RSSApple's attention shifts to Mac as iPod growth slows
By Scott M. Fulton, III | Published January 23, 2008, 11:32 AM
In the last few weeks, its biggest news has been the deals it's made with movie studios for streaming content over iTunes, and its having deflated the bulk of a notebook computer to a razor-thin profile. Didn't Apple used to sell those little song gadgets?
A public corporation always puts its best foot forward for its quarterly earnings report, and in that case, Apple Inc. is no different. But when a seasoned performer has become accustomed to always entering the stage with his right foot, as many have trained themselves to do for whatever reason, you take notice when one enters the stage with his left.
Late yesterday afternoon, the company that last year took the bold step of removing the "Computer" from its corporate name, entered the stage on its left foot for a change. The iMac and Mac Pro lines have sold 53% greater units, earning 59% greater revenue, for the quarter ending last December than in Apple's previous fiscal first quarter 2007. Unlike almost any other computer company in the world, Apple's desktop unit growth is outpacing its notebook growth, with 38% more MacBooks sold this last quarter than in fiscal Q1 2007, and growth over the previous quarter literally flat.
"We are extremely pleased with the very successful launch of Leopard on October 26th and the response from both customers and reviewers has been terrific," Apple CFO Peter Oppenheimer told analysts yesterday (via transcript provided by SeekingAlpha.com). "Total Leopard revenue was about $170 million during the quarter, a significant increase from about $100 million in revenue generated by the Tiger release in its first quarter. We believe that 19% of the Mac OS 10 installed based is already using Leopard."
The other "foot" that holds up Apple these days, for the first time, started to lag a bit. Growth of sales in the iPod segment are slowing, and this time not because the same number of new customers quarter after quarter constitutes a lower percentage of the base. Annual unit sales growth is now down to 5%.
"We set out to achieve three things in the December quarter with the iPod business," Apple CFO Timothy Cook told a UBS analyst yesterday. "The first was we wanted to hold our already high share that we enjoy in the United States. We wanted to continue to grow share internationally and as we've already said...we are very pleased to report that we did both of those...
"The second thing we wanted to do was to sell at least the number of iPod units that were comprehended in our guidance," Cook continued, "and we are pleased to report that the sales of over 22 million iPods not only set a company record but were also consistent with what we had contemplated in our guidance."
The third thing Cook mentioned, however, is hard not to pay attention to: It's a move by Apple to migrate the iPod out of its...well, its "iPod-ness," for lack of a better word. One big reason may be to build a differentiated enough new product line that can sell to a fresh new market all over again. That is evidently what the iPod Touch is really all about.
"The iPod Touch has the potential to grow the iPod from being just a music and video player into being the very first mainstream Wi-Fi mobile platform running all kinds of mobile applications," said Cook, "and we overwhelmingly met this goal. Introducing the Touch at the high end of the line may have traded off a bit of unit volume but it was the right decision to achieve the strategic goal of establishing a platform."
There was some question as to whether the iPhone may have cut a bit into iPod sales as well...and actually, the converse was also considered. A little over 2.3 million iPhones were sold in the last quarter, generating $241 million of revenue for the company. The iPod segment, meanwhile, generated just under $4 billion of revenue.
So the question deserves to be asked again: Is Apple a computer company or a CE company? Two years ago, the shift toward the latter was a modern business phenomenon. Last quarter, however, there may actually have been more of a move to balance the two segments out, as the Mac division produced revenue of $3.55 billion.
It still belongs in the "phenomenon" category, however, as the company most had written off in the early 1990s reaped $9.6 billion in revenue in the last quarter, with earnings of $1.58 billion -- up 57% over the year-ago quarter. Microsoft's earnings come out tomorrow, but for comparison, in its quarter ending last September, it earned nearly $4.3 billion on revenue of $13.76 billion.
The big problem may come down the road for Apple: The US may be entering a recession period, which means discretionary spending may be reduced, and those iPod purchases may get put off. CFO Oppenheimer gave slightly lower guidance for the upcoming quarter, and then made the mistake of attributing that guidance to "seasonality" (the fact that it's not Christmas any more) and a settling down of sales of Mac OS X Leopard.
Leopard? Suddenly Apple's a software company? Analysts couldn't help but note Leopard only generates $170 million in revenue when it's a successful product. By late morning trading on the NASDAQ exchange, Apple stock had plunged over $20 in value, or almost 13%, to over $135 per share.
With the upcoming downturn in the economy, Apple may need to find a way to enter the upcoming few quarters on both feet in order to weather the storm.
People who base their existence around a music player regardless what brand are next to mentally disabled.
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Who in their right mind would want an iPod when you can get a superior Zune? Apple's iTunes software is extremely slow.
