Apple sells fewer iPhones than expected, but revenues and ASPs jump on iPhone X

Apple's iPhone revenues jumped in its most recent quarter, largely due to the $1,000 price tag on its iPhone X. (Jackdaw Research)

Apple sold fewer iPhones overall than many on Wall Street had expected, but the company’s iPhone revenues and average selling prices jumped significantly due to the $1,000 price tag on the company’s new iPhone X. The results appear to show that Apple enjoyed solid sales of the iPhone X, though reports have indicated that Apple may reduce production on the device due to slowing sales.

For the final quarter of 2017, Apple said it sold 77.3 million iPhones, a figure that’s 1% lower than the year-ago quarter and also below Wall Street analysts’ projections of 80.2 million.

Apple blamed that shortfall in part on the shorter quarter this year compared with the same quarter a year ago (13 weeks versus 14 weeks a year ago). The company released its iPhone X in November; in previous years, Apple has sold its new iPhones in September.

However, Apple’s iPhone average selling price in its most recent quarter was $796, significantly ahead of expectations and a figure that’s roughly $100 higher than Apple’s ASPs from a year ago.

The WSJ reported this week that Apple plans to make about 20 million iPhone X handsets in the first quarter, down from roughly 40 million initially planned.

“It has been our top-selling phone every week since it launched,” Apple CEO Tim Cook said during the company’s earnings conference call with analysts today.

Cook did offer a few additional details into Apple’s iPhone business, though he stopped short of confirming the WSJ article or providing hard numbers for Apple’s iPhone X sales when compared with other Apple iPhone products like the iPhone 8 and 8 Plus.

“The revenue growth from iPhone across all the geographic segments was in the double digits,” Cook said, noting that Apple’s average weekly sales indicate 22% growth in its iPhone business. “It was a stellar quarter for iPhone.”

“Since the launch of iPhone X, it has been the most popular iPhone every week since, and that is even through today, through January. And so we feel fantastic about the results,” he said, noting though that Apple’s other iPhones also sold well. “In urban China and the U.S., the top five smartphones last quarter were all iPhones. … In a market as large as the smartphone market is, people want some level of choice.”

Concluded Cook: “We feel fantastic particularly as it pertains to the iPhone X.”

Apple executives also offered insights into other areas of the company’s business:

Apple Watch and other wearables: “It was our best quarter ever for the Apple Watch, with over 50% growth in revenue and units for the fourth quarter in a row and strong, double-digit growth in every geographic segment,” Cook said. “Sales of Apple Watch Series 3 models were also more than twice the volume of Series 2 a year ago.” Apple said that its revenues from wearables—like its AirPods and its Apple Watch—were up almost 70% year over year.

Guidance: Apple said it expects to report revenue of between $60 billion and $62 billion in its upcoming quarter, a figure that is below the $65.9 billion that analysts on average had expected, according to Bloomberg.

Augmented reality: Apple said it now counts 2,000 ARKit-enabled apps in its App Store. “Augmented reality is going to revolutionize many of the experiences we have with mobile devices. And with ARKit, we’re giving developers the most advanced tools on the market to create apps,” Cook said, though he declined to speculate on what Apple might do in the space in the future.

Installed base: Apple said it now counts an active installed base of devices reaching 1.3 billion. “That’s an increase of 30% in just two years, which is a testament to the popularity of our products and the loyalty and satisfaction of our customers,” Cook said in a statement.

Financials: Apple posted record quarterly revenue of $88.3 billion, a figure that’s up 13% from the same quarter a year ago. And the company’s profits beat analyst estimates.