iPhone, Mac sales continue to propel Apple forward
The iPhone and MacBook were a winning combination for Apple during the third quarter.
(Credit: Tom Krazit/CNET)Though iPod sales slipped, Apple rode increased Mac and iPhone sales to a better-than-expected quarter.
Revenue came in at $8.34 billion, resulting in earnings of $1.35 per share. That's a 12 percent increase from a year ago, when Apple reported earnings of $7.46 billion and earnings per share of $1.19.
Analysts were expecting $1.17 in earnings per share and revenues of $8.2 billion. The quarter ended June 27 was the best nonholiday quarter in terms of revenue and earnings for Apple--a bar that had been newly set during the previous quarter.
Apple also beat most analysts' expectations of its unit sales in its core businesses for the quarter. The company sold 2.6 million Macs, up 4 percent from a year ago, and 5.2 million iPhones, a 626 percent leap from a year ago. And even though the company's 10.2 million iPods sold during the quarter was better than expected, it's also Apple's first yearly drop in iPod sales, declining 7 percent.
Mac sales were very impressive for the quarter. Data provided by market research firm IDC showed the entire PC industry down more than 3 percent for April, May, and June, but Apple sold 4 percent more computers this quarter than it did during the same quarter in 2008. The company's laptops were responsible for that surge: MacBook and MacBook Pro shipments were up 13 percent.
Apple confirmed that much of that came late in the quarter after it transitioned to calling all of its unibody laptops MacBook Pros and cut prices across the board.
"Mac sales did accelerate" after WWDC, Chief Operating Officer Tim Cook said on the earnings call Tuesday afternoon. "We feel great about how they're selling."
What he's not enthusiastic about: Netbooks. He took the opportunity during the earnings call to take a few more swipes at the growing category of computing. It's a category that every one of Apple's competitors in the PC industry have embraced, yet Cook picked up where he left off during the previous quarter's earnings call in politely trashing the devices.
"Our goal is not to build the most computers, it's to build the best. Whatever price point we can build the best at, we will play there," he said in response to a question about Netbooks. "At this point, we don't see a way to build a great product for this $399, $499, this kind of price point, unit."
Cook also said most customers are disappointed by their experience with Netbooks.
"Some of these Netbooks, or many of those, are very slow, have software technology that is old, they don't have a robust computing experience. They have small displays and cramped keyboards. I could go on and on, but I won't."
In other words, it doesn't sound like we should expect a cheaper MacBook from Apple for less than $500. (But there was no mention of something between $500 and $999, where the company still has a very wide price gap in its current lineup.)
"We're going to focus on what we've always done," Cook said. "The Mac has outgrown market in 18 of the last 19 quarters. I think that says that we do have the right approach."
iPod Transition
The iPod business is officially in transition however. For the first time, Apple's year-over-year sales of iPods dropped, but Chief Financial Officer Peter Oppenheimer also did something unusual: he broke out sales of each model to provide context for the decline.
During the third quarter, Apple sold 10.2 million iPods, compared with 11 million a year ago. It turns out that the shifting appeal of the Shuffle, Nano, and Classic model iPods are to blame. But Apple apparently saw this coming. Those declining sales are "the reason we developed the iPod Touch," Oppenheimer said. "We expect our traditional MP3 players to decline overtime as we cannibalize ourselves with iPod Touch and iPhone."
Sales of the iPod Touch, on the other hand, grew 130 percent from the year before, he said. It reflects the growing emphasis Apple has been putting on the device that has become practically the same product as the iPhone, sans wireless phone service. It also drives revenue in a way that traditional MP3 model iPods do not: besides having access to the iTunes Store, iPod Touch users can also make purchases in the company's growing App Store.
Despite that positive outlook for the iPod Touch, the iPhone is clearly still the star of the company's lineup. The 5.2 million iPhones sold during the quarter was better than what many analysts were anticipating, although the 626 percent jump from a year ago is misleading--Apple didn't update the iPhone until July last year.
