Comment by pwatsonwailes | Hacker News Reader

Comment by pwatsonwailes | Hacker News Reader

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Short version:

Reported quarterly revenue: ~$111 billion, so a 17% year-over-year increase.

Diluted earnings per share: ~$2. 22% increase compared to the same quarter last year.

Operating cash flow: surpassed $28 billion. Record for a March quarter.

iPhone: Record March-quarter revenue of ~$57 billion, heavily supported by demand for the iPhone 17.

Services: Hit an all-time high revenue record of ~$31 billion.

Capital Allocation: The board raised the quarterly cash dividend by 4% to $0.27 per share and authorized an additional $100 billion for share repurchases.

More generally, we're seeing a transition in their financials away from hardware dependence. At this point we can pretty conclusively say that Apple is now a hardware manufacturer mainly, backed up by a high-margin services ecosystem. Services revenue has grown consistently, providing a smoothing function against the more spikey revenue from the hardware product cycles.

Overall they've managed to maintain an ability to deliver double-digit growth, despite creating categories of product which haven't succeeded, providing enough free cash flow to continue their insane (in terms of scale) capital return program (dividends and massive buybacks in the main).

So hardware independent, they don’t even have any Mac minis, Mac pros or Mac studios in stock anymore

This comment hits hard as I tried to buy a Mac Mini this morning and could not find one anywhere in Calgary

As a company, this is a great problem to have. Way better than the opposite.

Doesn't this prove that they are hardware independent? Even having products not in stock was a Steve Jobs thing and this is possibly a temporary effect of supply chains changing.

The capital return program was a massive own goal in my humble opinion. It will work for now but soon Apple will go through their Intel years because they spent too long sweating their (admittedly incredible) assets. Something like Harmony OS is going to eat their lunch and they will only have themselves to blame.

I imagine you're saying the capital return program is a mistake because they should reinvest the money in R&D etc.

I think the issue is there's diminishing returns to spending, and in some cases it can be outright negative. For example, one major thing you can do with money is hire more people. Hiring more people than you can handle is a great way to grind everything to a halt. You're basically making a bet when you hire that the additional capacity outweighs the danger of coordination failure.

Perhaps you could invest more money in fabs or something like that. I don't know, I'm a software person. But I did work at apple on software for 15 years, and I do not think throwing more money at software is particularly effective. The biggest teams at apple are often the least functional.

Yeah that's definitely what I'm saying.

Hopefully there is work being done on the replacement for the Mach kernel and OSX / iOS in general. If there isn't that would be a grave mistake and exactly the kind of one someone like Tim Cook would make. Look at how he fumbled AI at Apple. I'm not saying he isn't talented, he is, but he isn't a product guy or an engineer.

This could happen in parallel with existing software dev skunkworks style.

Why on earth would they migrate away from the Mach kernel and OSX/iOS?

Because nothing lasts forever. Take a look at what Harmony OS is capable of if you want to see what a modern take on an OS and ecoystem looks like. It sure isn't the pinnacle either.

There's no reason for Apple to migrate; none at all. The idea that they need to do so is just ridiculous, regardless of what Harmony OS may do. iOS/macOS does exactly what they need.

Will things change? Perhaps if/when quantum computing becomes a bigger item.

The people who designed Mach in 1985 would almost certainly design something very different if they had today’s hardware, AI agents, secure enclaves, NPUs, ubiquitous networking, cloud edges, wearables, smart home devices and generally device density per person.

HarmonyOS is interesting because it points at the right axis: one coherent OS fabric across many devices, not a set of separate device OSes glued together by continuity features. Continuity, iCloud, Handoff, AirDrop, HomeKit etc are impressive glue. They are not the same as one logical OS fabric.

Can you give a brief comparison? I'm not familiar with Harmony OS and wouldn't know where to start on comparing the two.

I found out about it through this guy and his videos, they are slow but in depth: https://www.youtube.com/watch?v=GSLFz4jTMEY

"For example, one major thing you can do with money is hire more people."

Something else you can do is buy companies.

That is absurd. Nobody is arguing that Apple should deplete its war chest. Steve Jobs's infantile stance against dividends has fortunately been replaced by a proper return to the company's OWNERS.

And "Harmony OS" is going to threaten their ecosystem of hardware, software, services, and developers?

I wonder if there’s a breakdown of their top performing or fastest growing services. It’s interesting how they dont seem to promote the services that much yet are seeing tremendous growth.

Always remember that most of their “services” revenue is the App Store 30% tax on casino games for children, and the commissions for Safari default search engine coming from Google. These two are Apple’s twin licenses to print money, and both of them grow without Apple needing to innovate or really do anything.

App Store grows as the addictive game publishers improve their manipulation skills, and Google’s check grows as browser usage increases. Every time someone types, say, “Citibank” into the search box and doesn’t add .com, Apple earns a tiny payment from Google.

I’m sure they als make a decent chunk of money from iCloud as users who buy base models are almost certainly forced to make use of iCloud Photo Library to free up enough space on the device to even function; but I suspect it’s orders of magnitude less than that.

I pay $40/month for Apple One alone, not to mention my various AppleCare subscriptions. Surely they make more money from that kind of service than google search payments.

