Notes from Apple’s Q4 2010 Conference Call

During Apple’s Third Quarter 2010 Financial Results Conference Call, Apple CFO Peter Oppenheimer, Apple COO Tim Cook, and, surprisingly, Apple CEO Steve Jobs made several noteworthy comments concerning the company’s digital media products, including the iPod, iPhone, and iPad. During his opening remarks, Oppenheimer noted that Apple passed 125 million iOS devices—including the iPhone, iPad, and iPod touch—last month, with over 200,000 registered iOS developers, 65,000 game and entertainment apps, and over 30,000 apps made specifically for iPad. Oppenheimer also noted that iAd launched in July, and that the company is very happy with its results so far.

In regards to the iPod, Oppenheimer said it remains the worldwide MP3 player leader with over 70% market share, and is gaining share in most of tracked countries, while iTunes revenue for the quarter was over $1 billion. Turning to the iPhone, he pointed out that Apple sold over 40 million iPhones in fiscal year 2010, and that the iPhone accounted for more than $8.82 billion in revenue in the fourth-quarter, with an Average Selling Price (ASP) of around $610. iPhone sales grew in Asia, Europe, and Japan during the quarter, with sales more than doubling year-over-year in Japan.

He added that the percentage of Fortune 500 companies piloting or deploying the iPhone jumped from 60% to 80% following the launch of the iPhone 4, and said Apple believes it could have sold even more iPhones if it could have kept up with demand.
Oppenheimer also spoke briefly about the iPad, saying that 65% of the Fortune 100 were now deploying or piloting the device, that the ASP for the iPad in the fourth quarter was around $645, and that the company finished the quarter with 3-4 weeks of channel inventory for iPad, or slightly lower than its preferred 4-6 week level. Later in the call, COO Tim Cook noted that the company is also seeing iPad interest pick up in the K-12 education sector, and said that the company is building additional sales capacity to handle the interest from the enterprise market, while training its carrier partners to do the same.

Prior to his colorful remarks about the tablet market, Apple CEO Steve Jobs joined the call to discuss the iPhone and its relationship/rivalry with Android. Jobs noted that the company sold 14.1 million iPhone in the quarter, besting the 12.1 million BlackBerry phones Research In Motion sold in its most recent quarter, and said he didn’t see RIM catching up to Apple in the near future. Shifting his focus to Android, Jobs quoted Google CEO Eric Schmidt as saying that the company handled 290,000 Android activations per day, and said that Apple sees an average of 275,000 activations per day with a peak of nearly 300,000 per day on certain days. Jobs also pointed out that there is no solid data on how many Android phones are shipped each quarter.

Continuing to discuss Android, Jobs called Google’s characterization of Android as open and iOS as closed “disingenuous,” noting that the Android landscape is very fragmented, and that many Android OEMs—including the two largest—install proprietary user interfaces to differentiate their products from the commodity Android experience. Jobs then talked about the experience of the developers of Twitterdeck, who said they needed 100 different UIs spread across 240 different handsets to make an Android app that would run on every possible device. He then compared this situation to iOS, where there are two versions of the software—the latest and second most-recent—to test against.
He went on to point out that there will be at least four app stores on Android that users will need to search to find applications, while Apple’s App Store is preloaded on every device, has 3x as many apps, and pays developers swiftly. Jobs called the open vs. closed comparison a “smokescreen,” and said the real choice was between fragmented or integrated, adding that Apple believes integrated will win every time.

Jobs later made some brief comments about the Apple TV, revealing that the company has sold over 250,000 second-generation units since its release, and adding that while the $99 price point is very enticing, the launch of AirPlay in November will give customers another big reason to buy it.