[HN Gopher] Apple reports third quarter results
___________________________________________________________________
Apple reports third quarter results
Author : mfiguiere
Score : 64 points
Date : 2023-08-03 20:31 UTC (2 hours ago)
(HTM) web link (www.apple.com)
(TXT) w3m dump (www.apple.com)
| yen223 wrote:
| "We are happy to report that we had an all-time revenue record in
| Services during the June quarter, driven by over 1 billion paid
| subscriptions..."
|
| What counts as a subscription? Because 1 billion feels incredibly
| high to me, like 1 out of 8 human beings has a paid Apple
| subscription?
| [deleted]
| tpmoney wrote:
| Or multiple people have more than one. Think news and fitness+,
| or iCloud and Apple TV. If you don't use more than 3 of their
| services subscribing to the bundle doesn't make much sense
| ZekeSulastin wrote:
| Haven't read the release, but I imagine they're referring to
| each component (i.e. iCloud, Music) as a separate subscription
| even if subbed to by the same user bundles notwithstanding.
| soneca wrote:
| I have their storage one and Apple TV+, does that count as 2?
| MBCook wrote:
| Apple has s lot of services. It's pretty easy to subscribe to a
| number of them.
|
| I wonder if Apple One counts as one service due to being a
| bundle or four(+) services for the parts.
| eclarkso wrote:
| Willing to bet a subscription is a service/person pair, not a
| person. E.g., a person with iCloud and Apple TV+ is 2
| subscriptions, and wouldn't be surprised if the Apple One (or
| whatever the bulk-subscribe thing is called) counts for all the
| individual services even if you only use say 3 of the 5 (or
| whatever the right counts are).
| what_ever wrote:
| I think that's pretty clear? They didn't say they have a
| billion subscribers...
| danbruc wrote:
| Never owned any Apple product so I have no clue what those
| subscriptions are, but could one person have several of them?
| And business phone?
| throwaway54_56 wrote:
| Subscription is a pretty generic term and it means the same
| with apple as it does everywhere else.
| wlesieutre wrote:
| The main subscription products are Music, TV, Arcade,
| Fitness, News, and extra iCloud storage.
|
| Don't know how they count Apple One subscriptions for this,
| it bundles all six of those into one package.
|
| I think AppleCare warranties are also sold as a subscription
| now, so those might be counted too?
| hahamaster wrote:
| They've subscriptions, not human beings. Some people have five
| subscriptions, some none.
| crazygringo wrote:
| > _There are more than 1.46 billion active iPhone users
| worldwide as of 2023._ [1]
|
| Given that some people have more than one subscription (e.g.
| iCloud + Apple TV+), it actually doesn't seem that crazy.
| Especially when the cheapest subscription is only $0.99/mo for
| 50 GB of storage, which a ton of people probably have since
| it's incredibly easy to blow past the free 5 GB tier for your
| iPhone backup.
|
| [1] https://www.demandsage.com/iphone-user-statistics/
| s0rce wrote:
| The backup seems to always try to backup more stuff to hit
| that limit forcing you to pay.
| planb wrote:
| That number still sounds crazy. They have to be counting
| third party subscriptions (from which they earn 30%) too
| here.
| [deleted]
| pertymcpert wrote:
| If it includes 3rd party 1B would not be high enough.
| [deleted]
| yen223 wrote:
| I know that iPhones are popular, but I didn't fully
| appreciate how insanely popular they are until I'm seeing the
| numbers laid out like this.
| treesciencebot wrote:
| Its incredible that "Services" brings as much revenue as Mac,
| iPad and wearables/accessories combined. I wonder what are the
| profit margins on services compared to traditional consumer
| electronics from Apple's point of view (they obviously need to
| sell both of them, since without hardware the software is not
| that useful but still it might incentivize them to subsidize the
| hardware like console makers in order to earn more from
| subscriptions).
| joegahona wrote:
| "Services" includes Apple TV+, Apple Music, Apple Arcade, Apple
| News, and iCloud+. I wish Apple broke out the subscriber or
| revenue numbers for each item in Services.
| PlunderBunny wrote:
| Does services also include the 'protection money' Apple gets
| from Google to keep Google as the default search provider in
| Safari? That's worth a few hundred million a year, isn't it?
