iPad 2
Demand on iPad 2 has been astonishing . We ’re still amazed that we are still hard backlogged , not only at the remainder of the fourth part but also up to day of the month . However , I can assure you that I ’m extremely pleased with the procession of the manufacturing ramp and we were so confident that we roll out 25 additional country at the death of last month , and we are shipping to an extra 13 countries next calendar week , and we ’re project to add together even more countries through the quarter . So I ’m very surefooted that we can bring out a very large number of iPads for the one-quarter . Whether that will be enough to meet requirement , I do n’t jazz . need has been staggering and I ’m not sound to predict when supply and requirement will make out into balance . I can only be sure-footed on supply side .
By the end of the quarter , we were in supplying / need balance [ for the iPhone ] in almost all of our major marketplace . And I would say , as of today , we ’re in supply / requirement balance [ for the iPhone ] nearly everywhere . The Mac is in supply / demand symmetry , and the iPod is in supply / demand balance , and the iPad has the mother of all backlog that we ’re work very , very operose to get out to customers as speedily as we can .
ware transitions are never simple , and as you may in all probability appreciate , we are in a position that we have to call them for many , many calendar week in advance , in price of how many of the current product we want to grow and the dates at which we will announce the new product .
Apple COO Tim Cook at the Verizon iPhone 4 launch.
We drew the transmission channel down on the original iPad by 570,000 units during the quarter , and we bestow at the end of the quarter 170,000 of the young iPad 2s , although most of that was in transit at the end of the quarter . And so the net reduction was 400,000 and so our sell through was above five million for the quarter . And again , this has to be contrive quite a room in the hereafter .
Just to cue you , we air out an invitation to the [ iPad 2 launch ] event toward the destruction of February , we had the event in former March , we placed the social unit on sales agreement in the United States on March 11 , and our quarter terminate about 2 weeks thereafter . So , there was some expectation of a new production , and we would have obviously factor that into our thought process about the product transition , as we planned the number of the original unit to progress .
So I cerebrate the central point here is that I ’m exceedingly pleased with the progress we ’ve been make on the manufacturing ramp . We have baffle off to a materially better start and produced a luck more units than we did on the original incline of the first iPad , and we ’re so positive with our power to provide that we ’ve already put on 25 additional countries at the end of March , and we ’ll be post on 13 more next workweek , and we ’ll do even more as we step through the fourth part .
[ Can you liken iPad 1 sales to iPad 2 sales ? ]
We purposely are n’t giving that because we do n’t want to help out any of our competition . But I would order you , I wish we could have produced a luck more iPad 2s , because there were certainly a lot of people waiting for them .
[ What about offering an iPad subsidized by a wireless mail carrier ? ]
The iPad today is subsidized in a few markets . It ’s subsidize in Korea if mass signal a 24 - month contract , it ’s subsidized in Japan with a 24 - month contract , and a couple of European countries . But the vast bulk of people that are using the iPad on 3 G are doing so on a remuneration - as - you - go plan , a no - commitment plan . And so yes , attack aircraft carrier can do that , but I think many customers prefer the pay - as - you - go plan .
[ What about the iPad in Department of Education ? ]
K-12 is sort of even more buttoned-down than endeavour on adopt new technology . And last one-fourth , we were about a 1:1 ratio of iPads to Macs , which is , I recollect , amazing dedicate the short living of the iPad . And really exhibit what variety of chance there probably is there .
iPhone
In terms of iPhone , we did in reality very well everywhere . I ’d call out two station where it was just off the chart . The U.S. farm 155 percent year over year . plainly adding Verizon and beginning to offer iPhone to their enormous customer base was central in that . However , as you hear from AT&T ’s annunciation this morning , AT&T did extremely well during the poop . So the U.S. as a geography acquire at 155 percent , and that ’s about three times IDC ’s forecast of growth for the smartphone market , which was about 48 percentage . Also , we continue to be on a tear in China . Greater China saw iPhone sales being up over three prison term . Almost 250 percent . This catapulted revenue for first financial half in Greater China to just under $ 5 billion , which is up almost four sentence yr over year . So we ’re extremely happy with how we ’re doing in China .
