Apple CEO Cook: iPhone Demand 'Strong,' But Mac And iPad Falter

While touting the rising sales for iPhone, services and wearables in Apple's latest quarter, CEO Tim Cook made no mention of sagging iPad and Mac sales results while speaking during a quarterly call Tuesday.

Apple CFO Luca Maestri blamed the sales drops for Mac and iPad upon "difficult" year-over-year comparisons, with newly updated MacBook Pro and iPad Pro models launching earlier in 2017 than this year.

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Overall, Apple said that its third quarter of fiscal 2018, ended June 30, saw record revenue of $53.27 billion. That's up 17 percent from $45.41 billion during the same period a year earlier.

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The results were mostly driven by Apple's iPhone and services businesses.

While iPhone unit sales grew only 1 percent during the quarter—to 41.3 million—revenue grew much faster thanks to the higher-priced iPhone X, which starts at $999.

Third-quarter revenue for the iPhone business jumped to $29.91 billion, representing 20-percent growth from a year earlier.

The iPhone "had a very strong quarter," while iPhone X "was the most popular iPhone in the quarter once again," Cook said during the call with analysts Tuesday.

"We could not be happier that it has been the top-selling iPhone since the launch," he said. "So we feel terrific about iPhone X."

Services, such as the App Store and Apple Music, "had a stellar quarter," Cook said. Services rose by 31 percent year-over-year, to $9.55 billion for the quarter.

Wearables—including Apple Watch and AirPods—rose more than 60 percent year over year, with Apple Watch seeing growth in the mid-40 percent range during Q3, Cook said.

Sales of iPad and Mac didn't help the growth surge during Apple's third fiscal quarter, however.

The Mac line generated revenue of $5.33 billion and the iPad line saw sales of $4.74 billion during Q3—which was down 5 percent from the same period of 2017 in both cases.

Mac unit sales fell even more sharply than revenue, by 13 percent, to a total of 3.7 million Mac units shipped during the quarter.

The quarterly results did not include any contribution from Apple's update in July to the MacBook Pro with Touch Bar, which improved the performance, keyboard and display of both the 13-inch and 15-inch models.

The upgrades for the latest MacBook Pro models were "past due and necessary," said Jim Harryman, founder and CEO of Kinetic Technology Group, a Mac-focused MSP and member of the Apple Consultants Network based in Dallas.

Apple, he told CRN in an interview, made the MacBook Pro updates "in such a way that they really gave high-end users more flexibility from the laptop line."

Harryman noted that the new MacBook Pro, which offers up to 32 GB of RAM for the 15-inch model, is one of the few notebooks out there other than bulky gaming laptops with that amount of available memory.

Reports that Apple is planning to refresh more of its Mac line this fall, including with a new version of the Mac Mini, also bode well, he said.

"I think that they're spending some more time and effort and research on the [Mac] products that've been ignored," Harryman said. "I think it will certainly bring the Mac product back a little more to the forefront."

Meanwhile, during the third fiscal quarter, Apple reported net income of $11.52 billion, or earnings of $2.34 per diluted share. That's a significant increase from the same quarter of 2017, when Apple's net income came in at $8.71 billion, or earnings of $1.67 per diluted share.

During the quarterly call Tuesday, Cook also addressed the tariffs imposed on Chinese exports by President Donald Trump's administration, and China's response with tariffs of its own against U.S. goods.

Apple's leadership believes that tariffs ultimately show up as a "tax on the consumer" and result in lower economic growth, Cook said. None of the tariffs so far have directly affected Apple, and the company is currently evaluating whether proposed additional tariffs might do so, he said.

Still, "we're optimistic, as I've been the whole time, that this will get sorted out" between the U.S. and China, Cook said.