It sure looks like Samsung’s pain was Apple’s gain

Four million more iPhones sold in quarter, versus three million recalled Galaxy Note 7 devices.

iphone, apple, iphone 6, apple's success, apple's gain

Apple’s Gain:

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There’s an old saying that a correlation isn’t a cause, but in the case of Apple’s latest financial results, one sure is looking like the other.

The company on Tuesday reported first-quarter profit of $17.8 billion (U.S.) for the period ended Dec. 31 on what it called “all-time record” revenue of $78.35 billion. Driving the growth was record iPhone revenue and unit sales.

The results are noteworthy, not just because the iPhone accounts for the majority of Apple’s overall revenue and profit, but because the latest two devices – the iPhone 7 and 7 Plus – were greeted with something of a ho-hum upon their release in the fall.

A number of reports said the iPhone 7 was selling so weakly that Apple was cutting production, which is consistent with the iPhone’s overall performance throughout 2016. Even top supplier Foxconn has been hurting from the slide.

And yet, Apple says iPhone sales for the quarter were 78 million, up five per cent from last year, which is a resumption of growth after a relatively prolonged period of decline.

To what does the company owe the rather odd results?

One big correlating factor that might explain it is Samsung’s implosion – or perhaps more accurately, its explosion. The well-documented exploding Galaxy Note 7 fiasco – one of the top tech stories of 2016 – may well have been as much of a boon for Apple as could have been expected.

Nearly three million Note 7 devices were recalled, which is a lot of smartphone buyers looking for a replacement. It’s very possible that many opted to go with an iPhone, thus giving Apple its bump. Interestingly, Apple sold about four million more iPhones in the quarter than it did last year.

Again, it’s a correlation – but the numbers do seem to line up. It at least makes the question worth asking: Would Apple have done as well if its top competitor hadn’t shot itself in the foot?

It is worth noting that Apple also had a big first quarter last year – like most companies, it tends to do well during the Christmas period. But it then settled into three successive quarters of doldrums. There isn’t much reason to expect the pattern won’t repeat this year.

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