Apple has quietly donated more than 100 iPods to students in the Poway school district, near San Diego, CA, who lost their homes during the October wildfires. Poway resident Steve Boyack asked Apple for the donation, thinking about the high school students who were affected. “The idea came up because of our experience in the past, helping with fire relief,” said Boyack. “It seemed like the high school kids were being left out. Having four boys, I thought what would be nice for the kids, and I thought iPods are an accessory most kids like and can’t live without.” Boyack said that Apple now plans to expand the program to the entire county, and that it didn’t want any publicity. “It was strictly from the heart and just wanting to help,” he said.
In a recent interview with Fortune, Apple’s vice president of Hardware Product Marketing Greg Joswiak spoke about the current state of the iPod, how the marketing of the devce has changed over the years, the iPod touch and iPhone SDK, the potential for growth in some international markets, and more. Responding to a question on how to handle an open iPod and iPhone, Joswiak said, “One of the things Steve talked about in his open letter is something Nokia’s doing, which is requiring a digital signature. That way if there’s something wrong with an application, you have a way to track it back to where it came from. So one of the things we want to do, again, is create a development environment that is going to maintain the security and reliability of the iPhone yet at the same time offer developers some really cool things that we can do.”
Speaking about the changes in iPod marketing that have been made over the years, Joswiak said, “I think what has changed over time is certainly early on, people had to understand what an iPod was about. You had to understand the whole message of a thousand songs in your pocket. So some of the early advertisements had to set up some of that foundation. In a market like the U.S., where we have 77 percent market share, that’s really not required. People understand what the iPod is – it’s become a cultural phenomenon here. So we can change the way that it’s marketed.”
He continued, “But when we went into Europe a couple of years ago with advertisements, when France was in single-digit market share and Germany was in single-digit market share, we again had to establish the ‘thousand songs in your pocket.’ We ran advertisements that were more foundational than the silhouette ads that we’ve done. And we saw market share rise pretty significantly — again, our latest French and German market share is about 28 percent each. That’s a pretty significant rise over a two-year period.” Joswiak went on to say that he sees a “significant opportunity” in international markets where the iPod’s market share is below 30 percent, due to the lack of a major name-brand competitor.
Finally, in discussing how Apple plans for future models, Joswiak explained, “We try to understand as we develop our product road map, what’s going to be exciting in the future. And that’s one of the advantages we have over our competitors. Our competitors tend to put the cross hairs on where we are now, and by the time they come up with a product that tries to match where we are now, we’re beyond them. We’re one or two generations beyond, moving faster than they are.”
Speaking at the GMSA Mobile Asia Congress, Warner Music CEO Edgar Bronfman Jr. praised Apple’s efforts to build a seamless music and media purchasing experience through iTunes, as he warned mobile operators against making mistakes that have his own company facing hard times. “We used to fool ourselves,” he said. “We used to think our content was perfect just exactly as it was. We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file sharing was exploding. And of course we were wrong. How were we wrong? By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find and as a result of course, consumers won.”
Although previously critical of Apple and some of its policies, particularly Apple CEO Steve Jobs’ stance on DRM, Bronfman used Apple as an example of how to cater to consumers’ wants and desires. “For years now, Warner Music has been offering a choice to consumers at Apple’s iTunes store the option to purchase something more than just single tracks, which constitute the mainstay of that store’s sales,” he explained. “By packaging a full album into a bundle of music with ringtones, videos and other combinations and variation we found products that consumers demonstrably valued and were willing to purchase at premium prices. And guess what? We’ve sold tons of them. And with Apple’s co-operation to make discovering, accessing and purchasing these products even more seamless and intuitive, we’ll be offering many, many more of these products going forward.”
Speaking about Apple’s mobile efforts, Bronfman continued, “You need to look no further than Apple’s iPhone to see how fast brilliantly written software presented on a beautifully designed device with a spectacular user interface will throw all the accepted notions about pricing, billing platforms and brand loyalty right out the window. And let me remind you, the genesis of the iPhone is the iPod and iTunes - a music device and music service that consumers love.”
