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Apple Conference Call: The Non-Boring Stuff

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Apple’s excruciatingly boring conference call for the third fiscal quarter has come and gone, but if you didn’t listen, or couldn’t stay awake, here are the top 10 items of interest (to me).

1) Apple’s Fab Four: Revenue Breakdown by Major Product

Sure, the iTunes Store earned over a billion dollars, and other hardware and software accounted for about $2 billion this quarter, but so what? That’s what the iPad earned in its debut quarter, or about one out of every seven revenue dollars. The “three-legged” revenue stool just became a four-legged comfy chair.

2) Not surprisingly, Apple announced the hundredth million iOS device (iPad, iPhone, or iPod touch) was sold sometime in June. RIM (s rimm) announced the same thing for BlackBerry OS in June, but what’s interesting is that RIM has been selling the BlackBerry since 2002. The first iOS device, the iPhone, went on sale in June 2007.

3) A new record was set for revenue, but not the $15.7 billion Apple earned for the June quarter, though a record it was. This Thursday, Microsoft (s msft) is expected to report earnings of $15.27 billion. Can you hear the chairs whizzing through air in Steve Ballmer’s office?

4) A new record was set for Mac sales, some 3.472 million Macs sold during the June quarter, up 33 percent year-over-year. The Mac not only out-paced the growth rate for PCs, around 20 percent, but saw insane growth in Europe, 46 percent, and even more insane growth in Asia, 71 percent.

5) “Antennagate” came up once directly, and once tangentially. First, iPhone 4 returns continue to be “less than the iPhone 3GS,” and for that “specific issue” they are “extremely small.” Second, Apple is projecting a $175 million “free bumper” deferral to revenue for the holiday quarter.

6) Apple execs continue to ignore and obfuscate regarding the threat of Android, saying only that the iPhone is “growing substantially faster than the market.” Well, Google (s goog) is allegedly activating 160,000 Android phones a day, and growing substantially faster than the iPhone, around 93,000 a day over the last quarter.

7) Speaking of that iPhone growth issue, once again, when asked about exclusivity and AT&T (s att), Apple execs said, “we won’t get into what we will or won’t do, but we’re very happy to be with AT&T.” I swear I heard teeth grinding.

8) More than 60 million people visited 293 Apple Stores last quarter, spending $2.68 billion. They purchased, among other Apple things, some 677,000 Macs. That’s about one out of five Macs sold, and “about half” of the buyers had never previously owned a Mac.

9) Apple now has $45.8 billion in cash, enough to pay for the Olympics in Beijing, bailout Greece, buy Warren Buffet, or every Apple fan’s dream, Nintendo.

10) On the issue of the iPad cannibalizing the Mac, it was suggested instead that a kind of “synergy” could happen. Looking at the iPod, it was “felt the iPod created a halo for the Mac,” as “iPod volumes took off, you see a dramatic change in Mac sales back in time.” And people thought Apple forcing the iPad to be tethered to a computer was a mistake.

And just in case the iPad does cannibalize Mac sales,”it’s great to have a lower share.” Seriously, that’s what was said in response to another question about the iPad and Mac sales. “If the iPad cannibalizes PCs, then that’s fantastic for us, because there’s a lot of PCs to cannibalize.”

Who knew Apple losing the PC wars could have been so fortuitous.

28 Responses to “Apple Conference Call: The Non-Boring Stuff”

  1. “Apple now has $45.8 billion in cash, enough to pay for the Olympics in Beijing, bailout Greece, buy Warren Buffet, or every Apple fan’s dream, Nintendo”


    They might’ve earned 45.8 billion but they can’t have it in cash form. Just not possible. So yes, they can’t do all those things because a lot of earnings go to paying costs.

    • Kitsch Kinkly

      Agreed, love my iTouch, hate hate HATE iTunes. Call me nostalgic, but I’m still using Winamp to manage my media library on the PC. Hopefully one day soon it will include support for the iTouch (its been supporting legacy iPods/minis/nanos for years now).

