Apple hits a billion services customers as iPhone sales fall, Amazon profits rise
Cloud bounce back
Amazon and Apple both reported quarterly this week. While Amazon posted better-than-expected profits, Apple saw iPhone and iPad sales decline as it shifts its focus onto services.
Like other hardware vendors, Apple has been hit by supply chain disruptions and global financial turbulence over recent quarters.
Apple reported a 1% decline in revenues in its third quarter to $81.8 billion, although it exceeded analyst expectations of $81.7 billion. Profits rose 2% to $19.9 billion, beating forecasts of a 3.6% decline.
iPhone sales fell 2.4% and iPad sales were down 20%. However, Apple's services business hit a record $21.2 billion in quarterly revenue, a rise of 8%, driven by more than a billion paid subscriptions, including from App Store sales and iCloud and Apple Music subscriptions.
Services carry substantially higher margins than devices and provide recurring revenue streams.
"Our services business is important in many ways for us," CFO Luca Maestri told the FT.
"It strengthens our ecosystem and it's important because it makes the overall business less dependent on the performance of our products," he added.
"We are happy to report that we had an all-time revenue record in Services during the June quarter, driven by over 1 billion paid subscriptions, and we saw continued strength in emerging markets thanks to robust sales of iPhone," said CEO Tim Cook in a statement, referencing continued strong sales in China and elsewhere.
AWS growth 'stabilised'
Amazon exceeded forecasts, largely due to AWS and rebounding consumer demand. The company's revenue rose 11% to $134.4 billion, exceeding estimates. Profits were also higher than expected.
AWS revenues grew 12% compared with 11% in April. The company has said that generative AI is contributing to renewed interest in its cloud services.
"Our AWS growth stabilised as customers started shifting from cost optimisation to new workload deployment," CEO Andy Jassy said in a statement.
Microsoft and Google also both beat Wall Street expectations last week with revenue growth of more than 20% in their cloud businesses, though both also said customers were still seeking savings on their existing cloud spending.