MacRumors

With 54.2 million smartphones shipped in the second calendar quarter of 2018, Chinese smartphone company Huawei has surpassed Apple to become the number two worldwide smartphone vendor, according to new data shared today by IDC.

During the quarter, which includes data from April to June, Apple shipped 41.3 million iPhones worldwide, a number that it shared earlier today with its earnings release for its third fiscal quarter. In the year-ago quarter, Apple shipped 41 million iPhones, marking just a small increase in shipments this year.

According to IDC, Apple's share of the smartphone market for the quarter was 12.1 percent, compared to Huawei's 15.8 percent. Huawei saw 41 percent year-over-year growth in market share with an increase of 15.7 million smartphones shipped in Q2 2018 compared to Q2 2017.

Samsung continues to be the number one smartphone vendor with 71.5 million smartphones shipped and 20.9 percent of the market, with Xiaomi and OPPO trailing after Apple and Huawei with 31.9 and 29.4 million smartphones shipped, respectively. Canalys, Strategy Analytics, and IHS Market have also published data agreeing with IDC's assessment of the smartphone market.

In total, IDC says there were 342 million smartphones shipped during the second quarter of 2018, a 1.8 percent decline from the 348.2 million smartphones shipped during the second quarter of 2017.

While Apple's iPhone shipments were largely stagnant year-over-year, the higher average selling price it achieved with the iPhone X resulted in an impressive 20 percent increase in revenue and iPhone earnings of nearly $30 billion.

IDC's numbers look only at total number of smartphones shipped, with Huawei seeing major growth in the $600 to $800 segment thanks to the P20 and P20 Pro series.

We are likely to see shifts in these smartphone vendor rankings over the course of the next few quarters as this is Apple's weakest quarter. At this point, Apple's flagship iPhones are several months old, which always results in a slowdown in sales. After new devices are released in the fall, Apple will see much stronger shipment numbers during the fiscal fourth quarter of 2018 and first fiscal quarter of 2019.

Apple dropped to the third spot for the first time despite its second quarter growth. Apple shipped 41.3 million iPhones, representing modest growth of 0.7% over the 41.0 million units shipped last year. The iPhone continued to perform well at the high end as the iPhone X remains a top seller in many markets. Apple will look to regain control of the market this fall with the expected launch of three next generations of iPhone models. The new models are rumored to bring different screens sizes, price points, increased performance, and new features to the table when they arrive next quarter.

Rumors suggest Apple plans to better compete in the mid-priced smartphone market in late 2018 and 2019 with a lower-priced 6.1-inch feature-rich iPhone that offers Face ID, an edge-to-edge display, and the same fast processor as the company's more expensive OLED models.

During today's earnings call covering the third fiscal quarter of 2018, Apple CEO Tim Cook was questioned about the health of the smartphone market and the impact the company's choice to offer low-cost battery replacements might have on replacement cycles.

In response, Cook said that he believes the smartphone market is "very healthy. "It's the best market to be in for someone in the business that we're in," said Cook. "Whether it grows one percent or two percent or five percent or six percent or 10 percent or shrinks one or two percent, it's a great market because it's just huge."

iPhone revenue, Cook pointed out, was up 20 percent during the quarter compared to the third quarter of 2017, and Apple has seen mid-single digit growth averages on a weekly sales basis and double-digit growth on an ASP basis. Apple sold a total of 41.3 million iPhones during the quarter, bringing in revenue of nearly $30 billion. The iPhone X continued to be the most popular iPhone during the quarter.

Cook said that he does believe replacement cycles are lengthening, and he says the "major catalyst" for that has been the fact that subsidized plans have become a much smaller percentage of total sales around the world. Apple's goal is to make great products to encourage customers to purchase new devices.

I think for us, the thing we always have to do is come out with a really great, innovative product. I think iPhone X shows that when you deliver that, there's enough people out there that will like that, and it can be a really great business.

In a separate response given to a question about Apple's focus on the home, Cook shared additional comments about the importance of smartphones. "The smartphone has become the repository that goes across the whole of your life, not something meant for a portion of it," he said. He went on to explain that Apple is focused on a number of areas with its product lineup -- home, work, the time between, health, and more. "We're focused on all of those things."

In terms of the battery replacement program that has seen Apple offering $29 iPhone battery replacements since the beginning of the year, Cook reiterated a statement he made back in February during an earlier earnings call. Apple, he said, has never done an internal analysis on how many people bought a battery compared to purchasing a new phone because it wasn't a factor in the decision.

"It was never about that for us," said Cook. "It was about doing something great for the user. Treat users and customers well and you have a good business over time. That's how we look at that."

Apple's services category continues to see rapid growth, further cementing its position as an important revenue driver for Apple.

