Apple's growth scorecard for second quarter 2011

Apple’s second calendar quarter was a record breaking performance. This is surprising because it shows super-seasonal performance. For as long as I can remember the fourth calendar quarter (i.e. holiday) was always the strongest quarter, by a large margin. This quarter was higher than the last holiday quarter. A glance at the following chart shows the anomalous performance:

iOS products make up 71% of sales (and at least 78% of profits) which makes the following growth scorecard a bit moot.

The growth in iPhone sales of 150% is hard to understand given the previous product cycle, but more about this later. The 122% growth in profits is (nearly) unprecedented. The growth in Q3 2008 was due to the launch of the iPhone 3GS and since there was no iPhone launch this quarter the growth shatters existing assumptions about the franchise.

The pattern in the table above is shown in the following chart:

This performance needs to be digested and contemplated a bit longer but I will make one early conclusion: One of the most common themes during the last year was that Apple’s growth rate was unsustainable. The theory cited was one of the “law of large numbers”. Apple’s performance shows it to be nonsense.

Instead of decelerating, Apple’s growth is accelerating.



  • Andi

    Great numbers and outstanding bottom line performance. However, the dependency on iPhone is very high, what happens if Android and WebOs are getting their act together?

    • Ted_T

      On the surface, you are correct. I've thought/said similar things myself before.
      — look at the previously all important iPod — dead in the water, and would ridiculously dead without the iOS based iPod Touch, which is an 'iPod" in name only. Does anyone care? The category has simply been rendered unimportant by the iPhone and iPad. Apple will be the first to cannibalize the iPhone — it won't wait for someone else to do it for them. As it is, at the present rate of growth, the iPad will soon surpass the iPhone in importance to Apple's bottom line.

      — What happens if Android (WebOS is nowhere anyway) far from getting its act together falls apart? How much of a priority is it for Google, considering its minimal profitability? How firm a choice is it to the OEMs considering the that same minimal profitability, plus the ever escalating patent headache? What happens when Google competitors like Amazon start branching old Android source for their own purposes?

      — What happens when Apple addresses the heretofore ignored prepaid/low(er) end markets internationally as well as Sprint, T-Mobile and minor carries in the US? China Mobile in China?

    • russell

      In terms of volume, Android has its act together now. The business model is the challenge.

      • Another way to look at it is that the two are the same. Android could never have achieved its volume without crashing thru IP restrictions, not licensing, getting the carriers (esp., Verizon) to give sweetheart terms on data, such as the now-gone free tethering, etc.

        The business model was predicated on all this. Some presume it was steady-state, unchanging. I think it was with recognition that there'd be costs to pay down the road, but “better to ask forgiveness than permission” since MSFT and ORCL never would've licensed their software on terms that would have trashed their own product offerings, as has happened, and GOOG can now afford to pay.

        Another view has explicitly been given by GOOG: they foresaw Apple's domination of smartphones, and knew damn well that with 75% market share, Apple would charge dearly to let GOOG get on the platform, maybe getting 30% of all ad impressions thru mobile Safari or whatever. So Android was a purely defensive ploy, a bargain at any price.

        So the business model actually looks intact, at least until the (possible) undermining of the handset volume thanks to the IP challenges.

    • FalKirk

      "the dependency on iPhone is very high"

      First, the iPhone didn't exist 4 years ago. Saying that a company is "dependent " on a 4 year old product that went from 0 to 40% of one's revenues is ludicrous. Don't try to turn a good thing into a bad thing. Every other company in the world would kill to be so "dependent" on a single product.

      Second, have you met my little friend, the iPad? The iPad is only 5 quarters old yet it out sold the Mac by 2 to 1 and it brought in half the revenues of the iPhone.

      And the ceilings on the iPhone and the iPad? Virtually non-existant.

      What you call "dependence" I call explosive growth.

    • asymco

      I think you mean dependency on iOS is very high. Android and WebOS are not devices.