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The Zune owns... blows an Ipod out of the water.
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"Who in their right mind would want an iPod when you can get a superior Zune?"
How is the Zune superior? What makes it better? It does not look better. It sounds worse on the same bit rate files. The software has horrible usability problems and crashes often.
"Apple's iTunes software is extremely slow."
Compared to what?
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Of course, it'd be good to be able to choose between the iPod (not lpod) and the Zune.
Those of us outside the US don't have that choice. Until Microsoft decides to officially
start selling Zunes beyond home territory, it stands very little chance against iPod.
Now if only Apple would start making iPods sans the ultra smooth mirrored chrome
case back that's so heavily prone to fingermarks, smudges, and general abrasions.
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Last I checked it was iTunes that had the horrible usability problems.
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You're absolutely right.
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One has to wonder where you get this information when we all know you've "never seen a Zune outside of the store"...
Oh, that's right. You make s*** up to support your BS. Silly me, I keep forgetting.
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I don't see how selling 22 million (more) ipods be considered a disappointment. The iPhone obviously does cannibalize a bit, and many people do have an iPod. The iPod touch is now going to be like a mobile platform as the SDK gets released. Love the products or hate them this is one successful company.
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It's about time. I can't wait for Leopard 10.5.2 to be released which should happen some time in February. That will be a major update for Leopard. Not that I'm having any problems now but there are many goodies in that update as well I'm looking forward to.
Macs simply rock and a new Apple era is undeniable. Even a Mac movie is being released:
http://www.macheadsthemovie.com
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"...I can't wait for Leopard 10.5.2 to be released which should happen some time in February. That will be a major update for Leopard. Not that I'm having any problems now but..."
Hilarious. You mac people crack me up!
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I guess it is funny if you quote part of the statement. (O_o) It's ok though mjm, we know like most Windoze users you're jealous and wish you could afford a Macs so you come to Apple threads to troll. (^__^)
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"we know like most Windoze users you're jealous and wish you could afford a Macs so you come to Apple threads to troll."
What's there to be jealous of exactly? Macs use the same hardware as PCs, you just pay a premium for the shiny Apple logo. There are ways to run Leopard on a PC if one really wanted to do so. I can't think of a really good analogy, but it would be something along the lines of: PC = Dodge Shadow, Mac = Dodge Viper body with a Dodge Shadow engine inside it. Those misleading Mac/Leopard ads tricked you into buying something that looks like a Viper from the outside, but just has the engine of a Shadow under the hood and uses special fuel.
I know you Apple users like to act like your crap doesn't stink, because Leopard is so much better than Windows (laugh!), but meanwhile it's running on the same PC hardware the rest of us paid half as much as you did for your Apple approved version.
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I can afford a Mac or even a case of Macs but I still won't use or buy one as Leopard can't run any of the software I use to make a living.
The iPod is overpriced and distorted while the cheapest Sansa MP3 player sounds better, I should know, I own both.
Mac fanboys are just like the BD fanboys in a lot of ways. Sad, pathetic, obsessed freaks.
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"The iPod is overpriced and distorted while the cheapest Sansa MP3 player sounds better, I should know, I own both."
that is funny, i listened to a Sansa, M$ Zune, and an iPod and the iPod sounded better by far. Not to mention iTunes is _way_ better than the software for any player out there.
Apple haters are just like the HD-DVD fanboys in a lot of ways. Sad, pathetic, obsessed freaks.
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Your being a troll.
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Thankyou for summing it up!
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"Sad, pathetic, obsessed freaks. "
That what you are. The headphones you get with the ipod suck. Itunes is slow and crappy.
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I'm callng BS on anything you say pitdingo, I don't think you have listened to all three. You make things up as you go along just to defend your precious Apple and bash anything MS.
Even with a pair of noise cancelling Sennhieser headphones (which are twice as good as the BOSE QC2/3's) called the PXC 350's, the iPod doesnt sound good. I can use the in-ear included headphones from the Sansa vs my Sennheiserss on an iPod, and there is still better dynamic range with the Sansa.
It's actually pathetic when my technology challenged wife noticed the same thing. We can plug her gen 3 Nano directly into our car stereo with no FM interface and have OSD touch screen control. We can also plug any device with a 3.5mm headphone output into the "aux" input as well. She noticed the difference when my daughter wanted us to plug in the Sansa because it has some of her music on it.
The same goes for our receiver in the Master Bedroom, we have a Pioneer Elite with direct iPod control with OSD. I plugged the Sansa into the aux input to see if there was a difference and we get the axact same results: The iPod has a limited dynamic range that truncates the low end frequencies and distorts the high end.
