During the call to discuss record fiscal Q3 earnings, Apple (NSDQ: AAPL) COO Tim Cook and CFO Peter Oppenheimer fielded keen questioning, from investment analysts, about the impact of Antennagate, about supply shortages of iPad and iPhone 4 and about whether iPad’s cannibalizing Mac sales.
— iPhone 4 slowdown, post-Antennagate? Apple COO Tim Cook: “Let me be very clear on this – we are selling every unit we can make currently.”
Any increase in returns? “My phone is ringing off the hook with people that want more supply. It’s hard to test the real question you’re asking because we’re selling every one we can make. The returns that we’ve seen on iPhone 4 are less than iPhone 3GS, the ones for this specific issue are extremely small.”
— Supply and demand: “High demand is never a problem. We are quoting longer lead times that we would like. In the scheme of things, it’s a good problem to have.”
Oppenheimer: “We do not create a shortage for buzz. I don’t know where that’s come from. That’s not our objective – we would like to fill every customer’s order as quickly as we can. The demand for iPhone 4 is absolutely stunning. We are working very hard to catch up with demand. I can’t predict when that will occur.”
When will the iPad supply issues ease? Apple COO Tim Cook: “We honestly don’t know… (iPad) is not following a typical early adopter curve and then taking a long time to cross in the mainstream. Our guts tell us that this market is very big. For us, it’s a jawdropper.”
Apple has no idea how many people want to buy its products. Asked by an analyst if iPad shortfall was “a couple of million” and iPhone 4 “half a million”, Cook said: “I don’t know – that question is very difficult to answer.” Historically, he said demand was an indicator of how much supply was necessary, but: “I truly don’t know … we have taken bets internally.”
— Cannibalization? Cook: “Internally, we focus on exactly the opposite – the synergy between … the Mac share is still low – so there’s still an enormous opportunity for the Mac to grow. The more customers we can introduce to Mac through iPhone, iPad and iPod touch – you would think there’d be some synergy with the Mac there.”
— And more… On AT&T (NYSE: T) – Cook: “They have been a first-class partner and have pioneered the smartphone (market) from a network point of view in the U.S. – that’s all I have to say about that.”
A data center Apple has been building in North Carolina is on schedule to be completed by end of this calendar year. Sounds like an iTunes Store initiative.
Cook flat-out refused to answer a question about how Apple intends to make good on its promise to open up FaceTime.