Source | Bohu Finance (bohuFN)

Unsurprisingly, Apple has once again reaped substantial profits.

As per the financial report for the fourth quarter of the fiscal year 2025, which was released a few days ago, Apple reported revenue of $102.466 billion during the reporting period. This marks an 8% year-on-year increase and sets a new record, with fourth-quarter revenue surpassing $100 billion. The net profit for the quarter reached $27.466 billion, showing a significant surge of 86% from the $14.736 billion recorded in the same period last year.

Despite persistent market pessimism surrounding Apple, its performance in fiscal year 2025 has been truly remarkable. In 2021, Apple's annual revenue just crossed the $300 billion mark, with a net profit of $94.68 billion. In contrast, for fiscal year 2025, Apple's total revenue soared to $416.161 billion, and its net profit hit an astonishing $112.01 billion.

However, this is far from the limit for Apple. Traditionally, Apple's stock price has a tendency to dip slightly following financial report disclosures. But this time, it quickly rebounded, mainly due to the strong expectations set by Apple. Cook anticipates that the next quarter will be Apple's highest-ever in terms of both revenue and iPhone sales.

Nevertheless, a more profitable Apple does not necessarily equate to a better Apple.

01 The Pinnacle of Apple

Apple's business is primarily divided into two segments: hardware and software. The hardware business is tasked with driving revenue growth, while the high-margin software business focuses on generating profits with minimal effort. Therefore, the ideal scenario for Apple is that hardware products, including the iPhone, sell in larger quantities at higher prices. Simultaneously, the user base of the Apple ecosystem continues to expand, leading to steady increases in software revenue.

To some extent, one could argue that the current Apple is at its peak.

In terms of the hardware business, in the fourth quarter, Apple's revenue from the iPhone business reached $49 billion, showing a 6.1% year-on-year increase. From a shipment perspective, IDC data reveals that in the third quarter of 2025, Apple ranked second globally with 58.6 million units shipped. This represents a market share of 18.2% and a year-on-year increase of 2.9%, outpacing the overall market growth of 2.6%. Regarding the average selling price (ASP), Dolphin Research estimates that the ASP of iPhones this quarter was around $837, up 1.4% year-on-year.

Among hardware products other than the iPhone, Mac shipments also exhibited promising growth. In the third quarter of this year, global PC market shipments increased by 10.3% year-on-year, while Mac shipments surged by 28.3%. The iPad business maintained its level from the previous year despite a high base. Meanwhile, other hardware businesses such as wearables saw a slight decline of 0.3% year-on-year, effectively halting the downward trend observed over the past nine quarters.

The simultaneous growth in volume and price of the hardware business not only boosted revenue performance but also strengthened Apple's barriers in the software business.

Leveraging its massive and loyal user base, Apple can mandate ecosystem developers to use the App Store and charge a fixed 30% commission on app sales and in-app purchases. This model has faced numerous opponents, ranging from game developers like Epic Games to government agencies in certain countries and regions. In October this year, an arbitration tribunal led by British scholar Rachel Kent ruled that Apple's behavior constituted abuse of market dominance. Apple promptly announced its intention to appeal the decision. These objections have compelled Apple to make some concessions. For instance, in the United States, the App Store is now required to allow foreign developers to add external payment links.

However, in the fourth quarter, Apple's software services revenue reached $28.8 billion, exceeding market expectations and growing by 15.1% year-on-year. This largely demonstrates the strong loyalty of Apple's ecosystem among its user base.

Meanwhile, the five-year antitrust lawsuit between Google and Epic Games has also witnessed new developments. Both parties have submitted a proposed settlement to a U.S. court. If approved, this would end the protracted litigation. According to a post by Sameer Samat, head of Google's Android ecosystem, on X, the core of the settlement is to grant developers more choices, reduce service fees, and introduce more competition while maintaining security. Clearly, while manufacturers can oppose exclusive agreements with monopolistic properties, it does not prevent Google from continuing to profit from its ecosystem barriers.

Google serves as a telling example. In the fourth quarter, the software business accounted for 28% of Apple's revenue but generated 45% of its gross profit. With the hardware business continuing to perform well, Apple's profit-generating capabilities will only become more stable.

02 Another Crossroads

The primary reason Cook dared to set such high expectations is that the iPhone 17 series has sold exceptionally well. According to Counterpoint Research, sales of the iPhone 17 series in China and the United States during the first 10 days after launch increased by 14% compared to the iPhone 16 series.

