 will allow you to get close to that. I’ll have to make a screen for that when it’s out of beta to see.
Has anyone tried this yet? (or something like it)
Disc: Googler.
Android Auto running on Android is different -- it has a 50 state legal purpose: Android is a popular OS for in-car infotainment. Apple CarPlay runs on Android too, that's how it was implemented in my car from the factory.
iOS, by contrast, is not used for car infotainment systems, only Apple's mobile devices. Apple is unlikely to go out of their way to make a product for their mobile devices that is intended to be used while driving that could only be used on a mobile device.
Android Auto was released in 2015, which only ran on a handful of OEM head units: https://www.theverge.com/2015/3/19/8259565/google-launches-a...
In late 2016, Google allowed it to be run on-phone: https://web.archive.org/web/20161107221224/https://blog.goog...
It's really just my opinion that Apple wouldn't go out of their way to port software to a different platform with no PR-friendly purpose.
Yes, but these were Android tablets fitted into head units. Not Androind Auto - a UI specifically designed to be used while driving which would make the Android OS liable for legal issues.
> It's really just my opinion that Apple wouldn't go out of their way to port software to a different platform with no PR-friendly purpose.
They don't need to. The ask in this comment thread was to have the CarPlay UI on the phone itself - the phone being an iPhone.
With all other gadgets, I want them independent. I want a printer that connects directly to the network, but one that requires a print server. I want a thermostat I can program on the device itself, not one that requires a phone just to program. I want a streaming device with its own remote, but one that requires a phone to work it. And for appliances like washers and refrigerators, well, I don’t want that connecting to a network or other devices at all.
So I don’t want the carmakers giving up on having decent infotainment built in to the car. I shouldn’t have to plug my phone into it. With cheap 5G the car should connect to the network on its own. It doesn’t help that I find Carplay underwhelming: stabbing and swiping a screen while driving is a bad experience.
Are you SURE that they haven't done that with TSMC?
They can back up their commitments with cash to help suppliers deliver the capacity / volume they need (which is high). This then pays off in terms a more predictable supply chain (ie, they want to launch iphones in fall with generally absolutely cutting edge process nodes).
You'd only do title on actual specific equipment if the supplier was a fair bit smaller than you are normally - but the transaction / cash flow story is the same. Upfront cash to help supplier deliver your supply reliably and at scale you need.
Yes. Because those machines are different. TSMC and Foxconn ( or any other contractor ) operate on a very different spectrum.
Back around the time Apple was looking at single sourcing chips from TSMC, TSMC's CEO started publicly saying that deals that dedicated a fab to a single customer made sense.
>The world's leading foundry chip maker Taiwan Semiconductor Manufacturing Co. Ltd. is considering operating single-customer wafer fabs, according to chairman and CEO Morris Chang.
Chang, speaking to analysts on a conference call to discuss the company's second quarter financial results, said that the market is tending to produce fewer higher volume customers and some are so large they need their own dedicated fabs.
https://www.eetimes.com/electronics-news/4391104/TSMC-says-s...
Which is it? I'm not up to speed on the details of the factory but on the surface ensuring local fab capabilities seems like a reasonably justified national security concern.
10.8B spent on dividends
66.2B spent on repurchase of shares
For context, Apple spent 16.1B on R&D. It’s amazing they can self-fund this kind of growth while still returning so much capital to shareholders.
iPhone, Mac, Watch, AirPods, etc. all have incredible customer satisfaction metrics.
However, I agree with the parent - you actually have to have great products and services that delight to become big and relevant... and stay big and relevant. This enables your sexy branding to be effective. Your sexy branding doesn't make your products and services better. It just lures consumers in, but that only works for so long unless you deliver on your promise. A brand is a promise kept as the old saying goes.
This is from 7 years ago but a pretty good: The Twilight of Brands - https://www.newyorker.com/magazine/2014/02/17/twilight-brand...
