What iPhone? Apple earnings (still) about the Mac
Usually all eyes are on Apple CEO Steve Jobs, but four times a year, CFO Peter Oppenheimer is the star.
(Credit: Apple)The Mac will reclaim its rightful place as the most important story inside the Apple universe when the company reports its third-quarter earnings later on Monday.
One could be forgiven for overlooking the Mac coming off a month of iPhone 3G madness, but the iPhone will have played a tiny role in determining the strength of Apple's quarter, which came to a close in June. Analysts expect another strong quarter from the company's Mac division to lead Apple to revenue of $7.4 billion and earnings per share of $1.08.
But, as always seems to be the case, Wall Street tends to focus on the guidance for the current quarter. Almost without fail, Apple provides guidance well under what analysts are expecting: its own guidance for its third quarter is $7.2 billion in revenue and earnings per share of $1. Since everyone knows this, however, investors spin themselves silly trying to analyze what Apple is implying about the upcoming quarter by just how much it undercut the consensus prediction.
With economic concerns still hovering over Silicon Valley, and lackluster results from Google and Microsoft dinging the market on Friday, Apple's earnings will demand the attention of the business community Monday afternoon. Investors seemed skittish on Friday, sending the company's stock down almost 4 percent, against a 1.3 percent drop on the Nasdaq.
Before the numbers arrive, let's review the third quarter as experienced by the three legs of Apple's money machine: the Mac, the iPhone, and the iPod.
Apple should report a strong quarter of Mac sales despite just one product launch, a speed bump to the iMac.
(Credit: Apple) Mac attack
We already know that Mac shipments increased by 38 percent in the U.S. during the last quarter, courtesy of IDC. That's strong growth without any sort of real catalyst for Mac sales other than a speed bump for the iMac product line. The second quarter of the calendar year--Apple's third fiscal quarter--is usually the slowest time of the year for the PC industry before the back-to-school and holiday shopping seasons take hold in the second half of the year.
Gene Munster of Piper Jaffray expects Apple to announce Mac shipments of 2.35 million units, which would be a 33 percent bump in Mac shipments compared with last year. Shaw Wu of American Technology Research is even more optimistic, believing that Apple shipped 2.5 million Macs during the quarter.
Wrong number
Contrast that with the iPhone, which seems to get all the attention but will probably contribute just 700,000 units to Apple's haul during the past quarter. The company has admitted that it underestimated demand for the product during the quarter, forcing it to go about six weeks without selling a single iPhone.
The financial community doesn't seem all that worried about the fact that iPhone shipments would have declined so precipitously from the 1.7 million shipments Apple recorded in its second quarter. That's partly because even at those levels, each iPhone shipment adds relatively little revenue to Apple's results in a given quarter since iPhone revenue is recognized over a 24-month period; Apple only recorded $378 million in iPhone-related revenue during its second quarter.
Steady beat
The iPod continues to be a large business for Apple, even if it's no longer growing at the pace it once did. The Wall Street guestimates seem to put iPod shipments for Apple's third quarter at around 10.5 million units, which would be a decline from the company's second quarter and roughly flat with last year's third-quarter totals.
iPod revenue growth, however, is the metric to watch in this category. Apple has been trying to promote the iPod Touch as the future of its iPod lineup. Even if unit shipments are flat, revenue growth would imply that iPod buyers are moving on up the price curve in line with Apple's plan.
As I thought coming off Apple's last earnings conference call, the company had a solid--if not spectacular--quarter, gaining share and making money even with no major launches spurring adoption. With few surprises anticipated, expect most of the question-and-answer session between Apple executives and financial analysts to focus on the upcoming quarter.
Long lines stretch away from the San Francisco Apple store as people wait to buy the iPhone 3G.
(Credit: Tom Krazit/CNET News)Apple has already announced that it sold 1 million iPhone 3Gs in the first weekend the device went on sale around the globe, but expect analysts to poke around that number for more details on where the phones were sold, and how many were sold at Apple stores versus carrier stores. It will also be interesting if Apple finally acknowledges the widespread server problems that tainted the iPhone 3G launch, and whether that had an impact on the early days of the iPhone 3G.
iPhone supply is also likely to be a hot topic, with reports of lines continuing to plague Apple stores and outages at AT&T stores. Apple has proven it can manage a large, complicated supply chain with the Mac and the iPod, but has had problems with its supply chain during the first year of the iPhone: albeit the good kind. Apple faced some iPhone shortages after a smooth launch in June 2007; it imposed purchase limits on iPhones later that year to make sure it would have enough to go around during the holiday season; and it ran out of iPhones midway through May.
