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News › Apple

Apple

Notes from Apple’s Q4 2016 earnings call

Last updated: May 16, 2021 2:02 pm UTC
By Jesse Hollington
Notes from Apple’s Q4 2016 earnings call

Kicking off Apple’s investor conference call following the company’s announcement of quarterly numbers for Q4 2016, Apple CEO Tim Cook noted that the quarterly results were strong and near the top of the guidance that Apple provided for the quarter. Cook said that the iPhone continues to see year-over-year improvements compared to the last two quarters, and that iPhone sales are up year-over-year in 33 of the top 40 markets where the iPhone is sold. Fiscal 2016 also saw more customers switching from Android to iPhone than ever before, Cook said, and Apple saw a record-setting quarter for services, with revenue growth accelerating to 24 percent, reaching 6.3 billion dollars, with Apple Music doing particularly well. Cook noted that Apple Pay recently launched in Japan, Russia, and New Zealand and will be coming to Spain in the next few months; Apple Pay volume is up 500 percent year-over-year and in fact September saw more Apple Pay transactions than all of fiscal year 2015 put together. Cook also spoke about the release of iOS 10, hailing many of the new features but notably pointing out that Apple has seen a “marked increase” in iMessage users since the release of iOS 10, likely due to the new features available in the Messages app.

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Notes from Apple’s Q4 2016 earnings call

Cook also touched on HomeKit, noting that we can expect over one hundred HomeKit-compatible products to be on the market by the end of this year, all reviewed and approved by Apple to help ensure customer security when using them.

During the Q&A portion of the call, Cook was asked to comment on rumors regarding the Apple Car project, particularly what he feels is a unique advantage that Apple could add in the automotive space. Not surprisingly, Cook responded that he can’t comment on rumors, but that Apple obviously looks for things that they can do to enhance the user experience, and made some vague and somewhat evasive comments about what Apple might be able to hypothetically bring to the car industry, and that there are lots of opportunities there and that he feels it’s an “interesting space.”

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Asked about Apple’s significantly increased R&D budget as compared to sales numbers in recent years, Cook responded that there are certainly a number of products in the pipeline that have not yet been announced, but emphasized that Apple is “confidently investing in the future” which is the reason for the increased R&D spending.

Asked about demand in China, Cook noted that looking at the full FY 2016, Apple has seen a 14 percent downturn in Chinese revenue growth year-over-year — however, the overall two-year increase is still greater than the downturn. Cook explained that in 2015 a surge of upgraders came into the Chinese market for the iPhone 6 and iPhone 6 Plus models, and that upgrade rate increased relatively more in Greater China than elsewhere around the world.

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The upgrade rate returned to a more normal level in 2016, which was akin with what Apple saw with the iPhone 5s the year before, so it had further to fall. Cook explained that this is the main reason that we can see a difference between FY 2015 and FY 2016 numbers, however he mentioned that looking forward the response to the iPhone 7 and iPhone 7 Plus has been very positive in China, although he notes it’s hard to gauge demand right now as Apple is “selling everything it’s making” but he believes that Apple is returning to growth in China this quarter, and Apple remains “very bullish on China.”

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Asked about Siri and artificial intelligence in light of Apple’s focus on privacy, as well as his thoughts on the importance of a dedicated “home assistant” versus just using the iPhone, Cook responded that “most people would like an assistant with them all the time” and that we “live in a mobile society” so that’s ultimately where Apple’s priority has been in developing Siri. Cook acknowledges that there’s a “nice market” for a home assistant, but that the usage of the assistant on the iPhone is “likely much greater.” Cook noted that with iOS 10 and macOS, Apple is now getting two billion requests per week for Siri. To the best of Apple’s knowledge they’ve shipped more assistant-enabled devices than anybody out there, and that the company’s focus on this continues to be worldwide, not only on a U.S. focus.

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