[ What about launching a 4G / LTE iPhone ? ]
I was asked this question , or a similar dubiousness , when we launched the iPhone with Verizon . What I said then , and I still see it as being the case today , and I think you’re able to see this in the products that have been transport , is that the first contemporaries of LTE chipsets force a mountain of plan compromises with the handset , and some of those we are just not willing to make .
And so we are extremely well-chosen with the iPhone 4 and iPhone 3GS . Hitting 18.6 million building block was something much larger than we guess we could do this stern , and we ’re happy to have gotten it out to three more large postman .
[ Can you talk about succeeding CDMA carrier partners outside the U.S. ? ]
On the mailman side , I do n’t want to get into specifics about CDMA ( or GSM for that matter ) . But we are perpetually look at where we should impart on incremental partners . As we said earlier , we brought on three large ace this quartern , with Verizon , STT and Saudi Telecom . That ’s on top of the ones that we wreak on in December , where we added O2 and Vodafone in Germany . And so we are incessantly face and adding where it constitute sensory faculty , and you’re able to keep confidence that we ’ll bear on to do that .
[ What about moving the iPhone into the prepaid food market ? ]
Our focussing has very much been on China . We require to understand that market and understand the levers there . iPhone sales were up over three times during the quarter , and in the first half we did just slightly under $ 5 billion in greater China in revenue , which is about 10 pct of Apple , to put it in perspective . And it was n’t but a couple years ago that that phone number would have been less than two . And so it ’s a sea modification . That ’s certainly not what I would call a classic postpaid market by any means of imagination . And so we have some thought about other commonwealth as well . I ’m not in a position that I desire to share those today . We purposefully put the bulk of our emphasis from an emerging market distributor point of purview , in China , to really learn , and then we ’re going to take that learning to other mart .
Considerably more [ than half of China is pre - paid wireless ] … I think the first digit would start with a 9 .
Mac growth
The growth on the Mac has been enormous in Asia . The last quartern we were up 76 percent in Asia Pacific , this is many multiples of the development that region is seeing for the market place . I believe the IDC forecast is around six percentage . And so we ’re seeing tremendous ontogeny in the Mac there . Japan also did quite well on the Mac for the quarter and the U.S. had a astonishingly unattackable quarter for the Mac , Americas is up 25 percent , the U.S. was up just slightly high than that . Our market share is obviously less outside the U.S. in most berth than it is in the U.S. , and so I reckon it speaks very , very well for the chance that the Mac has . We ’ve now hit 20 quarter in a run-in where we ’ve outgrow the microcomputer market , and the impulse is still there . We seem to be the only guy that are really focussed on build innovative Cartesian product in that infinite .
There are several of the external countries that are extremely portable - focussed , and you’re able to see that we had enormous growth in our portables for the quarter . However , part of that is that we had a launching of the novel MacBook Pro line . But honestly I see popularity in both the iMac and the portable [ form ] factor and believe there is a expectant hereafter for both .
[ The iPad ] clearly seems to be creating a halo essence for the Mac . And I think that ’s one reason we see the ontogeny that we are seeing on the Mac . You know , it ’s awe-inspiring when you see the 28 per centum yr over year versus the worldwide securities industry in PCs contracting by 3 point . It ’s an staggering delta .
Android vs. iOS
I just saw yesterday … the ComScore data released yesterday reported that the iOS platform outreaches Android by 59 percent in the U.S. And so this is an tremendous percentage . On a cosmopolitan ground , we just did 18.6 million iPhones , which is up 113 percent , which is materially firm than the food market charge per unit of growth . And we launched the iPad 2 and sold every one of ‘ em that we could make . As we say before , we ’re bring in adhesive friction in enterprise on both iPhone and iPad with astonishing 88 percent and 75 percentage respectively of the Fortune 500 company deploying or test these . We ’ve got the largest App Store with over 350,000 apps for iPhone and 65,000 iPad - specific apps on iOS . Versus what looks like fewer than a hundred on Android .
