In many ways, the pandemic has been a boon to large technology companies, as consumers stuck at home have accelerated demand for digital services and consumer electronics to help them stay connected, employed and entertained amid lockdowns.
But the pandemic also battered the advertising industry, strained supply chains, spurred a global semiconductor shortage and created shipping disruptions.
While the pandemic had a slight impact on Apple’s sales last year and a slump in advertising affected Google’s revenue, the quarter was huge for both companies. Apple earned $81 billion in the quarter, more than any fiscal second quarter in the company’s history, thanks to soaring sales of iPhones and services, which includes Apple’s streaming service and cloud storage. Google earned $62 billion, a 62 percent increase from the same quarter last year.
Still, executives at the companies warned they’re not out of the weeds yet. “We believe it is still too early to forecast the longer-term trend as markets reopen, especially given the recent increase in covid cases globally,” Google Chief Financial Officer Ruth Porat said on a conference call Tuesday.
Apple told analysts that it could not give revenue guidance because of “the continued uncertainty around the world,” as Apple Chief Financial Officer Luca Maestri put it.
Microsoft also shattered the expectations of Wall Street on Tuesday, reporting revenue of $46 billion, a 21 percent increase over the same quarter last year, which was largely due to the strength of its cloud-computing business. Cloud computing lets customers rent data storage and processing capabilities over the Web instead of running their own data centers.
Like all tech giants, Microsoft was buoyed by the pandemic, as business moved quickly to the cloud-computing technologies that the software giant sells. Microsoft expects those corporate customers to continue to accelerate their use of its products even as the pandemic winds down, chief executive Satya Nadella said on a conference call Tuesday. That’s because they’ve grown accustomed to them and learned that cloud services are more reliable to computing infrastructure that customers run themselves. “I think it is durable,” Nadella said of the pandemic-fueled growth.
Katy Huberty, managing director for research at Morgan Stanley, asked Cook and Maestri whether the pandemic was a net positive or negative for Apple, amid a debate going on in the market.
Maestri addressed the question by pointing to examples of both. “We’re all looking forward to a covid-free world. That would be very good for us and our customers as well,” he said.
Apple and Google did not address another possible headache: Looming regulation in Washington and Europe that aims to curtail allegedly anticompetitive practices. For Apple, that means a possible dip in App Store revenue, which Cook said generated $643 billion in sales in 2020. For Google, regulation could mean spinning off divisions of the company or ceding some of its advertising business to competitors who claim Google has too tight a grip on the industry.
Google’s expenses jumped slightly as the company paid a $268 million fine to French regulators after they found it abused its position in the advertising technology market to favor its own products. But the cost was tiny compared with Google’s overall profit and revenue in the quarter, underlining how the company continues to charge ahead despite facing high-profile antitrust scrutiny in multiple countries.