Annotating Tim Cook’s Remarks on the Q2 Analyst Call

From Six Colors’s transcript of Apple’s financial results conference call:

Keep in mind, as we described on the last call, in the March quarter a year ago, we were able to replenish iPhone channel inventory and fulfill significant pent-up demand from the December quarter COVID-related supply disruptions on the iPhone 14 Pro and 14 Pro Max. We estimate this one-time impact added close to $5 billion to the March quarter revenue last year. If we removed this from last year’s results, our March quarter total company revenue this year would have grown. Despite this impact, we were still able to deliver the records I described.

Excuses are cheap, but this really is a credible explanation.

We continue to feel very bullish about our opportunity in generative AI. We are making significant investments, and we’re looking forward to sharing some very exciting things with our customers soon. We believe in the transformative power and promise of AI, and we believe we have advantages that will differentiate us in this new era, including Apple’s unique combination of seamless hardware, software, and services integration, groundbreaking Apple Silicon with our industry-leading neural engines, and our unwavering focus on privacy, which underpins everything we create. [...]

Turning to Mac, March quarter revenue was $7.5 billion, up 4% from a year ago. We had an amazing launch in early March with the new 13- and 15-inch MacBook Air. The world’s most popular laptop is the best consumer laptop for AI, with breakthrough performance of the M3 chip and its even more powerful neural engine.

This doesn’t sound to me like a man about to announce iPad Pros with M4 chips. The present-tense “industry-leading neural engines” to me says Apple feels good about the AI capabilities of the devices already in our hands. What makes for a good “AI computer” are the very same things that make for a good computer, period.

However, we still saw growth on iPhone in some markets, including mainland China, and according to Kantar, during the quarter, the two best-selling smartphones in urban China were the iPhone 15 and iPhone 15 Pro Max.

It’s somewhat interesting to me that those are the two iPhone models: on the consumer side, the smaller-display iPhone 15; on the pro side, the big-display iPhone 15 Pro Max. The cheapest iPhone 15 model and the most expensive one.

Thursday, 2 May 2024