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Apple Q1 2011: Apple Wins Christmas

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For the holiday quarter, Apple (s aapl) reported revenue of $26.74 billion and a net quarterly profit of $6 billion, or $6.43 earnings per share, breaking the most recent record of $15.7 billion earned the previous quarter. Apple’s revenue surged past Wall Street estimates of $24 billion, and for the third year in a row, revenue has risen $5 billion or more during the first fiscal quarter. Although Steve Jobs is currently on a leave of absence, the obligatory press release quoted the CEO:

We had a phenomenal holiday quarter with record Mac, iPhone and iPad sales. We are firing on all cylinders and we’ve got some exciting things in the pipeline for this year including iPhone 4 on Verizon (s vz) which customers can’t wait to get their hands on.

The resurgent Mac also set a new sales record: 4.13 million units, breaking last quarter’s record of 3.9 million, and more than 750,000 Macs than the company sold a year ago. To put that number into even greater perspective, Apple sold 4.5 million Macs during all of 2005. Nine months after the launch of the iPad, it appears concerns of Mac cannibalization are groundless, though concern for desktop Macs might be warranted.

In 2010, two out of three Macs sold were laptops. For the first quarter of this fiscal year, Mac laptops represented 70 percent of sales. Mac desktop sales were actually down year-over-year, from 1.23 million to 1.28 million, while laptops surged to 2.9 million during the holiday quarter. While Apple doesn’t break out sales by individual model, the new MacBook Air appears to be having an impact. Apple has indeed become the “mobile devices company” Steve Jobs described last January during the iPad introduction, and the iPod remains the best-selling of Apple’s mobile devices.

Apple sold 19.4 million iPods in the first quarter, compared to nearly 21 million last year, a decrease of 7 percent. For the last four years, Apple has regularly sold between 20 and 25 million iPods during the holidays, indicating the iPod may have reached market saturation. Revenue, which had been increasing despite decreasing sales, is now flat, up just 1 percent. While Apple also doesn’t break out iPods by model, it’s been thought that increasing sales of the higher-priced iPod touch were offsetting an overall iPod sales decline. The change in revenue may indicate that the combination of the iPhone and the iPad are negatively impacting iPod touch sales.

As for the iPhone, after selling 14.1 million units during the first full quarter of iPhone 4 availability (July through September), Apple sold 16.2 million iPhones during the holidays. That’s up an astonishing 86 percent year-over-year, and since 2008, iPhone sales have approximately doubled during each subsequent year’s first quarter. The iPhone earned nearly $10.5 billion for Apple, some 40 percent of all revenue.

Looking forward to next quarter, it’s hard to imagine Apple beating sales for the last two quarters, especially since the next iPhone isn’t expected to arrive until June or July. However, Apple will have the Verizon (s vz) iPhone, and could finally manage to ship the white iPhone, so another record quarter is possible.

Another sequential record quarter is a little harder to imagine for the iPad. Launched just over nine months ago, the iPad sold 7.33 million units during the holiday quarter, up from 4.19 million the previous quarter. It appears the iPad, like the iPod, has great seasonal cache as a Christmas present. That makes one wonder if the yearly launch may at some point be moved from spring to fall, when new iPods are traditionally unveiled.

That question may come up during Apple’s conference call today, along with the expected queries about Steve Jobs and his medical leave of absence. As always, TheAppleBlog will have highlights and commentary immediately following the call.

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26 Responses to “Apple Q1 2011: Apple Wins Christmas”

  1. Let’s make it simple:

    Apple: $6.0 Billion in profits this quarter

    Google: forecasted $6.0 Billion in revenues (~ $0 from Android) this quarter- see you Thursday Sergey.

  2. So, Apple has sold over 33 million iOS devices in the last quarter, far in excess of the 20 million or so Android devices sold in that timeframe.

    – 16.24 million iPhones (beating RIM’s 14 million Blackberries for the second quarter running)
    – 7.33 million iPads
    – over 10 million iPod touch mini-media tablets
    – iOS Installed base = 160 million vs approx 40-50 million Android devices.

    With the iPad grabbing 90% share of the tablet market and the iPod as usual capturing 80% of the media player/mini-tablet market, Android is still a non-event in the non-smartphone space.

    This works out at 360,000 iOS devices per day averaged over the whole quarter, well in excess of the 300,000 activations per day that Google announced Android had reached just before Christmas, so Apple’s iOS platform has been surging just as much as Android these last three months.

    Not bad for One manufacturer versus dozens of manufacturers using Android.

    As such, predictions that Android will overtake iOS anytime soon continue to be overblown. You need to look beyond just phones with carrier subsidies, exclusives and BOGOF offers for the true picture to emerge.

    Guess which platform developers would be foolish not to keep developing for first? (not to mention that they make far more from iOS than for Android per device)


    • Apple used to talk about Android phones versus iPhone, but now its Android versus iOS. That tells us something. Further, no one is talking about Android tablets yet, and the Samsung Galaxy Tab is selling. The Tab made the initial goal set for it by Samsung, and is on track for at least 10 million units sold this year, and that’s just one Android tablet.

      While Android may not achieve a dominant market position, say 70 percent, it will at least achieve a strong plurality. However, iOS will do quite well also. It’s RIM and Microsoft that are probably screwed.

      • @Charles Jade
        Google changed the game when they required all Android tablets have cell phone hardware in order to be allowed to access the Android Marketplace. As a result the Dell Streak and the Samsung Galaxy Tab are always counted in Android smartphone numbers even though they are tablets. 

        Why compare smartphone operating systems anyway unless you are comparing the size of each App or ad platform? If so, then you need to compare all devices running that OS.  

        If you are just comparing smartphones, then you should be comparing individual Android manufacturers against Apple. 


  3. AAPL didn’t *earn* $15.7B in the *previous* quarter – the $15.7B number was their revenue number (not earnings) from two (not one) quarters ago.

    Revenues – Quarter – Earnings
    $26.74B – 2011Q1- $6B
    $20.34B – 2010Q4 – $4.31B
    $15.7B – 2010Q3 – $3.25B

  4. Good analysis. I agree with you about the iPad – it’ll have a seasonal rise then drop back to a comfortable 3-4 million or so a quarter.

    The iPhone, however, will sell at least as many units next quarter because not only is there the Verizon iPhone to take into account but also the Chinese New Year when gifts are made. Expect about 18 million.

    • The constraint on the iPhone will again be fabrications capacity. I got the impression at the conference call that Apple made a supreme effort to get a 25 percent increase during the last quarter. I’m wondering if the company will be able to get much more this quarter.

      • Not convinced. The numbers quoted were shipped, not sold and they also had over 3 million in inventory.

        Demand is good enough without pretending it’s better than it is.