  • Morten Jacobsen

    I paraphrased your excellent last paragraph to make it fit in twitter: “Law of large numbers” implies that Apple’s growth rate is unsustainable. Apple’s performance shows it to be nonsense. Ok?

  • Iosweekly

    I never understood the analysts predictions of a sequential drop in iPhone sales. The smartphone market is consistently growing, and all surveys more or less pointed to apple maintaining it's smartphone marketshare if not growing it. (I had informally predicted 19.5 million phones, will have to enter into the official AFB group next time)

    The main reason behind the increase of shipments, despite a lack of new iPhone model, I think, is due to the maturing of the smartphone market. The majority of new smartphone buyers are now the "less-informed early majority" who have less of an idea and/or care about the relative age of their smartphone purchase. To be sure, there is still a "well informed early adopter" section of the smartphone buying public that delayed an iPhone purchase, but this small percentage of buyers was more than evened out by the growth of the overall market.

    Appreciate it if others can share opinion on what I wrote above, either positive or negative.


    • Eric D.

      I think buyers want to buy into the iPhone environment, more than into a fancier phone. The iPhone 4 is still a great phone. The 3GS is a good entry. Both are highly serviceable as phones, but more importantly, both open the door to the App Store, which is where the candy is kept. People are buying keys.

    • Partly, this is Apple's reward for treating their last-gen owners with respect, with respect to upgrades. [sic!]

      A friend who just bought an iPhone last week is pretty sure that there'd be a new one in a few weeks but knew that the current model would meet his immediate needs, while iOS 5 would give him something to play with.

      So, not a question of how informed custs are.

    • unhinged

      Verizon is starting to have an impact, I think

  • It seems that most current smartphone buyers don't care about what analysts dream about. They are now buying smartphones when they need them. Apple is the gold standard in smartphones so when the "less-informed early majority" buy, they tend to fall back on the default choice, Apple. With the prime position as the default phone, this would seem to indicate that Apple will accelerate in sales as the first wave of mass adoption continues. Of course, the stickiness of the platform means that it will be very hard for competitors to win over iPhone users later through churn when it is time to replace their handsets.

    • jonshf

      And then there is the stickiness of the iPad. Many other smartphone buyers have or will buy an iPad. What might their next smartphone be? The real clincher, though, might prove to be iCloud.

  • Marko

    Scary to think what Q4 will look like. I'm officially convinced that Apple/ARM have locked up the profit-share of the industry for the next decade (in the same way MSFT/intel did previously). The only thing that can dent them now is washington…

    • Tony

      Why would Washington dent them? I assume you are referring to the way Microsoft have been targeted in the past for being a monopoly, but Microsoft's monopoly was judged to be as a result of restrictive and illegal business practices, whereas it seems to me that Apple are doing so well because they are simply better at making stuff people want to buy than anyone else.

    • Ted_T

      Apple does not have an identifiable monopoly, never mind an illegal one.

      Possibly the iPad could be judged a tablet space monopoly in the future, but only if it is insisted that it is a separate category — Microsoft disagrees claiming tablets are PCs. At the same time you'd need to ignore Android based eReading tablets like the Nook and the upcoming Amazon product. Hard to believe any future justice department would contort themselves that far.

      • davel

        iTunes in the conference call is the single biggest retailer of Music. Hence it can be looked at for monopolistic behavior. The govt already looked at Apple's app policies and lo and behold Apple relaxed them. Coincidence?

      • David


      • lkalliance

        I think the key is "monopolistic behavior." Microsoft wasn't pursued for simply being a monopoly; I don't think it's illegal to be one. It was pursued by the DOJ for utilizing its monopoly power in one market (operating systems) to manipulate a different market (browsers). OEMs that used Windows were forced to make IE their default browser, because MS made IE a requirement for Windows operation. That restricted the market in the browser space as OEMs were unable to make deals with other browser companies (Netscape at the time).

        The DOJ claimed that MS did not have to integrate IE so deeply that Windows wouldn't work without it; the court agreed.