Still, they're having trouble keeping the latest iPhone in stock. "We are currently unable to make enough iPhone 3GSs to meet the robust demand, but are working to address this," Cook said. The phone is currently in 18 countries and in still on track to be in 80 by the end of the summer.
The takeaway from Apple's earnings is that consumers are spending money on technology, which equates to more good news for the tech sector. Though the price cuts on MacBook Pros were a catalyst for much of the growth, iPhone unit sales continue to propel the company above most of its competition.
Looking ahead
As predicted, Apple also put more money into the bank during the quarter, adding $2.2 billion to bring its cash holdings to $31.1 billion total. That's second only to Cisco Systems in the technology industry. But Oppenheimer didn't seem itching to spend it, on a company or on a broad new capital-intensive project, saying, "We continue to focus on the preservation of capital, which has served us well in the current environment," he said.
As usual, Cook did not have too much to add about future products coming from Apple. He did confirm that the updated Snow Leopard operating system is on track to be released later this summer.
Apple again guided conservatively for the fourth quarter of 2009, saying it expects revenue between $8.7 billion and $8.9 billion on earnings per share between $1.18 to $1.23.
Shares were up 4.48 percent to $158.30 in after-hours trading.
Erica Ogg is a CNET News reporter who covers Apple, HP, Dell, and other PC makers, as well as the consumer electronics industry. She's also one of the hosts of CNET News' Daily Podcast. In her non-work life, she's a history geek, a loyal Dodgers fan, and a mac-and-cheese connoisseur. E-mail Erica. 
OTOH, the RC version that you and I play with right now is not the OS that the masses will get when it goes RTM (unless they feel like popping the ducats for Ultimate - fat chance of that happening on a cheap netbook or low-end laptop, eh?).
Most users will get the crippled versions - Home/Starter will be most likely (the latter for Netbooks).
Not everyone visits tech sites ;)
How many people line up to buy a 1999 model of a car when the 2000 model is waiting in the wings to replace it that is several factors ahead of it in features?
Any attempt to compare Apple's sales to that of other OEM's who are waiting for the OS to come out would be foolish and ignorant.
I wasn't afraid to upgrade to my iMac recently.. then again.. I will only have to pay $10 to upgrade to Snow Leopard.. and I know my computer will be compatible.. and most likely faster.
You car analogy makes no sense.. since Windows 7 is not a computer.. it's an OS. If one were to buy a decent computer today.. they should not have to worry about 7 compatibility. If they do.. 7 will be the next Vista.
I see you completely missed the point. Perhaps I didn't make myself clear enough...
Comparing a company that sells music players, computers, online music and video services, and a host of other products to one that solely makes hardware is foolish.
Buying a new machine now when there will be a new model out and you know it also seems foolish.
You are not afraid of buying a new Mac- that's great. You and Leo Laporte can share your frustration at buying a product only to have it updated with a new model shortly thereafter. If you KNOW that it's going to be updated and you still do it- well, that's just foolish on your part.
Does that make sense yet?
Your logic is confusing. Buy a Mac now and a new model comes out later? And that is bad?
So HP and Dell do not come out with new models every year? They sell the same box since they were selling in the 80's? 70's? The UNIVAC? Can you please explain that part.
Buying a new machine knowing there is a new model coming out? Well, my company just bought 10 Windows PC from HP knowing HP is coming with new models. We want the cheaper pricing for our test room. Why is that bad?
You sound really confused, lacking much logic but wanted to just "soldier" on to prove a very illogical conclusion, it seems.
So I will help you.
I bought a Dell Box for my home office two years ago. Hated to buy Dell but my company paid for it so I took it. It came with VISTA and I dislike VISTA but the machine works. Today, that box is slower than what DELL is offering but WIndows 7 will run on it. So when 7 comes out, I will be upgrading to 7 as soon as our IT people can get it into my hands.
I have a really old Dell box at home that can run only WIndows XP, not VISTA. It cannot handle Windows 7 with any effectiveness.
I bought a Mac each of the last four years resulting in four iMacs in my house for my children, wife and myself. These are personal machines. The OS has been updated from Tiger to Leopard and very soon, Snow Leopard.
