On February 2, Apple released its Q1 financial report for fiscal year 2024. Due to Apple's special fiscal year calculation method, this financial report actually reflects the performance of Q4 2023. Overall, Apple's report card performed well, with revenue and profit growth, bidding farewell to the decline in the first three quarters of 2023.
However, under the more detailed data under this financial report, there are still some hidden concerns. Apple's revenue in Greater China has declined significantly, and the proportion of iPhone's revenue contribution has risen, and the revenue of iPad and other business segments has decreased sharply year-on-year. For the next year, Apple may have to make adjustments in its product and marketing strategy.
iPhone是救命稻草,iPad摆烂收恶果
According to the financial report, Apple's Q4 revenue was $119.6 billion, a year-on-year increase of 2%, and a profit of $40.3 billion, a year-on-year increase of 12%. Among them, iPhone contributed $69.7 billion, accounting for more than 58%. For a technology giant like Apple, which focuses on all-round development, it is not a good thing that the proportion of mobile phone business is too high.
For more than a decade, Apple has been diversifying its business, reducing the iPhone's share of revenue. But it's clear that Q4 data shows that Apple's dependence on iPhones has increased again this quarter. As a comparison, in Q4 2022, the iPhone's contribution to revenue is about 56%.
(Source: Apple)
It needs to be admitted that the iPhone 15 series is still a big hit in the market despite the fact that there are a lot of negative reviews on the internet. IDC data shows that in Q4 2023, iPhone shipments will reach 80.5 million units, a year-on-year increase of 11.6%, and Apple is the world's most sold mobile phone brand. The hot sales of the iPhone 15 series played a crucial role in Apple's Q4 revenue growth.
(Source: IDC)
In contrast, Apple's other businesses have not fared so well, and iPad revenue has fallen by 25%. This is actually not difficult to understand, because Apple has not updated any iPad products in the whole year of 2023, and it is not easy to have a revenue of $7 billion under such a bad behavior.
At present, most of the tablets on Apple's official website are released in 2022, including the iPad Pro, iPad Air, and the entry-level iPad, and the last update of the iPad mini was in 2021.
(Source: Apple)
Frankly speaking, the iPad still has a strong advantage in the high-end field, and the hardware and system ecology are irreplaceable to a certain extent. It's just that new products that are not updated in normal iterations will have obvious negative effects on the market.
What's more, Android manufacturers have made a lot of moves in the tablet market in the past year, with flagships, mid-range, and entry-level tablets emerging, and brands have also made a fuss about productivity, office and other scenarios, and have made various attempts on tablets. For many people, iPad is no longer the only option when buying a tablet.
The Chinese market, which has been rolled to the extreme, has frustrated Apple
Apple's just-released financial report data also has an obvious minus - the revenue in the Chinese market has declined significantly. Specifically, in Q4 2023, Apple's revenue in Greater China will be $20.8 billion, down 13% year-on-year. Compared with the growth of overall revenue, Apple's decline in the Chinese market is a bit glaring.
The importance of the Chinese market to Apple is self-evident, with Greater China accounting for more than 17% of revenue in Q4. In addition, in Q2 2023, data released by TechInsights shows that China has become the world's largest single market for iPhones, and shipments have surpassed the United States for the first time. IDC data shows that in Q4, Apple's mobile phone shipments in the Chinese market were about 14.72 million units, accounting for about 18.30% of the global market.
（图源：TechInsights）
In his earnings call, Cook blamed the failure in China on "overall economic issues," stressing that "we occupy four of the top six smartphone sales in urban China." However, Cook's explanation is not convincing. After all, judging from the statistics of IDC and other institutions, China's smartphone industry picked up in Q4 and ushered in growth as a whole, but iPhone shipments fell by 2.1% year-on-year.
(Source: IDC)
In addition, at the beginning of 2024, Apple held a rare price reduction promotion for the Chinese market, with a maximum drop of 800 yuan. Although Apple has participated in Double 11 and 618 events before, it is only through the platform of Tmall. And this "New Year discount" is carried out by Apple on the official website and offline Apple Store, which undoubtedly reflects Apple's concern about the reduction in demand.