"the rise of brands was a response to an information-poor environment. When consumers had to rely on advertisements and their past experience with a company, brands served as proxies for quality; if a car was made by G.M., or a ketchup by Heinz, you assumed that it was pretty good. It was hard to figure out if a new product from an unfamiliar company was reliable or not, so brand loyalty was a way of reducing risk. As recently as the nineteen-eighties, nearly four-fifths of American car buyers stayed loyal to a brand."
"Roku, a maker of streaming entertainment devices, has thrived even though its products have to compete with similar ones made by Apple (which is usually cited as the world’s most valuable brand)."
So let's say you buy Apple (just the name and branding and nothing else) - you still aren't going to be shit without everything else.
We aren't in an information poor environment. Consumers would know the brand was sold and that the quality could not be trusted.
Bad management decisions, or CEO replacements, can turn really bad, regardless of the current situation.
Jokes aside, I want to point out that the money is made from selling to people. The profit does not come from air. They were from people. You can argue how justified that the profit belongs to the company. But it ultimately comes from people, and should be used on them as well.
So why is the seller then obligated beyond prior agreements to expend the profits of the sale on the buyer? Where is your logic?
Simply put, point of sell is a micro transaction. But profit coming from people ought to be used on people, that's a macro concept.
Just like you won't service intelligence by focusing on individual neurons activity, you won't buy the idea that collective the profit should be used on the people as a whole.
So, why apple profit should be used on people?
Because apple depends on the whole society providing the materials talents social constructs for its profit making. For example, without us military, you can ganrantee that apple will need to pay a lot more in tax to other countries (not saying that's wrong). And without the education system, there won't be enough highly skilled engineer.
And you might ask, the exiting system already extracted tax from Apple business.
That's right.
But the investors of us military and education are not organized as stock based ownership, so that part of value creation was never reflected in Apple' ownership at all. I mean, why someone invest in actual captital be able to grab certain percentage of companies, far larger than the employee of the firm? Wasn't employee do 99.99% of the work instead of shareholders? Let's say us military and education system decide, collectively, Apple should grant certain amount of share from the company, do you think it will work?
No, that's because the system cannot support such mechanism.
Back to the original argument. If the system could not correctly assess the actor's contribution to the profit, then it has to be that the profit needs to be pulled together for the people. And I am sure that Apple took more than their fair shares of economy profit for a smaller group of share holders.
Therefore my statement.
A purchase has a buyer and seller who are making an exchange, both of whom in the United States and the majority of the States are already paying tax on their income. The sale itself may be subject to sales tax. The surplus from the sale at a price agreed upon by buyer and seller, after expenses are accounted for, is profit. This profit becomes taxable income to the seller, and the tax rate set in advance of the reporting period by elected representatives in respectable countries.
The State, both the State of the sale and the United States but referred to generically and collectively as “the State” so as to keep this discussion open to other countries and jurisdictions p, is responsible for its own revenues to cover costs (military, education, or whatever) which include taxes.
So when a seller’s tax obligations are satisfied, which is revenue to the State to cover the government’s costs, what obligation does the seller retain to the buyer beyond warranty and prior agreed-upon support service?
If you want to discuss tax rates, that’s a whole other discussion and definitely not one I’m keen on. What I’m getting at is your idea that profitable businesses remain indentured to their customers beyond the point that their prior obligations are satisfied. They do not.
Discussions cannot have meaningful progress like this.
As I said, in this existing system, one cannot measure the investment value of other parts of the economy. Therefore one cannot justly determine the profit sharing in such system.
If you insist on tax collection is enough to justify the profit ownership, then you are not acknowledging the fact that I totally agree, in the existing system, where there is simply no other alternatives.
But my point was that the system is the problem itself. I.e., this system cannot justly assess the profit ownership. The case in point is that the military and education are not treated as investment like other capital investment.
Apple paid 14.4% in income taxes in fiscal 2020 and 16% in 2019.
Do your roads now lack potholes?
What if we increase that tax rate to 18% or 20%. Would the potholes go away? (nope)
The potholes have a lot more to do with vast government mismanagement of spending and a failure to raise gasoline taxes to fund infrastructure (at least in the US), than they do with a few billion dollars in tax revenue re Apple.