| lapcat wrote:
| > That's worth a few hundred million a year, isn't it?
|
| More like $20 billion, perhaps up to 25% of all services
| revenue.
| https://www.fool.com/investing/2023/02/21/20-billion-
| reasons...
| stochtastic wrote:
| It also includes the Apple One bundle. I wonder if the
| bundles complicate that breakdown -- I certainly never use
| Apple Music or Arcade, and almost never TV+.
|
| Anecdotally, I cannot figure out how to cancel One without
| losing my iCloud photo library. As soon as I do figure that
| out, I'll be iCloud only.
| acer589 wrote:
| Your iCloud Photo Library is just storage. So just sign up
| for enough iCloud Storage to cover what you have now, and
| you're good.
| [deleted]
| lapcat wrote:
| Those may actually be the smaller part of services.
|
| Services also include the App Store, AppleCare, and the
| Google deal to be the default search engine in Safari, which
| is massive.
| guiltygods wrote:
| Apple TV+, Apple Music, Apple Arcade, Apple News, and
| iCloud+ will outpace the Appstore as they gain traction.
| They just have to ensure that they maintain quality.
| gochi wrote:
| There is no way that happens unless mobile game
| monetization is so severely regulated that studios switch
| gears entirely. Remember 70% of revenue of the App Store
| comes from games.
| tguedes wrote:
| Services also includes the amount that Google pays Apple each
| year to be the default search engine on iOS. It's estimated to
| be $15+ billion a year https://www.makeuseof.com/why-google-
| pays-apple-billions-of-...
|
| That's pure profit
| gordon_freeman wrote:
| I read somewhere a while ago (can't recall the source) that
| services has way more profit margin than their hardware and
| it's somewhere around 50%.
| jrockway wrote:
| I'm not really surprised. The profitability of services are why
| everything ships with a service these days. Users obviously
| prefer "pay once and use forever" for things like heated seats
| on their car, but there is just too much money left on the
| table to offer that as an option. Depressing, but that's market
| forces for you.
|
| Apple definitely got me on services with E2E encryption. I am
| happy to pay $0.99 a month to keep all my data in their cloud.
| I suppose I would be even happier if it was included for the
| life of my iPhone for free, though.
| quickthrower2 wrote:
| Keeping all your data on their cloud at least costs them
| every month, and cannot be feasibly offered as a lifetime
| purchase. A heated seat though?
| solomatov wrote:
| It's actually possible to do this. There's a thing which is
| called perpetual bonds, i.e. bonds which pay a fixed sum ad
| infinitum. Not surprisingly, they have a non infinite cost.
| (https://en.wikipedia.org/wiki/Perpetual_bond)
|
| If you add a perpetual bonds with a coupon equal to the
| service charge, and the service price doesn't increase, you
| could create a perpetual "free" iCloud offering. However, I
| think the main problem there aren't that many people who
| are willing to pay for it.
| twoodfin wrote:
| Automotive leasing is basically "personal mobility-aaS" and
| it's wildly popular.
|
| Decomposing that lease cost into a bunch of small feature
| pieces is really about better price discrimination + fewer
| "SKUs".
| helf wrote:
| [dead]
| jzl wrote:
| Why else do you think they're fighting tooth and nail to
| preserve their 30% App Store cut?
| lapcat wrote:
| Products: Net sales $60,584M - Cost of sales $39,136M = Gross
| margin $21,448M (35.4% of net sales)
|
| Services: Net sales $21,213M - Cost of sales $6,248M = Gross
| margin $14,965M (70.5% of net sales)
|
| https://www.apple.com/newsroom/pdfs/fy2023-q3/FY23_Q3_Consol...
| randerson wrote:
| I take full advantage of my iPhone 14 Pro's 48MP camera raw and
| 4K60 video formats. Which quickly pushed my iCloud into the 2TB
| plan at $120/year. Which seems cheaper than AWS S3. In my
| particular case, I'm nowhere close to using the full 2TB, which
| is likely where the profit comes from on that particular
| service.
| HDThoreaun wrote:
| taking 30% of other people's revenue is as close to free money
| as you can get.
