Tech giants battle it out, but Google takes the lead
The battle of the tech giants was on again this week when Apple released its results for the three months to September, a week after rival Google did the same, and for roughly the same period.
The iPhone maker said it made $42.1 billion (about R462.3 billion) in revenue, a 12% increase on the same period last year. This was less than Google’s 20% increase in revenue, which came in at $16.5 billion.
Apple CEO Tim Cook had to field questions from unhappy analysts in a conference call on Monday, especially about flagging sales of the iPad tablets. Although Cook said the company was “working hard” to fill orders for the new iPhone 6 and 6 Plus models as fast as possible, and Mac revenues were up 18%, Apple’s published results showed iPad sales dropped 13% year-on-year.
Cook said Apple had sold 237 million tablets in four years. “That’s about twice the number of iPhones we sold over the first four years of iPhone,” he said. He dismissed the dip in sales as a “speed bump”.
Another issue was the company’s decision to lump Apple Watch and Apple Beats into a new reporting category called “other products”.
In May, Apple announced a $3 billion deal to buy Beats Music and Beats Electronics from music icons Jimmy Iovine and Dr Dre, giving it access to premium headphones, earphones and speakers, as well as audio software technology, music and music subscriptions.
Analysts had predicted huge sales for the Apple Watch, which will start shipping early next year, and were surprised by Apple’s decision to lump it with other accessories.
Cook said Apple’s competitors were looking for that information and it was better for the company to aggregate it.
Google still makes most of its money from advertising, which accounts for more than 88% of revenue. But its Play Store – where users can shop for apps, games and books, and in some countries, movies, music, and digital newspapers and magazines – is beginning to make a stronger showing.
Google finance chief Patrick Pichette told analysts Google’s nonadvertising revenue grew 50% year-on-year to $1.8 billion “driven by growth mainly from the Play Store but also complemented by an increase in licensing revenue”.
Omid Kordestani, its chief business officer, said he expected non-ad revenue to increase.
“We’re seeing remarkable momentum in our newer non-ads businesses whether it’s Play, Hardware or Google For Work,” he said.
Its expensive foray into hardware ownership has come to an end with the January sale of its Motorola business to the Lenovo Group for $2.1 billion. In that quarter, Google wrote off $185 million from the business. Google has retained most of the Motorola patent portfolio, which Lenovo will get a licence for – meaning that Google will ring up more licensing revenue.