On February 1st local time, Apple released its first quarter financial report for the 2024 fiscal year. Data shows that Apple's revenue in the first quarter reached $119.575 billion, a year-on-year increase of about 2%, and a year-on-year increase after four consecutive quarters of decline; The net profit was 33.916 billion US dollars, a year-on-year increase of 13%.
Among them, product revenue was 96.458 billion US dollars, service revenue was 23.117 billion US dollars, and service revenue continued the growth in the fourth quarter of 2023. Apple CEO Tim Cook said, "Apple's revenue growth this quarter is mainly driven by iPhone sales, and its service business revenue has also reached a historic high."
Although Apple's all-new MR headset Vision Pro was launched last year, the new product has not made a significant contribution to Apple's performance in the wearable category as it has not yet been available for sale in 2023. With the launch of Vision Pro in 2024, the industry is also observing its explosive power in the future.
Regarding the rapid development of generative artificial intelligence, Cook stated that Apple has invested tremendous time and effort in driving its progress in the field of artificial intelligence, and will announce specific details later this year, continuing to invest in technologies such as AI that shape the future.
IPhone revenue growth
From the perspective of product line classification, the iPhone business had a revenue of $69.702 billion in the first quarter, accounting for 58% of the overall revenue, a year-on-year increase of about 6%; The Mac business revenue was $7.78 billion, a year-on-year increase of approximately 0.6%; The revenue of the iPad business was 7.023 billion US dollars, a year-on-year decrease of about 25%, indicating a significant decline. The revenue from wearable devices, homes, and accessories was 11.953 billion US dollars, a year-on-year decrease of about 11%; The service revenue was 23.117 billion US dollars, accounting for 19%, with a year-on-year increase of about 11%.
It can be seen that the core revenue pillar, iPhone, achieved growth and also boosted the revenue for the quarter, exceeding analyst expectations. In terms of market share, Apple ranked first in both the global and Chinese markets in 2023. Besides mobile phones, the computer business has also slightly increased, which is in line with the trend of PC recovery. However, the tablet business has declined severely. Last year, Apple did not release a new iPad, while other hardware products are also declining.
On the other hand, Apple's software services have maintained rapid growth, which is also Apple's second growth curve. According to Counterpoint Research's Apple 360 service data, service products will become the fastest-growing part of Apple, expected to account for about a quarter of the company's total revenue by 2025 at a double-digit growth rate, or $100 billion.
Apple's overall performance is still improving. Counterpoint Research told 21st Century Business Herald reporters that Apple's total revenue in 2024 is expected to exceed $400 billion, and its ecosystem is becoming increasingly sticky, entering a "revenue super growth cycle".
Although Vision Pro has not yet been included in the financial report, the industry maintains high sales expectations. Guo Minggui, an analyst at Tianfeng International Securities, pointed out that it should not be difficult for the Vision Pro to reach 500000 units in shipment this year. However, there is still room for improvement in the production efficiency of the Vision Pro. Therefore, since the start of mass production, Lixun Precision has been working overtime to offset the impact of production efficiency on shipment volume.
Neil Shah, Vice President of Research at Counterpoint Research, also believes that due to supply shortages, Vision Pro is expected to only ship hundreds of thousands of units this year, and its sales share in the global XR market is not significant, but its revenue share will perform well.
Looking at regional revenue, Apple's net sales in the Americas market were $50.43 billion, accounting for 42%, a year-on-year increase of about 2%; The net sales revenue in the European market was 30.397 billion US dollars, accounting for 25%, with a year-on-year increase of about 10%; The net sales revenue in Greater China was 20.819 billion US dollars, accounting for 17%, a year-on-year decrease of about 13%; Japan's net sales amounted to 7.767 billion US dollars, a year-on-year increase of approximately 15%; The other Asia Pacific regions amounted to $10.162 billion, a year-on-year increase of approximately 11%.