I have G4's Mac at home and those will run only Leopard and not Snow Leopard. These G4's are anywhere from 5 to 10+ years old but they can still run all the OS up to Leopard.
So can you please explain your logic?
what's foolish is always waiting around for the next best thing.. and in computing.. there will always be something better down the road.. usually just months away. It would be foolish..or just uninformed.. to buy an iMac, for example, a week before Apple updates their line.. or an iPhone a week before the developer conference. Otherwise.. it's more foolish to sit around and wait for "something better".
Apple's big numbers are coming from their Mac and iPhone sales... so why not compare them to Dell and OEMs.. that's their competition.. that's what their hardware gets compared to in benchmarks.. isn't it? Didn't Dell have a music player at one point? Was it OK to compare Apple and Dell then?
Also.. what new hardware are you expecting from the OEMs when 7 is released? Does Dell have something innovative in line for the release? Maybe they will finally install their USB ports so they are not upside down.. or maybe they will redesign their CD/DVD trays so the close button is actually accessible after the tray opens. Who knows.. better sit on your palms and wait though... why should you be more productive now when you can play wait and see.
"But Oppenheimer didn't seem itching to spend it, on a company or on a broad new capital-intensive project, saying, "We continue to focus on the preservation of capital, which has served us well in the current environment," he said."
I'm thinking that this may be a combination of things - Apple's past history (specifically the 1990's) coupled with watching companies like Novell recover and grow due to a monster bank account (before Novell saved itself by buying SuSE and coupling with Linux? It was basically living off of its cash reserves and little else, but managed to do it for roughly 6-7 years - and had enough left over to hold out for at least four more if it came to that, IIRC).
Doesn't hurt to have a sound nest egg... or a thermonuclear-sized war chest to fend off all comers with.
Besides, buying for buying's sake is stupid. You only buy what you know (not "think" - but "KNOW") will bolster your long-term plans over time.
Words to live by. Now if only some people from the average consumer with their maxxed-out credit cards to the geniuses in the financial sector could figure that one out....
You are the ones addicted to that inferior Windows OS.
Apple and MS have completely different business models, and both do very well within their respective markets. Trying to compare the success of the two by using market share is pointless.
What Apple needs to do is continue to invest in the things that will allow them to continue to develop the back end for how Steve sees humanity living out their digital lives.
As far as the player itself, it really comes to a matter of personal preference. I for one don't like the interface on the player or the software. It's just too slow, and isn't as intuitive as I like. There is also a lot more video content on iTunes I want to purchase, that just isn't available on Zune yet. But for some people, it's the other way around.
Remember "Plays for sure"?
It could also be that the iPod hasn't had any real game changing new features in years now. The changes have been largely form factors that waver back and forth between short and fat to the tall and thin model. The software itself is a minor update without any real 'gotcha' features to really impress anyone.
It's an iPod. *yawn*. The public doesn't really see anything *special* about this anymore.
I wonder how Cook was able to get his information. There is no survey or any facts to back up this claim listed. I think any survey that covered all netbook purchases in the last year would have been noticable by the public or the media at the very least.
I'm sorry, Mr. Cook, but your claim is unfounded and is without any basis in fact. I would like to see the source of your information.
In other news, 87% of all people prefer OS 9 over OS X. What- you don't believe that? What do you mean I have to cite my sources to back up my claim? :)
"Some of these Netbooks, or many of those, are very slow, have software technology that is old, they don't have a robust computing experience. They have small displays and cramped keyboards. I could go on and on, but I won't."
I'm not sure this was a wise statement to make as any Apple netbook will no doubt fall into this category as well if/when one comes out. It's the form factor.
Really needed Jobs to make these sorts of claims- he could do it convincingly.
http://www.pr-inside.com/consumer-reviews-study-reveals-netbook-customer-satisfaction-falling-short-of-sales-growth-r1015840.htm
and this..
http://gadgets.tmcnet.com/topics/gadgets/articles/49248-netbooks-rank-low-among-laptops-customer-satisfaction.htm
The first survey is seven months out of date and refers to product that haven't been sold in a very long time. The market has shifted dramatically since then. The survey has not been updated.