| andy_ppp wrote:
| It's unbelievable really, I thought protection rackets and
| preventing shops from opening without payment would be
| illegal.
| lockhouse wrote:
| Unpopular opinion, but it's not like these developers are
| getting nothing from Apple out of this.
|
| Apple runs the modern digital mall. They provide the space,
| the signage, the discovery, they even handle payment for you.
|
| Also, small indie developers are only being charged 15% until
| they exceed $1 million. So the 30% you always hear about are
| the big fish that can afford it anyway.
| gnicholas wrote:
| > _They provide the space, the signage, the discovery_
|
| Signage and discovery are a joke. The App Store is littered
| with garbage, and even when you search for an app by name,
| you often get unrelated apps for pages and pages before the
| real app.
|
| > _Also, small indie developers are only being charged 15%
| until they exceed $1 million. So the 30% you always hear
| about are the big fish that can afford it anyway._
|
| This is a new development, which seems to have resulted
| only because of the pressure from regulators.
| lapcat wrote:
| > This is a new development, which seems to have resulted
| only because of the pressure from regulators.
|
| The 15% was actually part of the settlement of the
| lawsuit Cameron, et al. v. Apple Inc.
| gnicholas wrote:
| Thanks for the clarification -- I thought it was due to
| soft pressure, but you're right it was hard pressure as
| you mention.
| guiltygods wrote:
| > Signage and discovery are a joke. The App Store is
| littered with garbage, and even when you search for an
| app by name, you often get unrelated apps for pages and
| pages before the real app.
|
| That's what you get by making it is easy for anyone to
| develop and release apps. It is a very low barrier of
| entry. Almost anyone sitting at home can make an app and
| release it. If they release garbage to game the system
| and Apple blocks it, then there cries of draconian
| policies.
|
| Imagine the garbage that you will have to wade through
| when sideloading is forced upon them.
| gochi wrote:
| Somehow I have a hard time believing that the store being
| littered with junk comes from first timer app developers.
| what_ever wrote:
| The web still works...
| spywaregorilla wrote:
| No, it's because Apple sells the signage so that when
| people search for XYZ they instead get an ad for QQQ. The
| number of apps on the market has nothing to do with this.
| It's a monopolistic abuse. The only way to sell your apps
| is on a controlled platform where people with marketing
| dollars can put their name on top of yours when people
| search for your exact title.
| sneak wrote:
| Normal credit card processing is 1-3%. They are literally
| charging 10x market simply because they are the only game
| in town (due to bundling).
|
| They aren't providing 10x in value over basic card
| processing just by running the app store.
| epistasis wrote:
| Are they a credit card processor, or are they a store?
|
| What do you think the margin is at the mall?
| ribosometronome wrote:
| The only game town for what, though? Doing things on your
| iPhone?
|
| Most of the things Apple takes a 30% cut for are things
| that are very easy to do on other devices, it's just that
| people specifically want to do them on the iPhone. The
| most notable 30% case is with Fortnite but that's an
| excellent example of portability. There isn't really
| anything locking anyone to playing on iPhone except
| wanting to play on iPhone. Purchased skins and the like
| are all accessible regardless of where you purchase or
| play as long as it was linked to your Epic account.
| joejerryronnie wrote:
| Apple also controls all methods of transportation to the
| mall.
| ketralnis wrote:
| They also run the local government and ban any other malls
| from existing. Nothing could be more rent-seeking.
| Dig1t wrote:
| In this metaphor, another mall would be another platform,
| e.g. Android.
|
| Apple isn't stopping anyone else from creating a new
| platform, though it does seem pretty difficult.
|
| See: Samsung, Huawei, BlackBerry, etc
| slashdev wrote:
| There are two malls, Apple and Android on different sides
| of town. Both have a high level of foot traffic. There's
| a wide river with only one rickety old bridge joining the
| two halves of the town. People on the one side of the
| town almost never go to the mall on the other side of
| town. So both malls have a monopoly on their side of the
| town, and you have no choice but to pick one or both
| malls to setup your store and sell your wares. Both
| charge incredibly high rents, but then what choice do you
| have?
|
| There's just the two malls, and nobody has successfully
| started another mall in a decade.