However, the iPhone 17 series is not a product that strongly embodies the 'Apple flavor.' To summarize the most significant feature of this update in one word, it would be 'more for less' - Apple has given its all.

Apple's approach to the standard model has often been met with criticism. For example, the iPhone 14 series introduced the 'Dynamic Island' and an always-on display, features that were long overdue. Yet, only the iPhone 14 Pro series could access the Dynamic Island. The iPhone 15 standard model inherited some features from the previous Pro model, such as the A16 chip and Dynamic Island. But it also notably 'cut' key configurations like a 120Hz high-refresh-rate screen and a telephoto lens.

In contrast, the iPhone 17 standard model can be considered the most cost-effective standard iPhone ever. Although it does not feature a new motherboard architecture, it boasts the latest A19 chip, the same screen as the Pro model, a dual-camera setup with a 48-megapixel main camera and a 12-megapixel 2x telephoto lens, an upgraded 18-megapixel front camera, and even a 120Hz high refresh rate.

To continue benefiting from national subsidies, Apple even temporarily abandoned its globally unified pricing strategy. For the 256GB version, the Hong Kong version of the iPhone 17 standard model costs HK$6,899, while the mainland version costs only RMB 5,999, falling within the subsidy range.

In contrast, the iPhone Air is a product that more strongly embodies the 'Apple flavor.'

When Apple introduced the first iPhone, Steve Jobs began by posing a question: 'Today, we are introducing three revolutionary products. The first is a widescreen iPod with touch controls. The second is a revolutionary mobile phone. The third is a breakthrough internet communications device. What are these three products?' He then revealed the answer: 'They are not three separate devices but one device. And we call it the iPhone.'

This ability to explore better experiences and tell compelling stories was a core characteristic of Apple during the Jobs era and even in the early years after.

The iPhone Air model better reflects Apple's exploration of the future, as evidenced by its completely new design from the inside out.

To ensure the strength of its ultra-thin body, the iPhone Air is the only one among this year's three new models to use titanium metal. To fit essential components into a thinner body, Apple redesigned the component layout, removed the bottom speaker, moved the front camera module downward, and created a motherboard weighing less than 10 grams that still offers A19 Pro-level computing power.

However, despite being a very Apple-like product, the iPhone Air did not achieve good results. According to reports, the first generation of the iPhone Air sold only over 100,000 units in China after 12 days of activation, far below internal expectations. In comparison, the iPhone 17 series sold 1.5 million units in its first week and over 9 million units in 50 days, 150% of the previous generation's sales.

Ultra-thin flagship devices are indeed a challenging niche category with too many factors to balance. However, the market response also highlights a problem. In the past, Apple had a magical ability to guide aesthetics, trends, and even consumer demand. But now, it is approaching a different crossroads.

03 Conclusion

Whenever Cook is inevitably compared to his predecessor, Steve Jobs, he often faces criticism for not delivering products comparable to those under Jobs' leadership.

Strictly speaking, this accusation is somewhat unfair. Both the success of wearable products and the launch of the Apple Vision Pro demonstrate Apple's exploration of cutting-edge experiences under Cook's leadership. As a professional manager, Cook has undoubtedly been successful. When he took over Apple in 2011, its market value was around $300 billion. As of this writing, Apple's market value has reached a massive $4 trillion.

However, another indisputable fact is that the pioneering, avant-garde, and premium Apple that fans once admired may be fading away. They no longer blindly believe in Apple's product narratives and instead embrace more practical specifications. This shift is the result of Apple's overly cautious product and strategic approach in recent years.

The good news is that as a stable tech giant, Apple still has numerous opportunities to play its cards.

According to renowned Apple analyst Mark Gurman's predictions, Apple is preparing for a major move in 2026. In early 2026, Apple will launch a series of new products, including traditional offerings like the more affordable iPhone 17e, an entry-level iPad with the A18 chip, and an iPad Air equipped with the M4 processor. Additionally, it will introduce new products like the first smart display and a foldable iPhone. Meanwhile, AI and smart glasses, which are drawing more attention, are also in progress.

Whether Apple can once again achieve greatness may become clearer next year.

Reference Sources:

1. Tech Reviews: After Disassembling the iPhone Air, I Think Apple Still Has Some Tricks Left

2. Dolphin Research: Apple: iPhone Holds Steady as the Star, When Will AI Reveal Its True Colors?

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