The federal + state + local government systems of the US have spent something like $70+ trillion over the past ten years. How much of that did they allocate to infrastructure?
They spent our trillions of dollars in infrastructure money occupying and blowing up Iraq, Afghanistan, Libya, Syria. A couple of billion dollars from Apple is just about the least of our problems.
Why lie about such an easily checkable thing? In 2020 Apple paid 13.3 BnUSD in income taxes and had a gross profit of 129.8 BnUSD.
https://www.macrotrends.net/stocks/charts/AAPL/apple/total-p...
https://www.macrotrends.net/stocks/charts/AAPL/apple/gross-p...
https://www.discoverci.com/companies/AAPL/effective-tax-rate
Income tax is federal, and federal roads are pretty darn good in the US.
https://sixcolors.com/post/2021/07/apple-posts-81b-quarterly...
Edit: iPhone sales wow! Is it the most successful product ever?
I don't think iPhone will win any single one of them individually. Grouping together some or all of them...maybe, but probably still no. Heck it might not even the most successful mobile phone ever.
IT allows almost economies of scale to keep scaling longer than ever before. I don’t see a reason apple cannot push into new markets and eye a $5 or $10T market cap in the next decade or two.
I think the inconceivable revenue from walled garden platforms like iPhone and subscriptions means Apple just doesn't give a shit about their laptops.
I think that when companies get a taste of this it ruins everything . It's so much money that everything else takes a back seat.
All bullshit phrases to allow some to pretend to know more than they do, when they really don't know any more than you or I. Now, that's not to say there isn't some truth in my first paragraph. But if someone utters those same words, it doesn't mean it's true. At the end of the day (or after the end of the day, in this scenario), it is what it is.
As a side note, I've seen Apple (a stock I've been trading for over 15 years) take a dive in after-hours, only to come roaring back in the morning at market open. Or maybe it gets pounded the next day, but comes roaring back next week. And one more thing: guidance is often "we can't keep this up for ever!", and some people believe them, despite the fact that Apple has been saying that for at least a decade.
Services revenue increasing is just scary. A single company owning everything from the silicon to the device to the OS to the app gateway, web browser and software services is going to backfire for users in the long run I think.
For those of us without Android devices, and who only know what's happening with Android through HN, can you elaborate on this a bit?
* 3rd party app (Charles Schwab) was not usuable to execute an options transaction. App usability bug.
* QR codes would not scan, but would scan fine on my gf’s iPhone. Hard to imagine a Google Pixel camera can’t see these well?
* Battery drain was way worse than iPhone. Had lots of anxiety about this
These are not just differences. These are tablestakes things that should just work without any education between Android vs. iPhone.
Seems like a Charles Schwab problem.
> * QR codes would not scan, but would scan fine on my gf’s iPhone. Hard to imagine a Google Pixel camera can’t see these well?
Wouldn't scan with the default camera app? A different camera app? Because the ability to read QR codes is an app function, not a camera function. Works fine on Samsung Android phones.
> * Battery drain was way worse than iPhone. Had lots of anxiety about this
Pixels have relatively small batteries. Which iPhone? Hardware makes a difference.
Default camera app would not scan.
Pixel 4 vs. iPhone 12 Pro
Apple can control their quality to the degree they want, but it's also not an open platform and there's limited hardware choice.
I'll take Android any day, and most people I know do too.
Also, while we're talking about user experience, Google's cloud everything is far better than Apple's. Google services are amazing too.
Google has had numerous proposed solutions for this but yet their own devices do not get more than 3 years updates.
Google excels at apps and web services where Apple fails. I still use the google services on my iphone because they have native apps on more platforms and their web versions are better while icloud web hardly has 10% of the features it should.
Aka solutions except paying for labor to support their devices longer.
The only exception is that I preferred the fingerprint reader to the Face Unlock and the Jabra buds stayed in my ear easier.
Android is way more usable to me simply because Google does web and cloud things much better than Apple.
In the Q&A session they also mention the highest number of people coming from Android in any June Quarter.
That’s what I’ve heard for over a decade.
Smartphones also get replaced on a much shorter timeframe than TVs while costing about the same.