Apple is about to share its first financial report since last year’s iPhone 12 launch.
Andrew Hoyle / CNET
Apple’s iPhone is already one of the most popular consumer products ever. And normally, it’s a safe bet that when Apple makes major changes to the phone’s design, as it did with the iPhone 12, sales go into overdrive. But last year it was anything but normal.
In February, Apple warned that sales and production of its products may have been impacted by the coronavirus. Soon after, economies around the world slid into recession and unemployment rates soared as the pandemic disrupted our way of life and kept us locked in our homes.
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On Wednesday, Apple is expected to release sales and earnings data for the holiday shopping season, which typically runs from October to December. That period has been particularly busy for Apple, including launches of its highly anticipated iPhone 12 with 5G wireless and new laptops and desktops. The company also expanded its services with the $ 10-per-month Apple Fitness Plus digital health-class service and the Apple One package price, offering access to TV, music and data storage services starting at $ 15 per month.
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Wall Street analysts expect on average that this will all translate into $ 1.40 per share in profits on $ 102.76 billion in sales, according to surveys published by Yahoo Finance. This equates to a 12% increase in profits and 16% in sales, compared to last year. And all this despite the overwhelming COVID-19 pandemic that is still ravaging communities around the world.
“Overall, a strong year for the iPhone looks likely,” Bernstein analyst Toni Sacconaghi wrote in a message to investors last week. He added that the iPhone 12 Pro is still overdue in most major markets except the US and France, despite being launched in October.
If Apple were to report such strong sales, it will likely be seen as a benchmark for the broader tech sector, whose companies became even more powerful during the pandemic.
Other companies that have made big gains in the past year include Amazon, which has seen “record demand” in the past year, and particularly during the holiday shopping season when people switch to online shopping. Google and its parent company, Alphabet, have also surpassed Wall Street’s rosy expectations as marketers spend a lot to get people’s attention online. And Slack, the business collaboration app, was sold to software giant Salesforce for $ 28 billion, nearly double its value before it went public in 2019.
People rushed to buy new computers and subscribe to collaboration tools like Slack, Zoom, and Microsoft’s Teams to work and learn remotely. Most students continue to attend classes via video chat. And despite the success in vaccine development, daily life is not expected to return to normal for another year.
Smartphones have also become even more essential, as they have become the all-rounder device for work, life and entertainment. Industry observer analysts IDC predict smartphone shipments will increase 9% this year, thanks in part to new flagship features like 5G.
Lower prices are also helping to stimulate demand. While Apple’s iPhones didn’t drop in price last year, operators like AT&T, Verizon, and T-Mobile have offered hefty discounts to push people to 5G.
It helps that Apple’s latest iPhones have received positive reviews. CNET reviewer Patrick Holland named the iPhone 12 among the most popular CNET phones of all time, a sentiment shared by many other technology reviewers. “5G support, a striking new design, improved cameras and four different models add up to make the iPhone 12 an absolute unit,” Holland wrote in his review.
Last year, Apple released four models of the iPhone 12, as well as its cheaper iPhone SE.
Andrew Hoyle / CNET Shinier Apple
Consumers acquiring new iPhones mean more opportunities for Apple to attract people with its music, TV, games and news services, all powered by its hardware.
Apple has also caught the attention of the tech world with its computers. The company has announced a new line of computers powered by chips similar to its iPhones and iPads. The M1 chip, as Apple calls it, was designed to deliver higher performance using shorter battery life than the Intel chips Mac computers have run on since 2006.
“In our view, the iPhone 12 has been Apple’s most successful product launch over the past 5 years.”
Katy Huberty, Morgan Stanley
This is one of the reasons many analysts say they expect all of Apple’s businesses, including iPad, Mac and services, to grow.
“Apple’s portfolio has been positioned better than ever for the recent holiday season,” wrote Brian White, analyst at Monness Crespi Hardt.
What’s not so clear is how much each of Apple’s businesses will grow, and its services in particular.
The company’s $ 5-per-month Apple TV Plus service hasn’t attracted the same attention as the $ 7-per-month or $ 15-per-month Disney Plus service HBO Max. Both subscription services, launched in the last year or so, have attracted people with new installments of famous brands. Disney had The Mandalorian from its Star Wars brand and WandaVision from its Marvel division, which have helped it attract more than 86 million so far, far more than any other new service. HBO relied on corporate cousin Warner Bros., who released her new movie Wonder Woman 1984 online on December 25.
Netflix, meanwhile, continues to reign as the largest streaming service, with over 200 million subscribers.
But even if Apple’s services don’t attract everyone’s money, devices like the iPhone will continue to be one of the primary ways people look at them.
“In our view, the iPhone 12 was Apple’s most successful product launch in the past 5 years,” wrote Katy Huberty, an analyst at Morgan Stanley.
We’ll find out on Wednesday if it’s true.
Next: Read our iPhone 12 review.
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