During the third fiscal quarter of 2018, Apple's services revenue brought in $9.55 billion in revenue, up 31 percent from the $7.27 billion in revenue services earned in the third quarter of 2017.

The services category includes iTunes, the App Store, the Mac App Store, Apple Music, iCloud, Apple Pay, and AppleCare.

According to Apple CEO Tim Cook, Apple "feels great" about the momentum in its services business, and the company saw double digit growth in its active services installed base. This quarter's growth was driven by strong performance in a number of area.

Subscriptions from Apple and third parties have surpassed $300 million, an increase of 60 percent year over year. Cook called the revenue from subscriptions "significant" and an "increasing portion of services."

There are now nearly 30,000 apps that offer subscriptions, a number that continues to see strong growth.

Cook said that App Store revenue, which set a new June quarter revenue, had exceeded Apple's "wildest expectations." Customers around the world are visiting the App Store more often and downloading more apps than ever before. Citing third-party research, Cook said pointed out that the iOS App Store saw twice the revenue of Google Play.

Apple has seen rapid growth in revenue from App Store search ads, with a recent update expanding search ads to Japan, South Korea, France, Germany.

Apple Music grew by more than 50 percent year-over-year (with Cook again reiterating the 50M subscriber number from May), and AppleCare grew at its highest rate in 18 quarters. Apple's cloud services revenue was up 50 percent year over year, and communications services, including FaceTime and Messages, are hitting all time usage highs. Siri requests have exceeded 100 billion, and articles read on Apple News have doubled year over year.

Apple in 2017 set itself a goal to double its services revenue to $14 billion per quarter by 2020, and the company is well on its way to reaching that goal.

Earlier this year, Morgan Stanley analyst Katy Huberty predicted that over the course of the next five years, services revenue growth will contribute more than 50 percent of Apple's total revenue growth.

Huberty estimated that services revenue is at $30 per device, with just 18 percent of Apple's total device install base subscribing to paid services, leaving plenty of room for growth in the coming years.

Apple is working on bolstering its services category, with rumors suggesting that a new TV streaming service for its original TV shows is in the works, along with a magazine subscription service based on its April Texture acquisition.

In response to a question about Apple's future services plans, Cook said that Apple is "thrilled" with its upcoming product pipeline and the new services that are included with it, hinting at that rumored TV service. Cook explained that Apple has hired two TV executives (Jamie Erlicht and Zack Van Amburg) to work on a project that Apple is not ready to discuss. Cook said that Apple is expecting dramatic changes to the content industry and is happy to have something in the works.

"We're not really ready to share all the details of it yet, but I couldn't be more excited about what's going on there. We've got great talent in that area that we've sourced from different places and feel really good about what we will eventually offer."

Apple today announced financial results for the third fiscal quarter of 2018, which corresponds to the second calendar quarter of the year. For the quarter, Apple posted revenue of $53.3 billion and net quarterly profit of $11.5 billion, or $2.34 per diluted share, compared to revenue of $45.4 billion and net quarterly profit of $8.7 billion, or $1.67 per diluted share, in the year-ago quarter.

Gross margin for the quarter was 38.3 percent compared to 38.5 percent in the year-ago quarter, with international sales accounting for 60 percent of revenue. Apple also declared a quarterly dividend payment of $0.73 per share, payable on August 16 to shareholders of record as of August 13.

Apple sold 41.3 million iPhones during the quarter, up slightly from 41.0 million a year earlier, while Mac sales fell to 3.72 million units from 4.29 million units in the year-ago quarter. iPad sales rose slightly to 11.55 million from 11.42 million.

“We’re thrilled to report Apple’s best June quarter ever, and our fourth consecutive quarter of double-digit revenue growth,” said Tim Cook, Apple’s CEO. “Our Q3 results were driven by continued strong sales of iPhone, Services and Wearables, and we are very excited about the products and services in our pipeline.”

Apple's guidance for the fourth quarter of fiscal 2018 includes expected revenue of $60–62 billion and gross margin between 38 and 38.5 percent.

Apple will provide live streaming of its fiscal Q3 2018 financial results conference call at 2:00 PM Pacific, and MacRumors will update this story with coverage of the conference call highlights.

Apple's conference call has concluded. A rough transcript is ahead...

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Rumors have suggested Apple's upcoming 6.5-inch OLED iPhone, which can be thought of as an "iPhone X Plus" device, will feature a screen resolution of 2688 x 1242 with somewhere around 450 pixels per inch. Comparatively, the current 5.8-inch iPhone X features a screen resolution of 2436 x 1125, and the second-generation device is expected to use the same display.

As with Apple's plus-sized iPhones, the extra screen real estate of the larger 6.5-inch device will enable an iPad-style landscape mode that offers up more available information in apps like Mail, Contacts, Calendar, and Stocks when viewed in landscape orientation.

