Apple’s quarterly earnings call is a curious ritual. “Does it basically just consist of the sound of laughter and popping champagne corks?” asked an acquaintance. No, but it might as well do.
The raw facts are much the same each time. Record revenue and profits. Solid growth. iPhone and now iPad sales astounding. And if only Apple’s suppliers had the capacity to build more of the little buggers they’d be making even more money.
Today’s facts are, indeed, just that. Record second-quarter revenue of $24.67 billion; record second-quarter net profit of $5.99 billion, or $6.40 per diluted share; 3.76 million Macs sold, up 28% on the same quarter a year ago; 18.65 million iPhones sold, up 113%; 9.02 million iPods sold, a 17% decline (how did that get in there?); 4.69 million iPads sold.
Apple’s cash reserves are up another $6.1 billion and now sit at $65.8 billion.
The sheer scale of this money-making machine seems to reduce Wall Street analysts to dull sycophancy, because the subsequent ritual is the same too. Analyst: “Could you tell us about …?” Apple: “We don’t comment about the future or unreleased products. We’re confident. Look! Big numbers! Did you see the big numbers?” Analyst: “Thank you, and congratulations.” Repeat.
In the short term, it does appear that Apple’s main problem is simply cranking up the factories.
“The iPad has the mother of all backlogs. We’re working very, very hard to get out to customers as quickly as we can,” said Tim Cook, Apple’s COO and, while Steve Jobs continues to remain on medical leave, acting CEO. Other areas of the business are in “supply-demand balance”, he said.
Cook hosed down concerns that the disasters in Japan could disrupt production. While the spot price for DRAM chips did rise 11%, and Lenovo warned that shipments of its tablet computers could be affected, Apple doesn’t buy on the spot market and has contingency plans with its suppliers.
But looking further ahead, a key challenge for Apple will be the rise of Google’s Android operating system running on a plethora of third-party devices.
One analyst compared this situation with two decades ago. Apple’s closed, proprietary Mac environment was challenged by Microsoft’s more open Windows system that allowed third parties to open the box and innovate for themselves. Microsoft ended up owning 90% of the personal computer market and Apple nearly disappeared.
Cook responded by repeating the impressive iPhone and iPad sales figures, reminding us that most Fortune 500 companies are deploying or testing them — though of course a “test” could be just a handful of devices in a 10,000-personal company — and how many hundreds of thousands of apps they get available.
“We feel very, very good about where we are, and we feel great about our future product plan,” he said, before telling us that more than 10 billion apps had been downloaded.
Confidence. Big numbers. Repeat.
“We continue to believe, and even more and more every day, that iPhone’s integrated approach is materially better than Android’s fragmented approach, where you have multiple OSs on multiple devices with different screen resolutions and multiple app stores with different roles,” Cook said. “I think the user appreciates that Apple can take full responsibility for their experience, whereas the fragmented approach turns the customer into a systems integrator. And few customers that I know want to be a system integrator.”
Its a bit like art critics debating who was really better, Leonardo or Michaelangelo. In the end, you can’t quantify preference.
Fanboi exist. Its clearly irrational because not everything the jobsness touches is pure gold. you really CAN put glitter on a turd, and sell it with an apple logo. I mean, the iPhone4 antenna fiasco? the glass scratches? OMG>>>
Sorry. where was I. But equally. if your buddies all have nike, and the nerds have adidas, your mother might prefer the adidas pricepoint but you will grow up to buy nike even when you don’t run.
B&H manipulated the UK cigarette market with meaningless death-ridden symbolism and turned me into a product loyalist 5-6 years before I smoked.
Have you *seen* the product placement the apple logo has in mainstream TV? I don’t think even high end American hospitals have that many Macs in them, they aren’t exactly the health professional desktop of choice. House would have us believe they are given away like vicodin.
NeXT was a flop.
So, android. Has it succeeded in reducing the cost of semi-open devices? You bet. Are they better than the Symbian and Windows alternatives? You bet. Have they been individually licked by Steve Jobs as they come off the production line? Alas no. And Eric Schmid Spit doesn’t “do” it for me.
In the end, you’re either a rolling stones fan, or a beatles fan, and market economists cannot really model that.
What amuses me is that Wozniak might as well not have existed. He’s as irrelevant as Paul Alan is in the Microsoft story. ie, not irrelevant at ALL, but functionally written out. Why? because he is unsellable. Jobs understands that image is everything. Put Woz in a black polo and the beautiful set are still looking for somebody else.
