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Apple's M1 Mac shines as iPhones fly off (virtual) store shelves

Apple says a combination of enthusiasm over 5G wireless and working from home is driving demand despite a global chip shortage.

Apple computers

Apple's iPhone 12 and new M1 Macs are making a difference.

Dan Ackerman/CNET

For more than a decade, Apple faithful have worried the mega-success of the iPhone would draw the company's attention away from its Mac computers. After all, its biggest events always revolve around the iPhone. And even Oprah focused on the iPhone when announcing her new partnership with the company, quipping, "They're in a billion pockets, y'all. A billion pockets."

Now those Mac computers are having a bit of a moment. The company's trademark laptops and desktops notched their best sales quarter ever during its second fiscal quarter, which is the three months ended in March. That amounted to $9.1 billion in sales, higher than the iPad, Apple Watch or AirPods.

"Demand feels very strong right now," said Apple CEO Tim Cook while discussing the company's results. He attributed the spike in part to the new technology built into the Mac (of course). He also said that working and learning from home played a part, and noted that with many people likely returning to a hybrid work setup when the pandemic ends, this trend may continue. "iPad and Mac continue to be critically important tools for our customers," he said.

The results were the highlight of a strong earnings report from the company, in which its profits more than doubled from the same time last year, and revenue jumped 53%. Sales of iPhones jumped too, up 65%, and the Mac and the iPad both saw sales increase by more than 70%.

See also: Apple event 2021: New iMac and iPad, purple iPhone 12, AirTags and everything announced

Apple's results mark the latest example of how technology companies have thrived during the coronavirus pandemic. The iPhone 12, with its new design and 5G wireless technology, appears to have drawn people's attention since its launch in October. People have also turned to Mac computers and iPad tablets to help with learning and working from home, a trend driving unusually high demand across the tech industry. Apple said its Mac computers reported their best quarterly revenue ever Wednesday.

Daniel Ives, an analyst at Wedbush Securities, called the financial report "a 'drop the mic' quarter for Apple." He has an "outperform" rating on the stock.

Chip shortage

Apple's M1 chip

The M1 chip is Apple's big bet on the future of the Mac, using technology derived from the iPhone.

Screenshot/Apple

What's made Apple an unusual case during this last year has been its relatively strong supply of products despite an international chip shortage that's made it frustratingly hard for people to buy laptops, graphics cards, video game consoles and even cars. But before the iPhone 12 launch last year, Apple had a steady supply of iPhones available to customers. Apple said that despite the enthusiasm over 5G, which helped propel its highest-ever revenue and profit during the holidays, it was able to produce enough phones to meet demand in the past few months. 

Apple did say it's struggling to meet demand for the iPad and the Mac, though. Some of that may be due to Apple's newest chip, the M1, which was designed by in-house engineers to replace the Intel microprocessors the company had relied on before. The company's first M1-powered Macs garnered positive reviews and quickly became the most popular computers across its product line. Now, the $799 iPad Pro and $1,299 iMac will also be powered by the M1 when they go on preorder Friday.

Apple said it didn't know how long the chip shortage would keep supply from meeting demand, but it expects to be "supply-gated, not demand-gated" for the foreseeable future. That's in line with what other companies are saying too.

By the numbers

116-iphone-12-purple-2021

Apple's newest iPhone 12 color, purple, goes on sale Friday.

Sarah Tew/CNET

The strong Mac sales mirrored the success of the iPhone, which notched $47.9 billion in sales during the second fiscal quarter, up 65% from the year prior. While the company is still highly dependent on the iPhone, which makes up more than half of its revenue, other businesses have stepped up. 

Apple's iPads rang up $7.8 billion in sales, and the Mac hit $9.1 billion in sales, both up more than 70% when compared to last year.

All told, Apple said it raked in profits of $23.6 billion, more than double what it was the same time last year. That translates to $1.40 per share in profit. It posted revenue of $89.6 billion, up 53% from the $58.3 billion it reported last year. It also blew way past analyst estimates, which were 99 cents in profit per share on $77.4 billion in sales according to surveys published by Yahoo Finance.

The company's stock rose a little more than 2% in after-hours trading after closing down nearly 1% to $133.58 per share during market hours. The company's shares have risen about 3% so far this year.