Reporting its fourth quarter financial results today, Apple said it sold 10.2 million iPods during the quarter — a 17 percent increase compared to the same quarter last year. It also sold 1.119 million iPhones in the quarter, bringing the total number of units sold up to nearly 1.4 million. The company posted revenue of $6.22 billion and net quarterly profit of $904 million, or $1.01 per diluted share, compared with revenue of $4.84 billion and net quarterly profit of $542 million, or $.62 per diluted share in Q4 2006. Sales of Other Music Related Products + Services were up 33% over the year-ago quarter, but down slightly from Q3 2007, to $601 million total. That category includes iTunes Store sales, iPod services, and revenues from Apple and third-party iPod accessories.
“We are very pleased to have generated over $24 billion in revenue and $3.5 billion in net income in fiscal 2007,” said Apple CEO Steve Jobs. “We’re looking forward to a strong December quarter as we enter the holiday season with Apple’s best products ever.”
“Apple ended the fiscal year with $15.4 billion in cash and no debt,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the first quarter of fiscal 2008, we expect revenue of about $9.2 billion and earnings per diluted share of about $1.42.”
Leaper Footwear, owners of a 1998 patent covering “Performance measuring footwear”, has filed a lawsuit naming both Apple and Nike, claiming the companies’ Nike+iPod Sport Kit infringes on Leaper’s patent. In the complaint, Leaper claims that it contacted Nike in 2000, sending the footwear giant a copy of the patent and encouraging it to license and incorporate the technology into its running shoes; Nike reportedly responded by stating it had “no interest” in the technology. Leaper is seeking damages and a permanent injunction barring Apple and Nike from further infringement. Nike and Apple were previously named in a lawsuit filed by PhatRat Technology, also alleging patent infringement over the Nike+iPod Sport Kit.
Apple UK has sent out an email invitation to select media outlets announcing a press event to be held at the Apple Store, Regent Street in London on September 18 at 10:00 a.m. The invitation reads simply, “Mum is no longer the word.”, and includes directions to the store. The event could likely be used to introduce the European version of the iPhone; however, no confirmation of such an announcement has yet been given by Apple, or by the phone’s likely European service providers.
Apple has studied the possibility of joining an auction for the rights to use a highly-coveted wireless spectrum, according to BusinessWeek sources. The 700Mhz spectrum currently occupied by analog TV broadcasts will be given back to the government in 2009, and the Federal Communications Commission will hold an auction for usage rights on Jan. 16. According to rules set in place by the FCC, the winning bidder must allow any device or application to run, which means the winning bidder must also make sure the network supports competitors’ devices. The minimum bid required by the government is $4.6 billion; it’s expected that the winning bid will be around $9 billion. Labeled “beachfront property” by the FCC, signals at the spectrum could provide far faster Internet access than current cellular or Wi-Fi networks, and could be used by Apple to provide its own wireless service for devices such as the iPhone, iPod touch, and Macs.
In two separate interviews yesterday, Apple CEO Steve Jobs made comments regarding both the company’s recent dispute with NBC Universal and yesterday’s announcement of a $200 price drop on the iPhone. Speaking about NBC, Jobs said, “We hope they’ll reconsider their decisions over time and maybe find out that iTunes and iPods are a great way to digitally distribute their content to tens or maybe hundreds of millions of customers around the world.”
In an interview with USA Today‘s Jefferson Graham and Edward C. Baig, Jobs was asked, “What do you say to customers who just bought a new iPhone for $599? Sorry?” He responded, “That’s technology. If they bought it this morning, they should go back to where they bought it and talk to them. If they bought it a month ago, well, that’s what happens in technology.” He also responded to a question regarding iPhone manufacturing costs relative to the price drop, saying, “We’re in high-volume manufacturing, and we’re pretty good on the costs side. We’re also willing to be more aggressive… The product’s been extremely well accepted; we want to put the pedal to the metal. A holiday season is approaching; we’d have to wait another year for another one.”