        The question is, is Apple engaging in the same sort of behavior? It isn't licensing its technology, it's not restricting the market. Developers are free to write their code for any phone; they are free to even write web apps that work fine on iPhone even without going through the App Store. Much is made that "Apple only lets you do certain things with your phone," but even if you agree that's not restricting a market. If you want to get AT&T service, you don't have to buy an iPhone. If you want to buy Angry Birds, you don't have to own an iPhone (that is, the developer is free to write his program for other platforms if he wishes).

        So, granted I'm not a lawyer and I'm trying to use logical reasoning instead of legal reasoning, I don't think the government would have a case (or a problem) with Apple.

      • Bhupinder Chawla

        And ask this DoJ chaps now as to how come browser is the next OS (per Google) – Chrome anyone? Monopolies are not fought in courts but by creating environments which can create competition – had the money spent on these legal folks been utilized for this aspect – we would have seen better browsers much earlier or even a browser based OS (whether that would have been a success or not is debatable because of the network bandwidth availability at the time!)

      • EWPellegrino

        If MS hadn't been up to their neck in anti-trust issues there is no way that they would have permitted the browser to remain an OS neutral experience. They were aware of the risk, and considered it a 'nightmare scenario' that could only be stopped by embedding their own proprietary tech into the Web.

        Having killed off netscape and established a temporary browser monopoly they were halfway through the plan when the DoJ came knocking. Had they been free to pursue it there would be no chrome, no safari and possibly no iPhone.

      • davel

        I agree with what you say. However if you are the biggest player and can dictate pricing and distribution that is monopolistic behavior.

      • lkalliance

        Perhaps, though that sounds semantic to me. How is Apple dictating pricing? They are producing them and selling them at a competitive price instead of an artificially high price. I guess in a sense they "control" supplier pricing by negotiating favorable deals…but those come at a cost of either buying an incredibly large volume or by helping suppliers build more capacity. They can control distribution of their own product; only when you are functionally the *only* player would controlling distribution == controlling the entire market's distribution. Unless I'm missing something?

      • George Slusher

        I presume that you're an attorney, as you're giving an opinion on a very complex legal issue. Being a monopoly is not, per se, illegal. (For example, in most areas, electrical power is provided by a monopoly.) What is illegal is using monopolistic power to stifle competition. You really should read up on the Microsoft case. The DoJ's case had NOTHING to do with the Windows marketshare. It had everything to do with the illegal business practices that Microsoft used to stifle competition. Besides the browser issue lkalliance mentioned, Microsoft was found to have used its monopolistic power to force PC manufacturers to install Windows on every PC they made AND to NOT install any other OS–or they wouldn't be allowed to license Windows, which would destroy their business. (For example, Dell couldn't sell a PC with WIndows and Linux installed, much less just Linux.)

    • Joe_Winfield_IL

      Monopolies are about market share and choice, not profits. If Android is thriving and HP, Microsoft, and RIMM are actively promoting competing solutions, Apple's profits aren't highly relevant. Apple is profitable because of vertical integration, excellent cost management, and superior marketing….oh and great products. Antitrust courts don't care about any of that as long as there is no anti-competitive behavior (and IP lawsuits don't constitute anti-competitive behavior).

  • OldMan

    This iPhone growth is just the beginning. There's still iPhone on T-Mobile and Sprint, much less China Mobile, yet to come. With the merger pending, many T-Mobile customers are holding off on new phones, waiting for one that will also work on AT&T's GSM frequencies.

  • Today:
    • Apple reported 20.34 million iPhones sold in the June quarter – so 223,516 iPhones per day (Google says it is seeing 500,000 Android devices activated per day).
    • During the earnings call Apple COO, Tim Cook, said that iPhone's 142% year-on-year growth delivered more than twice the rate of growth of the smartphone market.

    Last week:
    • Nielsen reported Android and iPhone has 65% of the smartphone market.

