Apple Conference Call: Six Things You Should Know
Unlike last quarter, Apple's (AAPL) conference call on Tuesday, Jan. 18, regarding quarterly results did not include a cameo by iconic Chief Executive Officer Steve Jobs, who announced a leave of absence on Monday. In fact, his name didn't even come up in a question, and that's one of six things Apple watchers should know about Tuesday's call.
1. The Steve Work Ethic
Considering the turbulence Apple faced Monday and Tuesday, it's difficult to imagine that every analyst would choose not to ask questions about the impact Jobs' medical leave of absence would have on the company, yet none did, at least not directly. However, one question was posed about "long-term planning" about products.
"In my view, Apple's doing the best work ever," said Chief Operating Officer Tim Cook, adding that the company was "very happy" with the product pipeline, and then he said this:
"The team has an unparalleled breadth and depth of talent and innovation that Steve has driven in the company, and excellence has become a habit, and so we feel very confident about the future of the company."
Present or not, the influence of Steve Jobs still guides Apple.
2. Apple and the Dragon
When queried about how Apple can manage to sustain the insane growth of the present and the past, the answer that came up repeatedly was Asia, specifically China. The company stated that years ago Apple identified China among emerging markets as its "top priority" and the results are "absolutely staggering." China, Hong Kong, and Taiwan generated some $2.6 billion in revenue for the quarter, quadrupling performance from a year earlier. The number of visitors and sales at Chinese Apple Stores exceeded those of every other store, including flagship stores in the U.S. and Europe.
Besides China, sales in Japan were up 83 percent from a year earlier, with strong growth for the Mac: up 56 percent. Korea was also singled out as being very receptive to the iPhone, and Japan was mentioned as well, but clearly, China is the focus of new markets for Apple going forward.
3. The Mac Is Back
Actually, it never left. For a jaw-dropping 19 consecutive quarters, the Mac has grown faster than the rest of the PC market. For the most recent quarter, the Mac achieved 23 percent growth, compared with a meager 3 percent for the rest of the industry. Apple sold more than 850,000 Macs in retail Apple Stores, and once again, for nearly 10 years, "about half" of those purchasing Macs were doing so for the first time.
As to what people were buying, the biggest sellers were the MacBook Pro and the new MacBook Air. Apple executives described the Mac as a "phenomenal" part of their growth. That growth included 2.9 million laptops sold, representing 70 percent of Macs sold during the quarter. Consumers loved new features like "instant on" and the speed of solid-state drives, according to Apple. Look for SSDs to migrate to other Mac portables soon, most likely with faster CPUs from Intel (INTC).
4. The Unstoppable iPhone
After selling more than 14 million iPhones from July through September, Apple topped that by selling more than 16 million iPhones during the holiday quarter, and they could have sold more. More than six months after launch, the iPhone 4 is still supply-constrained, and Apple executives have no idea when supply and demand equilibrium will be reached.
It almost certainly won't be this quarter, with the launch of the Verizon (VZ) iPhone. In fact, a question regarding expanding sales of CDMA iPhones to countries like China was only partially deflected. While Apple is "always looking for opportunities," it was implied that current iPhone supplies preclude any major expansion in the short term. For the first time, Apple may be looking at an iPhone that sells out across the model year.
5. Other Tablets Still Suck
Trash-talkin' Steve Jobs may not have been there to put the smackdown on competing tablets, but Tim Cook filled those shoes admirably. According to Cook, competing tablets currently fall into one of three categories:
Window tablets that are "big, heavy, expensive, and have poor battery life," and that require input devices like a stylus. Consumers are simply "not interested."
Android tablets that, by Google's (GOOG) own admission, run an OS not designed for tablets in sizes that are "less than reasonable," failing to provide a "real tablet experience." They are "scaled-up smartphones" and Apple is "not concerned" about them. I wouldn't expect a 7-inch iPad this year.
Vapor. That would be tablets previewed at the Consumer Electronics Show or earlier, and possibly the BlackBerry PlayBook, though Research In Motion (RIMM) was never mentioned.
6. 160 Million iOS Devices Sold
To put that number in perspective, the number of iOS devices passed 100 million last June. In September, that number was 120 million, and now it's 160 million. By the time the next iPhone launches in June or July, it will be at least 200 million, perhaps as many as 250 million.
That's the takeaway from this quarter's conference call: six facts worth remembering.
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