The second story you link to..... is nothing more than a reference back to the first one. They quote the survey's data from that outdated report.
I think we need current information.
They do not meet your needs at this time. The largest growing segment of the market with record numbers of sales to consumers would tend to dispute that however.
There have been numerous articles in the past about how most netbooks sold by BestBuy were returned within a week of purchase due to user frustration. It probably has to do more with un-educated users expecting more but nonetheless, it's going on.
Netbooks are a curiosity and will remain so. Our company purchase a bunch of netbooks for the mobile staff and returned them within weeks of use due to their pitiful performance. They now sit on a shelf gathering dust. They're made with inferior materials and old technology to keep the cost down. The margins are razor-thin and manufacturers are barely making ends meet even with the quantities they sell. Fact... not fiction.
Just google this stuff as it is common knowledge.
As far as I know, most people buy netbooks for their low price and their portability. Apple probably can't compete in the price section.
Or, Apple is planning a new netbook, so it is making a marketing move.
As far as people disappointment, most people that I know are happy their netbooks and they knew what they are paying for.
http://www.npd.com/press/releases/press_090622b.html
http://www.pcworld.com/article/167173/netbooks_disappoint_consumers_survey_says.html
Hmm, if I were reading between the lines, it sounds like more fuel to the rumors that Apple would soon come out with a flat TouchMac tablet with a decent screen, large virtual keyboard, and the iPhone OS for something like $599....
Id love to be sinking in a boar with almost 30 billion in the bank and no debt.
But then again I dont work for Microsoft.
Next Quarter with quad core Imacs and new Ipods, along with momentum will make the best financial year for Apple, and yet we will still be hearing how great W7 is and will EVENTUALLY BE, but most mac users will be enjoying Snow Leopard for 30 bucks and laughing all the way to the bank.
Wow... why do you always assume $300 for every Win 7 price reference? Do you automatically assume everyone needs Ultimate? You are aware there are other versions for less, right? It hasn't exactly been a secret.
Also... be aware that you can buy Windows 7 without the purchase of a computer. You cannot buy OS X without the purchase of a new Apple Macintosh computer as per Apple's EULA. You can only buy an *upgrade*. Be sure you are absolutely clear on that fact.
The $29 upgrade ($49 for 5 computers) is for Leopard users. If you're running an earlier version, you'd have to buy the 'full' version. Usually that's less than $150 for a single, and Less than $200 for a 5-pack.
Um... only those that can upgrade to Leopard will be paying $29. Remember this is an OS upgrade price only.
@Vegaman_Dan--"mexnexus" clearly says "but most mac users will be enjoying Snow Leopard for 30 bucks and laughing all the way to the bank." The key word in that is "most".
Wrong again. I just installed 10.5 onto my macbookpro (after upgrading my HD). An upgrade disc will not let you do that without a previous OS in place (like going from Tiger to Leopard, Vista to Win7). The again, maybe I'm just lucky AGAIN. Seriously, get your facts straight.
If you where comparing apples to apples you would be comparing Windows 7 Home not Ultimate. You chose the Ultimate version for the price, nothing more.
@DrtyDogg-Actually, that's still pretty comparable. Example, Win7 Bit locker is only available in Ultimate. FileVault (similar to BitLocker) is offered on Leopard standard. Other than that, Wn7 Ultimate is not the best version to compare with. MOst home users probably won't mess that upgrade. Business users, on the other hand, probably will.
Yes
$9.95
What the heck are you talking about? Any intel Mac can upgrade to Leopard for $29. What is this "only those that can upgrade" talk? PPC users won't but try running Win7 on similar-aged hardware and see how performance is on that too.
How much for that upgrade/downgrade to Win7???
Windows 7 performs better then OSX smart one ;)
@monkeyfun--Post after post, you only provide more ammunition to those people who see you as a troll. And why not?? You are, once again, on a Apple related discussion, spewing more BS. Get a life and discuss things that interest you (things you like to use or would like to use perhaps) instead of finding more reasons to confirm the obvious!!