    How is it possible that Android is growing more than twice as fast as iPhone while iPhone is growing twice as fast as the smartphone market that both Android and iPhone already have 65% of?

    • Davel

      What is the market Nielsen is measuring? USA only? Apple's mkt is the world.

    • Seth

      Your comparison is off.

      Apple sold 33.5M iOS devices. This is roughly 370k/day. Closer to Android’s reported numbers.

      The growth comparison given by TCook (twice as fast as smartphoe market) was YoY which probably explains the perceived discrepancy between his statement and recent public numbers which are generally sequential growth.

      • Mark Newton

        No, I purposely used iPhone numbers rather than iOS because:
        1) I was drawing data for comparion to smartphone growth
        2) As everyone knows, Android activations = phone activations. Android tablets activations are a figment.

        I think my query still stands. One of these activation estimates looks wrong, and I don’t think it’s Apples’.

      • Joe_Winfield_IL

        Wouldn't negative growth from some others allow this math to be held valid? If Symbian/WinMo are actually shrinking, and RIMM is flatlining, their 35%ish share of the pie would allow for very favorable comparisons by both Apple and Google.

      • Kristian

        Yep. These manufacturers that now make Android phones used to make Symbian and Windows Phones. Actually continue to do so, but they simply don't invest marketing efforts for those anymore and don't make so many new models using those operating systems if any. So Androids growth is coming from those platforms. Apple is taking their share from the whole cake. RIM is losing to Apple and Android.

    • A goodly part of Apple's growth has been outside of US/Europe, as was detailed by one of the questioners on the call (Munster, IIRC).

      But also as Apple (Cook?) said on the call, they also have a hard time wrapping their minds around Google's “activations.” I presume that's from not knowing how they compare to never-before-activated devices, or the regions for them.

      Google has yet to crack the Android app profitability nut, and it doesn't take many Lodsys suits or malware incidents to hollow out the catalog, and its value to consumers. The CNN.Com class app will continue to exist but I think the battle will be whether Google can hold the small indy developer who has never made much money from the platform but has had his heart there.

      PS: there's a corollary to your observation: it sucks horribly to be the prior market leaders, whether US (BlackBerry, Palm and Microsoft) or international (Nokia).

    • Growth is acceleration, not velocity. I.e. if Google kept activating 500,000 Android devices per day for the next 5 years, it would not be "growing more than twice as fast as iPhone".

      Growth = (# today – # yesterday)/(# yesterday)

      Depending on who's measuring it, smartphone growth YOY is 70-80%. iPhone's growth is about double that.

    • EWPellegrino

      'How is it possible that Android is growing more than twice as fast as iPhone while iPhone is growing twice as fast as the smartphone market that both Android and iPhone already have 65% of?'

      First off you need to be very careful of the figures. Android & iPhone may have 65% of the US smartphone market, but they do not have 65% of the Worldwide market. Outside the US other platforms still count. Symbian, Bada, RIM, Android copycats such as Tapas etc

      Second these are YoY growth numbers, so you would actually need the Android+iPhone shares for last year, not last week, as the start point for the calculation.

      The numbers I find for mid 2010 are

      where Android+iOS = 30.4%, if both were growing at 140% against a market growth of 70%, they'd now be at a combined 43%, which doesn't seem too unreasonable.

      So while it's possible that Android's numbers are fiction, it's also entirely possible that they are legit.

  • I think the common sense portion of the Law of Large Numbers still applies…it's harder to double the 'next' time.

    And if a company remains in the same market, it's more applicable. If Apple remained only in the desktop and notebook market, it wouldn't be doubling it's earnings.

    But it entered a new market recently, 'mobile' and its growth isn't anywhere near tapped out like conventional PC growth is.

    I think Mary Meeker worded it something like, "each new generation of technology has been 10x the size of the last" in her mobile internet presentation.

    So Apple seems to be benefiting from meeting the needs of this next new, and larger market segment. Eventually the Law of Large Number will apply to it too.