Apple and BOSE goes hand in hand as they are both overpriced garbage. Only someone with an ear for music actually cares because most people are so g** d*** stupid.
When you use a Bose QC2/3 in conjunction with any iPod, you just doubled your limited musical range. I bought the Bose headphones to try them out, then listened to a pair of Sennheisers. I gladly paid the extra $150 to step up to a real pair of flight headphones.
I know all you Bose freaks are going to cry but you have been taken by the same viral marketing that Apple uses. My first iPod was part of a company Christmas gift so I started buying all kinds of accessories and pretty much gave it to my wife to use. I wanted something smaller and lighter so i bought the Sansa.
I have since replaced the lumbering 80GB with an 8GB Nano. I figured by this time the SQ would have improved .... nope.
Sorry dingo, I don't beleive for a second that you have listened to all three players with the same reference material all at the same time.
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iTunes sucks a fat ass, I showed her how to use SharePod from day one. Since the software sits on the iPod vs the PC, she can plug it into anyones computer, share her regular and iTunes songs and download anybody elses.
It supports video upload / download and cover art as well. And did I mention it's absolutely free. You just have to sync your new out of the box iPod with iTunes just once at the beginning, that's it.
Check out Sharepod 3.0 on Google if you own an iPod and you like to do whatever you want with your own music and anybody elses. It's fast as hell too. I added 260+ songs a couple days ago, i think I waited a whole minute for everything to transfer.
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First the problem with APPLE is their price range is not that good i saw an interview couple days ago that steve jobs did with the guy from cnbc on the day of MACWORLD and he said that he wasn't worried about price and i think that was something real foolish to say because thats the main reason why people have stayed away from APPLE. On top of that everybody knows that everyday their new products and new technology coming out but when something like an IPOD or MACBOOK PRO comes out every 6 months is not worth buying cause no matter what its already outdated. Another thing is that APPLE has to realize that the market is not just VIDEO AND MUSIC, their are other areas and thats where they need to invest in. The other problem is if you own an ipod or macbook and it gets damaged you have to pay an outrageous amount just so you can get it fixed mind you, you just spend over $1,000 to buy it so its not worth it and people don't like that for example the IPHONE BATTERY issue you spent $600 for a phone but yet you have to pay to get the battery replaced that is still under warranty not good for the consumer. But like what is happening now APPLE will once again like before go into a VERY SLOW period like it did before in the 90's.
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Then how come "[t]he iMac and Mac Pro lines have sold 53% greater units, earning 59% greater revenue, for the quarter ending last December than in Apple's previous fiscal first quarter 2007." ?
And what are your qualifications such that anyone should take your prediction seriously?
Sigh
--->First the problem with APPLE is their price range is not that good
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Thats a pretty dumb question.
Its cause they hardly sold any the previous fiscal first quarter.
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everyone has an ipod so thats why growth has slowed. my 3 year old ipod hasnt died yet so I havent needed to buy one. I really really want the 160gb new one but not till this one dies
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Basically true. They just need to come out with something in the same priceline that is as different and appealing as the iPod was back when that was originally released. The iPod Touch doesn't cut it for a lot of existing iPod owners.
They need something that'll get those folks to "upgrade".
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It is true for some extensive. But if you haven't notice, there are plenty of people who just buy into Apple products. I know a few personally, they have a collection of iPod since G4.
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Few and far between. The fact that you know a "few" is about as remarkable as me saying I know "several" Vista users.
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First the problem with APPLE is their price range is not that good i saw an interview couple days ago that steve jobs did with the guy from cnbc on the day of MACWORLD and he said that he wasn't worried about price and i think that was something real foolish to say because thats the main reason why people have stayed away from APPLE. On top of that everybody knows that everyday their new products and new technology coming out but when something like an IPOD or MACBOOK PRO comes out every 6 months is not worth buying cause no matter what its already outdated. Another thing is that APPLE has to realize that the market is not just VIDEO AND MUSIC, their are other areas and thats where they need to invest in. The other problem is if you own an ipod or macbook and it gets damaged you have to pay an outrageous amount just so you can get it fixed mind you, you just spend over $1,000 to buy it so its not worth it and people don't like that for example the IPHONE BATTERY issue you spent $600 for a phone but yet you have to pay to get the battery replaced that is still under warranty not good for the consumer. But like what is happening now APPLE will once again like before go into a VERY SLOW period like it did before in the 90's.
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I know what I am saying, there are few, and far in between. I never own an iPod. I mean, I did, got a nano from signing up a credit card, and gave it to my wife. I still don't find it attractive. I never buy into Apple's hype.
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I did the same thing. I won an ipod (hp branded, heh, so silly) and gave to my GF. Still in use today. I would never pay money for an Apple product.
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And that is just sad.
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