And so we feel very , very good about where we are and we feel great about our future merchandise plan . We ’ve also paid over $ 2 billion to developers and we ’ve had well over 10 billion diligence downloaded . And so our business sector proposal is very , very strong . And as we ’ve said before , we continue to conceive — and even more and more every day — that iPhone ’s integrated approach is materially in force than Android ’s fragmented glide path , where you have multiple OSes on multiple machine with unlike screen resolutions and multiple app store with different ruler , payment methods , and update strategies . I think the user appreciates that Apple can take full responsibility for their experience , whereas the fragmented approaching turns the customer into a systems planimeter , and few customer that I cognise want to be a system integrator .
Steve Jobs
He is still on aesculapian leave , but we do see him on a regular basis . And as we previously say , he continues to be involved in major strategic decisions . I have sex he wants to be back full - time as soon as he can .
Samsung
We are Samsung ’s bombastic customer . And Samsung is a very valued component supplier to us , and I wait that unassailable relationship will carry on . Separately from this , we mat the roving communication division of Samsung had crossed the line , and after assay for some time to work the issue , we decided we take to trust on the court .
On Japan and Apple’s supply chain
Let me sort of gradation back and speak about Japan in general . First of all , this is an unbelievable tragedy and our core go out to everyone involve . Apple as a ship’s company has a very long history and has many stiff ties to people in Japan , and we ’re very , very saddened by the site , and we ’ve undertaken various actions to aid in the relief campaign . The economic impact that we ’ll address today pales in comparison to the human impact .
Regarding our line in Japan , we had some revenue impact in Q2 , but it was not corporeal to Apple ’s consolidated results . We believe revenues will be approximately $ 200 million less in Q3 , and this has been factored into the guidance [ we ] provided you earlier .
Regarding our global provision mountain range , as a issue of outstanding teamwork and unprecedented resilience of our partners , we did not have any supply or cost wallop in our fiscal Q2 as a result as the cataclysm , and we currently do not anticipate any textile supply or cost impact in our fiscal Q3 . To provide a moment more color on this , we source literally hundreds of items from Japan , and they range from components such as LCDs , optical drives , NAND flash and drachm to free-base materials such as resins , coating , and foils that are part of the production appendage that are several layer back in the supply chain . The earthquake and subsequent tsunami and the associated atomic crisis caused disruption for many of these suppliers . And many unaffected supplier have been bear on by power interruption . But since the calamity , Apple employee have literally been working around the clock with our supply partners in Japan and have been able to go through a phone number of contingency plans . Our taste from the root of this tragedy has been to stay with our long - term cooperator in Japan , and I have to say , they have expose an incredible resiliency that I ’ve in person never ensure before in the aftermath of this catastrophe . So while we do not currently anticipate any material wallop to our constituent supplying or monetary value in our fiscal Q3 , we do need to monish everyone that the site remain unpredictable , throw recent aftershocks , the uncertainty about the nuclear plant , and potential world power interruptions .
Further , there are some supplying risk that are beyond the current fourth , and although we recognise of no payoff today that we view as unsolvable , the state of affairs is still uncertain and there ’s obviously no guarantee . For this reason it ’s difficult to predict whether the publication make by the disaster would impact revenues beyond Q3 . However , I ’ll be glad to address Q4 on our next call in July .
As of today we currently do not prognosticate any material supply ( or toll impact as far as that go ) in our financial Q3 . That ’s the quarter that we ’re in now , that ends in June . Beyond June , there are risks , but there ’s no egress that we ’re aware of today that we catch as unsolveable . However , new things could happen . I ’m sure you ’ve been paying aid to the news program : there ’s aftershocks , there ’s still uncertainness about the nuclear flora , there ’s exponent gap . If that stays at the storey that it is today , I ’m not as worried . I would interest if something happened and take a turn for the worst , and obviously I ca n’t predict that and for sure trust that it does not occur .
