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Apple Q2 2010: 10.89m iPods, 8.75 million iPhones sold

Reporting its second quarter financial results today, Apple said it sold 10.89 million iPods during the quarter, compared to sales of 11.01 million iPods in the year-ago quarter, and down 48 percent from the previous quarter. Apple also sold 8.75 million iPhones in the quarter, a 131 percent increase year-over-year, and up from 8.7 million units in the prior quarter. The company posted revenue of $13.5 billion and net quarterly profit of $3.07 billion, or $3.33 per diluted share, compared with revenue of $9.08 billion and net quarterly profit of $1.62 billion, or $1.79 per diluted share in Q2 2009. International sales accounted for 58 percent of the quarter’s revenue. Sales of Other Music Related Products + Services were up 27% from the year-ago quarter, and 14% from Q1 2010, to $1.3 billion total. That category includes iTunes Store sales, iPod services, and revenues from Apple and third-party iPod accessories.

Notably, the numbers from Q2 2009 are different from those originally reported due to Apple’s change in accounting rules that sees the company now recognize “substantially all of the revenue and product costs from the sales of iPhone and Apple TV at the time of sale,” instead of accounting for the sales over a 24-month period.

“We’re thrilled to report our best non-holiday quarter ever, with revenues up 49 percent and profits up 90 percent,” said Steve Jobs, Apple’s CEO. “We’ve launched our revolutionary new iPad and users are loving it, and we have several more extraordinary products in the pipeline for this year.”

“Looking ahead to the third fiscal quarter of 2010, we expect revenue in the range of about $13.0 billion to $13.4 billion and we expect diluted earnings per share in the range of about $2.28 to $2.39,” said Peter Oppenheimer, Apple’s CFO.

Apple releases iPhone OS SDK 4 beta 2

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Apple has released the second beta version of the iPhone OS 4 Software Development Kit for the iPhone and iPod touch. As with the prior beta release, a main Xcode and SDK beta is available for download, as are pre-release builds of the iPhone OS 4 software for the iPhone 3G and 3GS, as well as the second- and third-generation iPod touch. Both the new SDK and pre-release builds are available now for download by registered iPhone developers from the iPhone Dev Center.

Apple posts two new iPhone 3GS TV ads

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Apple has posted two new iPhone 3GS TV advertisements online. Both new spots continue Apple’s recent trend of iPhone advertisements that are more testimonial in nature, while featuring a single iPhone using a variety of apps in front of a white background. “Dog Lover” features a female narrator talking about searching local dog shelters to find a new pet, taking and sharing photos, finding nearby dog parks, and checking a monitor video feed while away. “Backpacker” features a male narrator talking about a trip to Spain, during which he checked for hostels, shared pictures, and downloaded and used a translation app. Both advertisements are available for viewing now on Apple’s website.

Apple ships iPad Camera Connection Kit

Apple has begun to ship its iPad Camera Connection Kit to customers who pre-ordered the accessory. Unlike other Apple iPad accessories, the Camera Connection Kit wasn’t available for pre-order until March 29, and was listed as shipping in “late April;” a shipment notification received by iLounge claims the dongle set will arrive by April 22. The iPad Camera Connection Kit includes two separate 30-pin connectors, one with an SD card slot, and the other with a USB port that can be used to attach most digital cameras. A recent report claimed that the USB-to-iPad connector may also provide support for USB audio devices, although this has yet to be confirmed. For more information on the Apple iPad Camera Connection Kit, see our First Look article.

Apple sued over iPhone moisture sensors (Updated)

Apple has been sued by a California woman over what she claims are false-positive readings on the iPhone’s moisture sensors. InformationWeek reports that Charlene Gallion of San Francisco claims to have had two separate iPhone units fail within six months of each other, and was denied warranty coverage due to triggered sensors. Gallion claims that neither of the units was ever subjected to water damage. The suit itself states, “As a result of Apple’s improper application of the Liquid-Damage Exclusion, Apple sells [devices] with the intent to exclude them from the warranty coverage Apple promises consumers it will provide—even when consumers pay extra for Extended Warranty coverage—simply because their Liquid Submersion Indicator has been triggered, without any attempt by Apple to verify whether the Class Devices actually have been damaged as a result of submersion or immersion in liquid.” Overly-sensitive moisture sensors have been a problem for some iPhone customers in the past; a report from September 2009 claimed that Apple’s company protocol when responding to a customer with a unit that has had its external sensors triggered is to say the warranty is now void and turn the customer away.

Update: Upon obtaining a copy the actual filing, iLounge has learned that Gallion has filed a class action suit, and is seeking both actual and punitive damages.

