Apple Thunders Forward with Record iPhone Sales

Apple Thunders Forward with Record iPhone Sales

Big numbers again for the Cupertino consumer electronics giant

In the quarter that saw the beginning of its biggest-ever set of product launches, Apple reported a record 33.8 million iPhone smartphones sold, with a net profit of $7.5 billion on revenues of $37.5 billion. But these heady numbers can't mask some troubling trends for investors, with concerns lingering that Apple has failed to break in to China, the biggest smartphone market in the world.

"We're pleased to report a strong finish to an amazing [fiscal] year with record fourth-quarter revenue," Apple CEO Tim Cook said in a prepared statement. "We're excited to go into the holidays with our new iPhone 5C and iPhone 5S, iOS 7, the new iPad mini with Retina Display and the incredibly thin and light iPad Air, new MacBook Pros, the radical new Mac Pro, OS X Mavericks, and the next-generation iWork and iLife apps for OS X and iOS."

Apple's numbers, as usual, are staggering. But many of its core businesses were surprisingly flat or down.

iPhone. In the quarter in which the firm launched two iPhone models for the first time ever—the iPhone 5S and iPhone 5C—Apple sold 33.8 million units, up from the 26.9 million it sold in the same quarter a year ago. That's stunning, but Samsung is doing even better: That firm sold an estimated 88.4 million smartphones in the same quarter.

iPad. Apple sold 14 million iPad tablets in the quarter, the same number as in the quarter a year ago. With tablet sales surging overall in 2013, the firm will need a big boost from the recently announced iPad Air and iPad mini Retina if it hopes to make up any of the market share it bled out this year: A year ago, iPad represented 65 percent of all tablet sales, but today the figure is under 30 percent.

Mac. Sales of the firm's Macintosh PCs fell from almost 5 million a year ago to 4.6 million in the most recent quarter, reflecting a wider trend in PC sales. Based on this number, Apple now controls 5.7 percent of the worldwide market for PCs. (PC makers sold 81 million devices in the quarter.)

iPod. Sales of Apple's media players fell 23 percent to 3.5 million units, down from 5.3 million a year ago. And though Apple didn't announce a new generation of iPods this year for the first time, it's worth noting that the lineup still dominates this market. There is essentially no iPod competition at all.

iTunes. Revenues in Apple's digital media service rose slightly from $3.9 billion a year ago to $4.3 billion, but Apple doesn't break down profits in the business, which is generally known to be break-even.

Investors voiced concerns about the firm's lackluster showing in China, where revenue climbed just 6 percent to 5.7 billion. Many had expected the long-rumored iPhone 5C, which mimics the look and feel (and even materials) of Nokia's low-cost Lumia smartphones, to come in with budget pricing there, as demanded by the Chinese market. But inexplicably, Apple is pricing the plastic iPhone 5C like a premium phone, and it costs even more in China than it does in the United States. As a result, consumers there—and elsewhere—have stayed away from the iPhone 5C in droves. And according to multiple sources, Apple has since cut orders of the device.

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