Among the five core regions, only the Greater China region experienced a significant decline in revenue, while the other four regions showed varying degrees of growth. Cook attributed part of the decline in the Greater China market to the US dollar exchange rate and stated that among the six best-selling smartphones in the Chinese urban market, Apple accounted for four.
However, there are also opinions that Apple will face greater challenges in the Chinese market in the future. Guo Minggui predicts that the shipment volume of Apple phones in the Chinese market will continue to decline, mainly due to Huawei's return and folding phones gradually becoming the preferred choice for high-end users to switch phones. And he pointed out in the latest supply chain survey that Apple has lowered its 2024 iPhone shipments for key upstream semiconductor components, with an estimated shipment volume of about 200 million units, a decline of 15%.
End side AI first year launched
Among Apple's business lines, the most closely watched is undoubtedly the phone with the highest revenue share. In 2023, the mobile phone market continued to decline, and although Apple was affected, it continued to grow against the trend and gained more market share.
According to data from research firm Canalys, the global smartphone shipment for the entire year of 2023 was 1.14 billion units, a decrease of 4% compared to 2022. In the ranking of major mobile phone manufacturers in terms of shipment volume, Apple ranked first in the year with a market share of 20% and a shipment volume of 230 million units; Samsung, Xiaomi, OPPO, and Transsion ranked second to fifth with market shares of 20%, 13%, 9%, and 8% respectively, as well as shipments of 230 million, 150 million, 100 million, and 90 million units.
And this is also the first time Apple has defeated Samsung in the global market, reaching the top spot in annual shipments. At the same time, Apple's market share also reached a historic high in 2023. Nabila Popal, Research Director of IDC's Global Tracking Team, stated that Apple's continued success and resilience are largely attributed to the growing demand for high-end devices. Driven by active trade in discounts and interest free financial installment plans, high-end devices currently account for over 20% of the market.
Beyond Apple's ascent, smartphone manufacturers such as Xiaomi and Transsion, which excel in cost-effectiveness, have also shown high shipments in the global market. Transsion, which focuses on incremental markets such as Asia, Africa, and Latin America, achieved rapid growth in 2023 and entered the top five in global shipments. Sanyam Chaurasia, senior analyst at Canalys, commented, "The recovery of emerging markets led the market rebound in the second half of the year, narrowing the decline in the global smartphone market. Transsion and Xiaomi benefited from the rebound in these mass markets and achieved remarkable year-on-year growth in the fourth quarter."
At the same time, in 2024, Huawei and Honor are also continuously striving to compete in the global market, and the competition among top mobile phone manufacturers is becoming more intense. It is worth noting that in multidimensional competition, generative AI has become an important growth point targeted by major mobile phone manufacturers, and is also a new trend in the development of smartphones.
Toby Zhu, Senior Analyst at Canalys, concludes: In 2024, investing in end-to-end AI at the high-end and expanding shipment scale in the mid to low end will be two major strategies implemented by smartphone manufacturers in parallel. AI will gradually rise from differentiation at the initial product level to an overall strategy at the operational and company levels, involving all smartphone manufacturers. Samsung will adopt generative AI as its long-term product strategy, and Chinese manufacturers such as Xiaomi, vivo, OPPO, and Honor have also taken the lead in releasing AI in the local market A flagship model with generative AI capabilities
Guo Minggui also stated that Samsung has raised its 2024 shipment volume for the Galaxy S24 series by 5% -10%, benefiting from better than expected demand due to highly integrated AIGC features. However, Apple has lowered its iPhone 15 shipment forecast for the first half of 2024, and he also expects Apple to only have differentiated AIGC applications in 2025.
In the 2024 smartphone market insight report, IDC pointed out that the use of AI big models on smartphones is expected to break the lack of innovation in the smartphone market for many years, and the demand for higher hardware performance is also conducive to driving some users to switch phones. However, the actual usage scenarios of AI large models are not yet clear, and voice assistants are still the main means of implementation.
2024 is regarded as the first year of end-to-end AI, and the AI application and ecosystem in smartphones will be a key point for fierce competition among mobile phone manufacturers.