According to Steve Jobs, the real battle between iPhone and Android phones didn't start until October.
During a rare appearance on Apple's last earnings report, he admitted that Android "outshipped" Apple "as we were transitioning to iPhone 4." And he added that he was most interested in how sales of the two competing smartphone operating systems did during the final quarter of 2010.
We get those results tomorrow afternoon. That's when Apple reports its fiscal first-quarter 2011 earnings, and that means accounting for its October, November, and December sales--prime holiday shopping time.
Investors will also be clamoring for information about the health of Jobs, the company's CEO and alter ego. This morning, Apple revealed out of the blue that Jobs, a pancreatic cancer survivor, would be taking a medical leave of absence. No date was given for his return, though Jobs is expected to have a say in strategic decisions, and in his absence, day-to-day operations will be handled by Chief Operating Officer Tim Cook, who also filled in during Jobs' 2009 medical leave.
The holiday sales period is crucial for any consumer goods company, but it's particularly important for the iPhone maker to see how it's doing compared to upstart mobile OS distributor Google and its free Android software. It's been proliferating across hundreds of devices and all major carriers, and over the summer began to show rapid gain in momentum. A report from ComScore last week showed Android just inched by iPhone, but remained behind Research In Motion in U.S. sales.
Of course tomorrow isn't all about the iPhone. Apple observers are anxious to hear how the iPad did during its first holiday sales period and while it's still one of just a few tablets for sale--something that will be very different come next December.
Overall, financial analysts are expecting yet another great showing from Apple: on average they expect revenue of $24.38 billion and earnings per share of $5.38. Here's the breakdown, by major product category, of what to look for.
iPhone: Bernstein Research thinks Apple will say it sold 15.2 million iPhones in its FYQ1, a 13 percent sequential increase over last year. Some of that increase at the end of the year can be attributed to AT&T allowing its customers to upgrade six months early without penalty starting in June. Many suspected it was a ploy to lock customers into new two-year contracts before the Verizon iPhone was announced last week.
Last quarter's earnings call was infused with a little extra drama when Steve Jobs joined the conference call and promptly jumped on the comparisons being made between sales of the iPhone and Android phones. He pointed out that Android "outshipped us while we were transitioning to iPhone 4," meaning for July, August, and September sales, and that he was looking forward to seeing the results of the last quarter of the year. Tomorrow we'll find out.
Obviously the biggest news so far for Apple this year is its introduction--at long last--of an iPhone able to work on Verizon's network. Now that we know Apple makes a CDMA iPhone, the next question is what other carriers that use that technology will be next to get it. KDDI in Japan is an example of a likely candidate.
iPad: Though the iPad debuted in early April, the last three months of the year are likely to bear the best results for sales of the touch-screen tablet. Why? Because Apple had some well-known problems with its supply of the iPad for Apple stores and other retail partners. Even during its last earnings call in October, Cook admitted that his inventory was still not beefed up to what is typical for Apple.
UBS analyst Maynard Um is telling his investors that the most recent quarter for Apple was likely the first that the iPad was not experiencing those supply issues.
As a result, UBS adjusted its expectations for iPad sales for the quarter, saying it expects 6 million iPads sold instead of the previous estimate of 5.5 million.
The iPad was also available in more places during the holiday season: Apple stores, AT&T stores, plus Target, Wal-Mart, and Best Buy. Verizon also began selling the iPad bundled with a Wi-Fi hot spot in October, all factors which suggest good results tomorrow.
Macs:There was only one new Mac released during the quarter, and UBS says it's expecting good results from it. Holiday sales of the MacBook Air, introduced right at the beginning of the holiday shopping season for $999 for the 11-inch model, was likely to attract shoppers, said UBS.
Overall, the firm estimates 3.9 million Macs sold during the quarter, which would be 16 percent more than last holiday.
iPod: Bernstein estimates Apple sold 19.3 million iPods, down 8 percent from holiday sales last year. That's despite a brand new iPod Touch with FaceTime and a "retina" display, but not much of a surprise: iPod sales have been dropping each quarter for more than a year.
Come back here after 1:30 p.m. PT Tuesday to find out Apple's latest financial results.
Updated at 6:14 a.m. PT: Added information about Steve Jobs' medical leave of absence.