The good news for Apple shareholders is that the company again beat expectations, earning $11 billion in its fiscal second quarter of 2017. While iPhone sales fell less than 1 percent compared with the same period last year, and Macs rose a bit over four points, the stain on the record is the iPad family. Cupertino's tablets fell 12.98 percent with 8.92 million units, and you have to go back to the first quarter of 2011 to find such low numbers.
Let's clear up any doubt before we begin: Apple is swimming in money. Beyond some questionable decisions regarding hardware designs and configurations, it's not hard to imagine Tim Cook, executives, and shareholders jumping into pools full of bills in the style of Scrooge McDuck. The latest official report indicates that the Cupertino giant has $250 billion in the bank, and to be honest, it's burning a hole in their pocket. Rumors of major acquisitions soon appeared, with candidates ranging from Tesla to Netflix, including AMD and ARM.
Now to the numbers: For some time, Apple has been a phone and services company. If we combine the iPhone with the iTunes-App Store-iCloud-Apple Music bundle, we find they represent more than 76 percent of revenue for fiscal second quarter of 2017 (first of the calendar year). Technically, iPhone sales fell 0.84 percent, but its specific revenue rose 1.19 percent, suggesting a push toward more expensive models. As for the iPad situation, all arrows point down. Tablet sales plummeted 12.98 percent compared with the same quarter last year. It's the third consecutive year of decline, though Tim Cook didn't hesitate to defend its sales, reporting good progress in the United States, Japan, and Australia. It's the rest of the world that isn't buying iPads, and we must ask why.
First, hardware cycles are longer. The iPad 2 (2011) stopped receiving updates in August 2016, and even with a discontinued operating system, the vast majority of apps work very well. Second, the main movement in the tablet market is in devices under $250, a category to which the iPad simply doesn't belong. And then there's the "phablet effect" mixed with a pinch of saturation. Devices with 5.5-inch or larger screens (including two generations of iPhone) are eating part of the tablet pie, and OEMs may be slow, but they're not asleep. At the end of the day, it's a "sales problem" that other companies would kill to have. 2017 will be very important to see the evolution of the iPad. Has it hit its ceiling, or can it bounce back?
