It was a mixed bag in hardware land as Apple reports its third-quarter profits today. In spite of lowered expectations, iPhone revenue was up slightly year over year, from $39.5 billion to $40.7 billion -- amounting to a 3% jump from the same time period in 2021. But while the company's overall picture beat Wall Street expectation, things fared less well across other categories. Mac, iPad and the combined wearables/home category all took a hit for the quarter.
Mac took the biggest hit of around 10%, as revenue dropped from $8.2 billion to $7.4 billion. Wearables/home/accessories, which includes the Apple Watch, AirPods and HomePods, dropped around 8%, from $8.8 billion to $8.1 billion, while iPad dropped slightly from $7.3 billion to $7.2 billion. Soft numbers are certainly no surprise, given strong economic headwinds. Continued supply chain issues, coupled with inflation, have had an impact on both buying habits and companies' ability to get product in front of consumers.
Apple's products have long been regarded as something of a bellwether for luxury good purchases, and the company's performance in a word (or three) is easily summed up as: "could be worse." Not banner growth for the company, but increased iPhone revenue (if only slight) among much bleaker macro trends for the smartphone industry is a vote of confidence for the company.
Apple CFO Luca Maestri made reference to some of the broader challenges in a press release, noting,
Our June quarter results continued to demonstrate our ability to manage our business effectively despite the challenging operating environment. We set a June quarter revenue record and our installed base of active devices reached an all-time high in every geographic segment and product category. During the quarter, we generated nearly $23 billion in operating cash flow, returned over $28 billion to our shareholders, and continued to invest in our long-term growth plans.
All told, Apple saw a 2% year-over-year revenue increase, in part buoyed by a 12% increase in services revenue. The hardware maker has increasingly banked on the performance of content offerings like TV+ and Music, coupled with other software offerings, including iCloud. It's clearly proving to be a savvy mood, as hardware sales have slowed across many categories, amid a confluence of external factors.
While the company has continued upgrading the Mac line, purchases of Apple's computers may have also dropped off in part after an initial boost driven by the M1 chip rollout. The company reportedly has high expectations for iPhone 14 sales, coupled with rumored redesigns of its popular Apple Watch wearable.