| arcticbull wrote:
| Is it possible that on Android, where other malls have
| been permitted for a long time (and sideloading, too) -
| that there really just isn't much demand for another
| mall? Maybe they haven't been successful because nobody
| really wants to deal with another mall. Maybe this will
| be a complete no-op for Apple if they allow other app
| stores, too.
|
| If they allowed other app stores, I wouldn't make the
| move. I get a ton of value out of Apple's ecosystem,
| including - maybe _especially_ - the ability to see what
| subscriptions I have and cancel them with a single click
| without even interacting with the app vendor.
|
| idk what they'd have to do to make me move over, but man,
| it'd have to be demonstrably valuable - not just the same
| thing but different 3 feet over that way.
|
| [edit] What if I told you Amazon had its own Android App
| Store, and literally nobody cares. [1]
|
| [1] https://www.amazon.com/gp/help/customer/display.html?
| nodeId=...
| what_ever wrote:
| > Is it possible that on Android, where other malls have
| been permitted for a long time (and sideloading, too) -
| that there really just isn't much demand for another
| mall? Maybe they haven't been successful because nobody
| really wants to deal with another mall. Maybe this will
| be a complete no-op for Apple if they allow other app
| stores, too.
|
| Yes, that's exactly the reason Apple is not allowing
| other malls. /s If it's so harmless for Apple, why not
| just allow other malls?
|
| > If they allowed other app stores, I wouldn't make the
| move. I get a ton of value out of Apple's ecosystem,
| including - maybe especially - the ability to see what
| subscriptions I have and cancel them with a single click
| without even interacting with the app vendor.
|
| What makes you think other app stores can't do it? What
| if apps are cheaper on other app stores because other app
| stores don't charge 30% tax?
| ketralnis wrote:
| > idk what they'd have to do to make me move over, but
| man, it'd have to be demonstrably valuable - not just the
| same thing but different 3 feet over that way.
|
| - Since Apple is currently charging 30%, another app
| store might charge only 10% and so you might be able to
| get your spotify subscription for 20% less.
|
| - A provider of especially expensive software (say a CAD
| or Mathematica) might be unwilling to cede so much of
| their margin to anybody at all and may prefer to run
| their own single-item "store", making them the only place
| to get that particular item.
|
| - Same for especially inexpensive software. Open source
| game ports that don't want to pay Apple's developer fees.
| They may make so little margin that they aren't
| profitable at all with Apple's tax. New software may
| become sustainable to develop and distribute that isn't
| currently.
|
| - Porn. Emulators. Software that doesn't conform to
| Apple's capricious reviewers and gave up. The kinds of
| things that _are_ available on the jailbroken appstores
| currently.
|
| I'm glad you personally don't have a need for any of
| these things but that's hardly evidence that the market
| for it shouldn't be allowed to exist.
| highwaylights wrote:
| There's only another year to get out of it anyway.
|
| iOS will be allowing other stores in the EU before then,
| and it's hard to see other places not passing similar
| legislation when their citizens ask why it's allowed in
| the EU but not there.
| HDThoreaun wrote:
| Hey I'm not saying apple isn't providing value here, just
| that they're making unbelievable margins on the app store.
| Just guessing here but would not be surprised if just the
| app store ads cover all the app store expenses and then the
| 30% is pure profit.
| jbverschoor wrote:
| Credit card fees are somewhere between 0.5% and 2.8%
|
| So when do we start complaining about Nintendo, Sony,
| Microsoft, Spotify, etc. etc?
|
| They all take 30%+ margins on their platforms.
| ketralnis wrote:
| Since forever? It turns out that more than one thing can
| be bad
| what_ever wrote:
| Whataboutism... You can't argue for one issue by saying
| what about this other issue.
| lockhouse wrote:
| Game consoles are even worse because you usually have to
| buy special developer kit hardware. As far as I'm aware
| only Xbox lets you switch to developer mode on standard
| hardware.
|
| Also Google takes the exact same cut on the Play Store
| and yet Apple is still the one that usually gets singled
| out.
| bryanlarsen wrote:
| The top player is always the one singled out. For
| example, when people protest about excessive packaging
| for fast food packaging they protest McDonald's, not
| Burger King.
| ribosometronome wrote:
| Interestingly, that's not really what has happened here.
