The iPhone, with Help from China, Bears More Fruit for Apple

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Feb 12, 2015

Record sales of iPhones helped boost Apple to its biggest profit in corporate history during the fourth quarter of last year.

Let’s take that in for a second: Apple just enjoyed a historic profit. A profit so large that it’s historic for Apple. And for big business in general.

Wow.

Published reports indicate that the company sold 74.5 million iPhones in the final quarter of 2014. That boosted Apple’s profit more than 37% to a whopping $18 billion. That’s even larger than Gazprom’s $16.2 billion, first-quarter profit in 2011 (the previous record by a corporation). Apple also enjoyed a staggering $74.6 billion in sales, almost 30% higher than the same period last year – the best quarterly revenue ever posted by the company.

Apple shares roses 5% during after-hours trading.

While Mac sales rose about 15%, to a record 5.5 million, and iTunes sales also hit a record high,  the real story here was the iPhone (Apple CEO Tim Cook has said the company sold an average of 30,000 iPhones every hour), as well as Apple’s massive inroads in China.

Although the iPhone is already the best-selling device of all time, during the fourth quarter it actually outsold some gadgets made by entire industries. For example, reports indicate that the whole TV industry sold fewer than 60 million televisions in the quarter, while the tablet industry sold about 54 million tablets. Shockingly, the iPhone nearly outsold the entire PC industry, which sold fewer than 84 million desktop computers and laptops.

Previously, Apple had never sold more than 51 million iPhones during a single quarter. But that was before its deal with China Mobile – China’s largest mobile provider – which went into effect during the first quarter of last year. That pact was a godsend for Apple: Its sales in China skyrocketed 70% last quarter. It marked the first time that the company sold more iPhones in China than in America.

Making such gargantuan inroads in China was once deemed impossible, even for Apple. Simply put, its brand did not hold the same appeal for consumers as Chinese smartphone makers like Lenovo, Huawei and Xiaomi. Those brands also discount their phones considerably, making them much more accessible to the average consumer than Apple makes the iPhone.

Additionally, Apple rolled out the iPhone 6 to other nations last quarter more quickly than it had in previous years, helping Apple increase its iPhone sales. The iPhone 6 is now available in 130 countries. The company has also announced that its supplier efficiencies helped it to manufacture 7 million more iPhones than it had planned to make during that quarter.

InfoTrends will continue to monitor Apple’s profits as the year continues. Let’s not forget: Cook announced last month that the Apple Watch will become available in April.

 

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