All You Need Is a Cult Following: Apple’s $123.9bn Earnings

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Just when you think they’ve made more money than is conceivably possible… they go and make more money.

This week, Apple reported its first-quarter earnings of 2022. Between October to December last year, the company posted revenues of $123.9bn, which was up 11% on the year previous.

It’s hard to get your head around that number – particularly during a pandemic and global chip shortage; two events that have levelled many businesses and made it nearly impossible for others to get their products into the hands of customers.

How on earth does Apple continue to defy… well, everything?

What sold so well?

During the earnings call, Apple’s CFO Luca Maestri revealed that there had been “very strong customer response to our recent launch of new products and services”.

That hasn’t just impacted the company’s revenue, though. As Tim Cook remarked during his opening statement, the active install base of all Apple devices now stands at a record 1.8bn.

These are tricky numbers to get your head around, and they get more impressive when you break them down by product category.

This is how that huge revenue figure spreads across Apple’s arsenal of products and services:

• iPhone: $71.63bn (up 9%)
• Mac: $10.85bn (up 25%)
• iPad: $7.25bn (down 14%)
• Wearables, home, and accessories: $14.70bn (up 13%)
• Services: $19.5bn (up 24%)

iPad aside (that M1 chip hasn’t helped its black sheep status in the Apple Earnings Family, eh?), that’s quite a satisfying list if you’re an Apple exec.

The iPhone continues to be Apple’s darling, but boy does it have some interesting stuff nibbling at its heels.

The resurgence of the Mac thanks to Apple silicon and, finally, a refocused approach to the professional market, is clearly having quite an impact on sales. The product that started it all is finally making its way back up the ranks, which is a rather lovely thing to see.

Apple no longer breaks down its sales by product, therefore we have to make some educated guesses about the numbers above, but it’s fair to assume that the 13% growth in ‘wearables, home, and accessories’ will be influenced primarily by Apple Watch. You’ve got to sell a lot of HomePod minis and Apple TVs to start hitting the billions, after all.

The laser focus on health and fitness has clearly worked wonders for what was originally a confused, weird product. It’s why the Apple Watch is becoming almost as ubiquitous as the iPhone.

But that services figure is perhaps the most intriguing. It continues to climb at a rate even the iPhone can only dream of. There are, after all, only so many physical devices you can sell; the world is your oyster when it comes to layering service upon service for your existing user base.

I’m glad it’s growing at such a rate. Apple TV+, Apple Fitness+, iCloud’s expanding range of services, and, of course, the App Store, is the glue that holds the entire Apple ecosystem together.

This brings me to the reason Apple is making so much money.

The power of the Apple fanboy/girl

“Apple’s cult following will always buy the latest version of its flagship device,” explains Tom Johnson, Mindshare Worldwide’s chief digital officer.

He’s right. Sometimes, this stuff is ultra simple.

Apple generates a shedload of revenue each quarter because it has one of – if not the – most loyal fanbases on the planet.

They (and I include myself in that crowd) are knocked for being ‘fanboys’ or ‘fangirls’. They’re pointed at and laughed at for buying products that are allegedly overpriced and inferior.

Apple is late to market, copies others, and ties people into its all-or-nothing ecosystem. They focus on design rather than function. They charge more for certain products simply because they’re painted a different colour. They refer to the use of plastic on their phones as “unapologetic”.

They even lock down their devices, services, and operating systems to such a degree that users can only tweak and tailor them in ways that Apple sees fit.

It kinda works though, right?

Those loyal fans keep buying this stuff, regardless of price and any perceived shortcomings or pretentiousness.

Mark my words; the power of the fanboy and fangirl is what lies behind these humungous figures. And Apple knows this, because it isn’t really winning anywhere else.

Forever the outsider

During that record-breaking quarter, Apple shipped just 13% of computers in the US. During Q3 of 2021, it retained only 14% of the global smartphone market share.

By those numbers, Apple is still a small player, globally. But boy does it have the magic ingredient that every business desires: the loyal fan. More importantly, it has managed to scale that loyalty to epic proportions.

It doesn’t matter that Apple ships fewer computers or phones than other manufacturers – it has remained a cult hit, which is an incredibly tricky feat to achieve, let alone maintain for so many years.

The result of that in terms of revenue is eye-watering. Most businesses owners would give up a vitally important body part for just one of those product categories above. They’re all colossal businesses in their own right.

Apple fans are going nowhere, and as the company continues to innovate (no matter how slowly), they’ll continue to spend their hard-earned. That’s why these numbers won’t stop rising.