With a Cover Flow-themed widescreen graphic for its invitation, Apple has invited selected members of the media to a September 5, 2007 “Special Event” in San Francisco, California. The graphic, titled “The beat goes on.”, shows a silhouetted iTunes dancer holding a fifth-generation iPod in hand alongside six album covers. As with other major iPod- and iTunes-themed events, the Moscone Center has been selected as the venue, suggesting the need for greater seating capacity than the smaller Mac- and iPod accessory events Apple has staged in months and years past. iLounge editors will be on site to cover the Event live.
A new Apple patent application for a “multi-touch gesture dictionary” has been found online. The application, dated January 3, 2007, describes different gestures, or “chords,” which could be used on a multi-touch system to trigger different events. The patent application covers both a dictionary to provide a guide and system of applying user-selected actions to the gestures, and a dictionary application running on its own or in the background, to detect such movements and take the appropriate action. It is possible such a system could be used on the iPhone to implement requested features like text selection and cut and paste. Whether any of the systems described in the patent appear on the iPhone is not certain. [via Engadget]
Eight Mile Style LLC and Martin Affiliated LLC, music publisher and copyright manager for rap artist Eminem, have filed a lawsuit against Apple in U.S. District Court in Detroit, claiming the company violated copyrights by allowing unauthorized sales of the artist’s works. The lawsuit is a possible sign of things to come as artists fight for a larger share of revenues from digital download sales, reports the Detroit News. “There are a number of unresolved issues,” said Owen Sloane, of Berger Kahn, who has negotiated recording deals for artists such as Elton John, Kenny Rogers and Bonnie Raitt. “You’re going to see more of these suits.” The suit alleges that although Apple pays a portion of the revenues from Eminem downloads to recording label Universal Music Group, Eight Mile Style and Martin Affiliated have never authorized Universal to allow the downloads. Apple has yet to comment on the suit.
In its reporting of third quarter results, Apple has revealed that it sold 270,000 iPhones over the launch period of June 29 and June 30. This falls slightly short of analysts’ predictions of 300K units, but should reassure those who questioned the success of the product’s launch following AT&T’s statement that it had activated only 146,000 iPhones during the same period. In addition, Apple CEO Steve Jobs said, “iPhone is off to a great start—we hope to sell our one- millionth iPhone by the end of its first full quarter of sales.” Apple’s fourth quarter will end on Sept. 29.
Updated: During its third quarter conference call, Apple COO Tim Cook explained iPhone’s prospects as follows: “The starting gun has been fired and we’ve gotten off to a great start. However, our primary focus is not on initial sales. We’re focused on building a third great business for Apple… it won’t be easy because the competitors are large and entrenched… but the rewards are huge for Apple. Our next step is to begin selling the iPhone in Europe next quarter starting with a few major countries.” Additional expansion will take place in other European countries throughout 2008, and in Asia in 2008 as well.
Update 2: In response to an analyst’s question, Apple noted that the 270,000 iPhones “sold” figure also included iPhones in transit to AT&T stores during the initial 30-hour launch window, and not just iPhones that were actually in consumers’ hands. In a subsequent exchange, the company noted that though it did not generally provide breakdowns of iPod and iPhone sales by capacity, “the mix skewed to the 8GB for early sales in June.”
Reporting its third quarter financial results today, Apple said it sold 9.815 million iPods during the quarter—slightly below some analyst predictions, but a 21 percent increase compared to the same quarter last year. The company posted revenue of $5.41 billion and net quarterly profit of $818 million, or $.92 per diluted share, compared with revenue of $4.37 billion and net quarterly profit of $472 million, or $.54 per diluted share in Q3 2006. Sales of Other Music Related Products + Services were up 33% over last year’s quarter and down 7.5% from the second quarter of 2007, to $608 million total. That category includes iTunes Store sales, iPod services, and revenues from Apple and third-party iPod accessories.
“We’re thrilled to report the highest June quarter revenue and profit in Apple’s history, along with the highest quarterly Mac sales ever,” said Steve Jobs, Apple’s CEO. “iPhone is off to a great start — we hope to sell our one- millionth iPhone by the end of its first full quarter of sales — and our new product pipeline is very strong.”
