Apple May Reveal Its Biggest Quarter Ever After IPhone 13, AirPods 3 And MacBook Pro Launches
Apple may reveal its biggest quarter ever after iPhone 13, AirPods 3 and MacBook Pro launches
Ever since Apple's value blew past a trillion dollars a few years ago, analysts and tech industry experts alike have frequently wondered aloud, "How much larger can it get?"
We'll get an answer Thursday, when Apple announces its fiscal first-quarter sales and tells us how many iPhones, Macs and other products it sold during the holiday shopping season. Apple has built a lot of its business around this period, timing product launches -- like those of its well-reviewed iPhone 13, its revamped MacBook Pro laptops, its latest iPads, AirPods 3 and the Apple Watch Series 7 -- to maximize sales as people hunt for gifts for family and friends. After the quarter's December close, investors pushed Apple's shares so high that the company's value topped $3 trillion for the first time, despite ongoing supply shortages for chips and other technology.
On average, Wall Street analysts expect the quarter to deliver new all-time financial records of $1.88 per share in profit on $118.38 billion in revenue, according to surveys published by Yahoo Finance. Though that's impressive, Apple isn't expected to show as much growth as it did in the 2020 holiday shopping season. That's when the iPhone 12, Apple's first 5G-compatible device, helped push the company's profit up 30%, while sales jumped more than 17%.
That wasn't all, though. Apple has continuously said over the past year that its Mac computers and iPads were seeing record demand as well, in part thanks to the company's highly anticipated new M1 "Apple Silicon" chips. That technology scored well among reviewers, including CNET's, who ran tests that showed performance improvements and increased battery life. "It was zippy," CNET's Andrew Hoyle wrote of using the new MacBook Pro to process high-detail photos.
Now analysts are broadly expecting 2021's holiday shopping season to mark another record for Apple.
"The performance seen by Apple in the quarter was despite an unprecedented chip shortage out of the Asia supply chain," Wedbush analyst Daniel Ives wrote in a Monday message to investors. Despite Apple's established position as one of the world's most highly valued companies, Ives says he still expects to see Apple's "renaissance of growth" continue and its shares "outperform."
An Apple spokesman declined to comment ahead of the company's earnings report.
CNET named the iPhone 13 an editors' choice.
Andrew Hoyle/CNETIndustry leader
No matter what Apple says in its financial report Thursday, the results will be seen as a bellwether across the tech industry, and potentially beyond. But that report may prove an outlier as other companies struggle with supply and worker shortages, disappointing already dour Wall Street investors worried by further inflation, COVID-19's continued impact on the world, and saber rattling between Russia and the US over Ukraine.
"Given resilient iPhone and Mac demand, we see Apple as a high-quality 'flight to safety' name to own during market volatility," Cowen analyst Krish Sankar wrote in a note to investors. He too labels Apple's stock at "outperform."
Apple has long operated one of the most successful supply chains, particularly as it navigated disruptions from the COVID-19 pandemic. Even so, Apple's executives have said they believe the company has lost out on billions of dollars in sales due to silicon chip shortages and manufacturing problems amid seemingly ceaseless demand.
Rod Hall, an analyst at Goldman Sachs, said he's "slightly cautious" about Apple's prospects, considering tech's continuing challenges with the global supply chain. In a note to investors, he warned that even though Apple may have been able to manage the chip shortages better than most, he'll be closely listening to executives as they give commentary on a post-earnings conference call.
Read more: US government warns that chip supply crunch remains dire
Apple has also largely escaped the scrutiny that tech giants like Alphabet (née Google) and Meta (née Facebook) have faced over how their respective advertising-heavy business models erode people's privacy and trust in big tech.
Whatever Apple announces Thursday, it'll come at a time when investors are questioning Big Tech's future. Netflix shares have plunged more than 35% this year, driven in part by the company's own predictions last week that it would add far fewer subscribers than expected in the first months of 2022. Electric-car giant Tesla's stock, meanwhile, plummeted nearly 28% from $1,199.78 per share at the start of the year, driven in part by the company's struggles to put out new cars.
The new MacBook Pro, released last fall, scored good reviews at CNET.
Dan Ackerman/CNETIt all comes down to the iPhone
The iPhone remains king at the Cupertino, California-based company, even as Apple fans and industry watchers dissect each of the company's new product lines and business moves.