Sure, and I have that Apple One plan too. Certainly from you and me they do. But the sheer number of people doing "searches" (99% of the sites visited from every safari browser is probably doing a "search" to get there) makes the Google search commission so big -- $20 billion per year in 2022 when we found out the figure due to court filings. It would take over 526 million of us - half a billion users - all subscribing to Apple One $38 tier just to equal that number. And I don't think the shift from Google to LLMs for "question asking" has probably put a dent in it, because when I look at how people use their devices, I believe that most searches are done for navigation purposes (people don't like remembering URLs and don't use bookmarks).

I should buy a share of AAPL and instigate a shareholder’s lawsuit that argues that calling the App Store baksheesh “services” is misleading.

"More generally, we're seeing a transition in their financials away from hardware dependence."

Nonsense. They make 72% of their revenue from hardware, and without those hardware sales, the Services category would be nil.

Yes, but their hardware growth might have "ceilinged", services is likely where future growth will be.

Services is really just Google's baksheesh plus corrosive game mechanics. Without the hardware, there is no Services. Hence Apple will always be dependent on maintaining a large lead with their devices.

They really need to build their own fabs at this point. AI is going to kill their ASIC and DRAM supply chain if they don't.

"Real men have fabs." - Jerry Sanders, first CEO of AMD.

Actually, AMD, Nvidia, and Apple need to build their own fabs. Maybe Google, Amazon, and Meta too.

“They need their own fabs” is a very current events-biased read of the situation.

You can easily end up like AMD or Intel spending years with your own fab that’s uncompetitive.

One of the best things that ever happened to AMD was spinning off their fabs.

Intel only recently righted their ship after spending years with fabs that couldn’t keep up with competition, and even Panther Lake still contains some TSMC silicon.

The AI boom is inevitably not going to last forever. Either demand will subside or production will increase. High prices in tech rarely stick around.

You can easily end up like AMD or Intel spending years with your own fab that’s uncompetitive.

You could.

Or you could have no fab and no supply of chips for your business.

Being short on chips means you can raise prices.

Making chips on an uncompetitive lithographic process means your chips are worth less.

No, you CAN'T raise prices because no one will buy them, destroying your brand and your business. And you won't have supply anyways.

There is no scenario where not having a fab is beneficial.

Apple will have to build their own fabs, whether they like it or not. And they will need to make it competitive if they want to stay in business.

> There is no scenario where not having a fab is beneficial.

Mmm, I think that's an overly strong statement.

In the scenario where Apple has a fab that's doing work at a 2030 level in 2030, that's great, especially if everyone else is, by their standards, doing work at a 2025 level. In the scenario where Apple's fab is doing work at a 2030 level in 2035, and another fab is doing work at a 2035 level, owning their own fab has suddenly become a liability. If they had used that money to hire the output of other fabs, then as soon as it became clear that another one was eclipsing the one they were using, they could simply switch. And given the way businesses operate, it would be very hard to justify closing down their own fab to use the one that was outperforming it.

Now, granted, that's not an especially likely scenario, but it is a very realistic one.

Yeah, one of those two bad scenarios sinks a corporation the other is a tax write off.

Perhaps something that Ternus can add to his legacy-building exercise, given that he led hardware.

I always wonder if this is a possibility. They've worked so closely with TSMC that they've many times over the decade bankrolled R&D and equipment that TSMC uses. I would be super interested to know if that relationship has left them enough know-how of the fab process to someday control their destiny there, that would actually be pretty insane.

Apple almost certainly has entire production lines at TSMC that they effectively own. I don’t really think bringing chip fabrication in-house has any immediate benefit for them.

We can observe with Apple’s pricing staying stable that they have some of the best supplier arrangements in the industry.

Apple doesn't own TSMC. TSMC is putting Apple in the back burner in favor of Nvidia and other high margin companies.

They are literally being limited by TSMC (as well as the DRAM makers) because they don't have their own fabs.

It isn’t that simple: Apple made strategic investments in TSMC, and actually fronted the money for many of the fabs making their chips.

Especially outside of Taiwan.

The other reading is that the company plans to shift to a no-growth one, since it starts to return 100's of Bs to the shareholders, essentially admitting they cannot invest them in the company itself.

I wish they’d stop doing buy backs and invest 100B in R&D … imagine what they could do in battery tech or otherwise.

They really should have built a car.

It'd make them leaders in batteries.

It'd keep America at the forefront of EVs.

Huge disappointment.

Actually, the product they should build is an ebike. They should buy Weel.[1]

[1] https://insideevs.com/news/614379/weel-evb-electric-concept-...

"Keep?" If it ever was at the forefront, those days are gone and fading fast.

Not sure we need yet another unaffordable luxury car brand.

I never know why this keeps getting downvoted, is HN really full of investors and not engineers? why do you want buy backs and not R&D?

Because Apple dropped 10 billion on car research which was an apparent fail.

Far simpler and cheaper to snipe startups where you know you are getting a proven product. That comes with a fresh batch of engineers in most cases who specialize in the tech so you skip a lot of the hiring/training steps.

If I had an R&D request it would be they train some machine models on their developer feedback and public feedback databases to give some guidance on where the real holes are and what people are actually hoping for.

I certainly never wanted a car from them… the whole Apple business model is reducing the moving parts to reduce product failures and a car would be a huge regression.

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