Mac Sales Crater: Down 34% Year-Over-Year, But Apple Is Optimistic

News
By Anton Shilov
published

Sales are down, but services thrive

Apple
(Image credit: Apple)

According to Apple's FY23 earnings call, sales of Apple's desktop and laptop computers were down 34% year-over-year in Q4 FY2023. Q4 of FY2022 was the most successful quarter for Macs ever, but this represents the fourth consecutive quarter of YoY declines for Macs. Apple remains optimistic about the future of its PCs as its M3-based lineup looks more competitive (and generally more expensive) than the previous-generation M2-powered family.

Sales of Macs and iPhones Disappoint

Sales of Macs totaled $7.614 billion in the fourth quarter of fiscal 2023 and $29.357 billion for the whole, year, down nearly 34% and 27% year-over-year, respectively. While the declines look dramatic, fiscal 2022 was a record year for Macs in general as the company sold huge amounts of its high-performance M1 Pro and M1 Max-based MacBook Pro notebooks and Mac Studio desktops. Meanwhile, the company faced major shipments constraints in Q3 FY2022, which is why Q4 FY2022 was the record quarter for Macs ever.  

"In Mac, revenue came in at $7.6 billion, down 34% year-over-year from the prior year's record quarter," said Tim Cook, chief executive of Apple, at the earnings call with financial analysts and investors (via SeekingAlpha). "This was due to challenging market conditions, as well as difficult compares against the supply disruptions and subsequent demand recapture we experienced a year ago." 

While comparison with Q4 FY2022 may be a bit off, there is another reason why sales of Macs decline: owners of Apple's PCs who wanted to get an Apple Silicon-based machine have already got one. Given that their M1-based desktops and notebooks are three years old at most, Q3 of calendar 2023 was not their time for an upgrade given mediocre performance difference between M1 and M2-series processors. Apple admits that only half of the Macs last quarter were bought by Mac owners, the rest of sales came from people who were new Apple customers.

"We have great confidence in our Mac line-up and are excited about the recently announced iMac and MacBook Pro powered by our M3 chips," said Cook. "Our installed base is at an all-time high and half of Mac buyers during the quarter were new to the product, driven by MacBook Air." 

Apple's iPad brought in $6.4 billion in revenue in Q4 FY2023, marking a 10% decrease compared to the same period last year. This downturn mirrors the situation seen with Mac sales in Q4 FY2022. Just like Macs, iPads were significantly impacted by supply chain disruptions in the June quarter, which led to an unusual spike in demand in the following September quarter as the pent-up demand was met.

But iPhones and Services Prosper

Apple's iPhone revenue saw an increase in Q4 FY2023, reaching $43.8 billion, a rise from the previous year's $42.6 billion. However, looking at the annual figures, iPhone revenue experienced a decline, falling to $200.6 billion from $205.5 billion the year before. 

While Apple's hardware business was a mixed bag both for Q4 FY2023 and for the whole year, the company's Services business thrived as the company's install base increased to two billion active devices. Revenue from services hit an record high, reaching $22.3 billion in Q4 FY2023 (up a 16% from Q2 FY2022) and 85.2 billion in FY2023 (up 9% from FY2022).

As Apple Increases R&D Spending to $30 Billion

Being the world's largest supplier of consumer electronics by revenue and the world's most valuable public company is a hard job. You not only need to meet customer's expectations, but also exceed those of investors. While Apple generally produces competitive and user-friendly products, it cannot force its customers to upgrade if subsequent models are moderately better than those on the market, especially amid economic downturn. Which is why some may consider Apple's results disappointing.  

But Apple still makes tons of money. The company earned $89.5 billion in Q4 FY2023 and $383.285 billion for the whole year. Despite lower sales, the company upped its research and development spending form $26.251 billion in FY2022 to $29.915 billion in FY2023, which makes the company one of the largest R&D spenders in the world.

Anton Shilov
Anton Shilov
Freelance News Writer

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

14 Comments Comment from the forums
  • Co BIY
    "Being the world's largest supplier of consumer electronics by revenue and the world's most valuable public company is a hard job. You not only need to meet customer's expectations, but also exceed those of investors."

