During Apple’s second-quarter 2012 financial results conference call, Apple CEO Tim Cook and CFO Peter Oppenheimer made a number of comments related to Apple’s iPhone, iPad, and iPod businesses.
Peter Oppenheimer, Apple’s CFO, opened the conference call by calling attention to the company’s record March quarter, which he said was fueled primarily by strong iPhone and iPad sales. He said that iPod sales, though down year-over-year, were ahead of internal projections, and as with the past few quarters, the iPod touch accounted for over half of iPod sales. Regarding the iTunes Store, Oppenheimer said that the catalog now includes over 28 million songs and 45,000 movies.
iPhone sales more than doubled in the Asia Pacific region, according to Oppenheimer, who added that the January launch of the iPhone 4S in China and the addition of China Telecom as a second carrier were responsible for a lot of growth. Cook later stated that the company saw 3X year-over-year revenue growth in China. Oppenheimer said that the manufacturing ramps for both the iPhone 4S and the third-generation iPad were extremely successful, which enabled the company to fulfill demand in the March quarter, compared to the June quarter last year. As a result, the company is expecting a sequential decline in iPhone sales.
The company was “very pleased” with iPad sales during the quarter—including sales of the third-generation model, which is now available in over 40 countries. iPad sales more than doubled in each segment, and as a result, the company is slightly supply-constrained. Oppenheimer said that the iPad is about to enter the K-12 institution buying season, which the company expects to boost sales, and later added that the company is selling third-generation iPad units as fast as it can make them.
When asked about what the company is learning about lower price points on the iPhone and iPad, Apple CEO Tim Cook said the company is thrilled with the results they’ve seen thus far, although obviously it’s only been a few weeks. He added that the lower price of the iPad 2 unlocked some education demand, probably more price-sensitive customers, and in some countries, there was a marked change in demand. The company is not sure yet what the mix of third-gen iPad to iPad 2 will be, but said that on absolute sales of the iPad 2, what the company is seeing is exciting. Cook went on to say that the iPhone 3GS and iPhone 4 contributed to the 35 million in iPhone sales—the company’s second biggest quarter in terms of iPhone sales.
Overall, more than 365 million iOS devices have been sold, and the App Store now offers over 600,000 apps, 200,000 of which are built specifically for the iPad. Oppenheimer added that iCloud now has over 125 million customers signed up.
Finally, when asked about the company’s ongoing legal disputes, Cook said that he has always hated litigation, and just wants companies to invent their own stuff. He added that if Apple could reach agreements where it would be guaranteed that companies would be using their own inventions, and that included a fair settlement on stuff that’s occurred, it would be happy to settle instead of battle. That said, he added that Apple can’t become the developer for the world—that the company needs people to invent their own stuff.
During the company’s Q2 2012 Financial Results Conference Call, Apple CEO Tim Cook made several very interesting comments regarding the merging of traditional PCs with tablets. Cook said that while any two types of products can be forced to converge, the resulting products involve tradeoffs, and eventually reach the point at which they no longer appear to anyone; combining products creates compromises that do not please either user. He used the MacBook Air as an example of continuing innovation in the Mac space, and said that it appeals to someone who has somewhat different requirements than an iPad user. Cook specifically said that Apple will not make the compromise of convergence, adding that while others might converge their lines—especially for defensive reasons, such as seeing their computer or tablet sales flagging—Apple will play in both markets simultaneously.
Reporting its second quarter 2012 financial results today, Apple said it sold 35.1 million iPhones in the quarter, an 88 percent increase year-over-year, but down slightly from 37.04 million units in the prior quarter. Apple sold 11.8 million iPads during the quarter, up 151 percent from the year-ago quarter and down from 15.43 million units in the first quarter of 2012. Finally, the company said it sold 7.7 million iPods during the quarter — a 15 percent decrease compared to the same quarter last year. Unit sales of iPhones, iPads, and iPods bring the cumulative totals for the three device categories to 218.1 million, 67.08 million, and 344.28 million, respectively.
Apple posted revenue of $39.19 billion and net quarterly profit of $11.6 billion, or $12.30 per diluted share, compared with revenue of $24.67 billion and net quarterly profit of $5.99 billion, or $6.40 per diluted share in Q2 2011. Revenue from Other Music Related Products and Services, which includes revenue from the iTunes Store, App Store, and iBookstore in addition to sales of iPod services and Apple-branded and third-party iPod accessories, was $2.027 billion for the quarter, up 32 percent year-over-year and down 6 percent over the prior quarter.
“We’re thrilled with sales of over 35 million iPhones and almost 12 million iPads in the March quarter,” said Tim Cook, Apple’s CEO. “The new iPad is off to a great start, and across the year you’re going to see a lot more of the kind of innovation that only Apple can deliver.”