@ Seaspray... if you don't own a Mac computer why are you posting here? Your comments are present on almost every Apple article that pops up. And before you trash me for posting on Windows articles, check the facts. Haven't been to the 'MS only' side in a while now, nothing interesting there, nothing I need to know.
@ Seaspray... if you don't own a Mac computer why are you posting here? Your comments are present on almost every Apple article that pops up. And before you trash me for posting on Windows articles, check the facts. Haven't been to the 'MS only' side in a while now, nothing interesting there, nothing I need to know.
well all those people that laughed and jumped on the IDC bandwagon get to EAT CROW now.
So while the overall PC market is declining, Apple is growing.... hmm i guess all those "Laptop Hunter" ads aren't working afterall...
That was a Foxconn employee working with Apple where the hell does Microsoft equate into this?
And Apple is one of the biggest sweatshop using companies in the industry.
Designed in california made in china.
@topgun
That was a Foxconn employee working with Apple where the hell does Microsoft equate into this?
And Apple is one of the biggest sweatshop using companies in the industry.
Designed in california made in china."
@monkeyfun14--You asked a while back about showing where you slam Apple. There's one right above this comment. Also, seeing as how every other computer uses China, what is your point anyway?? Please provide some proof that Apple is the ONLY one with those working conditions and I'll take it back. Until then, troll onward.
On top of that I know many people who got an iPhone and now use their old iPod solely in the car or keep it docked at their home in a stereo.
The App Store changed that, but it really took six months before the average Joe probably understood that when you buy an iPod touch, it's not just an MP3 player. A lot of people who are buying traditional iPods (something like 60%?) are first-time iPod owners who probably don't understand the value-add of apps yet.
Remember that Apple uses its iTunes Store to drive sales of its high-margin hardware. Those new iPod users will peruse the store, see games, social networking apps, etc. and eventually think, "Gee, I'd love to get a iPhone/iPod touch so I can have those apps."
The magnetic AC adapter is very nice.
Meanwhile, in a crap economy mind you, Apple, which should have been losing money/sales/whatever along with HP and Dell, is making more money, (and more importantly to them) more sales - more than they did at this time last year.
They're growing. Their marketshare is growing as well - they were at 8% this time last year. They're at 10% now. They're the third-largest laptop seller on the planet, where five years ago they were so low in laptop sales they had commonly been lumped in with the "others" category.
Even in your own post, you mention but fail to see the trend... If you as a PC maker made 90 last year but are only making 87 this year, next year it is liable to drop to 80, then 70, then... and since PC makers have razor-thin margins, they are far more sensitive to sales drops than the little guy who is (incidentally) selling his gear with some hella big margins.
No I didn't miss the memo no other PC manufacturer has released their numbers as of yet so to say that they are ", hurting... badly. As in, losing sales. Losing money. Scrambling to find ways to prevent themselves from being devoured." is not only over-dramatic, it is just plain wrong.
Then all you have to do is show me a PC maker that is growing, not shrinking.
"Cook also said most customers are disappointed by their experience with Netbooks."
"Some of these Netbooks, or many of those, are very slow, have software technology that is old, they don't have a robust computing experience. They have small displays and cramped keyboards. I could go on and on, but I won't."
He is so full of it! Everybody I know that has gotten a Netbook of at least 9" or better loves them. They may reload them with a different OS (even Win7) but they still love 'em. As far as not perfoming well, that is not true. The Atom CPU Hyperthreads and I have an AV and Malware scanner running while I surf or use Microsoft Office and I don't see any delays. I have it set up for Secure 802.11n WEP 256AES and it is faster than the 100Mb drop I typically connect to.
Typical arrogant "Not Invented Here" trash we've all come to expect from Apple.
Oh, and before you BASH me as an Anti-Apple Windows FanBoy I also have a MacBook and it is superb.
- by metomjr July 25, 2009 6:30 AM PDT
- what else would propel them forward?
- Like this Reply to this comment
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