Apple’s core devices surge despite closed stores

Tech giant enjoys sales boom amid pandemic as customers get their fix online, finds Matthew Field

On March 13, Apple Stores around the world closed their glass panel doors and went into lockdown. But despite a near global closure of its retail outlets, Apple has seen sales surge with consumers seemingly unable to get enough of its premium technology.

On Thursday, Apple reported blockbuster sales amid the pandemic, despite global smartphone sales plummeting an estimated 20pc. Its revenues increased 11pc to $59.7bn (£45.6bn) with a profit of $11.25bn.

Tech giants have defied the Covid-19 turmoil. Between them, Apple, Amazon, Google and Facebook – which all reported financial results on Thursday – saw their market cap increase $230bn yesterday. Apple even overtook Saudi Aramco as the world’s biggest listed company during trading.

The results seemingly back up the belief, presented by Congress on Wednesday, that these tech giants are untouchable monopolies. Twitter boss Jack Dorsey has accused rival tech giants of “killing competing ideas”.

But unlike other technology firms, the iphone-maker has a major, traditional retail presence. With such strong performance, does Apple even need its thousands of retail outlets?

“Apple has seen strong sales online,” says Felicity Terry, an analyst at Kantar. “The new iphone SE launched during lockdown has significantly bolstered Apple’s online sales, particularly in the UK.”

Selling products in its physical stores is increasingly less relevant for Apple, although they remain a key branding and marketing tool.

But even with the stores closed, iphone revenue increased 1.7pc year-on-year to $26.4bn.

Meanwhile, revenues from its Macbook line-up and ipads grew 21.6pc and 31pc respectively, according to investment bank Baird, “driven by work-from-home benefits”.

Richard Windsor, a technology analyst at Radio Free Mobile, notes the closure of Apple’s retail outlets probably held sales back, but that had been “made up by the services business which now sports 550m paid subscriptions and grew 15pc”. He adds: “I suspect that a lot of retail sales that would have gone through stores went online instead.”

Such a strong performance has not been reflected across mobile retail. Carphone Warehouse’s mobile business swung to a £104m loss, with poor online sales during lockdown.

Geoff Blaber, an analyst at CCS Insight, adds that the latest results show Apple is positioned better than other traditional gadget retailers.

“Covid-19 has demonstrated Apple is a more diversified and resilient business than many gave them credit for,” he says.

Apple may have enjoyed another boost from the unique economics of the pandemic. Windsor, the independent analyst, notes that it is mostly cheap and budget phones that have collapsed, while the middle classes have remained free-spending.

According to research from Gartner, phone sales overall slumped 20pc in 2020 the first quarter. Samsung and Huawei both saw declines of more than 20pc.

The iphone giant still faces challenges. Its new device is expected to be delayed by “a few weeks”, the firm told investors on Thursday. While it is now worth nearly $1.7tn, even it will not be totally immune if the market corrects itself.

Windsor notes: “When the correction comes, Apple is as vulnerable if not more so than the rest of the market.”