“We are very pleased to report strong financial results including cash flow from operations exceeding $1.2 billion for the quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the fourth fiscal quarter of 2007, we expect revenue of about $5.7 billion and earnings per diluted share of about $.65.”
Updated: During Apple’s Financial Results Conference Call, Apple revealed that iPod controls a 71.5% share of the US MP3 player market based on numbers from NPD. iTunes saw 33% year-over-year growth, as iPods and music related income accounted for 40% of total revenue during the quarter. In addition, Apple TV and iPhone accounted for $180 million in revenue; Apple has previously stated it will use a subscription accounting model for both devices.
According to a new research report from DRAMeXchange, Apple may end up using as much as 25 percent of the world’s flash memory in the third quarter. This projection is contingent on Apple wishing to generate strong holiday sales of the iPhone, as well as the introduction of a video-capable iPod with flash storage. “If Apple also unveils upgraded iPods in Q3, which may include new iPod video products that employ Flash for storage, the required amount in 3Q07 from both the iPhone and iPod will be more than 25%,” claims the report. “Therefore, with Apple’s products given a high priority in the Flash supply, the future sales of the iPhone will most certainly affect the NAND Flash market in 2H07.” Samsung currently provides the flash memory used in most iPhones, the report mentions, and the company’s flash business has been boosted by strong iPhone sales.
An Apple patent application has recently been uncovered that suggests possible wireless sharing capabilities for the iPod and iPhone. The application, from September 1, 2006, addresses methods for mobile devices to discover others in the vicinity, and wirelessly transmit and share files such as video, music, games, photos, playlists, and slideshows. The patent also mentions restrictions for media that may have “limited-use rights.” The application assumes wireless capabilities for the devices, stating, ““however, as portable electronic devices become more versatile and more interactive, it is advantageous to exchange (send and/or receive) media or other types of data with other electronic devices in a wireless manner.”
Recent increases in Apple’s orders of NAND flash memory are causing difficulties for other customers of the company’s suppliers, reports DigiTimes. Hynix Semiconductors and Samsung Electronics began reserving more of their stock for Apple beginning in July, according to Taiwan memory house sources. Both companies told customers in late June that July supplies would be constrained as Apple pre-stocks the flash memory in anticipation of a seasonal upturn in demand. Apple uses NAND flash memory in the iPod nano, iPod shuffle, and iPhone.
Apple has completed the purchase of the iPhone.com domain name from Michael Kovatch for more than $1 million, according to a DomainTools report. iPhone.com now redirects to Apple’s iPhone page at http://www.apple.com/iphone/ . Kovatch, who owns several other high-profile domains such as Wine.net and Golf.net, bought the iPhone.com domain in 1995 in hopes to capitalize on internet telephony, even though the technology to support it did not exist at that time. Exact terms of the sale have not been revealed, but if Apple indeed paid more than $1 million for the domain, it would make the domain name sale one of the richest in history.
A new patent application published by the US Patent & Trademark Office may be a new feature of upcoming iPods and iPhones, reports InformationWeek. The patent application, “Protecting electronic devices from extended unauthorized use,” covers a technique to keep a device from being recharged if certain conditions — “a timer expires, device is connected to a power-supply or another device, device is outside a determined geographical boundary” — are met. If that should happen, the user would then need to enter an authorization code. Failure to input the correct code would keep the device from recharging. The patent states simply, “normal use and enjoyment of the device can be significantly reduced by disabling the recharger.”
Apple has re-branded the area of its online store reserved for refurbished products and closeouts. Formerly known as “Special Deals,” the area now bears the moniker Apple Outlet. A new image on the store promoting the outlet claims “Big savings. Limited-time offers. Certified refurbished.” The new Apple Outlet is currently offering several deals on iPods, such as refurbished second-generation iPod shuffles for $50, refurb second-generation 4GB iPod nanos for $150, and refurbished fifth-generation 30GB iPods for $200.