“Our record March quarter results drove $14 billion in cash flow from operations,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the third fiscal quarter, we expect revenue of about $34 billion and diluted earnings per share of about $8.68.”
Apple infringed on a single Motorola Mobility patent in its production of the iPhone, iPad, and several other products, according to an International Trade Commission judge. Reuters reports that ITC Judge Thomas Pender handed down his preliminary ruling in the dispute today, stating that Apple had infringed one Motorola patent, but did not violate three other patents which Motorola accused it of infringing. Judge Pender’s ruling is not final, and will be reviewed by the full commission before a final ruling is issued in August.
Apple has launched new mini websites highlighting the use of the iPhone and iPad in business. Entitled “iPhone in Business” and “iPad in Business”, respectively, the sites include pages dedicated to apps that are useful for business, discussion of integration of the devices into existing company infrastructure, task-specific examples of how the devices can help with various tasks, and profiles of businesses that are using the iPhone and iPad to help boost their productivity. Apple regularly touts business adoption of both the iPhone and iPad, both of which have been adopted by a high percentage of Fortune 500 companies.
Apple has offered a settlement relating to the ongoing eBook pricing case in Europe. The Telegraph reports that according to European Union competition commissioner Joaquín Almunia, the body has received settlement offers from Apple as well as all the publishers, save for Penguin. “[The publishers] are making proposals to reach an early resolution of the case,” he said; terms of the proposals were not disclosed. Notably, Apple has not made an effort to settle a similar case in the US, possibly due to the differing conditions of the two markets at the time of the alleged collusion.
Apple has reached a deal with Prineville and Crook County, Oregon to move ahead with its new data center there. According to the Associated Press, Apple has agreed to pay local governments $150,000 a year and will get a 15-year property tax exemption for the new data center. In addition, Apple has also committed to a minimum of 35 jobs at the data center, wages that are at least 150 percent of the county’s average wage, and an investment of at least $250 million across its 160 acres of land.
Apple is testing a new system which would automatically backup the device of any customer seeking an iOS device exchange or replacement at an Apple Store Genius Bar, according to a new report. Citing retail sources, 9to5Mac reports that the system is based on a wireless server that would securely and temporarily store a user’s content locally, then automatically wipe the content once the device swap is made. The report indicates that this backup information could come from iCloud or the device itself, and that this solution is preferable to simply relying on an iCloud backup as the process of restoring from an iCloud backup is typically takes too long. The system is said to be in the very early stages of testing, and should it launch, Apple is planning to pilot the system in a few select store by mid-2013, with a full-scale launch coming later that year.
Apple has released Configurator 1.0.1, the latest version of its mass deployment tool for iOS devices. Originally debuted in March, Configurator enables schools, businesses, and other institutions to configure up to 30 iOS devices at a time, update software, create and restore backups of settings and app data, and more. According to the release notes, version 1.0.1 improves overall stability and performance, and address a number of issues, including those related to the import and installation of .ipa files, redemption codes, note and bookmark deletion, WPA2 passwords, and backup name editing. Apple Configurator 1.0.1 is available now as a free download from the Mac App Store. [via MDN]
Apple and Samsung have agreed to meet for a Magistrate Judge Settlement Conference in an effort to resolve their ongoing patent disputes. FOSS Patents reports that the talks will be held in San Francisco and will include Apple CEO Tim Cook and general counsel Bruce Sewell, as well as Samsung CEO Gee-Sung Choi and Sewell’s counterpart at the South Korean company. The talks will be overseen by U.S. Magistrate Judge Joseph C. Spero; as noted in the report, the court can obligate the two companies to meet and talk, but can’t force a settlement.
Zane Rowe, executive vice president and Chief Financial Officer for United Continental—owner of United Airlines—is leaving his position to become a vice president of sales at Apple. “We are thrilled that Zane Rowe will be joining us as one of our vice presidents of sales,” Apple spokesman Steve Dowling told AllThingsD. “He built a great team at United and we think he is going to do a fantastic job at Apple.” Rowe has served as United’s CFO since October 2010, according to the report.
Apple has released an update to its iBooks application intended to address an issue that was causing the iTunes Store sign-on prompt to appear at unexpected times for some iOS users; the somewhat random prompts were often, but not exclusively, connected to automatic downloads of new content purchased on other devices. iBooks 2.1.1 addresses this issue, noting that users will need to open iBooks at least once after downloading the update. The new version also contains some minor stability and performance improvements. iBooks 2.1.1 is available from the App Store as a free download.