(I like both btw. Also If John Mayall licked a phone, I’d buy it)
Technically speaking, it’s a huge success. Mac OS X is, after all, basically NeXTSTEP 5.
@GGM
For a millisecond you were doing ok, then:
“B&H manipulated the UK cigarette market with meaningless death-ridden symbolism and turned me into a product loyalist 5-6 years before I smoked.”
I don’t think that level of suckerdom can even be compared to fanboidom. Cancer, bad breath, emphysema, thousands of dollars a year and an early painful death, versus unending pleasure in an insanely great piece of technology etc.
And:
“Have you *seen* the product placement the apple logo has in mainstream TV? I don’t think even high end American hospitals have that many Macs in them, they aren’t exactly the health professional desktop of choice.”
Yeah, but for all the wrong reasons. For years my research institute was run by the usual IT neo-nazis who insisted that we had to buy Dell. Even though we were using our own hard-won research grant dollars (which for most of us also paid our salaries) a slice of which the institute takes for central services (yes, those neonazis were paid by us). Luckily about the time I arrived, an insurrection had just happened and the Allies finally defeated the nazis, and we were set free. I really feels for those condemned to Dellworld. Incidentally the main reason was that with Dell, institutes and businesses above a certain size get “high service”. Well, duh, it’s a Dell, it needs high service. Never once did I hear of an Apple needing service; certainly in the 20 odd years I have had Macs (along a PC) I have never needed service. And of course relieving the IT boys from doing much except putting things in boxes and shipping back to Dell (or maybe telephoning Dell). The only time when Apple users call upon IT is when IT does something wrong–it took them half a day (in my office) before they discovered that THEY had reassigned my Macs IP address with a printer somewhere else on the floor.
Do you notice that Mythbusters use Macs but tape over the illuminated logo, presumably because Apple will not pay for that product placement. So I wonder if they really do pay House. And imagine what people like me would think if House used a Dell.
Oh, and GGM, Paul Allen and Woz are both incredible people without whom neither MS nor Apple would have existed. Quite apart from both being the tech guys, it was Allen who convinced Gates to drop out of Harvard to take up opportunities he could see. Woz was older and was working for HP in Palo Alto (many the history of the entire silicon valley revolution began in HP). But Allen had a falling out with Gates and left ; over the years they subsequently made up. Obviously Gates was totally focussed on one thing only, commercial success which he foresaw required both owning and monopolizing the OS. Fair enough and he made Allen much richer than he probably otherwise would have been (despite the fact that Gates tried hard to rip him off of his share in the company in those early days).
Very early on in Apple’s takeoff Woz got sick and had an accident (in his own plane I believe) and so kind of wandered off thru circumstance.
But both these guys were very unconventional and had too many interests to be consumed solely with their original computer companies. He wasn’t pushed out by Jobs. (And incidentally Apple declined when Jobs was kicked out by the suits, then Apple revived when Jobs returned a decade later and added in all that his NeXT venture had developed.) Allen has funded all kinds of things, including the Human Brain Map.
But Bill Gates has partly redeemed himself by his world health foundation, and also his approach to giving his wealth away. Another interesting comparison between the two is that they both gave Commencement addresses to universities in the same year, 2005 I think. I don’t have the Gate’s one because it was all worthy motherhood statements about diligence, working hard for your dream blah, blah. But here is Job’s address to Stanford. Of course, he lived in Palo Alto but didn’t go to Stanford and dropped out of whatever minor college he went to. It won’t turn you into a fanboi (whatever that is) but it is a truly inspiring speech.
(news-service.stanford.edu/news/2005/june15/jobs-061505.html)
@michael, thats the whole POINT. Woz and Allan are real people. they are only written out by the follow-steve brigade (and follow gates respectively). The investors don’t actually care nearly as much about Jobs as people think: there might be price-shocks, but the year-on-year value of Apple is about a company, not a person, and the non-history of the other people who helped build these empires is striking.
Woz is still on book as an apple employee. I don’t want to imply he ‘left’ apple or ‘argued’ with steve, but I do believe he’s not held to be a sellable asset for positioning apple right now, or in the recent past, or forseeable future.
http://www.apple.com/legal/trademark/copyright.html details a contact at Apple for product placement. I am led to believe that they pursue this aggressively, as a marketing strategy, but as in-kind more than money. I don’t think people in the movie industry want to use Dell, so an in-kind offer in return for logo placement wouldn’t work as well for them.