This has been confirmed in data gathered by Brazilian site iHelpBR from the most recent beta versions of iOS 12 and Xcode. The site forced the iOS Simulator tool to run at a resolution of 2688 x 1242 with a PPI of 458 and found that many native apps have been adapted with landscape mode features appropriate for a larger device.

In screenshots, the Contacts and Calendar apps, for example, both feature iPad-style layouts that are currently used in plus-sized devices like the iPhone 6 Plus, iPhone 7 Plus, and iPhone 8 Plus.

This suggests that Apple plans to treat the "iPhone X Plus" as it does the other larger-screened Plus devices, taking full advantage of the extra display area, and it also confirms that the upcoming device is likely to use the rumored 2688 x 1242 resolution.

Apple first introduced the new landscape mode features in iOS 8 alongside the release of the iPhone 6 Plus, the first larger-screened Plus sized device that Apple launched. Since then, the feature has been limited to the larger iPhone models.

Though the iPhone X's 5.8-inch display is bigger diagonally than the 5.5-inch display of the iPhone 8 Plus and prior plus-sized iPhones, it did not adopt the iPad-like landscape mode features.

Apple is set to report its earnings results for the third quarter of its 2018 fiscal year at 1:30 p.m. Pacific Time today.

The quarter began April 1, 2018 and ran through June 30, 2018, according to Apple's fiscal year accounting calendar.

Apple provided the following guidance for the quarter back on May 1:

• revenue of $51.5 billion to $53.5 billion
  

• gross margin between 38 and 38.5 percent
  

• op. ex. of $7.7 billion to $7.8 billion
  

• other income/expense of $400 million
  

• tax rate of approximately 14.5 percent

Apple's guidance suggests it will report its best third quarter results ever, by revenue, comfortably topping its 2015 record of $49.6 billion:

• 2014: $37.4 billion
  

• 2015: $49.6 billion
  

• 2016: $42.4 billion
  

• 2017: $45.4 billion
  

• 2018: $51.5+ billion

Wall Street analysts forecast that Apple will report $52.3 billion revenue, meeting roughly the midpoint of its guidance, and earnings per share of $2.18, according to 29 estimates averaged by Yahoo Finance.

Key Takeaways and What to Look For

• iPhone unit sales of around 41.7 million, according to a FactSet estimate.
  

• Apple doesn't break out iPhone sales on a model-by-model basis, but the iPhone's average selling price should reveal whether the iPhone X remains Apple's best selling iPhone model since it launched, or if sales have slowed. iPhone ASP was $728 last quarter. $606 in year-ago quarter.
  

• iPad unit sales should be boosted by the new sixth-generation 9.7-inch iPad, released March 27, just four days before the third quarter.
  

• Apple's guidance for its fourth quarter, which runs from July 1 through September 29, as new iPhones will likely be available to order during the final two weeks of the quarter. Analysts expect revenue of $59.5 billion, based on 29 estimates averaged by Yahoo Finance.
  

• Apple's comments on the trade war between the United States and China, and what impact it could have on Apple products, if any.
  

• Continued growth of Apple's Services category, including the App Store, Apple Music, iCloud, iTunes, Apple Pay, and AppleCare. Loup Ventures expects Services growth of 19 percent on a year-over-year basis.
  

• Continued growth of Apple's Other Products category, including the Apple Watch, Apple TV, HomePod, AirPods, Beats, iPod touch, and accessories, as Apple diversifies revenue beyond the iPhone.

Apple's CEO Tim Cook and CFO Luca Maestri will discuss the company's earnings results on a conference call at 2:00 p.m. Pacific Time today. MacRumors will loosely transcribe the one-hour call as it occurs live.

Apple today seeded the fourth beta of an upcoming macOS Mojave update to its public beta testing group, two weeks seeding the third macOS Mojave public beta. Today's fourth public beta is the same as the fifth developer beta released earlier this week.

Beta testers who have signed up for Apple's beta testing program can download the macOS Mojave beta through the Software Update mechanism in the Mac App Store. Subsequent betas are installed in a different way, using the Software Update icon in System Preferences.

Those who want to be a part of Apple's beta testing program can sign up to participate through the beta testing website, which gives users access to iOS, macOS, and tvOS betas. Potential beta testers should make a full Time Machine backup before installing macOS Mojave, and it should not be installed on a primary machine because betas are unstable and often have serious bugs.

Today's macOS Mojave update introduces several new wallpapers appropriate for use with Dark Mode. There are several wallpapers that feature images of the Mojave desert, along with new abstract oil slick-style wallpapers, new dark flower wallpapers, images that have been used to promote recent Mac refreshes, and more.

macOS Mojave's main new feature is a systemwide Dark Mode, which gives Mac users a new way to view the operating system. A revamped Mac App Store makes it easier than ever to discover great apps, while Dynamic Desktops give you wallpapers that subtly change throughout the day.

