However, Apple also reported that it sold 45.5 million iPhones in the quarter, down from 48 million in the same quarter last year and marking the third-straight quarter of year-on-year declines in sales of its flagship device.
The future of Apple is not about the future of iPhone. As Yahoo Finance wrote, it is about whether the company will create something customers don’t even know they want yet. The problem is that Apple faces some self-imposed challenges that are hindering this process.
A pointed question that UBS’ Steve Milunovich put to CEO Tim Cook on Apple’s earnings conference call isn’t likely to make anyone confident Apple is on the path to creating game-changing products. As Business Insider’s Kif Leswing flagged a few days ago, Milunovich asked Cook about whether the company had a "grand strategy" that goes beyond just selling more iPhones. The answer from Cook was, more or less, "No."
"We have the strongest pipeline that we've ever had and we’re really confident about the things in it," Cook said. "But as usual, we’re not going to talk about what's ahead."
A pipeline of products is not a strategy for creating new ones, and selling tens of millions of iPhones — and millions of iPads and millions of Macs — is a viable path towards remaining a big cash-generating company, but not a strategy to remain the most admired, most innovative company in the world. Apple is not going to remain “Apple” by selling iPhones in perpetuity — if this is the path forward, Apple becomes Coca-Cola.
But it was Milunovich’s follow-up question that gets more to the heart of an issue that has defined, but now shows signs of hampering, Apple’s success: its organizational structure.
"In terms of your approach I guess to new products, do you have a strong sense of where technology is going and where you’re going to play?" Milunovich asked. "Or is it still enough up the year that you are willing to react fairly quickly, which arguably your organization allows you to do for the size of company you are?" (Emphasis added.)
Cook replied simply that, "We have a strong sense of where things go and we’re very agile to shift as we need to."