During the company’s Q2 2009 financial earnings Conference Call, Apple CFO Peter Oppenheimer and COO Tim Cook made several comments relating to the company’s iPod and iPhone businesses. Oppenheimer opened the call with some opening remarks, during which he revealed that the 11 million units sold marked a new March quarter record for iPod sales, driven by the iPod touch, which saw sales more than double the year-ago quarter. He added that customers and reviewers responded favorably to iPod shuffle 3G, and that Apple is very pleased with its iPod MP3 Player market share, which remains over 70% in the U.S., according to the latest data from NPD.

Oppenheimer also revealed that there are now over 35,000 applications available in the App Store, and that the billionth app download should happen “within hours.” He said the App Store was a key differentiator for the iPhone and iPod touch relative to competing devices, and that it keeps Apple “years ahead of the competition.” iPhone’s global reach expanded during the quarter, as it is now available in 81 countries. As with the early announcement of iPhone OS 2.0, Apple will delay recognition of revenue from all iPhones sold on or after the March 17 iPhone OS 3.0 announcement until after the updated software’s release.

A brief question and answer session followed, continue reading to see more.
Q: Do you have any thoughts on the netbook category now that you’ve been able to watch that segment for a while?

Tim: For us, it’s about doing great products. In the netbook segment right now, we see cramped keyboards, small hard drives, junky hardware, etc., and we don’t see it as a segment we’re interested in… although we are watching it. Customers looking for a product simply to browse the net and check email might be interested in an iPod touch or iPhone, so we compete in that category indirectly.

Q: Is there any additional information you can give relative to the ratio of paid versus free apps on the App Store, and iPhone versus iPod touch downloads.

Peter: We don’t break that down, but we are just hours away from the billionth app download, and are extremely happy with its performance.

Tim: One of the keys to iPod sales this quarter was the iPod touch, sales of which were more than double the year-ago quarter. Total iPhone + iPod touch base is now roughly 37 million units, which provides an enormous platform for developers.

Q: Our survey suggests the AT&T partnership is the number one reason not to get an iPhone, do you have any comments on that relationship? Also, do you have any comments on Steve Jobs?

Tim: We view AT&T as a very good partner, and think they’re the best wireless carrier in the U.S. They’ve done a very good job with iPhone, putting the full force and weight of the company behind it, and we do not have any plans to change our arrangement. From a technology standpoint, we chose from the beginning to focus on the whole world, meaning GSM technology, which omits CDMA carriers such as Verizon. We would like to be in China in the next year, and are obviously working on it.

Peter: We look forward to Steve returning to Apple at the end of june.

Q: You said you were surprised by the elasticity in iPhone’s price last quarter, can you tell us what you’ve learned over the last quarter?

Tim: We were very happy with the only marginal drop in iPhone sales compared to the holiday quarter, and of course we announced 3.0 which will attract people to iPhone even more. We’re focused on both the hardware side and the software side, including the App Store. We have a plan that we believe will keep us the leader in the space, and keep us years ahead, without providing a pricing umbrella for competitors.

Q: I was wondering if you have any numbers on percentages of users who upgraded their iTunes libraries to DRM-free files?

Peter: It’s only been a couple of weeks, so we don’t yet have any numbers on that, but iTunes revenue was up for the quarter, with all offerings, including apps, doing well.

Q: You guys started selling iPhones at Wal-Mart in December; how much of an impact did that move have, and what was the inventory situation at the end of the quarter?

Tim: We believe they provide us extended reach, and we are pleased with the results so far, but it’s still early, and we don’t have any numbers to share just yet. In terms of inventory, we count demos in inventory, we have about 100,000, we also count units in transit in inventory, which accounts for another 100,000 units. We like to be very specific on inventory, but we can’t give you a count in weeks, as this will be our first year with a worldwide reach. However, in the countries in which we were selling in the Fall, we have roughly 1.8 million units, including those I spoke about earlier.

Q: What steps is Apple is taking to ensure that apps can be discovered, given the explosion in the number of apps available?

Peter: We’re doing a number of things, including the top 100 and top 50 lists, we’re expanding those, and we think the team is doing a fantastic job.

Q: Can you talk about the competitive landscape on smart phones, including the Palm Pre?

Tim: There’s nothing intelligent I can say about products that aren’t shipping, so that rules out the Pre, but we’ve sold over 21 million iPhones, and it has the highest customer satisfaction of any product shipping. We think with the App Store, we’re in a great position, and are years ahead. We see this business through a platform lens. The breadth of apps on the store is breathtaking, the power of the device and ecosystem is enormous, and we’re just scratching the surface of what’s possible.

Q: Last quarter you talked about protecting your intellectual property; does the lack of action over the last 90 days show a weakness on your part, or do you have to wait for a product to ship?

Tim: We welcome competition, and think innovation from other companies is great, as long as they come up with their own stuff.

Charles Starrett

Charles Starrett was a senior editor at iLounge. He's been covering the iPod, iPhone, and iPad since their inception. He has written numerous articles and reviews, and his work has been featured in multiple publications.