Last year, the iPhone represented 52% of the company's $365 billion in revenue, a slight increase from the 50% it represented in 2020 and a slight decrease from the 54% in 2019. That's part of Apple's seemingly endless conundrum: Its position as one of the largest companies ever is tied to the iPhone's success.
Apple has tried to build on that success, announcing ambitious services offerings, including the $5 per month Apple TV Plus, the $5 per month Apple Arcade and the $10 per month Apple Fitness Plus. Its other iPhone add-on-type products like the AirPods headphones and Apple Watch wearable have performed well too, analysts say.
Rumors suggest that Apple's next big product launch will be a headset, potentially coming this year or next. Many tech executives believe that headsets from Apple, as well as those from Microsoft, Meta, Sony, Google and Magic Leap, could represent the next step in computing beyond the phone. And many companies have already begun preparing.
Apple's lineup of products is steadily growing.
CNETOver the past year, tech executives from game companies to social networking giants to, yes, even Apple have begun publicly discussing a new term for the types of experiences these headsets will make possible: the metaverse. That's a catchall description of apps and experiences people can share in connected virtual worlds like a video game.
The metaverse "is an attempt to redefine our entire relationship with the internet, from virtual communities to ownership of digital content. It snakes into gaming, cryptocurrency, NFTs, teleconferencing software and 3D scanning. It's... a lot," CNET's Scott Stein wrote about what he expects from the technology this year. "A year ago, nobody even talked about the idea of a metaverse. Now it's spread across countless news stories."
For Apple, though, the metaverse may represent more than the next step in computing: It may finally be the product to take the financial crown from the iPhone.
But don't expect CEO Tim Cook to spill the beans about his plans while speaking with analysts on a conference call Thursday. Those reveals are typically reserved for Apple's splashy events, whether in person or entirely virtual, as the events have been during the pandemic.
Apple CEO Tim Cook is typically tight-lipped on conference calls with analysts.
AppleInstead, when analysts and investors wonder how much larger Apple will get, what they'll mean is how many more iPhones can Apple sell, as well as maybe iPads, Macs, Apple Watches, AirPods and all sorts of other tech, including the company's (in)famous $19 polishing cloth.
"We'd expect a bullish installed base update," Morgan Stanley analyst Katy Huberty wrote in a message to investors, citing upbeat reports from Apple throughout the past year. Though she also rates Apple's stock at "outperform," she'll be listening for any other signs of how the pandemic and supply chain are affecting the company.
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This story is part of The Year Ahead, CNET's look at how the world will continue to evolve starting in 2022 and beyond.
In April 2021, I pitched a story idea to my editors: "How to cope with post-pandemic anxiety." As vaccines became widely available, I pictured parties with no masks, handshakes with no fear and all the other markers of a world going back to "normal." In this imminent post-pandemic future, I thought my biggest challenge would be re-adjusting to life outside my cocoon.
Half a year and several new COVID variants later, it has become clear that the very concept of "post-pandemic" requires re-examining. For starters, it's not clear what it means for a pandemic to end -- even scientists disagree on where to draw the line. And across the nation and world, there are wildly varying levels of coronavirus spread, vaccination rates and mitigation measures. In one state, day-to-day life may certainly feel post-pandemic, with little mask-wearing or social distancing. In a neighboring state, COVID may very much feel like a constant presence still.
Perhaps "post-pandemic" is like art: You know it when you see it. But however you define the end of the COVID pandemic, one fact remains true: It continues to escape our grasp. New, more transmissible variants push the light at the end of the tunnel back further and further, as does hesitancy around vaccines, and other factors.
You can take heart in the fact that pandemics do, by nature, come to an eventual end. But not in the way that you think. When I pictured post-pandemic life in April 2021, I pictured the threat of COVID going away entirely, like one big switch flipped across the whole world at once. But the end of a pandemic isn't sudden, grand or neat. In fact, experts now believe that COVID will always be with us -- just not in pandemic form. And the pandemic will continue to shape our lives in some ways, even after it's over.
Here's what the end of the COVID pandemic will really look like, how we can get there, and what you can expect life to look like afterward.
How pandemics like COVID-19 end
There are a few ways that a pandemic can potentially end. The disease can be eradicated completely: zero cases, anywhere in the world, ever again. We can reach herd immunity, when enough people in a certain region are immune to the disease that it's eliminated there (that's what happened in the US with measles). Or the disease could become endemic: it continues circulating at a predictable baseline level, but is no longer a major health threat to most people.
