iLounge

By Charles Starrett

Senior Editor, iLounge
Published: Monday, January 25, 2010
News Category: Apple

During Apple’s First Quarter 2010 Financial Results Conference Call, Apple CFO Peter Oppenheimer and Apple COO Tim Cook made several comments concerning its media-related products, including the iPod, iPhone, and Apple TV, as well as U.S. cellular partner AT&T. In his opening statements, Oppenheimer said that while traditional iPod sales declined, sales of the iPod touch were up 55% year-over-year, boosting the iPod’s Average Selling Price (ASP) by nine percent.

The iPhone saw “very strong” growth in several international territories, and has been a “runaway hit” in Japan, with sales up over 400% year-over-year. iPhone sales were also up over 500% from the year-ago quarter in the Asia/Pacific market, because of Korea and other newly added countries, including China. Specifically, Cook revealed that the iPhone passed the 200,000 activation mark in China earlier this month, and that the company is very focused on quality at the point of sale and quality of customer experience, in order to build the brand for the long term in that market. In the corporate market, 70% of the Fortune 100 are now actively deploying or piloting iPhone. When asked about iPhone inventory levels that sat at roughly 2.7 million units in the channel at the end of the quarter, including demos and in-transit inventories invoiced to carriers, Cook said that Apple is completely comfortable with the number, adding that Apple could have sold a lot more units but elected not to because the company is managing inventories very tightly. The implication, we felt, was that a transition from 8GB iPhone 3G models to 8GB iPhone 3GS could have achieved this.

In regards to the company’s accounting changes, Oppenheimer explained that the company has settled on estimates of $25 for iPhone and $10 for Apple TV software updates which will be taken from the selling price and deferred over time, but did not provide any specifics on how the company arrived at either number. Both executives also praised Apple’s financial team for rapidly facilitating the switch to the new accounting principles. When asked about Apple’s recent acquisition of mobile advertising firm Quattro, the executives said that the company wanted to acquire Quattro to offer developers a way to easily monetize apps, especially free offerings, adding, “we’re going to work hard to provide developers a great opportunity and we’ll see where it takes us.”

Finally, when asked about the potential effect recent criticism of AT&T might have on Apple’s and the iPhone’s brand, the men hailed AT&T as a great partner, noting that the two companies have a working relationship that pre-dates the initial launch of the iPhone, and that AT&T has more mobile broadband usage than any carrier in the world. They also pointed out that iPhone customers have a great experience in the vast majority of locations, that AT&T has very detailed plans to address its network problems in cities, and that Apple has reviewed the plans and believes AT&T will make significant progress towards fixing them.