Apple launches replacement program for Headphones with Remote

Apple has launched a new Apple Headphones with Remote Replacement Program for units included with certain third-generation iPod shuffle models. According to the program’s page, “Apple has determined that the Apple Headphones with Remote included with the iPod shuffle (3rd gen) may fail under certain conditions.” The page claims that a “very small percentage” of iPod shuffle owners had experienced the issue, and that the headphones were distributed with iPod shuffles made between February 2009 and February 2010. “If your headphones stop working or work intermittently as described below, Apple will replace them, free of charge, for two years from date of purchase,” the page states.

Apple lists several symptoms for failing headphones, including non-responsive or intermittently working controls, unexpected volume changes, and unexpected voice feedback. According to the program page, the serial number ranges for the iPod shuffle units with covered headphones are xx909xxxxxx to xx952xxxxxx and xx001xxxxxx to xx004xxxxxx. Notably, the page also states that Apple’s In-Ear Headphones with Remote and Mic and the company’s Earphones with Remote and Mic are also eligible for coverage under the program if they exhibit the listed symptoms. Failing iPod shuffle headphones have been the source of customer complaints since the third-generation model was released last year; Apple was sued in a class-action lawsuit over the issues in March. [via TUAW]

Apple files countersuit, ITC complaint against Kodak

Apple has filed a lawsuit against Kodak in California Northern District Court claiming patent infringement. In conjunction with the lawsuit, Apple has also filed a complaint against Kodak with the U.S. International Trade Commission (ITC). According to the ITC Law Blog, the technologies in the Apple patents Kodak is allegedly infringing “relate generally to advancements and innovations in the fields of image processing, power management, and memory architectures in portable digital devices.” Apple is claiming a number of Kodak products infringe on its patents, including the Kodak Z series, M series, and C series of cameras, as well as the company’s Zi6, Zi8, Zxl, and Zx3 video cameras. Kodak filed a lawsuit and ITC complaint against both Apple and BlackBerry-maker RIM in January, claiming that the iPhone and some BlackBerry models infringe on a patent covering technology for previewing photos; the ITC later said it would consider Kodak’s claim against the two companies, but has yet to announce a decision.

Apple begins promoting iAd to Ad Agencies

Apple has begun visiting advertising agencies to promote its new iAd platform. In a posting on his company’s blog, Hill Holliday advertising executive Ilya Vedrashko shares some details on his meeting with the Apple iAd team. Vedrashko indicated that each published advertisement will carry the iAd logo to differentiate it from other advertising content, that there will be only one advertising banner per screen and that the ads “look and behave a lot like apps” comparing ads to the Zippo lighter app. He also notes that iAds can tap into OS features of the iPhone such as the compass, accelerometer and multitouch interface, and that while all ads will initially be built by Apple’s own iAd team in HTML5, Apple does plan to release an iAd SDK at some point in the future.

Apple also emphasized during this meeting that it is selling advertisers on the iPhone and iPod demographic in general, and not users of any specific app, and that it is lining up “charter” advertisers to be online for the June launch that will produce “high-quality creative” ads. Apple also discussed targeting and pricing during this meeting, and while Vedrashko indicated that he is unable to share any details, he described the targeting as “impressive in its granularity” and the pricing scheme as “straightforward and elegant.” In discussing the targeting, Vedrashko made reference to comments in a January blog post from his colleague Adam Cahill, suggesting that “Adam got more than a few things right” with regard to Apple using consumer metrics from iTunes and the App Store for targeted behavioural advertising.

Apple’s iAd features are part of iPhone OS 4, expected to be released for the iPhone and iPod touch this summer. The iPad will get iAd support later this fall when the iPhone OS 4 update is released for that device. [via Mac Rumors]

Apple patent application points to iTunes Concert Ticket system

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Patently Apple reports on a new patent application from Apple for a “Concert Ticket+” system. Patent application 20100082491 details a system that would provide an iTunes-based service for purchasing, storing and using concert tickets electronically. Users would be able to purchase event tickets via iTunes, store them on an electronic device such as an iPhone and use them in place of a paper ticket to gain entry to an event or venue. The patent outlines a ticketing system to be used not just for traditional music concerts but also sporting events, amusement parks and even a wedding invitation system. The patent outlines detailed information on how such tickets would be purchased, transferred, stored and validated at points of entry. Information is also outlined on how iPhone Concert Tickets could include detailed map and seating plan information and also be used to obtain additional benefits such as live recordings, exclusive interviews,  and discounted or prepaid merchandise and refreshments at an event. The full patent application is at the available online on the United States Patent and Trademark Office web site.

