Flying high, Apple readies Watch to ship in April

But iPad sales are being 'cannibalized' by other products, Tim Cook said

The Apple Watch will ship in April, according to CEO, Tim Cook, ending speculation about when Apple will release its first new category of product in more than four years.

Rumours about the release date have swirled ever since the device was shown in September. At that time, Apple said the smartwatch would ship in early 2015. It has yet to reveal a few key details about the product, such as its battery life.

Cook revealed the ship date during a conference call to discuss Apple's earnings, which sailed past expectations. Sales of iPhones and Macs helped its revenue soar to $US74.6 billion for the quarter ended December 27, up from $US57.6 billion a year earlier.

iPhone sales came in at a record 74.5 million units and provided more than two-thirds of Apple's revenue, at $US51.1 billion. That was up from 51 million iPhones and $US32.5 billion revenue a year earlier.

Last quarter was the first full quarter that the iPhone 6 was available. Apple doesn't break down its sales by model, but Cook said the iPhone 6 was the top seller.

Revenue from China increased by 70 per cent to $US16.1 billion, and sales outside the US accounted for 65 per cent of revenue.

Mac sales were another highlight. The systems brought in a record $US6.9 billion, up from $US6.4 billion a year earlier. The company sold 5.5 million Macs, up from 4.8 million.

A bleak spot was iPad sales, which have been in decline for the past three quarters. Apple sold 21 million tablets, down from 26 million in its first fiscal quarter of 2014. IPad revenue was $US8.9 billion, compared to $US11.5 billion a year earlier.

"I believe over the long arc of time the iPad is a great business," Cook said, adding that "there's probably some level of cannibalisation going on with the Mac on one side and the phone on the other."

The iPhone 6 features a larger screen than previous models, and the MacBook Air is lighter than traditional laptops, features that give the devices some of the mobility of a tablet.

Another factor contributing to declining iPad sales, according to Cook: a longer upgrade cycle for tablets compared with iPhones and Macs.

Apple's attempt to establish a greater presence in the enterprise market, an area where it has struggled to gain acceptance, may change the iPad's fortunes.

In July, IBM announced it would sell Apple products and services to its enterprise customers. The first results of the partnership appeared in December, when the companies unveiled a suite of mobile apps aimed at specific industries. During Tuesday's call, Cook said that 12 apps will debut this quarter, including some targeted at new markets like healthcare and energy.

Apple products are used in many businesses, but only a small percentage of workers at those companies use iPads, said Cook. IBM's experience dealing with business users, and Apple's mobility background, could change that situation.

"The real opportunity is to bring mobility into the enterprise. To do that, you obviously need apps that are written for specific jobs. IBM provides us with knowledge of the verticals," he said.

Income for the quarter was $US18 billion, up from $US13.1 billion in the same quarter last year. Earnings per share came in at $US3.06 compared with $US2.07 a year earlier.

The company's revenue and profit also beat financial analysts' expectations. Analysts polled by Thomson Reuters had called for revenue of $US67.7 billion and earnings per share of $US2.60.

Fred O'Connor writes about IT careers and health IT for The IDG News Service. Follow Fred on Twitter at @fredjoconnor. Fred's e-mail address is fred_o'connor@idg.com

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Fred O'Connor

IDG News Service
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