Some cynics might think this is all a ploy to drive up demand, but it would be an expensive ploy: I suspect Apple and its investors would much rather see iPhone sales flowing uninterrupted. Just ask Nintendo.
Apple isn't exactly a bellwether for the tech industry, but it has a pretty good hold on the consumer technology zeitgeist at the moment. Monday's numbers present one of the four opportunities a year to see Apple's report card and check whether that hold continued for another quarter.
Tom Krazit writes about the ever-expanding world of Internet search, including Google, Yahoo, online advertising, and portals, as well as the evolution of mobile computing. He has written about traditional PC companies, chip manufacturers, and mobile computers, spending the last three years covering Apple. E-mail Tom. 
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http://rixstep.com/2/1/20080701,00.shtml
Bill Gates makes the list, Michael Dell, Sergei Brin, Larry Ellison and a host of other tech people.
Closed and proprietary system. That's Apple. That's Evil.
What Steve Jobs does with the money he's honestly earned is none of your or anyone else's business.
As to Gates giving away money. I wonder how much of that is the influence of Melinda.
Actually, it has more to do with using charity to bribe third-world governments into buying Windows. See also Mexico as a prime example.
http://rixstep.com/2/1/20080701,00.shtml
I will give you one, is called Vista. I bought a Mac because I was fed up with MS junk OS, with no real future for the Windows platform, I took the alternative, MAC
That is nonsense.
A closed and proprietary *system* would be a system where all major components are closed and proprietary. The major components of OSX are the XNU kernel (open sourced), the BSD base system (open sourced), two GUIs: X11 (open sourced) and Aqua (proprietary). Both X11 and Aqua coexist and run concurrently, so you are not even forced to make a decision for one over the other.
Also, Aqua is proprietary but not closed, the specification is public and there are at least two open source implementations of it, most prominently GNUstep. If you want to build your own MacOSX clone from open source components, you can actually do that using existing software, all entirely legal, too. The graphics of the GNUstep GUI don't look as nice as Aqua, but hey, Novell's and Red Hat's logos and graphics used in their Linux distros are proprietary, too. You can always create your own logos and graphics, though.
Can I legally purchase an Apple computer without an Operating system?
No.
Can I legally purchase and install the Operating system onto a non-Apple computer system?
No.
That, my friend, is a monopoly. That isn't necessarily a bad thing though. But it is a closed and proprietary system 100%. Anything else is hacking and you can do that with pretty much anything, however it does violate Apple's rules.
Argue it however you want, but the Psystar case blows any argument you may have out of the water.
There is a saying, if you can't say anything nice, don't say anything at all.
iPhones, both the previous and current models, are sold every single day.
What percentage of a system do *you* suggest needs to be proprietary for the whole lot to be proprietary? Anything greater than zero percent?
If so, then by your definition, many if not all Linux distros would also be proprietary because many if not all of them contain proprietary parts, ie the name of the distro, logos, graphics and in some cases installers and some utilities. You can fork the OS, but you cannot use the same name, logos, graphics and any utilities which are proprietary to the distro in question. Granted the percentage is small and these parts are relatively easy to replace, but the percentage of proprietary parts is never zero.
In other words, it ain't as simple as black and white when it comes to being proprietary.
In respect of MacOSX, I personally find the synopsis "Open source OS with proprietary GUI" to be most accurately representing the facts. Calling it plainly "proprietary" or "closed and proprietary" is simply a misrepresentation of the facts.
Not just Apple, but Microsoft and any other large company. There will always be idiots making stupid statements. It's just a way of life......
- by Perry_Clease July 21, 2008 9:11 PM PDT
- ""As to Gates giving away money. I wonder how much of that is the influence of Melinda."
- Like this Reply to this comment
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(28 Comments)Actually, it has more to do with using charity to bribe third-world governments into buying Windows. See also Mexico as a prime example."
Well cozying up to tin-pot dictators is a possibility, a big possibility. However, as an unapologetic Apple FanBoy I was being gracious and Bill Gates wouldn't be the first guy that had a good woman influence him to be altruistic.