    What's next after mobile, "ultra mobile"? Will Apple dominate a market for even smaller more wearable computers? Again increasing the size of the markets it in?

    Will iCloud open up a new area of growth that MobileMe never really tapped into?

    I think the Law of Large numbers has attacked Microsoft, and their glory growth days from the PC market are past. Apples innovation has allowed them to move on to the next market and future markets and is enjoying the 10X opportunities Mary Meeker was describing.

    The Law of Large numbers is still back there, having it's normal effect on other companies. Apple has been able to stay in front of it with market insight and innovation.

    We are just in the damn unlucky position of having a stock that can double its earnings while only having a p/e of 1/5 that. Bad bad luck, what's an investor to do.

    When corn is on sale, buy corn.

    • Davel

      Microsoft has dominated the desktop and millions are sold every year. There is still good growth there, just not the numbers you see in mobile.

      As you say Apple has moved on. They did not have a profitable franchise to protect. They were fighting for their life and went into music which morphed into phones and then tablets. Apple was able to look at the opportunity and think about what features were needed. I think if they had something to defend it might be a different story.

      • PatrickG

        Your view though is only a partial one – if you look at the potential market for desktops there is a near and foreseeable ceiling to the number of desktops sold as the market for them slowly saturates world-wide. Once saturated the market rolls into almost exclusive refresh cycling and the ability to drive market growth is severely crippled. Microsoft has three main revenue streams: Windows server, Windows desktop and Office. All three are playing to nearing saturation markets – there is no room for the kind of innovation that Apple has been driving, in their product set and while the profitability is still there, the growth is diminishing rapidly. Without growth, the market stagnates and becomes captive to paradigm shifts (like ultra mobile computing).

      • PatrickG

        Apple isn't in the business to protect franchises – look at the impact the ultra mobile shift has had on thie own cash cow – the iPods. These are losing ground under the influence of iPod Touch, iPhone and iPad. Apple is very good at EOLing product streams that are not a part of where they are going. They also didn't just go into music they produced a device that provided a low-cost halo opportunity for their computer stream. This has been more than adequately covered here and elsewhere so I won't belabor the point – you have to view what Apple does in terms of a consumer solutions package, not as individual devices or features. In the same way that Dell and HP provide solutions to corporate customers Apple provides solutions to the average consumer – their market share statistics bear this out conclusively. They look at where they are going not what features are going to sell more devices. And this entire ecosystem is what they are defending and building out.

      • And today they cannibalized their MacBook line by replacing their entry MB with the Air. Ruthless. Smart.

      • althegeo

        There is marginal growth in PCs. Microsoft is losing market share in PC OS sales. Macs are PCs but they are not Windows PCs. Windows PCs have about 89% market share. Apple's Macs have a hell of a lot of room to grow.

        Apple hasn't moved on. They are attacking the Windows PC market with Macs and iPads. A 5% gain per year in PC market share could easily be in the cards for Apple.

    • Joe_Winfield_IL

      Taking Meeker's 10X theory into consideration, Apple still can't see the ceiling. Of course they'll eventually slow down. But IDC/Gartner are still forecasting somewhere a bit shy of 400M PC sales this year. For argument's sake, let's use last year's actual 350M volume. This means the "mobile" space is worth 3.5B sales annually.

      Apple just sold somewhere around 34M iOS devices in its record quarter. Annualized, this comes to 136M. Now, if we want to cap Apple's share of the "mobile" space at say, 20%, we are calling the total market 680M devices. This means that the entire market needs to grow more than 5x, before we reach saturation. And this doesn't account for any organic growth once the market matures. If Apple gains no share, they will sell 700M iOS devices in a calendar year in the not too distant future.