  2. Apple generated its best quarter to date, reporting US$15.7 billion in sales and a profit of US$3.25 billion yesterday with shares accelerating US$3.51 per share, up 75% in the year over year from the same period in 2009.

  3. Regarding the mobile platform war against Google, Apple does indeed have temporary advantages with both the iPad and the iPod touch. There will undoubtedly be Android tablets in the near future, but the iPad will be fighting on a level playing field, unlike the iPhone. Carrier exclusivity continues to hurt the iPhone, especially in the U.S. where a potential market of some 90 million Verizon customers is left to Google. As for the iPod touch, there will probably never be an Android media player because handheld devices without cellular modems are ultimately doomed, though that’s probably five years into the future.

    The short of it is that Apple is squandering its iOS advantage with the iPad and iPod touch by not having the iPhone sold by every carrier possible.

    • Kitsch Kinkly

      “As for the iPod touch, there will probably never be an Android media player because handheld devices without cellular modems are ultimately doomed, though that’s probably five years into the future.”

      Archos has an Android media player on the market, and its been around since September.

      Granted I don’t know what sales of the device amount to, but there are Android media devices out there.

      • To date, Archos devices have had no impact on the handheld or tablet market, not to mention decidedly mixed reviews. At this late stage in the evolution of the handheld media player, and with Apple’s dominant iPod touch and iTunes Store, it seems highly unlikely to me a real competitor will emerge before everything is a phone. But I could be wrong. I usually am.

    • iPhone 4 was incredibly successful. It made over 3,000,000 sales in 80 days. If it was a failure, people would be returning them all! Quoting from The iPhone Antenna Song ‘the media loves a failure in a string of successes.’That is why the iPhone 4’s antenna has had so much publicity

    • Smellykitty

      Wrong….Jobs already diverted iPhone4 reception probs when he had his little conference and offered out free bumpers. Live in the past much? Wake up. iPhone4 IS the most successful product launch to date.

  4. iPhone sales of 8.4 million are lower, compared to Q1 (8.75M) and Q4 of 2009 (8.7M). iPhone market share is down to 14% from peak in Q3 of 2009, of 17%; while the global smartphone market grew 10% over the past 6 months. Of the 100 million iOS, subtract the iTouch and iPad which are not phones, and then make the iPhone vs RIM phones comparison.

    • Only a person with no knowledge about Apples Quarterlys result can writ such number picking wrong statements: Q1 is always the Best selling Quarter because its the christmas quarter.. and Q4 is the summer quarter wich usally is the slowest of them all.. BUT: selling 8.4 million iPhones in a quarter where a lot of people know that there is a new iPhone coming out soon (and already mostly into Q4) is acztully an achievement. This is the biggest Q3 so far in Apples Historie.

      And: Since this is a war of OS, it’s totally ok to count ALL iOS Devices against competitors. Just because they haven’t manageged to come out with another form factor or use then a phone doesn’t mean you count only the phones. This is about the OS, and nothing else.

      • @URS

        Only someone who hasn’t actually done any research would make the statement you just did.

        Look at Q2 to Q3 in 2009 when people knew the 3GS was coming out. Yup, a spike of about 37%. Compare that to Q2 to Q3 in 2010 when people knew that the iPhone 4 was coming out. Yup, a drop of 4%. Non techies don’t care what’s imminent, they just buy what the best product is available at the time. That’s why Apple sold over 6 million 3GS units in the quarter when we knew the iPhone 4 was due.

        Secondly, this is not a war about OS, this is a comparison of iPhone sales to other phones. Throwing in iPads and iPods is like BMW inflating their car sales numbers by adding motorbikes into them.

        And, really, ask yourself this: if you go into a phone shop because you want a trendy phone, pick one up and then are told it doesn’t make calls what woud you do with it?

        Exactly. This is about phone sales, not total product range.

        In summary, do not mistake what you think happens with what actually has.

    • @MARK
      The difference is: In april, the iPhone 4 Prototype got stolen and published. Everybody and his cat knew, that a new iPhone was coming 3 month ahead. It was everywhere in the news.. so no way around that. I had many people telling me that story, people that I never thought they even knew what an iPhone was. So I am shure this is the effect we’ve seen here and that has never been like that before.