Direct-to-iPad rentals don’t transfer to iTunes

Movies rented from the iTunes Store using the iPad cannot be transferred back to users’ iTunes libraries, iLounge has discovered, and must be viewed solely on the iPad. When Apple introduced movie rentals as a new iTunes Store feature, it noted that movies rented using iTunes on a computer or on a portable device could be transferred to and from each other during the duration of the 30-day rental period. Movies rented from a computer version of iTunes can still be transferred to the iPad or any other Apple device, and of course, items purchased rather than rented using the iPad transfer back to iTunes in the same manner as with the iPod, iPhone, and Apple TV.

Unlike the Apple TV, however, the iTunes Store does not provide any notification of this restriction when renting a movie on the iPad; the information is hidden unless the user chooses the “Learn About Rentals” option, or looks within the iTunes Store Terms of Service—it is similarly buried in a just-published Apple KnowledgeBase Article on Viewing and downloading HD content on iPad. Although similar to restrictions for the Apple TV, this differs from renting movies directly on iPhone or iPod touch devices, which can still be transferred back to iTunes during the rental period.

iPad Camera Kit to provide USB Audio support?

A report from Create Digital Music indicates that the iPad Camera Connection Kit may be able to provide support for audio interfaces that are compatible with the USB Audio Class. The report points to a posting on the Apple Core Audio API Mailing List from Apple software engineering manager William Stewart. When asked if “class-compliant USB audio devices” would be supported through the USB dongle from the iPad Camera Connection Kit, Stewart replied simply “Yes.” Support for USB Audio Class devices would potentially allow applications on the iPad to interface directly with a variety of pro audio equipment without requiring specialized hardware accessories. The iPad Camera Connection Kit is scheduled for release later this month so this functionality has not yet been confirmed, however another post from Stewart implies that USB Audio Class support is already included in the OS and that the Camera Connection Kit is the only other requirement to interface with such devices. [via Mac Rumors]

Apple delays international iPad launch

Apple announced this morning that it will be posponing the international launch of the iPad until the end of May. Citing “surprisingly strong US demand,” in a statement released today Apple indicated that it expects demand for the device to exceed its available supply “over the next several weeks” and that they have already taken a large number of U.S. pre-orders for iPad 3G models which remain on track for delivery by the end of April. The iPad was originally scheduled to also launch outside of the U.S. at the end of April, however Apple now plans to announce international pricing and begin taking online pre-orders in other countries on Monday, May 10th for delivery by the end of May.

Apple claims ownership of ‘Pad’ trademark

Apple has begun banning App Store applications that contain the term ‘pad’ in the app name. Previously, the company contacted Jesse Waites, maker of ContactPad, to inform him that an update to his application would be rejected because “it [was] inappropriately using ‘Pad’ in the application name.” The company also included its product work mark guidelines, which states that the developer can use the mark “in a referential phrase such as ‘runs on,’ ‘for use with,’ ‘for,’ or ‘compatible with.’” Following Waites’ rejection, Chris Ostmo, developer of journalPad and journalPad Bible edition, received a similar notice from Apple regarding his apps’ names, and emailed Apple CEO Steve Jobs explaining his position on the matter. 9 to 5 Mac reports that Ostmo claimed to have “spent tens of thousands of dollars” on marketing and media exposure for the two apps, both of which will need to be renamed.

Jobs, in a typically brief response, wrote simply, “Its [sic] just common sense to not use another company’s trademarks in your app name.” Curiously, Apple’s Copyright and Trademark Guidelines page, linked to in the initial email to Waites, makes no mention of a “Pad” trademark, and neither does the company’s official Trademark listing. Judging by the language in both App Store correspondence emails and in Jobs’ response, however, it appears that Apple considers the “Pad” trademark to be under its ownership, and intends to defend it.

Adobe to sue Apple over Flash exclusion?

Adobe may be preparing to file a lawsuit against Apple over its refusal to allow Flash to run on its iPhone OS devices, and its recent decision to ban apps from the App Store created using cross-compilers such as Adobe’s Packager for iPhone OS, which debuted with Flash CS5. Citing source close to Adobe, IT World reports that the App Store policy change was the “last straw” for Adobe, despite the company’s refusal to talk about possible legal action. “We are aware of the new SDK language and are looking into it,” said Adobe spokesperson Wiebke Lips. “We continue to develop our Packager for iPhone OS technology, which we plan to debut in Flash CS5.” Adobe released Flash CS5 on April 12.

Opera Mini approved by Apple

Opera reports that its alternative mobile browser for the iPhone, Opera Mini, has been approved by Apple. First previewed at the Mobile World Congress in Barcelona in February, Opera Mini for the iPhone is intended to provide an alternative to the iPhone’s native Safari browser, promising significantly faster browsing speeds due to data compression on Opera’s servers. Opera Mini was submitted to Apple in March amidst much speculation as to whether it would be approved by Apple due to past restrictions placed on third-party browsers and other applications which duplicated existing iPhone functionality or executed third-party code on the device. While Apple has been approving other mobile browsers for the iPhone for over a year, Opera Mini is the first iPhone browser that does not use Apple’s WebKit engine. Opera Mini will be a free download and is expected to be available on the App Store within the next 24 hours.

