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Summary:

With Apple announcing earnings next Wednesday, it’s bound to be good news for stockholders. But it’s good time to look at what that means for consumers, too. Could the earnings call provide hints about the future of Apple’s hardware and software plans?

apple_q211_macs_preview

On Wednesday, Apple will announce results for the second quater of the fiscal year, and expectations are looking large. Guidance is for $22 billion in revenue, $4.90 earnings per share, while conventional analyst wisdom calls for $23 billion in revenue, $5.30 EPS. Apple will likely blow past both, which is great news for shareholders, but the rest of us are likely more interested in Apple products. At the conference call, and in the numbers, there may be a few hints about Apple’s mysterious “product pipeline.”

Mac sales are expected to be between 3.5 and 4 million units, up from 2.9 million last year. More interesting, IDC is reporting ten percent growth year-over-year for Mac sales in the U.S., and while Toshiba also saw growth, HP, Dell, and Acer saw declines of 2.4, 11.8, and a CEO-firing 42.1 percent, respectively. According to IDC, “media tablets” like the iPad could be one factor in those declines. However, the reverse appears to be true for Apple, with the iPad having yet another “halo effect” on Mac sales. This ensures the Mac will remain a major focus for Apple, good news for Mac users, but which Macs will receive Apple’s attention in the future?

While Apple doesn’t break out numbers on individuals models, 70 percent of Macs sold last quarter were laptops, with the redesigned MacBook Air likely leading sales. Analysts expect the trend towards portability to continue, even though desktop sales are actually increasing. Nonetheless, the continued decline in market share likely means less focus on Mac Pros, Mac minis, and even the iMac. The Xserve, of course, is no longer part of the picture at all, having been discontinued.

Also in decline, or at the least stagnating, are iPod sales, likely to be between 9.5 and 10 million units, compared to 10.9 million last year. Sales of iPods have been slowly declining since 2008, but that decline is tempered by the increased average selling price of iPod units. That is attributed to the iPod touch, which accounted for half of all iPod sales in the holiday quarter last year. That’s great for the iOS platform, far more important to the future than Apple controlling 70 percent of the declining market for media players. The interesting question will be whether, despite alleged e-mails from Steve Jobs to the contrary, the iPod classic will be phased out. For that matter, merging the iPod nano and shuffle into a single device starting at $99 doesn’t seem like an impossibility, either.

For the iPhone, the opposite might happen with the introduction of news models and price points. Sales for last quarter will likely be between 16 and 20 million units, but it’s hard to be too optimistic because of the uncertainty over Verizon iPhone sales. Apple, never shy about being self congratulatory, has been silent on sales, though Verizon has said the iPhone 4 was the “largest retail launch” in company history. But even if Apple sold 20 million iPhones last quarter, that would be ten million fewer than Google is reporting for Android activations. Those numbers are likely the reason Tim Cook was hinting about the iPhone being “not just for the rich” earlier this year. A low-priced, current generation of iPhone would definitely help keep the iPhone from being relegated to niche status in an Android world.

As for Android doing to the iPad what was done to the iPhone, it hasn’t happened so far, though estimates on iPad sales are all over the place, anywhere between 5 and 10 million. Arguably, if iPad sales are near the holiday quarter’s 7.3 million, that will put the iPad on track for 30 to 35 million units sold this calendar year. That kind of success took years for both the iPod and iPhone to achieve, but let’s hope Apple isn’t getting fat on margins and lazy. Competitors like Samsung and beleaguered Acer are finally bringing tablets to market with lower price points than the iPad. Price will be the challenge for the iPad in the second half of the year, a challenged that could be met with another iPad 2.

In summary, my predictions for next week are:

  • Revenue, EPS: $24.9 billion, $5.05
  • Macs: 3.75 million
  • iPods: 9.95 million
  • iPhones: 17.55 million
  • iPads: 7.05 million

What are your estimates for Q2 2011?

And don’t forget TheAppleBlog will provide highlights of the earnings report and the conference call, including any trash talking from any Apple execs on RIM’s Playbook.

  1. That should be $6.05 for the EPS prediction, typo on my part.

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  2. OMG!
    Charles is an analyst.
    Who knew?

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  3. Revenue, EPS: $25.3 billion, $6.20
    Macs: 3.75 million
    iPods: 9 million
    iPhones: 18 million
    iPads: 7.5 million

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  4. Laughing_Boy48 Friday, April 15, 2011

    It looks like Apple shareholders are going to take another earning’s beating. Analysts are boosting Apple numbers to an impossible to beat level. Even a slight miss on any device sales will send the already shaky Apple share price plummeting. Wall Street really wants to take this stock down. Maybe even more than RIM or Google. The coming Apple bloodbath will probably cause investors to completely stay away from tech.

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  5. Michael Moskowitz Saturday, April 16, 2011

    Android is complete crap. It is not a platform, but an underpinning for HTC, MOTO, Samsung, etc. No intraoperability, no upgrade, no apps, no revenue. Market share for free is nothing. If you are going to insist on reporting Android as if it is a competitor with iOS then add up all iOS to Android activations (iPhone, iPod Touch, iPad, Apple TV and Mac- yes Mac since just like Android OS X is the underpinning of iOS.) Even these comparisons are dumb. Who is making money on their operating system? Not Android. 30,000,000 times 0 is $0. 16,000,000 times $600= $960,000,000 and that’s just the hardware. Who is selling Apps? Which company has an ecosystem that feeds itself.

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