iPhone and iPad Crackle, Mac Cruises, iPod Crumbles
Apple's blowout third-quarter revenues can be mainly attributed to its two superstar iDevices -- the iPhone and the iPad -- as well as its trusty Mac lineup. But although Mac sales are swimming along, Apple's desktops and notebooks aren't getting the kind of marketing heat they once had. As for iPods, revenues there are climbing, but the general device category seems to be in decline.
07/21/10 11:40 AM PT
Apple's third quarter, which saw revenues hit an all-time high of US$15.7 billion, was fueled largely by sales of the iPad, iPhone and Mac lines.
However, Apple has of late seemed to throw most of its marketing muscle behind the iPad and the iPhone 4, generally neglecting its former crown jewels, the iPod and Mac lines.
Are developments in these lines slowing down as more resources are directed to iPads and iPhones, or are the Mac and the iPod still running strong, albeit without as much marketing limelight as they once had?
Whither the iPod?
In its fiscal third quarter, Apple sold 9.4 million iPods for a total revenue of over $1.5 billion. Total desktop and portable computer sales came up to almost 3.5 million units, bringing in revenues of nearly $4.4 billion.
That means iPods accounted for about 10 percent of Apple's revenues, and Macs accounted for about 28 percent.
Overall, iPod sales fell by about 7 percent year over year, although revenues climbed $53 million year over year. How can this be?
"iPod touch sales grew 48 percent year over year," Peter Oppenheimer, Apple's chief financial officer, said during the company's earnings call on Tuesday. "iPod touch average selling prices increased 12 percent."
The iPod continues to gain share in every country year over year, and has 70 percent of the United States market for MP3 players.
"That doesn't surprise me," Andrew Eisner, director of community and content at Retrevo, told MacNewsWorld. "In some ways, the iPod touch is better than an iPhone, because you don't have to get a phone plan. It's a very attractive product for a kid who's too young for a cellphone but may benefit from connectivity and apps."
However, market forces may nudge along an iPod decline.
"The MP3 market, which includes iPods, is a mature and declining market," Jim McGregor, chief technology strategist at In-Stat, pointed out. "Devices are becoming portable media players, not just music players, and a lot of that functionality shifts into high-end smartphones."
"The increase in sales for the iPod touch goes against what we perceive to be the long-term trend in the PMP/MP3 player market," Jordan Selburn, a principal analyst at iSuppli, told MacNewsWorld. "Our forecast for this market is one that is peaking now and should begin an overall decline going forward."
In the short run, however, iPod touch sales will continue to be driven by the "plethora of apps available" on the device, Selburn said.
Giving the Mac Some Love
Meanwhile, Mac sales hit new highs in the third quarter. Does that mean the line's future is assured?
"We generated record quarterly sales of 3.47 million Macs, exceeding the previous record established in the most recent December quarter by over 100,000," Apple's Oppenheimer said during the earnings call Tuesday.
This represents a 33 percent year over year growth, while IDC's estimates show the PC market overall grew 22 percent in the June quarter.
"We are pleased to have outgrown the global market in both the desktop and portable categories," Oppenheimer said.
The iMac and MacBook Pro families led Apple's charge in this area. Apple also chalked up record Mac sales in its U.S. educational institution segment despite state budget constraints, Oppenheimer pointed out.
"Desktop sales are up in general, so people are recognizing that maybe it's time to trade in that four-year-old computer and get a little faster processor and a more up-to-date computer, and I think Apple may be benefiting from that to some extent," Retrevo's Eisner remarked..
The MacBook Air line may lead Apple's future sales, In-Stat's McGregor told MacNewsWorld.
"The growth area right now is in mobile, especially in the thin and light form factor which makes up the MacBook Air line," McGregor explained. "In the next couple years, that segment will lead the market for PCs. We saw the shift from the desktop to the notebook, and now we'll see the shift from the netbook to ultrathin and light devices."
Half the Macs sold in Apple stores during the June quarter were purchased by new customers who had not used a Mac previously, Apple's Oppenheimer said.
"Apple has plenty of room to grow-- it has only about 5 percent of the PC market because it's been focused on North America, and its global success with the iPhone and iPad opens up new avenues for growth for its other products."
The Future, Possibly
Apple is seeing increasing business sector interest in the Mac, Tim Cook, the company's chief operating officer, said during Tuesday's earnings call. However, the scope is "difficult to measure" because many of those sales are built into the channel.
Apple will focus more on home entertainment than on Mac sales, Retrevo's Eisner predicted.
"Apple's changing directions a little more towards home entertainment, so it's as much a battle for the living room as for the office desk, which it was never really that good at and where Windows has something like a 90 percent share of the market," Eisner explained.
"However, it's anyone's guess where that's going to go," Eisner opined. "Consumers find Mac laptops and PCs attractive, the creative industry still uses them, and they're more acceptable in the office now than they were before," he pointed out.
"I expect Apple to put its money where the market is going, and that's the iPhone and iPad," In-Stat's McGregor remarked.
"The iPad is the kind of in-between device that sits between the really mobile products -- smartbooks and netbooks -- and the desktop computer," McGregor said. "That's a hot area and if there's any area where Apple's obviously going to push, it's the hot areas -- the iPhone, the iPad and now the Mac."