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Apple defies law of large numbers by booking bang-up iPhone sales

Gregg Keizer | Jan. 29, 2015
Sells nearly 75 million iPhones, 46 percent more than ever before, on the backs of the new iPhone 6 and 6 Plus.

Apple yesterday said it sold a record 74.5 million iPhones in the December quarter, a record that bested the old by a whopping 24 million -- close to the entire quarter's sales in April-June 2012.

iPhone sales were up 46% compared to the December 2013 quarter, which until Tuesday was Apple's best-ever.

"Apple defied the law of large numbers," said Ezra Gottheil, an analyst with Technology Business Research, referring to the already-huge base of iPhones, the impressive sales of a year prior -- 51 million -- and the inherent difficulty of doing anything but nudge such a big needle.

"Everything came together for them for the iPhone this quarter. The supply chain was executed perfectly, they pretty much met demand, and they launched the larger models," said Gottheil. "It was all in sync."

CEO Tim Cook called the iPhone numbers "staggering" and "hard to comprehend" during yesterday's earnings call with Wall Street.

Revenue generated by the iPhone topped $51.1 billion, another record -- 58% higher than the previous set in the December 2013 quarter -- and accounted for 69% of the company's total revenue of $74.6 billion, yet another record. The iPhone's prior share maximum of 57% had been set in 2014's first quarter.

In other words, more than two-thirds of Apple's revenue came from the iPhone, with the other legs of its sales stool -- the iPad and Mac -- contributing just 12% and 9%, respectively. The Mac share was an all-time low, while analysts had to backtrack to Q1 2011, less than a year after the iPad's launch, to find a three-month stretch where the tablet did so little, percentage-wise, for the bottom line.

Apple launched its latest iPhones in September, bumping up the screen size of the mainstream iPhone 6 and debuting a so-called "phablet," the 5.5-in. iPhone 6 Plus.

Although some had wondered whether Apple had missed the big-screen bus -- especially in China and other parts of Asia, where phablets are particularly popular -- that wasn't the case.

"This 74.5m in iPhone sales tells us that this was not true," said Ben Bajarin of Creative Strategies on Tech.pinions today (subscription required). "Apple didn't lose customers and, more importantly, they increased their base of new users by anywhere from 15-18m based on my estimates."

Greater China, a sales region Apple defines as the People's Republic of China, Hong Kong and Taiwan, put $16.1 billion on Apple's bottom line during the December quarter, 22% of the total and a year-over-year jump of 70%.

iPhone sales in China were double that of the year prior, Apple said.

"The numbers show that Apple was able to get a high conversion rate from other high-end smartphones there," said Gottheil about Apple's China business. "They've managed, unlike Samsung, to create something that's an object of desire."

 

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