Apple smashes Mac, iPhone sales records again

Execs duck questions about Wednesday's rumored tablet event during conference call

Apple reported record Mac and iPhone sales today, marking the second consecutive quarter the company has reset the bar for both product lines.

"An impressive quarter," said Ezra Gottheil, an analyst with Technology Business Research. "Apple has resumed the kind of growth it had prior to the Great Recession."

In the quarter than ended Dec. 31, Apple sold 3.36 million Macs, a 33% increase over the same quarter the year before and 309,000 more than the previous record, which was set in last calendar year's third quarter.

"This was our best quarter ever," Peter Oppenheimer, Apple's chief financial officer, said during an earnings call with Wall Street analysts on Monday afternoon. "We set new records in Macs and iPhones."

Globally, desktop Mac sales were up 70% year-over-year to 1.2 million, said Oppenheimer, confirming earlier estimates by outside analysts and researchers, who had bet on breakout sales of the refreshed iMacs, introduced last October.

MacBook, MacBook Pro and MacBook Air unit sales, meanwhile, were up only 18% for the quarter. But even with the jump in iMac sales, Apple's notebooks outpaced desktops by nearly a 2 to 1-margin; Apple sold 2.1 million laptops last quarter.

Most analysts had predicted smaller sales totals from Apple, but Brian Marshall of BroadPoint AmTech nearly nailed it earlier this month with his estimate of global Mac sales at 3.3 million.

When asked if Apple could continue to post that kind of Mac growth -- in other words, be able to return to the pre-recession rates of 40% and more -- Tim Cook, the company's chief operating officer, declined, as he put it, to "predict the future."

"The Mac growth rate was twice the [PC] market's [17%]," said Cook, citing recent estimates from research firm IDC. (Actually, IDC put the global PC sales growth rate for the fourth quarter at 15.2%, not the 17% that Cook used.)

"And in some of the markets that we're in, the Mac growth was absolutely spectacular," Cook said. Sales in China increased by more than 100% compared with the year earlier, he said. Sales in Italy, France, Switzerland and Spain were also up more than 40%. Usually, Apple does not break out sales country-by-country.

Gottheil wasn't so squeamish about commenting on Apple's future. "I think the growth rate has to decline," he said, noting that once the quarters during the downturn have been exhausted for comparisons, Apple would find it much harder to continue posting growth rates in the 30% and above-range. "I think there's been a certain loss of momentum for Macs," Gottheil said, citing the decline in average selling prices (ASPs) for Apple's computers.

In the last two years, he said, Mac unit sales have averaged a growth rate of 20%, but revenues from those system sales have increased an average of only 11%. "Apple took a big hit [during the recession]," said Gottheil.

iPhone keeps on giving

Apple also smashed iPhone sales records last quarter, selling 8.7 million iPhones, a 100% jump over the previous year and almost 1.4 million more units than the previous record of 7.4 million, which like the Mac sales record, was set in the third calendar quarter of 2009. More than 200,000 were sold in China since the launch there last October, Cook said.

Because of a change in accounting that the company instituted in mid-2009, last quarter was the second running where the iPhone contributed more revenue to Apple's bottom line than either its Mac or iPod business. Last quarter, the iPhone accounted for 35.6% of the $15.7 billion that Apple raked in revenues. The Mac line pitched in 28.4%, while the iPod and iTunes contributed 27.8%.

Analysts today also continued to question Apple about the company's exclusive partnership in the U.S. with AT&T, which has been hammered by users for poor performance. "Can you remind us of the virtues of having a single carrier in the United States?" one analyst asked.

Apple's answer was similar to those it's given in the past, but it added a small piece of new information. "AT&T is a great partner," said Cook. "In most locations, most iPhone users are having a great experience." In locations where AT&T has acknowledged problems -- New York City, for instance -- the carrier has "a very detail plan," added Cook. "We have personally reviewed those plans, and we have a very high confidence that they will fix the [problems]," he said.

Not surprisingly, both Oppenheimer and Cook dodged every question thrown at them about the Wednesday morning event that most expect will involve the long-rumored tablet. "I think you're alluding to our event on Wednesday," said Oppenheimer when one analyst tried to get an answer about whether Apple's financial guidance for the next quarter included any unannounced products. "We don't have anything to share today, so stay tuned," Oppenheimer added.

Cook couldn't be drawn into a conversation about new products either, telling a different analyst later in the call, "I wouldn't want to take away your joy" of being surprised later this week, "so I'll delay that for Wednesday."

Even CEO Steve Jobs, who was not on the earnings call, got into the is-it-a-tablet act. "The new products we are planning to release this year are very strong, starting this week with a major new product that we're really excited about," he said in a statement released just before the call today.

However, Gottheil, who like others has taken to dubbing it the "iSlate" in lieu of an official moniker, said, "There's a lot more uncertainty for this device. Apple doesn't really have a track record [in tablets]. My biggest problem with it is that it's more of a 'might-have' than a 'got-to-have,' which is one reason why I think its success will be of more modest numbers."

Other analysts have argued that the tablet -- assuming Apple does unveil one Wednesday and ships the first units relatively quickly -- could deliver another $1 billion to $5 billion in revenues to Apple's coffers this year.

What Apple has going for it, said Gottheil, was its timing. "There's some recovery going on, not only in the international market, but also in the U.S.," he said, pointing to the 30% increase in Mac unit sales in the Americas, and a 34% increase in sales at Apple's retail stores, most of which are in the U.S.

Computerworld blogger Seth Weintraub plans to live-blog from Wednesday's Apple event, which is being held in San Francisco.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, send e-mail to or subscribe to Gregg's RSS feed.

This story, "Apple smashes Mac, iPhone sales records again" was originally published by Computerworld.

Copyright © 2010 IDG Communications, Inc.

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