Notes from Apple’s Q3 2010 Conference Call
During Apple’s Third Quarter 2010 Financial Results Conference Call, Apple CFO Peter Oppenheimer and Apple COO Tim Cook made several noteworthy comments concerning the company’s digital media products, including the iPod, iPhone, and iPad. In his opening statements, Oppenheimer said the company has sold its 100 millionth iOS device—a long-awaited milestone—that the iPod continues to gain market share year-over-year in nearly every tracked country, and that iTunes revenue was up 25% from the year-ago quarter. Apple saw strong sales of the iPhone in Asia, Europe, and Japan, and is now available from 154 carriers in 88 countries. In regards to the company’s offer of free cases for all iPhone 4 purchasers, Oppenheimer said the company would defer an estimated $175 million in revenue until the December quarter, corresponding to the estimated total value of the case giveaway.
The executives revealed that the average selling price (ASP) of the iPad for the quarter was $640, while the iPhone saw an ASP of $590, the latter reflecting both direct payments by customers and shared revenue from carrier partners. In terms of corporate use, more than 80% of the Fortune 100 and over 60% of the Fortune 500 are now deploying or pilot testing the iPhone, while around 400 higher education institutions have embraced the iPhone for faculty, staff, and students. The executives also said that after just 90 days, 50% of the Fortune 100 are deploying or testing the iPad, a stunning number considering the opposition Apple once faced trying to sell Macs to these companies. In discussing iPhone sales numbers and the lead up to the launch of the iPhone 4, Cook revealed that the company saw significantly lower sales from June 7—the date the iPhone 4 was unveiled—through June 24, the device’s official launch, which came only days before the end of the quarter. The year-over-year growth rate for the iPhone was close to 90% heading in to June 7, but finished at 61% as a result of the slowdown, a reflection of how changes in both Apple’s iPhone inventory and consumer demand can impact its sales numbers immediately before a new model is launched.
Throughout the call, Cook repeatedly explained that Apple is making both iPads and iPhone 4 units as fast as it can sell them, and while it is working to ramp up production and meet demand as quickly as possible, it can’t say definitively when it will have enough supply to meet demand. This was characterized as a good problem to have, and iPad sales were noted to be as strong during the three-month quarter as some had expected in an entire year. The executives also said that the company had seen an extremely small number of iPhone 4 returns over the antenna issue. Notably, the Apple TV was not discussed at any point throughout the course of the call.
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