Apple Inc. (NASDAQ:AAPL) Q3 2023 Earnings Call Transcript

Aaron Rakers: I have two as well. So first of all, I just want to kind of ask Tim. Strategically, as we think about the Services growth and kind of the content expansion behind that, I’m curious if you could help us maybe appreciate what you’ve seen from a sporting perspective in terms of the engagement with MLS, the engagement with Major League Baseball, and how strategically you’re thinking about expansion in sports as a key driver of Services growth going forward.

Tim Cook: We’re focused on original content, as you know, with TV+. And so we’re all about giving great storytellers the venue to tell great stories and hopefully get us all to think a little deeper. And sport is a part of that because sport is the ultimate original story. And for MLS, we’re — we could not be happier with how the partnership is going. It’s clearly in the early days, but we are beating our expectation in terms of subscribers, and the fact that Messi went to Inter Miami helped us out there a bit. And so we’re very excited about it.

Aaron Rakers: Yes. And as a quick follow-up, I’m just curious, an update on — you mentioned in your prepared remarks the continued growth that you’ve seen in India. I’m curious how we think about that market opportunity looking forward. Is there anything that you see evolving that could accelerate the opportunity for iPhone in that large mobile market?

Tim Cook: We did hit a June quarter revenue record in India, and we grew strong double digits. We also opened our first 2 retail stores during the quarter. And it’s — of course, it’s early going currently, but they’re currently beating our expectation in terms of how they’re doing. We continue to work on building out the channel and putting more investment in our direct-to-consumer offers as well. And so I think if you look at it, it’s the second largest smartphone market in the world. And it’s — so we ought to be doing really well there. And where I’m really pleased with our growth there, we’re still — we still have a very, very modest and low share in the smartphone market. And so I think that it’s a huge opportunity for us. And we’re putting the — all of our energies in making that occur.

Operator: Our next question comes from Sidney Ho with Deutsche Bank.

Sidney Ho: Your — I just wanted to ask about the AI side of things. Your strategy on AI seems quite different than many of your peers, at least you don’t talk too much about that, how much you invest in it. Maybe you can elaborate a little bit on that. But related to that, how do you see your investment in this area turning into financial performance in the future? Is it mainly through faster upgrade cycle, maybe higher ASP? Or are you thinking about maybe additional services that you can capitalize on that? And then I have a follow-up.

Tim Cook: If you take a step back, we view AI and machine learning as core fundamental technologies that are integral to virtually every product that we build. And so if you think about WWDC in June, we announced some features that will be coming in iOS 17 this fall, like Personal Voice and Live Voicemail. Previously, we had announced lifesaving features like fall detection and crash detection and ECG. None of these features that I just mentioned and many, many more would be possible without AI and machine learning. And so it’s absolutely critical to us. And of course, we’ve been doing research across a wide range of AI technologies, including generative AI for years. We’re going to continue investing and innovating and responsibly advancing our products with these technologies with the goal of enriching people’s lives.

And so that’s what it’s all about for us. And as you know, we tend to announce things as they come to market, and that’s our MO, and I’d like to stick to that.