On third-party platforms, we can feel the price reduction of Apple products such as the iPhone 15 series. Three months after its launch, the price of some iPhone 15s has dropped by more than 1,000 yuan. So, although the Apple Q4 has achieved good sales results in the Chinese market, many of them have discounted their prices.
It is worth noting that in Q4 2023, Huawei re-entered the list of the top 5 shipments, with a sales increase of 36.2%. With models such as the Mate 60 series, Huawei has returned to the king in China's high-end market, and it is an established fact to seize Apple's market share.
There is no doubt that China is the single market with the most volume in the global mobile phone industry, and the involution of the major Android head brands in technology, products, and prices is staggering. In the past year, domestic manufacturers have carried out a lot of technological innovation in mobile phone products, and have created a number of high-end flagship products, which can compete with Apple in terms of performance, image, screen, materials and other aspects.
Judging by the results, Apple maintained its lead in the Chinese market, but the results did not meet expectations.
Apple needs to open up more growth tracks
Over the past few years, Apple's "de-iPhoneization" strategy has yielded some results. Today, businesses other than the iPhone can contribute more than 40% of Apple's revenue. In Q4, Apple's services business continued to grow the most, up 11.3% year-on-year to $23.1 billion, more than iPads and Macs combined. However, the growth potential of Apple's current business can almost be seen at a glance, and Cook needs to open up a new growth track.
In 2023, the most innovative product released by Apple is undoubtedly the Vision Pro. Apple's headset has previously opened pre-sales in the U.S. market, and the official release time is February 4 local time. In the post-earnings conference call, Cook mentioned the Vision Pro again to highlight Apple's continued efforts in innovation.
At present, the first criticism of Vision Pro by foreign media has been released. For Vision Pro, the shortcomings that everyone complains about mainly include heaviness, poor battery life, many bugs, and insufficient ecology. In terms of advantages, the Vision Pro has a powerful configuration that can bring a high sense of immersion. But overall, the Vision Pro is still the only one of its kind in consumer XR products.
(Source: Apple)
According to a report by MacRumors, Apple sales staff revealed that the Vision Pro has sold more than 200,000 units in about 10 days after it opened for pre-order. According to Ming-Chi Kuo's previous prediction, the annual sales of Vision Pro in 2024 can reach about 500,000 units. If this forecast is accurate, Apple will be able to earn more than $1.7 billion this year through Vision Pro. Such a revenue is a bit insignificant compared to Apple's overall revenue. But XR is an industry with broader prospects, and headsets like the Vision Pro are pinning on Apple's hopes of opening up new markets and finding new growth points.
So, what new tracks can Apple find outside of the Vision Pro? Car building was once regarded as the business that can bring the most incremental growth to Apple, but it is clear that Apple's car building has taken too big a step forward, and the vision of redefining the car is somewhat unrealistic. With the departure of key technical backbones, Apple's car-making business has been at a standstill.
Before that, AirPods and Apple Watch can be regarded as Apple's successful innovative products, which not only bring new growth points to Apple, but also open up a new market. However, whether such a successful case can be replicated in the future requires Apple to maintain its advantages in the accumulation of innovative technologies and market demand insights.
Write at the end
On a business level, Apple is clearly one of the most successful tech companies in all of 2023. In the past four quarters, Apple's overall revenue has basically only declined slightly, and profits have increased for several quarters. Moreover, in the mobile phone industry, Apple also won the world's first sales throne for the first time. Clearly, Apple's strategy of maximizing profits has worked, and the goal of guiding users to buy more expensive products has been achieved.
Of course, for most ordinary users, Apple is still a company that can continue to make excellent products. In the next year, the iPad and AirPods product lines are expected to be updated, and the Vision Pro may be sold in more markets.
It's just that there are still some problems behind Apple's beautiful financial report card. The iPhone suffered a setback in the highly competitive Chinese market, with overall revenue plummeting. According to a recent report released by PerfectRec, the main model of the iPhone 15 series, the iPhone 15 Pro, user satisfaction continues to decline due to problems such as battery life. The EU's upcoming Digital Market Plan has also posed unprecedented challenges to Apple's long-held closed iOS ecosystem.
Under the new growth pressure, how to open up more new tracks may be the next problem that Apple will focus on.