Update: Opera Mini is now available from the App Store as a free download.

Apple CEO Jobs: no more upgrades for original iPhone

In a reply to a customer email, Apple CEO Steve Jobs has said that the original iPhone won’t be supported by future software updates. Twitter user Ven000m asked Jobs in an email if Apple would be “supporting/updating” the original iPhone in the future, to which the regularly terse Jobs replied, “sorry, no.” Apple made no mention of the original iPhone or the first-generation iPod touch during its iPhone OS 4 special event last week, where it announced that the new multitasking features would be limited to the iPhone 3GS and third-generation iPod touch, with the iPhone 3G receiving a stripped down upgrade; later comments from Jobs during a Q & A session suggested the company was ceasing support for its oldest iPhone OS devices. [via Engadget]

QuickTime video of iPhone OS 4 Event now available

Apple has posted a streaming QuickTime video of its iPhone OS 4 Event held yesterday in the Town Hall presentation room at Apple’s campus in Cupertino, California. The video is one hour long and discusses and demonstrates some of the major new features that are expected to be released in iPhone OS 4 this summer. The video can also be downloaded in iTunes from the Apple Keynotes Podcast for viewing on an iPod, iPhone, iPad or Apple TV.

Apple posts iPhone SDK 4 betas for iPhone, iPod touch, not iPad

Apple has posted the preliminary version of the iPhone OS 4 Software Development Kit, also known as the iPhone SDK 4 beta, to its Developer Web Site. The SDK download is 2.9GB in size, with separate iPhone OS 4.0 operating system betas at roughly 300MB-400MB a piece. Apple’s OS betas are for 2008 and 2009 iPhone and iPod touch models only. They notably exclude the iPad, which is explicitly disclaimed as not compatible with “iPhone OS 4.0”, and 2007 iPhone and iPod touch models, which are not and apparently will not be supported by iPhone OS 4.

Apple iAd: iPhone OS 4 ad platform offers devs 60% of revenue

During Apple’s iPhone OS 4 event today, Steve Jobs announced the creation of a new mobile advertising platform which will be integrated directly into the iPhone OS. The new platform, named iAd, is designed to allow developers to easily add in-app advertising to their applications by supplying ads through a centralized advertising network without having to implement their own solution. Apple will take care of selling and hosting the ads, providing developers with the industry standard 60% of advertising revenue.

Jobs explained that Apple wants to provide incentives for developers to keep free apps as free, but that ads based on search have not been as successful on mobile devices as they have on the desktop as users spend most of their time in apps rather than searching in a web browser. He went on the explain that the average iPhone user spends 30 minutes each day using applications, and supplying even 1 ad every 3 minutes would equate to 10 ads per day. Jobs notes that with 100 million iPhone users, this presents one billion ad opportunities per day within the iPhone community.  Apple is also looking to improve the quality and accessibility of in-app advertising, with more interaction than typical web ads and allowing users to view advertising without being taken out of the application that they are currently using, thereby encouraging users to click on ads without having to worry about leaving the current app.

Apple: iPhone OS 4 won’t support 2007 iPhone, iPod touch

During the course of its iPhone OS 4.0 Sneak Peek event today, Apple noted that the operating system software will be available in at least three different versions: one that is fully feature-enabled with multitasking for the iPhone 3GS and 2009 “third-generation” iPod touch, one that is limited by the less advanced hardware in the iPhone 3G and 2008 “second-generation” iPod touch to not support multitasking, and finally, a third version for the iPad, which will come later than the other Summer versions, in Fall. No mention was made during the presentation of the original iPhone and iPod touch, released in June and September, 2007, respectively.

Two separate questions were asked during a Q+A session, however, attempting to pin Apple down on whether iPhone OS 4 would be available for the earlier devices; responses from Apple, including Steve Jobs, appeared to suggest otherwise. He stated that earlier hardware wasn’t capable of supporting iPhone OS 4.0 features, differing based on model, and suggested that it wasn’t Apple’s choice, but rather just limitations of the devices. Additionally, Jobs suggested that sales of the iPod touch and iPhone 3GS had really taken off in the past year, so that more devices were being supported than not, and said that while users of the older products may miss features like multitasking, “if that’s an incentive for them to upgrade to a new phone, that’s terrific.”

Updated: Apple’s iPhone OS 4 Preview page explicitly leaves out the original 2007 iPhone and iPod touch from its list of compatible devices.

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