Apple’s newer lines of business – Apple Pay, the App Store and Apple Music – helped the tech giant to drive growth in its third quarter.
Quarterly profit rose 12% to $8.7 billion. Revenues grew by 7% year-on-year to $45.4 billion.
The news sent its stock surging more than 5% in after-hours trade.
Apple, which also forecast strong sales, is expected to release new and updated iPhones next month.
CEO Tim Cook was tight-lipped when it came to details on the new launch and said reports about the new phones may have caused some people to “pause” their purchases of the existing phones.
However, “while that affects us in the short-term, it probably bodes well”, he added.
Even with some people waiting for the new models, Apple said the number of iPhones sold in the quarter increased a solid 2% year-on-year, driven by strong demand in markets such as Latin America and the Middle East.
The growth lifted revenue from iPhones, which account for the bulk of the company’s sales, by 3% to $24.8 billion.
Apple also said the number of iPads sold climbed 28% year-on-year, while revenues from the product increased 2%. The rise follows the introduction of new models, as well as increased efforts to incorporate the tablets into operations at schools and in businesses.
Revenue from other devices, such as the Apple Watch, Apple TV and Beats products, jumped 23% year-on-year.
Apple’s China revenues slipped 9.5% from a year earlier to slightly more than $8 billion.
Its flagship iPhone is losing market share to a slew of local competitors, while the company also faces challenges in dealing with China’s strict internet censorship regime.
Tim Cook stressed the success of its services unit, which includes Apple Pay, the App Store and Apple Music. The division had sales of nearly $7.3 billion during the three months to the end of June, a rise of 22% on the same period last year.
Apple Pay now accounts for almost 90% of mobile payment transactions around the world, said CFO Luca Maestri. Paying accounts on the App Store are also on the rise, he said.
Tim Cook also addressed Apple’s decision to remove some products from its App Store in China, saying the company had to abide by the law.
Samsung’s mobile wallet service has been launched in China, in co-operation with local vendor UnionPay.
Instead of using cards, Samsung Pay allows shoppers to use their smartphones to pay for in-store purchases.
Last month, Apple launched its own Apple Pay system in China, also in partnership with UnionPay.
China’s smartphone market, the largest in the world, presents a huge business opportunity for mobile-payment systems.
Apple Pay and Samsung Pay will now compete with Alibaba’s Alipay, which currently dominates China’s electronic payments market.
However, analysts say that mobile payment services provided by Alipay and WeChat were so dominant in China that international newcomers such as Apple and Samsung would face an uphill battle to win market share.
Tencent’s WeChat also has a payment system which is popular in China, and telecommunications giant Huawei launched its own service earlier this month.
Samsung Pay was now available in China on a range of smartphones including the Samsung Galaxy S7, Galaxy S7 edge, Galaxy S6 edge+ and Galaxy Note5, the South Korean electronics giant said.
Samsung said it would have “the opportunity to support additional mid-range models in the future”.
In announcing its official launch, which has been expected since late last year, Samsung said that Samsung Pay currently supports select credit and debit cards of nine major banks in China including China CITIC Bank, China Construction Bank and China Everbright Bank.
The company has previously said it has one critical fact that will in its favor – its technology works with a much larger number of existing payment terminals.
There has been a rapid take-up of smartphones in China, with an estimated 68% of the population now owning one. And digital wallets are becoming a more popular way to pay for goods and services.
Samsung said on March 29 that its payment system was “simple, safe and easy to use” and that it worked “virtually anywhere you can swipe or tap your card in China”.
Unlike Google Wallet and several other earlier payment apps, Samsung says there is no need to unlock its phones to launch a special app to get started.
Like Apple Pay, Samsung Pay will use near field communication technology (NFC), which needs a separate transaction device, but it will also support magnetic secure transmission technology which works on regular credit card machines.
Samsung Pay is currently available in South Korea and the US.
Google’s Android Pay is now available at more than one million locations in the US competing with Apple Pay in the burgeoning mobile payments market.
The mobile payments market is estimated to be worth $1trillion in 2017.
Technology companies are trying to convince shoppers to use their handsets, rather than plastic cards, to pay for purchases.
Android Pay can be used with smart phones that have near-field communication (NFC) capability and Google’s KitKat 4.4+ operating system.
Google’s mobile payment system will allow users to store their credit card details on their phones, as well as loyalty cards and other data.
Existing users of the Google Wallet app can access Android Pay through an update, while new users can download it from the Google Play app store in the coming days.
Retailers including Macy’s, Bloomingdale’s and Subway are among the first to participate in Android Pay, with more to come.
It will be extended to mobile checkouts in some apps later this year.
Android Pay will support credit and debit cards from providers including MasterCard, Visa and American Express, as well as banks including Bank of America, with Citigroup and Wells Fargo to follow.
Rather than passing users’ credit card details to a retailer, both the Google and Apple systems generate a “token” so the actual data is not revealed during a transaction, reducing the risk of data theft.
Last month, Samsung launched its own mobile wallet service, called Samsung Pay, in South Korea.
Samsung Pay will be available in the US from September 28, with countries including the UK, Spain and China to follow.
Google is yet to reveal when Android Pay will be available outside the US.
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