Apple, Inc. -- July 28,2021

From MacRumors overnight:

• double digit growth in iPhone upgraders and switchers in 3Q21 (June quarter);
• wearables, home, and accessories category sets new June quarter revenue record; almost $9 billion;
• services revenue reaches $17.5 billion; sets new all-time record;
• Apple's Mac and iPad sales continue to surge in June quarter; Apple Mac brought in $8.8 billion, up from $6.5 billion one year ago;

The two biggest Apple, Inc., stories:

• the number of folks switching from Android phones to iPhones
• services revenue

Most under-reported story: Apple is now inside Elon Musk's mind (Tesla's conference call). Does Elon know something about Apple's "car" project that the rest of us don't?

Hunch:

• iPad and Mac laptops will surge in August as public schools issue iPads to first-time kindergarten/first graders entering public school;
• huge re-supply for all elementary students returning to school this September;
• incoming college students have spent past few months putting together tuition plans, course schedule, transportation needs, etc., but now as we come close to moving into dorms, focus will be on new laptop computers
• we're going to see huge supply shortages of iPads and laptops by October, if not sooner; folks will accept whatever is left on the shelf and worry about upgrading to what they want later; if not shortages, delivery delays;

*********************************
Getting Into The Weeds

Highlights from the linked articles above.

iPhones:

Apple experienced "strong double digit growth" in the number of iPhone users who were upgrading an older device or swapping to an ‌iPhone‌ from an Android device, Apple CEO Tim Cook said during today's earnings call covering the third fiscal quarter of 2021. 

Cook said that it was the largest upgrade quarter for Q3 ever, and that the iPhone 12 upgrade cycle on the whole was "very strong." Sales of the iPhone 12 Pro and the iPhone 12 Pro Max were "particularly strong."

Going forward, Cook said that Apple feels "really good" about the future of the ‌iPhone‌ because 5G penetration remains "very low" and there's a lot of opportunity for sales growth in the 5G market. "We're in the very early innings of 5G," Cook said. "There are only a couple countries that are in the double digits."

Wearables:

The category brought in $8.8 billion, up 36 percent from $6.5 billion in the year-ago quarter. According to Cook, the category set a new all-time June quarter revenue record.

Wearables, Home, and Accessories includes the Apple Watch, AirPods, AirPods Pro, AirPods Max, HomePod, Beats headphones, and more. AirTags is in this category, and Cook said that the response to AirTag has been "enthusiastic" and "very strong."

Nearly 75 percent of customers who purchased an Apple Watch during the quarter were new to the Apple Watch, and Apple Watch is one of the main drivers of wearables revenue.

Services:

Apple's services category, which includes the App Store, Apple Music, Apple Pay, AppleCare, Apple TV+, Apple Arcade, Apple Fitness+, and more, saw another quarter of incredible growth according to Apple's earnings results for the third fiscal quarter of 2021 (second calendar quarter). 

Services brought in $17.5 billion during the quarter, up 33 percent from $13.2 billion in the year-ago quarter and up from $16.9 billion last quarter.

Cloud services, ‌Apple Music‌, advertising, video, and payments saw all-time revenue records, while the ‌App Store‌ saw a new June quarter revenue record.

During the earnings call announcing the results, Apple CFO Luca Maestri said that Apple's install base of devices hit a new all-time high as well, which helps drive services growth.

Apple now has more than 700 million paid subscriptions, which is up 150 million from last year, and is four times the number of subscriptions that Apple had four years ago.

Paid accounts on digital content stores reached a new all-time high across each geographic segment, and paid accounts increased by double digits. 

Mac and iPad:

Sales were just a bit down from the second fiscal quarter of 2021, when Apple's Macs brought in $9.1 billion in revenue. iPad revenue was at $7.4 billion, up from $6.6 billion in the year-ago quarter and again, just barely trailing Apple's second quarter earnings results.

The ‌iPad‌ had its best June quarter in nearly a decade, while the Mac set a new June quarter revenue record. Apple CFO Luca Maestri said the last four quarters have been the Mac's best four quarters ever.