With Apple set to report second quarter earnings on Tuesday, observers will be watching for two big trends:
How far will hardware sales fall? How much will growth in services close that gap?
There seems to be fundamental consensus that iPhone sales will decline this year, and iPad sales will continue to tumble as well. New-ish products like Apple TV and Apple Watch will help ease that pain, but probably not by much.
Instead, as Ben Thompson lays out in a lengthy post over at his Stratechery blog, Apple is hoping to transition away from hardware-driven growth to service-driven growth. He has a detailed explanation of the hows and whys of that and the challenges Apple faces. But in general, the trick for Apple is to get the people who already own its products to use more, and spend more on, services.
While we get regular reads on number of gadgets sold each quarter, what may be important over time is the size of that Apple user base. Apple CEO Tim Cook has repeatedly made the point in earnings calls that even if hardware sales are seeing slower growth or declining, the overall universe of Apple users continues to increase.
In a new report, Verto Analytics takes a stab at measuring that user base and giving some insight into just what it looks like.
Here are some of the most interesting data points from the report:
- Apple has 124.4 million users in the U.S. who accessed at least one of Apple’s online services (web or Apps) at least once last March. That means Apple reaches more than half of all adults.
- Looking at just iOS users, in March, the company had 91.3 million users. That breaks down to 73 million iPhones users and 54.3 million iPad users.
- Interestingly, 66 percent of iOS users are women.
- Among total PC installed base from Q1 2015 to Q1 2016, Macs (laptops and desktops) increased share by 1.9 percent, from 11 percent to 12.9 percent.
- iPhones grew 1 percent to represent 41.8 percent of the U.S. smartphones in use during that same time.
- However, somewhat alarmingly, iPads fell 1.9 percent to 38.6 percent. Remember, that’s not quarterly sales, that’s percentage of tablets in use.
- But…23 percent of iPads in use are iPad 2. If those are like mine, their performance has slowed waaaaay down in recent months and could finally be hitting the point of needing to be replaced.
- And, on a brighter note, Apple Watch’s share of wearable devices in use is at 17.5 percent.
- Also, Apple TV ticked up .5 percent to 16.5 percent of all streaming players in use.
“Relatively speaking, Apple is still doing well both in desktop/laptop computers and smartphones where they continue to gain market share even today,” said Dr. Hannu Verkasalo, CEO of Verto Analytics, in a statement. “For Apple to grow here in the U.S. and other developed markets, they need to successfully monetize their user base outside of the revenue streams coming from device sales and current Apple app store payments.”
Apple is looking at one of its toughest years since the release of the first iPhone in 2007. Hardly catastrophic, but a golden age of growth is at the very least hitting the pause button.
How much Apple can increase interest in services like Apple Music, Apple Pay, and iCloud in the coming months could determine just how rocky 2016 turns out to be.
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