      Of course, the 10X is a guideline and the 20% share is arbitrary. The point is, AAPL will eventually become a blue chip…but not for a while. Today, it's still the world's biggest growth stock with a long runway and an embarrassingly low valuation. (Disclaimer: I bought a truckload of corn a couple weeks ago when it was really on sale)

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  • Davel

    I have not had a chance to listen to the call yet, what was the breakdown in the USA and china re the phones? I am curious exactly how many phones went VZ and what is selling in china. India seems too small because ey don't have a robust 3G as I understand it.

    • FalKirk

      I don't have the numbers for the phones, but I have the revenue figures:

      38% U.S.
      62% International
      -13% China

      • FalKirk

        I just re-read my post. I put a dash in front of "China" to indicate that it was a subset of "International". But on re-reading it, I see that it comes across as "negative 13%". Let me start anew:

        38% U.S.
        62% International
        13% China

      • davel

        I am surprised China phone growth is so low.

  • fjarlq

    Nitpick: it was the iPhone 3G, not the 3GS, that had an impact on Q3 2008. 3GS was summer 2009.

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  • gprovida

    Large number limitations are generally driven by market maturation. However, mobile phone, tablet, and Mac markets are sitting at low numbers 5% to 10%, there is enormous multiple in earning and revenue over the next few years. During this time, Apple has the opportunity to enter new markets where it has little to no presence, e.g., TV and Enterprise although I do not know if Apple next disruptive leap will be anywhere in these areas.

    As pointed out by Horace, manufacturing on 100s of millions may be a more likely limitation than market maturation. The other wild card is, similar to MS license renewal in the Enterprise, the consumer annual Apple buys across a range of products and Services has not really been accounted for by analysts and the market. Again Horace has put his finger on another major business shift that will drive growth as well as a floor upon which to enter new markets.

    I would love to sit in on an Apple board meeting and listen to their coming to grips with these unprecedented business opportunities.

  • Pieter

    To what extend is this "higher" eps growth a result of first time "un-throttled" iPhone supply?

  • Two future factors that could double the iPhone sales per year:

    a) Asia, esp. China. That market is just revving up.
    b) churn rates among existing smartphone users. I think the "2nd smartphone purchase" (e.g. when contract expires) has to favor iPhone over Android. How many iOS users (with their iTunes/iPad/iCloud tethers) will switch to Android compared with vice-versa?

  • EWPellegrino

    There were indications that the iPad numbers were going to be good, the dropping order times on the online store for example, but I don't think anybody could imagine that they would be this good. The iPad, just like the iPhone beat out the previous Christmas quarter, and there is every reason to imagine that the iPad will be a highly seasonal product – more akin to iPod than iPhone as a stocking filler.

    Peter Cook even added that there had been further improvements in supply in July, and indications are that most of the additional supply this last quarter came on stream fairly late – we could be looking at yet another huge sequential rise for next quarter. Given the extremely low stocks in the channel there seems no difficulty in believing that additional supply will be sold.

    At this point a conservative estimate for Q4 would seem around 15million iPads – assuming that there isn't a major iPad release disrupting supply.

    The question seems no longer to be if the iPad will overtake the iPhone, but rather when.

    • Ted_T


      So far as a major iPad release, I see Apple releasing a retina display/double resolution iPad Pro without replacing the iPad 2 so while the iPadPro may have its own supply issues, the iPad 2 won't. There is no way Apple will attempt a full replacement upgrade in 2011 and even the Pro is doubtful.

      • FalKirk

        "I see Apple releasing a retina display/double resolution iPad Pro without replacing the iPad 2 -Ted_T

        Respectfully disagree. Niche product. Apple is already selling every iPad they can make. No need to build a specialty product at this time.

      • guest

        Would normally agree but iPad 1 itself was selling very well and Apple pushed out iPad 2 to deflate competitors with generation 1 machines. An iPad 2pro would counter the effects of generation 2 competitors just when they thought they had sufficiently matched iPad 2.

      • Ted_T

        Niche or not, a "retina" display based iPad is happening, the only question is in 2011 or 2012 — there are too many component maker side reports circulating on the new displays for it to be a baseless rumor.