    This is true for all companies and important to remember.
    Reply
  • Heat_Fan89
    The universe maybe infinite but our world and its business cycles are finite. You can't grow forever. Eventually you run out of new customers and have to rely on existing customers.

    The iPhone, iPad and Macs are all mature platforms. There's only SO much you can do with either of them. Case in point, the most exciting thing about the yearly released iPhone's are the new colors. There's no new exciting idea like Siri, selfie camera, rear camera, internet access, App store etc. It has already been done by Apple and copied by others.

    So the only options Apple has are incremental upgrades and new colors. A sign that Apple understands this, is that they now sell iPhone's for every buyer. So buyers now ask whether buying a new phone when there phone works just fine is justified. Then Apple is faced convincing customers with higher pricing in a turbulent economy. All of this can add to soft sales.
    Reply
  • NinoPino
    "...But Apple Is Optimistic", very strange.
    Reply
  • ezst036
    Apple will do just fine. Their sales are down because things have slowed. It's not that Apple is making bad products.
    Reply
  • Eximo
    M1 to M2 performance might have something to do with it. Don't need to upgrade for a minor improvement. Everyone is probably waiting for M3 devices.
    Reply
  • stonecarver
    Heat_Fan89 said:
    So the only options Apple has are incremental upgrades and new colors.
    Yeah I seen the new now with Titanium commercial. I find the love/ hate boyfriend video being pitched for the the latest iphone cooler then the product.
    Reply
  • Co BIY
    For some of us their haven't been any important innovations that justified a new phone since text messaging.

    I know I'm an outlier, and even I have an iPhone 13 because of upgrades when my employer changed providers. I find it adequate although I miss the 12 mini or SE I had before because of it's smaller size.

    Eventually every innovator is in a mature industry.
    Reply
  • bit_user
    Co BIY said:
    "Being the world's largest supplier of consumer electronics by revenue and the world's most valuable public company is a hard job. You not only need to meet customer's expectations, but also exceed those of investors."

    This is true for all companies and important to remember.
    Bah. You don't need to exceed investors' expectations. It's nice when you can, obviously, but you've got to have fools for investors if you're consistently exceeding their expectations.

    The real trick is how you simply continue growing such a large company. The bigger you get, the fewer markets represent worthwhile growth opportunities, as you begin to saturate your existing markets. That's why some people figured it was a foregone conclusion Apple would try to get into the automotive industry. Along those lines, I wonder how much bigger Apple will get, in the content production business.

    BTW, I'm a little surprised nothing was mentioned of the Chinese market. Didn't Apple recently have its first Apple Store closure, in China?
    Reply
  • watzupken
    Apple's optimism is likely going to last a quarter to 2 at most. The products they have been churning out are predictably lacking in innovation and boring. To add salt to the wound, the SOCs for iPhone, iPads and Mac have seen very marginal improvement in performance since the A14/15 and M1's release. They are faster mostly because of high clockspeed, and more GPU cores, which both likely will result in higher peak power draw even on 3nm.
    Reply
  • bit_user
    watzupken said:
    Apple's optimism is likely going to last a quarter to 2 at most. The products they have been churning out are predictably lacking in innovation and boring. To add salt to the wound, the SOCs for iPhone, iPads and Mac have seen very marginal improvement in performance since the A14/15 and M1's release. They are faster mostly because of high clockspeed, and more GPU cores, which both likely will result in higher peak power draw even on 3nm.
    Well, unlike the M2, the M3 is actually made on a new process node. So, I'm expecting to see a real performance improvement from that.

    Anyway, I don't really care if Apple falls back to Earth, a bit. As far as I'm concerned, they've done their part in showing that ARM is a viable mainstream computing platform and evangelizing the benefits of on-package DRAM.

    I do hope they continue to refine their AR tech, for at least a couple more generations, as I feel they're really breaking new ground in that area. You can laugh at their headset and its price all you want, but anyone familiar with the cutting edge of AR tech wouldn't dare say Apple isn't innovating there. For people who truly want/need AR, that's genuinely exciting. I no more likely to buy-in than I was for Microsoft's or Facebook's solutions, which I also skipped. I just want to see the tech continue to get improved.
    Reply