Apple CEO Steve Jobs made an uncharacteristic appearance on his company's quarterly earnings call Oct. 18, offering attacks on both Google and BlackBerry maker Research In Motion.
"As most of you know, I usually don't participate in the earnings calls," Jobs told analysts and media on the call, "but I couldn't help dropping by for our first $20 billion quarter."
Apple posted revenues of $20.34 billion, and a net quarterly profit of $4.31 billion. Apple reported sales of 3.89 million Macs during the quarter, along with 14.1 million iPhones and 9.05 million iPods. While sales of Macs and iPhones experienced year-over-year increases of 27 percent and 91 percent, respectively, the iPod continued its slow quarter-by-quarter decline.
For some time, Apple executives have partially blamed the dip in iPod sales on cannibalization by the iPhone. The question now is whether iPads are eating into the traditional iPod market share.
The company had sales of 4.19 million iPads for the fiscal 2010 fourth quarter, a significant increase from the 3.27 million sold during the previous quarter, and yet another sign that the tablet PC is gaining traction among customers.
Analysts seemed generally unsurprised by those numbers. "The only metrics that did not beat our Street-high estimates were GM, iPads units, and iPod units," Peter Misek, an analyst with Jefferies & Company, wrote in an Oct. 18 research note. "Otherwise another stellar quarter with large upsides on Mac and iPhone units."
During the earnings call with media and analysts, Apple executives also highlighted what they termed an increased acceptance of the iPhone by the enterprise.
"We've seen extraordinary growth from 60 percent to 80 percent of Fortune 500 companies," Apple Chief Financial Officer Peter Oppenheimer said during the call, listing companies such as Procter & Gamble that had "made iPhone available to their employees." Many of those large companies apparently offered the iPad to their workers.
But it was the unexpected appearance of Steve Jobs that elevated the quarterly earnings call beyond the typical. Jobs immediately launched full-frontal attacks at both Research In Motion, whose BlackBerry remains the iPhone's significant opponent among business users, and Google Android, which is loaded onto an increasing number of smartphones.
"We've now passed RIM, and I don't see them catching up with us in the immediate future," Jobs aid. "I think it's going to be a challenge for them to create a competitive platform. ... With 300,000 apps in Apple's App Store, RIM has a high mountain to climb."
Jobs then took a swipe at Google. "[Google CEO] Eric Schmidt pointed out that they're activating 200,000 units per day," he told media and analysts. "By comparison, Apple has activated 270,000 units per day, on average."
Jobs' rapid-fire attacks climaxed with a refutation of what he ironically termed the "avalanche" of tablet competitors poised to enter the market. The "painful lesson," he said, will come when those competitors realize their "tablets are too small and increase the size next year, abandoning developers and customers who jumped on the 7-inch bandwagon."
Various competing manufacturers, including Samsung and RIM, are preparing 7-inch tablets for launch sometime within the next few months. However, Jobs added, "Our potential competitors are having a tough time coming close to iPad's pricing."
Outside of the sound and fury surrounding the iPad, Apple may be preparing a Verizon iPhone, which some analysts and pundits expect to appear by either the end of 2010 or the beginning of 2011. The iPad will appear in Verizon Wireless stores starting Oct. 28, the same day it goes on sale in archrival AT&T's retail locations.
Whether or not the Verizon iPhone makes its long-awaited appearance, analysts generally expect the iPad to remain a strong seller through the holidays. "We continue to believe the Apple iPad will be one of the most coveted gifts this holiday season," Brian White, an analyst with Ticonderoga Securities, wrote in an Oct. 14 research note. "Our trip to Taiwan and China this week provides further evidence of strong demand for the iPad during H2:2010."
Bernstein Research analyst Colin McGranahan has estimated the current iPad sales rate at 4.5 million units per quarter, and 2011 revenues for the device at around $9 billion. "By any account, the iPad is a runaway success of unprecedented proportion," he wrote in a research note quoted by CNBC.
Apple's next event is scheduled for Oct. 20 at its Cupertino, Calif., headquarters. The company is remaining characteristically tight-lipped about the nature of that shindig, although invitations sent to media last week were titled "Back to the Mac." The invites also promise attendees a glimpse of "the next major version of Mac OS X."