      And yes, if you only compare phones, then you are right. But as I said, this is about an OS war, thats the big picture there. And nobody but Apple figured it out yet.. all other manufactureres have Phones.. and then.. aehm.. try to make something else, like tablets and what not..

      Whats really @ stake here is the future of a mobile OS. Besides Android, nobody else has something equivalent to the iOS (yet) Every other manufacturer is actually in the process of reinventing their mobile OS … which means.. how will the compatibility turn out? How do you compare a RIM with OS 6 against an older one? and soon it gets very fragmented.

      • @URS

        Sorry, that’s simply not true. I’ve checked the press and blog archives back in May 2009 and there is an equal amount of hype and talk about what turned out to be the 3GS. The bottom line is that there wasn’t the spike there has been.

        I agree about the fragmentation but it’s less important than people think.

    • vishnu

      @Tim, while you are at it (the math, I mean), perhaps you could make more clear what is RIM’s situation once you adjust the BOGO (buy one, get one) movie they have been screening at VZN for the last 6 quarters! The reason for removing the piggy-back unit sale would be that it never got sold?

  5. Could someone explain how “160k *activations* per day” beats “93k *sales* per quarter”, with the former being by DOZENS, maybe HUNDREDS of different companies, with effectively ZERO DIRECT REVENUE to Google, while the latter is by ONE company, and ALL revenue going to Apple?

    An activation does not bring in any revenue and isn’t a sale for Google as far as I understand, since the very reason for Android’s success is no licence fees.

      • Exactly right, though.

        Android is already starting to fragment. Carriers are going back to their nasty old habits, like installing spamware on phones that users can’t remove.

        Android is just Linux on the Desktop all over again.

      • onecallednick

        @Lava I’m using linux right now. There’s nothing fragmented about my fabulous user experience, I can run literally anything I want to run. What’s so bad about “desktop Linux”? Why do people keep bringing up the wonderful array of choices in linux as a bad thing? Pick one and dive in, and may I recommend Ubuntu? But if you don’t like it, there are others, possibly created by people who didn’t like the same thing you didn’t like.

        And yes, some carriers are locking down their Android phones in crappy ways. Particularly AT&T. But you know what? There is a vibrant hacking community dedicated to unlocking the true potential of these hobbled devices. And if that doesn’t work, Android users get the luxury of switching carriers, unlike some people.

      • It’s quite simple. It’s not a question who makes more money, Google or Apple, it’s about which device has the dominant market share.

        And it’s shaping to be a repeat of the Mac vs PC.

        There will be way more Android devices out there than for the iPhone. As a result, developers will focus on developing for the Android and the iPhone will become a second class citizen. Apple will still make money, but a lot less than they do now, since the iPhone having a lot less apps, it’ll become much less appealing.

    • So? It’s never about selling phones for Google, it’s about selling ads. And to do that, they need the smartphones out there to use their mobile OS. While it doesn’t generate direct revenue, it doesn’t cost them much either. They don’t have to hire people to design the phones, they don’t have to pay manufacturers to make the phones, they don’t need to spend on marketing, no maintenance, no customer service, no colourful rubber bands. The reason for Andriod’s success is not no licence fees, no licence fee only helps get manufacturers to put it on their phones. It’s strong carrier support that gets people to buy the phones.

      • vishnu

        Right! All sealed and delivered. Welcome back to the past where things are a little more “in progress”. While it does appear to be an easy copy of the Win-Mac wars, perhaps this time around the results will be a bit more different qualitatively, you think? And you probably missed out on the small issue of backward compatibility that’s completely missing in Android? Goog released some stats of who’s eating what flavor of Android and how much just yesterday. What you write for 2.1 is not compatible with 1.6 and so on! Must be fun to be a developer for Android!! You are very kind to them to bring them to the Android platform where less than 20% of apps are getting paid for. Adsense may appeal as a business/revenue model for vague website owners, but developers? Cheers.

  6. Will be interesting to see the same pie chart after the holiday season. Impressive that the iPad hit 16% with only a limited market release.