Apple has updated its Cards iOS app with several new card designs. Cards allows iPhone and iPod touch users to create professionally printed physical letterpress cards from their device with custom photos and text that can then be mailed out for delivery to the recipient via the U.S. Postal Service. Cards 1.1 adds new categories for Mother’s Day and Get Well card designs along with additional card templates in existing categories such as birthday and thank you cards. The update also improves the accuracy of envelope address verification and simplifies the checkout process. Cards 1.1 requires iOS 5.0 or later and is available from the App Store as a free download. Individual cards are paid for via in-app purchase at $3 for mailing within the U.S. or $5 for international recipients.
A potential pilot of a new Apple store-within-a-store concept has been spotted at an Arkansas Walmart. IfoAppleStore reports that the new displays are inside a Walmart located just 20 minutes from the retailing giant’s headquarters, and could be a prototype for the rumored expansion of in-store Apple displays to Walmart’s warehouse chain Sam’s Club. The displays themselves feature tall, double-sided back-lit graphics promoting the iPad and the iPhone, as well as black frames and shelves, light wood tables, live display products, and under-table storage with security glass. The product displays themselves bear a great resemblance to those seen in Apple’s retail stores, albeit with more strict security measures. It is unclear when—or if—the concept will see a wider rollout across Walmart or Sam’s Club stores.
Renowned industrial designer Philippe Starck has suggested that he has worked with Apple on a major upcoming product, according to a Le Figaro report (Translated Link). Speaking on the radio program France Info, Starck said that he has been working with Apple on a “revolutionary” product that will be launched in the next eight months, without going into details. Though Starck is perhaps best known within the Apple world for his collaborations on third-party accessories, including iPod-docking speakers from Parrot, a unique iOS device-docking lamp from F’los, and a line of external Mac-compatible hard drives from LaCie, he has become internationally famous for fashion-forward products and architectural endeavors, including the designs of hotels, restaurants, and public spaces.
Starck said in the interview that he met regularly with late Apple co-founder Steve Jobs to talk, noting in a roughly translated quote that “[f]or seven years I came to see him once a month in Palo Alto and elsewhere Monday I go there, because even though he is dead, now I will see his wife. We liked to talk all things interesting.” [via MacRumors | Mac4Ever]
Update: In a statement to AllThingsD, Apple has denied that it is working on a project with Starck; the report suggests that the designer is instead involved with the design of the Jobs’ yacht.
A German regional court has upheld a ban on push emails delivered by Apple’s iCloud and MobileMe services, according to a Wall Street Journal report. The Mannheim regional court backed an earlier decision that barred Apple from offering the service in Germany on devices that were part of a patent dispute brought by Motorola Mobility. The court also held Apple liable for damages which must be paid to Motorola, although no amount was specified. A decision on a separate dispute between the two companies related to mobile communications standards was adjourned, with no date given for an expected ruling.
Apple has issued a statement on the matter of the antitrust lawsuit filed against itself and several major book publishers earlier this week. “The DOJ’s accusation of collusion against Apple is simply not true”, Apple spokesman Tom Neumayr told AllThingsD. “The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon’s monopolistic grip on the publishing industry. Since then customers have benefited from eBooks that are more interactive and engaging. Just as we’ve allowed developers to set prices on the App Store, publishers set prices on the iBookstore.”
Apple is reportedly starting to require additional security information when using an Apple ID for purchases. The Next Web reports that Apple is prompting some users to confirm their password, add a backup email address, and create a number of new security questions that will be used to verify user identity in the future. According to the report, Apple is sending out an email to the new backup address once the process has been completed, thanking the user for adding the information, and asking them to click on a link to verify their address by clicking a link in the email. The prompt is apparently appearing when attempting to buy media directly on a device or via iTunes; notably, no iLounge editor has yet encountered the prompt, suggesting that Apple is rolling out the new security features slowly.
The U.S. Department of Justice (DOJ) has filed a price-fixing antitrust lawsuit against Apple and Hachette in New York district court. Bloomberg reports that the suit revolves around alleged collusion to raise the prices of eBooks, and that Harper Collins, Macmillan, and Penguin were also sued. The DOJ warned Apple and the publishers in early March of plans to file the suit; several of the parties reportedly held negotiations in hopes of settling the case; Apple may face similar charges in Europe, thanks to a European Union investigation into the same matter.
Update: the Department of Justice has since announced that Hachette, HarperCollins, and Simon & Schuster have agreed to settle charges in the antitrust lawsuit, pending approval by a New York federal court, according to a Cnet report.
Apple earlier this morning quietly replaced the online Apple Store’s downtime sign, according to AppleInsider. Long known for its “We’ll be back soon” yellow sticky note, which was joined by the text “We are busy updating the store for you and will be back shortly”, the old sign has been replaced by a more modern looking rounded square note with a textured white background and a gray Apple logo, with the text “We’ll be back. We’re busy updating the Apple Store for you and will be back soon.” The placeholder frequently appears in early morning hours when Apple is doing routine maintenance to the site, as well as during Apple media events where new products are announced.