Apple appears to be a company that is addressing all the challenges that the coronavirus throws up. However, it also sounds like more challenges lie ahead.

Indeed, Apple's March quarter could have been much worse as the shutdown caused by the COVID-19 outbreak began hitting Apple's business in China in early February and spread worldwide throughout March. However, Apple ended the three months ended March 28 with quarterly sales of $58.3 billion, up 1% from the fiscal year ended March 2019.

This was far from what Apple had expected at the start of 2020 and even through the first few weeks of the year, CEO Tim Cook told Wall Street analysts on a conference call today (April 30).

In February, he warned that the company would not meet its sales targets during the quarter as supply chain disruptions began to affect Apple's iPhone supply and Apple Store closures in China reduced demand in that country. Still, Apple beat analysts' revised estimates of $54.4 billion in sales.

"Without this pandemic, this quarter might not have been possible, but I can't remember a quarter where I was more proud of what we do and how we do it," Cook told analysts.

Apple was spared a quarterly decline because Apple continues to make gains in services and wearables. Services hit a record $13.3 billion for the quarter, up 16% from a year ago, as the App Store, Apple Music, and cloud services all broke records. Wearables sales were up 23% to just under $6.3 billion, and Apple pointed to the large number of new Apple Watch customers.

These numbers helped make up for the iPhone business lost during the quarter, as Apple's smartphones still account for half of the company's sales. These numbers do not include the iPhone SE 2020, which was released after the quarter ended in March.

The question for Apple is what happens next: iPhone and wearable device sales are expected to deteriorate year-over-year, while Mac and iPad sales are They are expected to improve.

Longer term, Cook struck a more confident tone about Apple's direction. He said, "Our global supply chain is very durable and resilient. We have demonstrated a consistent ability to respond to and manage temporary supply challenges such as COVID-19. We have continued to deliver innovative new products across multiple categories that appeal to a broad customer base."

According to Chief Financial Officer Luca Maestri, Apple's outlook is supported by the fact that its global supply chain is up and running again. Cook added that production levels were back to normal by the end of March.

While Apple will not discuss upcoming products during its earnings call with analysts, comments about the supply chain are likely to fuel optimism that the iPhone 12 is still on track despite the disruptions of the first three months of the year. Earlier this week, reports circulated that the iPhone 12 launch could be delayed by up to a month.

Last year, the iPhone 11 was announced in the second week of September, and before the outbreak, many Apple watchers expected a similar schedule this time around.

"Apple typically announces the new iPhone in the second week of September, but product availability varies from late September to early November," said Avi Greengart, president and principal analyst at Techsponential. 'But Apple's product development plans appear to be largely on track. "

Apple has many other products in the works for later this year. in addition to the iPhone 12, Apple is working on the Apple Watch 6, new versions of the iPad Air and MacBook Pro, exercise-focused earphones called AirPods X, a new tracking device called AirTags a new tracking device called AirTags, and other rumored products. And restoring the supply chain is only one piece of the puzzle for a successful launch, with several other conditions beyond Apple's control.

For one thing, Apple stores outside of China remain closed as evacuation orders remain in effect in most locations. While some states and countries have begun easing these restrictions, it is unclear when Apple stores will reopen and that could limit its ability to sell any new products it has in operation. In an interview with Bloomberg, Cook said Apple will begin gradually opening "a small portion" of its U.S. retail stores in May.

"Apple's stores play a big role in discovery and support to introduce new products to consumers. In the long term, Apple definitely needs to open stores," Greengart said. But in the short term, Apple's products are so well known and appreciated that consumers are willing to buy online."

And there is the prospect of a recession, which would limit shoppers' ability to purchase new phones, tablets, and other devices. Cook said the company began to see demand increase in March and April, partly because of the release of the new iPhone SE and iPad Pro, but also because of government-backed economic stimulus programs. It is unclear if these programs will continue through 2020.

Greengart sees Apple facing several challenges to get its business back on track. For starters, the trade war with China appears to be heating up again, with the two countries trading accusations over the pandemic. This is a potential trouble spot for Apple, which relies on Chinese partners for parts and assembly of the products it designs. There are also economic conditions that may discourage consumers from paying for more expensive electronics.

"It's unclear how the economic impact of the global shutdown will play out in the long run, but ultra-premium phones costing $1,000 or more will likely be out of reach for many people who may have purchased them in previous upgrade cycles," Greengart said. Still, Apple has plenty of products that are well suited for a pandemic that forces people to work and learn from home." They include premium and professional computers, a rich line of tablets at multiple price points, watches with health monitors, noise-canceling earbuds, and more.

Meanwhile, Cook voiced optimism about Apple's prospects in his prepared remarks for today's earnings news.

"We manage difficult moments by constantly doubling down and investing in the next generation of innovation, and that is our strategy today," Cook said.

"So I can't say for sure how many chapters there will be in the book, but I'm confident the ending will be a good one."