In the conference on November 2nd regarding the financial results of the fourth fiscal quarter of 2023, Tim Cook confirmed that Apple is “investing significantly” in Artificial Intelligence, anticipating significant advancements in their products that will incorporate generative AI. However, that wasn’t the only interesting piece of information. In addition to the figures related to revenue, profits, and dividends, the Apple executive answered some questions about the company’s plans in various areas.
A record quarter at several aspects and a significant outlook for AI at Apple
Apple began by announcing the financial results of the fourth fiscal quarter of 2023, ending on September 30, 2023. The company reported quarterly revenues of $89.5 billion, a slight decrease of 1% compared to the previous year, and diluted earnings per share of $1.46, representing a 13% year-over-year increase.
“Today, Apple is pleased to report a record September quarter revenue for iPhone and an all-time high in Services revenue,” said Tim Cook, Apple’s CEO. “We now have our strongest product lineup heading into the holiday season, including the iPhone 15 series and our first carbon-neutral Apple Watch models, a significant milestone in our efforts to make all Apple products carbon neutral by 2030.”
Later, during the question and answer session, when asked how Apple could monetize generative AI, Tim Cook declined to comment on the matter but assured that Apple is “investing significantly” in AI and there will be advancements in products involving generative AI.
In Apple’s journey in the field of AI and machine learning, it’s evident that these are foundational technologies integrated into every product the company releases to the market. With the arrival of iOS 17, features like Personal Voice and Live Voicemail were introduced. AI is at the core of these functions.
Going further, features like fall detection, accident detection, and ECG on the Apple Watch wouldn’t be possible without AI. Although they aren’t labeled as such, the underlying technology behind them is AI and machine learning.
In terms of generative AI, Cook admitted that there is work in progress. “I won’t go into details about it because we really don’t do that, but you can bet we are investing. We are investing significantly. We will do it responsibly. You will see advancements in products over time where these technologies are at the core of them.”
Service revenues, sales, Google, and more details
Moving to a more condensed format, here are the key data points from the quarterly results conference:
- Service revenues reached a historic record of $22.3 billion in the quarter, marking a 16% increase compared to the previous year.
- Throughout 2023, service revenues totaled $85 billion, compared to $78 billion in 2022.
- Revenue records were set in the App Store, advertising, iCloud, AppleCare, payment services, and video, as well as a record for Apple Music in the September quarter.
- iPhone sales revenues increased during the quarter to $43.8 billion, up from $42.6 billion in the same quarter the previous year.
- However, annual iPhone revenues decreased to $200.6 billion, down from the previous year’s $205.5 billion.
- The iPhone 15 models sold better than the iPhone 14, although there were supply constraints on the Pro models that impacted total iPhone revenues.
- Apple is ramping up production of the iPhone 15 Pro and Pro Max and expects to balance supply and demand by the end of the holiday quarter, anticipating revenue growth for the December quarter.
- Mac sales decreased significantly in the fourth quarter of 2023, with revenues of $7.6 billion, a 34% decline from the $11.5 billion in the same quarter the previous year.
- Total Mac revenues in 2023 amounted to $29.4 billion, down from $40.2 billion in 2022.
- Tim Cook expects an improvement in Mac revenues in the next quarter due to the introduction of new Macs with M3 chips.
- iPad revenues decreased to $6.4 billion, down from $7.1 billion in the same quarter the previous year.
- In 2023, total iPad revenues amounted to $28.3 billion, down from $29.3 billion in 2022.
- With no new iPad releases in 2023, a significant year-over-year slowdown in performance is expected.
- Revenues from wearable products decreased to $9.32 billion in the quarter, down from $9.65 billion in the same quarter the previous year.
- Annual revenues for the wearables category decreased to $39.9 billion from the previous year’s $41.2 billion.
- Apple increased its investment in R&D to $30 billion in 2023, an increase from the $26.3 billion in 2022.
- This increase is due to investments in Vision Pro, artificial intelligence, machine learning, and Apple silicon development.
There was also time to discuss Vision Pro, Apple’s highly anticipated upcoming release set for a few months from now, as well as other details about the company’s status.
- Apple reported a new historical record in its active installed base of devices across all its products and geographic segments.
- The shopping experience for the Vision Pro is going to be unique, requiring customers to visit the company’s stores for demonstrations and personalized assembly.
- Tim Cook reaffirmed Apple’s commitment to Apple silicon development, expressing satisfaction with the transition and its benefits, ruling out the purchase of generic components.
- Tim Cook reaffirmed Apple’s commitment to the development of Apple silicon, expressing his satisfaction with the transition and its benefits, ruling out the purchase of generic components.
- Without going into specific details, Cook acknowledged the importance of Apple’s relationship with its partners, including the agreement with Google to be the default search engine for Apple products. He emphasized that Apple makes “decisions that we feel are most beneficial for users.”
Tim Cook’s comments during the conference provide a glimpse into Apple’s future ambitions. The investment in generative AI could open up new possibilities for the future of Apple’s products and services, from enhancing multimedia content to more advanced health and safety features. Beyond that, we are looking at intriguing results that can only become more exciting as we approach the holiday season.