An improved Finder window with Gallery View, Sidebar, Quick Look, and Quick Actions makes it easier to manipulate, edit, and organize your files, while Desktop Stacks organizes all of the files on your desktop.

The Apple News, Stocks, Home, and Voice Memos apps have made their way to the Mac in Mojave, and for the first time, you can use Siri on Mac to control HomeKit products. Group FaceTime, an iOS 12 feature, is also available in Mojave and lets you chat with up to 32 people at one time.

Apple is keeping your data safer than ever with new security and privacy improvements, and Safari in macOS Mojave makes it much harder to track you through share/like buttons and via your system configuration.

macOS Mojave is compatible with 2015 and newer MacBooks, 2012 and newer MacBook Air, MacBook Pro, Mac mini, and iMac models, the 2017 iMac Pro, and Mac Pro models from late 2013 and mid-2010 and mid-2012 models with Metal-capable GPUs.

Mojave will be available in a beta capacity for the next several months so Apple can work out bugs ahead of a fall release.

Apple today seeded the fourth public beta of iOS 12 to public beta testers, giving non-developers a chance to test the software ahead of its upcoming fall release. The fourth iOS 12 public beta, which comes two weeks after the third public beta, corresponds to the fifth developer beta released earlier this week.

Beta testers who have signed up for Apple's beta testing program will receive the iOS 12 beta update over-the-air after installing the proper certificate on an iOS device.

Those who want to join the beta testing program can sign up on Apple's beta testing website, which gives users access to iOS, macOS, and tvOS betas. Before installing a beta, make sure to create a full encrypted iTunes backup or an iCloud backup and be sure to install iOS 12 on a secondary device because beta software is not always stable and can include bugs.

Today's iOS 12 beta introduces several new bugs that testers should be aware of:

• After restarting a device, paired Bluetooth accessories might not function correctly or might be displayed using the device's address instead of name.
• Using Apple Pay Cash to send or request money via Siri might result in an error.
• When using CarPlay, Siri can't open an app by name. Shortcuts that involve opening an app won't work, and Shortcuts that require confirmation might not work.
• Some Shortcuts requests might not work.
• When multiple ride-sharing apps are installed, Siri might open an app instead of providing an ETA or location when asked. Apple suggests asking again as a fix.
• Users might not see custom UI when using Siri Suggestions Shortcuts with built-in intents.

Several existing bugs have been addressed in the update, including error messages in the App Store when attempting to install an app, an inaccurate cellular signal bar on iPhone X while on Lock screen or Home screen, a bug that caused Wallet to crash on launch, and a failure for Screen Time usage and data settings to sync between devices. Shortcuts will also mostly work in CarPlay now, and will be restored from iCloud backups.

Other changes in the new iOS 12 beta: Screen Time in the Settings app no longer lists family members who aren't children, it needs to be reenabled after updating to the new beta, and there are hints of a future HomePod software update that will enable phone calls directly from the speaker. For more details on the beta, check out our iOS 12 beta 5 developer article.

The iOS 12 update introduces major changes like Group FaceTime, local multiplayer shared AR experiences, new Animoji, and a Memoji feature that's designed to let you create a personalized Animoji that looks just like you.

Animoji, stickers, text, and more can be used in FaceTime and the Messages app through the new Effects camera, and there's a Screen Time feature to help customers understand and manage the amount of time they're spending on their iOS devices. There are options to limit app time and it includes comprehensive controls for parents.

New Do Not Disturb features make it easier to manage notifications, as do interactive notification options and notification grouping on the Lock screen.

Siri has been improved in iOS 12 with Siri Shortcuts, a feature designed to work with third-party apps to let you create voice-activated automations, and Siri is also smarter and able to provide info on motorsports, food, and celebrities. Later in the year, Apple will launch a Shortcuts app so you can create your own shortcuts.

Under-the-hood improvements to iOS 12 will make everyday tasks on the iPhone and iPad faster and more responsive, with the camera launching up to 70 percent faster and the keyboard showing up to 50 percent faster.

iOS 12 also includes a rebuilt Maps app with a new Apple-designed Maps engine that's available in Northern California at the current time. When iOS 12 launches in the fall, it will additional locations across the United States.

The revamped Maps app displays foliage, pools, buildings, pedestrian pathways, and other map elements more accurately, and it brings improvements to traffic, real-time road conditions, construction notices, and more.

iOS 12 will be available to developers and public beta testers as a beta for the next two months to allow Apple to work out bugs and other issues ahead of a fall launch alongside new iPhones.