Apple expects strong Mac growth but wearable deceleration in the holiday quarter

AppleInsider

Economic conditions and product release schedules caused the 34% Mac revenue decline year-over-year, but similar effects are expected to cause strong Mac growth in the holiday quarter.

Mac expected to see growth

Supply chain issues in 2022 led to a Mac sales spike in September 2022, which is the primary driver of the Mac revenue decline in Q4. Apple also released the 15-inch MacBook Air in June 2023, which also has an impact on the Q4 earnings.

According to Apple CFO Luca Maestri on the quarterly earnings call, the conditions that created the tough Q4 compare weren't present in the end of 2022, so the Mac will show strong growth for Q1 2024. Also, wearables will face a tough compare for Q1 since supply issues pushed device demand into the holiday quarter in 2022, which isn't present in 2023.

Both of these situations were created since initial demand and sales cause a spike in revenue at launch, but since supply wasn't available for these products at release, the revenue spike didn't come until later. Macs released earlier in 2022 gained supply traction in Q4 2022, while the Apple Watch released in September didn't gain traction until Q1 2023.

"Mac revenue was $7.6 billion, down 34% year-over-year, driven by challenging market conditions and compounded by a difficult compare in our own business, whereby last year we experienced supply disruptions from factory shutdowns in the June quarter, and were subsequently able to fulfill significant pent-up demand during the September quarter," said Maestri on the call. "We also had a difference in launch timing, with the MacBook Air launching earlier this year in the June quarter compared to the September quarter last year."

"We have great confidence in our Mac lineup and are excited about the recently announced iMac and MacBook Pro powered by our M3 chips," Maestri continued. "Our install base is at an all-time high, and half of Mac buyers during the quarter were new to the product, driven by MacBook Air. Also, we saw reported customer satisfaction of 97% for Mac in the U.S."

Year-on-year percentage change in Mac revenue

Apple's release

of the M3, M3 Pro, and M3 Max and new Macs in November will drive Mac revenue, plus Q1 2023 didn't have a difficult compare for the line. Customers that purchased the new devices start receiving them on Tuesday.

Read on AppleInsider

entropys

I know Apple is going for the upsell by only having 8GB RAM and 256GB storage in the base model with no possibility of aftermarket upgrade, but  it looks very much like in the pursuit of margins sales overall have gotten in a bad place.

perhaps sales might be goosed a bit if the base models were perceived as having a bit more value.

it seems Tim Apple has forgotten that not all Apple’s friends are Larry Ellison.

OctoMonkey

There have been many instance here on the forums where folks were quite vocal in their support of the limited amount of RAM offered in Apple Silicon.  Indicating with fast storage and memory swapping you don't need more RAM.  SoC RAM has value, but without external upgrade options it is a no-go for me.

aderutter

It just boils down to price, either you can afford the spec you want or you cant.

Poor people like to confuse and say they wish Apple would not make lower spec versions of their premium products; in reality they wish they could afford what they want.

In order to sensibly ramp up from Mn to Mn Pro to Mn Max to Mn Ultra you have to start at the low end.

For what it’s worth I bought the lowest spec M1 Mini just to test it out as a point of interest until the MBP was released. That 8gb / 256gb Mac Mini is now used daily by my son for all his college work, minecraft gaming, even Nvidia GeForce Now gaming. 

Marvin

entropys said:

I know Apple is going for the upsell by only having 8GB RAM and 256GB storage in the base model with no possibility of aftermarket upgrade, but  it looks very much like in the pursuit of margins sales overall have gotten in a bad place.

perhaps sales might be goosed a bit if the base models were perceived as having a bit more value.

it seems Tim Apple has forgotten that not all Apple’s friends are Larry Ellison.

The chart gives the wrong impression. The M-series Macs have sold huge amounts. When they launched in late 2020, there was a huge +70% spike in YoY sales. People who bought the M1 models won't need a new one for a while so subsequent YoY sales drop by comparison.

While the Mac upgrades are expensive, the majority of users don't need them. Total desktop users in the world are around 1.5 billion:

https://www.windowscentral.com/more-14-billion-devices-now-run-windows-11-or-10

Macs are around 150m.

One of the most common higher-end use cases is photo editing. Adobe has 30 million users. That's 2% of all users.
Another high-end use case is video editing. Apple said FCPX had 2 million users and similar apps will have less than this. That's < 0.5% of all users.
Software development is a higher-end use case but can be done on an 8GB/256GB machine and anybody doing it professionally can afford the higher spec.
Gaming needs good hardware and there are 150-200m gamers on Windows. This doesn't apply so much to Mac yet but the entry level hardware is > 3TFLOPs (PS4 Pro).

A 16GB/512GB 15" Air is $1699. That's not all that expensive and is enough for more than 98% of worldwide PC users.

People overestimate how many people buy higher-end Mac hardware. Macs over $3k are < 5% of the userbase.

tldr: Mac sales are down because loads of people already bought an M-series Mac and don't need another one and probably won't for a while (7-10 year upgrade cycle).

Cheaper upgrades would be nice of course but it wouldn't change these numbers.