With COVID, our best bet is the latter scenario, according to current expertise. In a January 2021 Nature survey of over 100 immunologists, virologists and infectious disease researchers, almost 90% said they think the coronavirus will become endemic. Herd immunity is an increasingly unrealistic goal, and eradication is unlikely -- throughout recorded history, only two diseases have ever been eradicated: smallpox and a cattle virus called rinderpest. Even the plague is here to stay.
"When SARS-CoV-2, the virus causing COVID-19 first appeared, it was new, unexpected, and quickly spread around the world," Mackenzie Weise, an epidemiologist with Wolters Kluwer Health, tells CNET. "It's realistic to think that circulation of the SARS-CoV-2 virus won't just suddenly end."
The good news: Living with an endemic disease is strikingly different from living in a pandemic. Just take the flu. The H1N1 virus that caused the Spanish flu pandemic killed more than 50 million people from 1918-1919. That virus never really went away -- it's the genetic ancestor of the seasonal influenzas that still circulate every year. But the flu now results in far fewer deaths, and it impacts our lives in a more manageable way.
"If [COVID] becomes endemic, it'll be like the flu," says Dr. Robert G. Lahita, director of the Institute for Autoimmune and Rheumatic Disease at St. Joseph's Health and author of the upcoming book Immunity Strong. "There'll be a spate of deaths every year in the US from the novel coronavirus or COVID, and there will also be deaths from flu, influenza, which there are every year."
We learned to live alongside the flu with a delicate balance of precaution and treatment, and we can one day do the same with SARS-CoV-2.
What life in a post-pandemic endemic world looks like
Living with the endemic version of COVID may look a lot like the post-pandemic world I envisioned back in April 2021. Mask mandates, social distancing, stay-at-home orders, travel restrictions and other mitigation measures will disappear in most places.
"I think that we will remove our masks and remove social distancing and go back to normal once this virus goes away," Lahita says. "And it will go away, but it will be with us in some form forever. The pandemic will go away."
COVID vaccines will still be necessary, possibly every year like the flu shot, Lahita says. They'll be especially important for people who are vulnerable to severe illness, like immunocompromised people and the elderly. Vaccine mandates may be here to stay, too -- the COVID vaccines could, for example, join the list of immunizations that children and teens are required to get in order to attend school. (So far, only California and Louisiana have gone that route.)
One sign that we've reached endemicity is that hospitalizations and deaths stay at a constant level, which health care services can predict and manage, and which the public considers an acceptable risk. As with other endemic diseases like the flu, COVID's impact on individual people will vary. To some of us, flu season is no big deal. To others, it's a risky and scary time.
And truthfully, it would help if we kept wearing masks, washing our hands religiously and using other preventive measures against both flu and COVID, even after the pandemic stage. But in reality, only a small group of cautious people are willing to keep taking those steps once they're not required. For most, the cost of fear and isolation is too high.
"There's always the subset of the population that becomes very anxious and very obsessive. Those people will continue to wear masks and will socially distance and avoid groups and gatherings and restaurants and theaters and so on. There's always that subgroup," Lahita says.
Similarly, there will continue to be many people who hesitate to get a COVID vaccine. "Even when it becomes endemic and no longer a pandemic, people will still be arguing about not getting injected with antigen or with messenger RNA to protect them," Lahita says.
How we get there, and when
"The ideal scenario toward endemicity is that enough people receive immune protection in order to significantly reduce ongoing transmission, severe illnesses, hospitalizations and deaths," Weise explains.
There are two ways to get immune protection from COVID: get vaccinated, or recover from a coronavirus infection. Of those two, it's easy to see why vaccination is the ideal route. "Because COVID-19 vaccines are extremely effective at preventing all the above, vaccine-induced immunity is the only logical path towards this goal," Weise says. As we've seen over and over in the last two years, battling a COVID infection is unpredictable and can have fatal outcomes in otherwise healthy people.
Weise continues: "I'm optimistic that we can reach a point when COVID-19 isn't a severe threat to most people, but we desperately need more people to step up and get vaccinated." To be more specific, Lahita predicts that at least a 50% vaccination rate in most countries would be necessary for endemicity to occur.