        And I agree with "guest"'s comment — it will totally deflate Apple's would be high end tablet space competitors — even the "only specs count" crowd would have a hard time justifying anything that's not an iPad. Apple doesn't want a repeat of the iPhone/Android race — if it can insure that iPad competitors remain stillborn, it will.

      • FalKirk

        "Niche or not, a "retina" display based iPad is happening, the only question is in 2011 or 2012"-Ted_T

        I didn't say that the "retina" display was niche. I said a second, pro version of the iPad selling side by side with the iPad 2 was niche (and unnecessary).

        And yes, the only question is whether the retina display is coming in 2011 or 2012, but that question swallows up the rest of your post. If it's coming in 2012, then we're in agreement and this conversation is moot.

      • davel

        I vote next year. A new product would be disruptive to the manufacturing chain. They sell as many as they make. There is no reason to take money off the table to address a niche. As it stands at mid year there is no competition for the iPad.

    • unhinged

      Minor quibble: Peter Cook makes me think of the comedy duo with Dudley Moore; Tim Cook is the Apple executive. 🙂

      • EWPellegrino

        Haha, you're right. I mentally merged him with Peter Oppenheimer to make part of a great comedy duo.

  • With Apple being a global company and rolling out products gradually the holiday quarter's lead will necessarily shrink a bit. Analysts define holiday quarter by (mainly) Western holidays and as its been pointed out there are more mobile phone subscribers in China than people in the United States. If you add in the other countries who don't celebrate Christmas or Hanukkah then there are more people globally who have a different holiday period than the Western nations.

    Also this past quarter had several competing tablets launched, all of which bombed in comparison to the iPad. Those on the fence likely saw this and chose which way to swing over.

    • PatrickG

      Actually given that Chinese New Year is a major gift-giving celebration and occurs in the Western calendar Jan/Feb timeframe you still see a significant uptick in purchasing during the preceeding months (Nov/Dec) that corresponds to the western celebrations. Hong Kong, due to western influence still celebrates the western festivities – so the softening of the market in the holiday quarter I do not think will occur as you predict. I agree with those who have stated that there is not so much a "tablet" market as there is an "iPad" market.

      • Nangka

        Actually we mostly only give cash gifts (in red packets) during Chinese New Year. Just a time for get together and good food. Much like the Thanksgiving holidays except maybe with the Christmas significance.

      • I wouldn't mind getting an iPad instead of a 红包 😉

  • rashomon

    The stunning thing here, other than the slopes of the curves, is that iPad revenues approximately match Mac revenues, after only 5 quarters on the market.

  • Travis Lewis

    Great work Horace. Thank you for all your hard work.

  • Senator Gronk

    Indeed. The Law of Large Numbers will apply when Apple’s numbers are large.

    But we have a few years before that happens.

  • Jbelkin

    Apple knows what they are doing versus all the old stodgy companies built around mini fiefdoms and google who gives everything away hoping to make money on search. Apple has nothing to fear for 4 years unless it's an internal defeat … Apples market limit is whenever 60% of the audience for smartphones & iPads are reached in the entire world who are "middle class." whatever that number is, apple will reach 50-80% of that mar ket with the lower class choices filling in the rest of the market. Android is the new symbian and win phones are the new blackberry – fine lower tier choices but apple only competes with apple while te other 300 entities compete with each other.

  • LowEndMac

    Y-y iPhone growth of 150% can be summed up with one word: Verizon. US buyers now have two choices.

    Also, this quarter usually sees a drop in iPhone sales because the next model will arrive in late June or ealy July. Not so this year.

    Toss into the equation the $49 iPhone 3GS at AT&T, and you can see why Apple is selling so many.

    • I think it has more to do with a $49 iPhone than Verizon. Apple opened up, what,? 15 new carriers. Verizon is a nice one and accounted for, perhaps, 2-3 million of those phones (10-15% YoY).

