Apple posts record quarter on sales of 20 million iPhones, 9 million iPads

Apple breaks revenue and profit records yet again with record sales of iPhones …

Chris Foresman – Jul 19, 2011 6:40 pm | 68

Credit: Illustration by Ars Technica

Apple on Tuesday announced record revenue and profits for another consecutive quarter, largely ruled by sales of over 20 million iPhones and over 9 million iPads. International sales and developing markets, including a 600 percent increase in China, are also increasingly responsible for Apple’s booming sales, accounting for 62 percent of revenue for the third fiscal quarter of 2011.

Apple recorded revenue of $28.57 billion for the quarter, up 82 percent year-over-year. The company converted $7.79 billion of its revenue into profit, up over 120 percent. That’s also up sequentially from the second quarter’s $25 billion in revenue and $6 billion in profit respectively. Gross margins were up to 41.7 percent.

A large chunk of that revenue is due to massive increases in iPhone and iPad sales. Apple sold 20.34 million iPhones, a 142 percent increase over last year’s third quarter, and up sequentially from last quarter’s 18.65 million units. The iPhone accounted for $13.3 billion of quarterly revenue, or 46.6 percent.

Apple moved every iPad it could make in the quarter, selling 9.25 million units—nearly three times as many iPads as it sold for the iPad’s launch last year. iPads and related accessories generated about $6 billion in revenue, or about 21 percent of the quarterly total.

iPod sales were down 20 percent year-over-year—good for 7.54 million units. That downward trend has been well established following the introduction of the iPhone 3G in 2008.

Apple COO Tim Cook noted that over half of all iPod sales are iPod touches, though, which adds to the overall iOS platform’s growth. All told, the company sold about 33.4 million iOS devices in the last quarter, or about 367,000 devices per day. Apple said that over 222 million iOS devices have been sold through June since the platform launched with the original iPhone in 2007.

Mac sales were up almost 14 percent year-over-year. Apple sold 3.95 million Macs, which didn’t quite top its previous 4.1 million unit record, but it’s still a record for the June quarter. Cook also noted that year-over-year growth beat the industry average considerably. “To grow at 14 percent when the market is growing at 2.6 pecent is certainly something to be proud of,” he said during Tuesday’s earnings call.

Despite beating the industry’s average, though, Mac sales grew slower than expected. Cook attributed this to three factors: iPad cannibalization, customers waiting for Lion, and the MacBook Pro factor.

“In terms of cannibalization, we do believe that some customers chose to purchase an iPad instead of a new Mac during the quarter,” Cook said. He noted that Apple sold more iPads to K-12 education markets than Macs; total iPad sales were almost triple total Mac sales in the June quarter.

Customers that are waiting for Lion will be taken care of this week, as Apple confirmed that the new OS will ship on Wednesday. But Cook noted that new MacBook Pro introductions have a considerable effect on Mac sales. “The MacBook Pro makes up the majority of the units that we sell in the Mac area,” he said, noting that Apple introduced new MacBook Pros third quarter last year, but only had new iMacs this past quarter. We wonder if new MacBook Airs expected shortly will have a similar effect on next quarter’s results.

International sales now account for 62 percent of Apple’s quarterly revenue. In particular, sales in “greater China,” which includes China, Taiwan, and Hong Kong, accounted for $3.8 billion for the quarter. “China was very key to our results,” Cook said. “This has been a substantial opportunity for Apple and I firmly believe that we’re just scratching the surface right now.”

Developing and emerging markets were especially important for iPhone growth. Apple added 42 new carriers in 15 different countries throughout the quarter, with China, Latin America, and the Middle East driving increasing numbers. “These markets are a bit more difficult to do well in, so I think we have a very good focus here,” Cook said.

“We can compete with anyone,” Cook noted, perhaps addressing criticism from Google’s Eric Schmidt, who recently suggested Apple couldn’t compete with Android except through lawsuits.

Apple said it expects to report revenue of about $25 billion for the fiscal fourth quarter, with gross margins down to 38 percent. When asked why the company was forecasting on the low end, Apple CFO Peter Oppenheimer attributed it to “a future product transition that we are not talking about today.” In other words, expect the iPhone 5 to launch right around the end of the September.