| In the Epic vs Apple case, iOS represented only 7% of
| Fortnite revenue while Playstation alone represented
| nearly 47%. All the platforms pretty much have 30%
| default markups, though.
|
| >Apple lawyers also took the dominance of consoles as a
| chance to ask why Epic Games has not sued Sony for the
| 30% fees it charges to Epic Games. (Sony is a major
| investor in Epic Games, and it recently put $200 million
| into the company.) Epic's lawyers' rebuttal was to point
| out the major differences between phones and game
| consoles, as well as the fact that Sony and Microsoft are
| more willing to negotiate than Apple. At one point,
| Sweeney said he would have taken a deal from Apple for
| lower commissions, if it had been offered. Sweeney also
| noted that most game consoles are sold at a loss and make
| money back from sales. Unlike phones, consoles are mainly
| used to play games. To Sweeney, this was a big reason why
| Sony and Microsoft's fees are more palatable.
|
| Read more at: https://www.newsobserver.com/news/business/
| article251156384....
| HDThoreaun wrote:
| I've been complaining about high margin service business
| for quiet a while now. The credit card business is
| especially problematic, we need to limit fees like the EU
| did asap.
| jonplackett wrote:
| While the AppStore was a meritocracy I think this could be
| fair comment.
|
| Now that you can pay your way to the top with a shitty
| spammy app and outcompete a good quality less well funded
| app, because search and discover ability are absolutely
| dire, I don't think it holds true.
|
| Being an indie developer used to be great. Now you just get
| a bit shafted by the system.
| summerlight wrote:
| If the number was something around 5~10%, your opinion
| would be more popular and I think Apple deserves that. But
| 30%, not so much.
| summerlight wrote:
| Not only 30%. Apple actually launched lots of competing
| services on their platform, which effectively means that it
| has a significant advantage in their product pricing.
| r0fl wrote:
| I believe Services margins are ~70%
|
| By far the highest of their entire product mix
| nyjah wrote:
| I wish Apple would make a handheld gaming device and make it work
| with steam similarly through the proton layer like Valve. I'm
| sorta hoping by putting this into writing it might bring it into
| existence.
| crazygringo wrote:
| You know, by this point is does seem like Apple could make an
| M2 chip extra-heavy on the GPU, like they have their
| Pro/Max/Ultra variants, package it in an Apple TV chassis, ship
| it with a controller, and have an instant Xbox/PS competitor if
| they could get gaming companies to target it as a platform for
| AAA games.
|
| I wonder why they don't, but I'm not a gamer. Is there
| something about GPU performance that still doesn't stack up?
| Does the violence of many AAA games go against their Disney-
| clean brand? Are there too many platform exclusives that would
| hamstring the effort? Is it just not in Apple's DNA? Or is
| console gaming just not profitable enough at the end of the
| day?
| wilsonnb3 wrote:
| Not sure they'd be able to compete with the performance loss
| from running Windows binaries via the Game Porting Toolkit
| (their proton like tool) and the x86 to ARM translation.
|
| Apple has been able to make a killer game console or handheld
| for a while but they just don't seem to care.
|
| All they really have to do is change the marketing around the
| Apple TV, put a controller in the box, and start courting
| developers to port their switch games...
| TheRealSteel wrote:
| I guess they'd encourage developers to officially port their
| games to native Apple Silicon, but have emulation as a
| backup.
| andy_ppp wrote:
| Will do healthcare and a car eventually right?
| lvl102 wrote:
| Apple hit a plateau. I don't think AR will be a meaningful driver
| of growth for awhile.
|
| Perhaps they make a big move and buy Disney.
| sircastor wrote:
| People suggest this a lot, but I think it's not a good fit.
| While some of Disney's profit centers would be a good match for
| Apple (Film and Television), others (Theme parks and
| merchandise) would be a lot of distraction. Disney's workforce
| is almost twice the size of Apple, and Apple is very protective
| of its work culture and how people function in the company.
|
| I think Apple much more prefers to operate as a partner to
| Disney
| jsight wrote:
| I really thought that the current lineup of Macbooks would be a
| big driver of growth for a while. Then again, the ones worth
| upgrading to are really expensive and that is probably keeping
| a lot of potential purchasers on older versions.