    • asymco

      The US is only 30% of the iPhone market. Verizon is about 10%. That 10% cannot account for much of the 145% of the iPhone's growth.

  • castor

    Apple's revenue numbers are just staggering when compared to other companies. One of the most remarkable things they've done is figuring out to sell their products to the entire world.

    Apple's trailing twelve months (according to wolfram alpha) are now bigger than companies
    like Proctor and Gamble, Costco, Kroger, and Wells Fargo.

    If we annualize this quarter's revenues to $112 * 10^9, it will be bigger than Verizon, Bank of America, and IBM.

    Apple's performance is truly mind-boggling.

    Then again, after having owned probably half a dozen computers over the last twenty years, I'm thinking of buying my first mac after cashing in some apple stock. So there's still room for growth, even in a mature market like the US.

  • oldjoey

    Fortunately you don't need to cash in much stock these days or, borrow the money and cash in six months from now and buy yourself a treat with the extra cash from those five shares.

  • r.d


    I was really surprised by your miss of iphone # (15 million) for fiscal Q3.
    Apple sold 39.99 million iphones in fiscal year 2010.
    So if you project 80 million for fiscal year 2010 that
    meant that Apple had to sell 20 million in fiscal Q3
    and 25 million in up coming fiscal Q4.

  • Anonymous

    Any chance that the weak US dollar is amplifying these results, given enormous growth in Asia-Pacific?

  • deanbar

    Quote – “The growth in iPhone sales of 150% is hard to understand given the previous product cycle” -Asymco.
    This comment shows the author has not really had his finger on the pulse at all. If he had been keeping up to date with Apple’s progress, he would have been aware of the massive take-up of Apple products in China and Asia generally, besides upswings globally.

    But he’s no different to all the other analysts who also don’t (or don’t want to) understand the ever accelerating climb of new Apple switchers. Regular Apple watchers already know this, these analysts are so out of touch it’ s unbelievable.

    • Mark McDonald

      Not so. It show your lack of reading comprehension skills. The entire point was that iPhone sales were constrained due to supply issues. As Horace stated several times, demand was unlimited.

  • What about revenue from iPod touch? With more than half iPods sold being iPod touches, you may want to rearrange the chart to show iPod revenue numbers right below iPhone to take iPod touch into account.

  • Kizedek

    What about the Deferred Revenue that was mentioned in the quarterly call? To cover new features of iOS or OS X added later, it sounds like they are once again deferring a certain amount per unit (at least 16 or so dollars per iPad for last several weeks, plus more dollars from now on? They mentioned iPhone and Macs, too, I think. I'll have to listen again).

    Does this not mean these astounding figures could have been even higher and they have already put some aside to add to bottom for upcoming quarters? …just as they did before when it confused analysts as to the true value of Apple's business?

    • I think this is very important. The last time Apple used deferred earnings with the iPhone, few on Wall Street ever figured it out. They were always amazed at this "hidden" income when it popped up and were incapable of incorporating it into their forecasts even though it was specified clearly by Apple. The question is if Wall Street will make better sense of it this time.

  • Luis

    Horace: the law of diminishing returns is not the law of large numbers, but it is so common a mistake in the financial community. Maybe is time to change the definition!!!

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  • claimchowder

    thanks a lot for your outstanding work, as always. But I do have a suggestion for imrovement:
    The graph "Quarterly Sales by Product" is hard to read above the red "iPod" streak. This is due to iPod's strong seasonality causing bumps in the graphs from "iPod" on upward. Could you put iPod or other highly seasonable items on top of the stack, rather than in the middle? That would make comparison between the smoother layers further down much easier.

    Thanks a lot.

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  • Frank

    Horace, about your quarterly sales graph:
    I think this kind of graphs would be improved if the iPod were on top. That would make it easier to read the other products' variations and have them less disturbed by the seasonality of the iPod graph.

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  • As the graph shows, Mac is the solid bedrock upon which the company grows. Hope they don’t overlook that fact.