Because vaccines play such a crucial role in ending the pandemic, public health officials are working hard to get them into everyone's hands (or arms). But the pharmaceutical industry hasn't made it easy. Moderna and Pfizer, which have two of the most effective vaccines against COVID-19, have refused to share their mRNA technology with other companies or scientists. Meanwhile, high-income countries have been accused of "hoarding" vaccine doses and have failed to follow through on promises to donate enough extras to poorer countries to bridge the gap, despite pleas from the World Health Organization.
As of this writing, only 3.7% of people in low-income countries have been fully vaccinated, compared to 69.1% in high-income countries. But even the US, with plenty of doses to go around, has struggled to meet goals for vaccination rate as a result of people who are vaccine-hesitant or resistant. As of the end of December, more than 65% of the US population ages 5 and older is fully vaccinated.
Their unvaccinated status has an impact on everyone, Weise explains: "The problem is that viral transmission is sustained among susceptible [unvaccinated] persons, and we can't anticipate how or where these people may interact with one another, or even with vaccinated persons to perpetuate further spread."
The more that the virus spreads, the more that it mutates into new variants, each of which has the potential to be more transmissible, more deadly, or more resistant to current vaccines. And unlike man-made vaccines, viruses know no borders.
With the majority of the world still not fully vaccinated, the end of the pandemic still feels like a long way off to many experts. "Eventually, I think that the virus will be controlled. It may take years, however, for that to happen, because of the unvaccinated masses," Lahita says.
It's also important to note that endemicity won't happen everywhere at once. Some places will reach this stage sooner, depending on vaccination and infection rates. New York City may be among the first cities in the US to get there, thanks to high rates of immunity from vaccines and prior infections.
If the coronavirus continues to have such disproportionate impacts, it could become similar to malaria or HIV: the pandemic will be "over'' in richer countries, but still a deadly force in others. If that's the case, the WHO could downgrade it to an epidemic (like a pandemic, but not worldwide).
Has COVID-19 changed us for good?
Even after the pandemic ends, its society-wide effects may stay with us in ways that we can't predict quite yet. In addition to millions of lives lost, the pandemic created challenges and disruptions to every imaginable part of life, leading to a mental health crisis and collective trauma that will likely persist long after it's over.
But the long-term legacy of the COVID-19 pandemic may not be all negative. Past pandemics have led to new habits that improved health for years to come. Screen doors, for example, were popularized as a way to prevent malaria and other mosquito-borne diseases. The AIDS pandemic shifted condom usage into the mainstream, and the tuberculosis epidemic led people to stop sharing drinking cups and spitting in public. Some pandemics have also led to sweeping improvements in economics, education, housing and public health.
Will similar changes happen after COVID? In the University of California, Berkeley's World After COVID project, 57 scientists shared predictions about how the COVID-19 pandemic may change society, in both positive and negative ways. Their positive forecasts included greater solidarity, renewed social connections, and a greater effort to address our world's structural inequalities.
Many experts in Berkeley's study also pointed to the embracing of technology, which played an unprecedented role in our lives when COVID-19 kept us indoors. During the pandemic, tech innovations like virtual reality and QR codes took on new life, not to mention the explosion in remote work and telehealth.
Similarly, in a Pew Research survey of 915 "innovators, developers, business and policy leaders, researchers and activists," almost all respondents agreed that we'll be living in a much more tech-driven society after the pandemic: a "tele-everything" world, with all its pros and cons.
Remote work is likely here to stay, but that doesn't mean offices are doomed to disappear. Surveys show that most office workers would prefer not going back to the office full-time, but their bosses feel the opposite. If Australia's reopening is any indication, there won't be one single path forward -- instead, different companies will take different approaches, and we'll live with a mix of remote, in-office and hybrid work setups.
One thing the COVID pandemic has taught us is that you really just never know. The crisis exposed how delicate our regular routines are, on both an individual and a global scale. We've seen how difficult and yet surprisingly doable it is to adjust to a new normal, and how disarming it is not to know what to expect. Even experts aren't fortune tellers, and no one can say for sure when the pandemic will be declared over, or what will happen in the years to come.
The pandemic will continue to surprise us, even after it's over. But first, we have to get there.
The information contained in this article is for educational and informational purposes only and is not intended as health or medical advice. Always consult a physician or other qualified health provider regarding any questions you may have about a medical condition or health objectives.
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