Apple Made a Lot of Money as "Traditional" iPods March to Extinction

Illustration for article titled Apple Made a Lot of Money as "Traditional" iPods March to Extinction

Surprise, Apple made a boatload of money the past three months. What's interesting is that iPhone sales are up a massive 626 percent vs. the same quarter last year, but iPod sales dropped. iPhone ascends, iPod falls. Updated live.


To fill in some numbers behind the percentages, that's 10.2 million iPods and 5.2 iPhones. Mac sales were up slightly—2.6 4 percent (they sold 2.6 million Macs)—indicating the economy wasn't entirely the culprit behind flattening iPod sales. Also, these numbers are from before the iPhone 3GS launch—so maybe they indicate certain winds a-shifting (even considering we're comparing iPhone 3G sales this past quarter to the sales of original iPhone at $399 last year). TechCrunch also notes that that's twice as many iPhones as Macs—pointing at another kind of paradigm shift at Apple.

Will we hear from Steve? Probably not, but you never know.

The Call
Details on the iPod decline: The drop in iPod sales was entirely limited to the "traditional MP3 players," the Classic, nano and shuffle. Apple says they expected this, saying it's "one of the reasons we developed the iPhone and iPod touch. We expect traditional MP3 players to decline over time as we cannibalize ourselves" with the iPhone and touch. Translation: Apple basically just said the traditional iPods are walking dinosaurs. To that point, the iPod touch actually grew 130 percent, making the sales decline of the other iPods that much more severe, since the 7 percent drop includes the touch. Also, Apple expects that trend to continue going into next quarter—more iPod touches, fewer regular iPods.

Interestingly, 50 percent of traditional iPods sold are to people who've never owned one before. They've still got over 70 percent of the MP3 player market.

They're unable to make enough iPhone 3GSes to meet demand, since they've sold a million in the first three days.

Tim Cook on their relationship with AT&T: "I think it's an excellent relationship and we're very happy with it."

They won't break down what the mix of $99 iPhone 3G to iPhone 3GS sales are, and it's too soon to figure out what people's iPhone purchasing habits are.


Talking about cheaper MacBooks, Tim reiterates for the millionth time that they won't put an Apple brand on a product that doesn't have their "legendary ease of use" and isn't totally super awesome.

The App Store rules all other stores with 65,000 apps—Nokia, RIM and Android are puny.


Hey look, it's the netbook question again: "At this point we don't see a way to build a great product for this $399, $499...for this kind of pricepoint unit. Some customers, maybe many customers buying these become disappointed and disenchanted buying these." So Apple is "going to keep giving people the best" like a MacBook Pro for $800 less than you used to be able to get one.

Asked if the iPhone is constrained by carriers with limited capacity (read: AT&T), Tim Cook replies, "without talking about specific ones, I see them making more investments to have faster networks and see them being very happy about" making more money.


People are getting aggressive! A straight up question about the tablet (sorry, a "mobile device" with a larger screen) gets a response from Tim Cook that first dallies, "without discounting anything for the future," before he continues "I think most customers buying a portable want a full-featured notebook." And "many people won't be happy" with the crappy experience of a netbook, so Apple is "only going to play in something that's very innovative that we're very proud of."

Asked about better separating good apps from crappy ones, Tim Cook says, "We're always looking for ways to categorize apps differently and we have some ideas...we realize there's an opportunity there for further improvement."

Apple Reports Third Quarter Results

Best Non-Holiday Quarter Revenue and Earnings in Apple History

CUPERTINO, Calif., July 21 /PRNewswire-FirstCall/ — Apple® today announced financial results for its fiscal 2009 third quarter ended June 27, 2009. The Company posted revenue of $8.34 billion and a net quarterly profit of $1.23 billion, or $1.35 per diluted share. These results compare to revenue of $7.46 billion and net quarterly profit of $1.07 billion, or $1.19 per diluted share, in the year-ago quarter. Gross margin was 36.3 percent, up from 34.8 percent in the year-ago quarter. International sales accounted for 44 percent of the quarter's revenue.

In accordance with the subscription accounting treatment required by GAAP, the Company recognizes revenue and cost of goods sold for iPhone(TM) and Apple TV® over their estimated economic lives. Adjusting GAAP sales and product costs to eliminate the impact of subscription accounting, the corresponding non-GAAP measures* for the quarter are $9.74 billion of "Adjusted Sales" and $1.94 billion of "Adjusted Net Income."

Apple sold 2.6 million Macintosh® computers during the quarter, representing a four percent unit increase over the year-ago quarter. The Company sold 10.2 million iPods during the quarter, representing a seven percent unit decline from the year-ago quarter. Quarterly iPhones sold were 5.2 million, representing 626 percent unit growth over the year-ago quarter.

"We're making our most innovative products ever and our customers are responding," said Steve Jobs, Apple's CEO. "We're thrilled to have sold over 5.2 million iPhones during the quarter and users have downloaded more than 1.5 billion applications from our App Store in its first year."

"We're extremely pleased to report record non-holiday quarter revenue and earnings and quarterly cash flow from operations of $2.3 billion," said Peter Oppenheimer, Apple's CFO. "Looking ahead to the fourth fiscal quarter of 2009, we expect revenue in the range of about $8.7 billion to $8.9 billion and we expect diluted earnings per share in the range of about $1.18 to $1.23."

Apple will provide live streaming of its Q3 2009 financial results conference call utilizing QuickTime®, Apple's standards-based technology for live and on-demand audio and video streaming. The live webcast will begin at 2:00 p.m. PDT on July 21, 2009 at and will also be available for replay for approximately two weeks thereafter.


[Apple, Image via Macblogz]



But wait ... didn't Dell just drop the price on the Adamo to compete with the MacBook Air? Put a fork in Apple, the glory days are o-v-e-r.