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Announcing sales records, Jobs vows Apple 'will triumph' over Android
- — 19 October, 2010 11:11
Steve Jobs - CEO Apple
Apple announced on Monday that it once again had set a Mac sales record last quarter, and also broke previous records for both the iPhone and iPad.
CEO Steve Jobs, who rarely participates in earnings announcements, joined the conference call with Wall Street analysts to boast that Apple's iPhone had passed Research in Motion's BlackBerry, and to maintain that he was "confident we will triumph" over rivals running Google's Android operating system.
Overall, the company posted record revenues of $20.3 billion for the quarter -- the first time Apple has passed the $20 billion mark -- an increase of 61 per cent over the same period last year. Profits were $4.3 billion, up 70 per cent from the same quarter in 2009.
"Spectacular," said Ezra Gottheil, an analyst with Technology Business Research.
"Every quarter seems to be a record with them," added Brian Marshall of Gleacher & Co.
In the quarter that closed Sept. 30, Apple sold 3.9 million Macs, breaking last quarter's then-record of 3.5 million machines. Mac unit sales were up 12 per cent over 2010's second quarter and 27 per cent over the same quarter in 2009.
Apple has set Mac sales records in four of the last five quarters.
Apple sold 14.1 million iPhones , up 98 per cent over the same period last year, not only a record but also the first time the company sold more than 10 million iPhones in a single quarter.
It was also the first time Apple sold more iPhones than it did its less expensive iPods. iPhone revenues were about six times that of the iPod's, Apple said. The iPhone accounted for 43 per cent of the company's total revenues for the quarter.
But the iPhone sales number could have been even larger.
"We would have been able to sell more iPhones if we had had them," said Peter Oppenheimer, Apple's chief financial officer. Apple currently has 3.3 million iPhones in inventory, enough for less than a month's sales at last quarter's pace.
Oppenheimer said that Apple wrote off $100 million to cover the costs of its free case program, which it launched in July (and shut down in September) to quell complaints from customers over dropped calls when they held the iPhone 4 in certain ways.
The iPad 's second quarter of sales hit Apple's balance sheet with 4.2 million units sold, a 28 per cent jump from the prior period.
"We have a tiger by the tail," said Jobs of the iPad.
Last quarter was also the first time that Apple sold more iPads than it sold Macs, something Jobs was quick to mention.
"iPad will clearly affect notebook computer [sales]," said Jobs, echoing industry analysts who have said that the popular tablet has cannibalized sales of both notebooks and smaller, cheaper netbooks . "I think the iPad proves that [the tablet] is not a question of if, but of when," Jobs added.
The iPad's impact on notebooks wasn't limited to Apple's rivals: Apple racked up 2.6 million notebook sales, an increase of only 17 per cent and a far cry from the 41 per cent boost in the prior quarter.
Meanwhile, desktop Mac sales were up 58 per cent year-over-year, to 1.2 million, a growth rate dramatically higher than the 18 per cent increase the prior quarter. Apple refreshed its popular iMac desktop line in August, mid-way through the past quarter.
But Gottheil saw some iPad cannibalization of Apple's notebook sales, and perhaps a shift in what people buy from the company. "I think the numbers show that for Apple's customers, there is a new way of thinking about the computing environment, where there's a large-screen iMac as the home's central computer, with MacBooks and iPads all around it," Gottheil said.
Taken together, the Mac's 27 per cent year-over-year increase in Mac sales was more than double what research firm IDC pegged last week as the global industry average of 11 per cent, triple that of rival Gartner's more anemic eight per cent.
Although Apple sold over 4 million iPads in the last quarter, the number was disappointing to analysts who had pegged tablet sales as high as 5 million.
Apple, however, said that iPad supply caught up with demand last month, and that it has enough in the pipeline to handle the new iPad sales outlets Apple has announced recently, including Walmart and Verizon.
Verizon will start selling the iPad Wi-Fi later this month in its 2,000-plus stores.
In the middle of the call, Jobs spent 10 minutes or more touting that iPhone sales outnumbered those of the BlackBerry for each handset's most recent quarter, and defended Apple's iPhone ecosystem as better for consumers than Google 's.
"Google wants to characterize us as closed and Android as open," said Jobs. "We find this a bit disingenuous, and clouding the real differences between our two platforms."
He blasted what he called Android's fragmentation -- the variety of user interfaces on different makers' smartphones -- and said that Apple's model, where every iPhone has the same interface, was better for consumers and developers.
"We think the open versus closed argument is just a smokescreen," Jobs said. "What's best for the customer? Fragmented or integrated?"
Marshall said he thought Jobs' comments were "counterproductive," in part because they took time away from the usual Q&A portion of Apple's earnings calls when analysts, usually unsuccessfully, try to get more information out of the company's executives.
"He came across as very cocky, which he didn't need to do," said Marshall. "It was kind of ego talking."