| spaceman_2020 wrote:
| Think they'll find growth in India, Indonesia and Vietnam
| lvl102 wrote:
| But that's more than offset by weakness in China.
| HDThoreaun wrote:
| eps up 5%, they're doing fine. I think it's much more likely
| that they go all in on partnering with a sports league,
| probably NBA, to be the sole carrier of their content. As far
| as I can tell the most impressive demo for the vision pro is
| currently live sporting events. I'm pretty sure apple tv's main
| reason for existing is to create content for their headsets.
| maverick2007 wrote:
| There's actually talk that they might pick up the media deal
| for the PAC 12 (if the conference exists in a week) so you
| might be right on the money there
| TheAlchemist wrote:
| PER is >30. For a company that size, with interest rates at
| ~5%, this is very high by historical standards.
|
| But then, we have Tesla and Nvidia which make them look like
| a bargain.
| KptMarchewa wrote:
| > eps up 5%
|
| Only because they buyback.
| HDThoreaun wrote:
| I don't really see how that's an excuse that's supposed to
| make me think the quarter wasn't successful. Such high
| margins are almost always due to market failures. Buying
| back enough shares that eps grows 5% a year is a good
| outcome for apple.
| comboy wrote:
| Their version of LLM should be fun, they have their silicon,
| they can make it local and integrate with the ecosystem.
| lvl102 wrote:
| Going by Siri, they are behind competition by a wide margin.
| vvvvtt340 wrote:
| I don't think Siri's quality is a good indication of
| Apple's ability to come out with a successful LLM product
| in the future.
|
| One thing I think about is how Alexa is apparently
| considered a failure at Amazon
| (https://arstechnica.com/gadgets/2022/11/amazon-alexa-is-a-
| co...). Alexa devices sell well but people only use them
| for trivial use cases that are hard to monetize.
|
| I speculate that Apple doesn't see a need to invest in Siri
| because the market has shown that digital assistants don't
| synergize with "services" that well.
|
| Additionally, I don't think that Apple will need to
| leverage the "Siri codebase" as a starting point for
| releasing a compelling LLM codebase - maybe voice
| recognition, but who knows.
|
| Apple has shown through other product launches that they
| will take a "wait and see" approach and release something
| when its ready.
| what_ever wrote:
| If that's the case, why do they keep releasing HomePods?
| Dig1t wrote:
| I agree, this will probably be more impactful than the Vision
| Pro. Making all their products way more useful. You can
| already run Llama on a Mac and it's pretty great. When Apple
| release theirs it will probably be a very nice experience.
| guidedlight wrote:
| iPad isn't doing very well. I wonder how they can fix that.
| ChrisArchitect wrote:
| "Services"? Sounds about right. Apple is/has been a media company
| for over a decade. The services that have come along like Cloud
| etc are just periphery things that support the main thing.
| arberx wrote:
| Before this report, people were paying 32x earnings for Apple.
| Which has grown roughly -1% in the last year.
| throw03172019 wrote:
| Waiting for someone to summarize the earnings, as always :)
| lapcat wrote:
| I think these charts are a good summary:
| https://sixcolors.com/post/2023/08/charts-apple-q3-2023-resu...
| pharmakom wrote:
| Less revenue, more profit. looks like the services strategy is
| working
| [deleted]
| jbverschoor wrote:
| P/E should be higher to reflect that
| queuebert wrote:
| So, in the limit, revenue will approach zero and profit will
| approach infinity?
| Brendinooo wrote:
| No, but it does make you wonder if some Ballmer-y future
| CEO decides that the margins of Services are more important
| than hardware sales, and chases some short-term gain from
| opening up iOS to commodity hardware makers.
| burnte wrote:
| Yes. According to my math by the year 2044 they'll have
| roughly $45/month in expenses (domain names), $400 trillion
| in revenue, and $580 trillion in profit.
| jsight wrote:
| I'm not sure how you arrived at those numbers, but I'm
| sure an LLM somewhere will agree with you soon.
| burnte wrote:
| :D
| loeg wrote:
| Not sure where you're going with this clearly silly
| question but if Apple could persuade its costs to be
| negative, yes, that would be good for shareholders.
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