Record revenue, as well as iPhone and iPad sales, were not enough to distract investors from focusing on the fact that Apple's margins are down and its profits are not blowing expectations out of the water anymore.
Regardless, Apple's results for its first fiscal quarter for 2013 (ended 29 December 2012) offered some impressive numbers.
Apple CEO Tim Cook said 500 million iOS devices have now been sold to date, with over 75 million sold in the last quarter alone.
Apple CFO Peter Oppenheimer also noted during the earnings conference call that iPhone, iTunes and iPad sales were all at record highs. According to Oppenheimer, Apple's devices are hitting the mark with business clients and are increasingly being adopted by corporate and government agencies.
A total of 47.8 million iPhones were sold during the quarter, up from 37 million in the same quarter the year before. During the conference call, Cook indicated there is still strong demand for the two-generation-old iPhone 4.
"If you look at the iPhone sales across the quarter, we were very constrained for much of the quarter on iPhone 5. As we begin to produce more and ship more, sales went up. iPhone 4 was actually in constraint for the entire quarter. Sales remained strong. That's how sales progressed along the quarter."
Cook also added that Apple believes it will be able to achieve a supply/demand balance on the iPad Mini and iPhone 4. Amid the recent rumours of Apple potentially building a low-cost iPhone to be released this year, it has been noted that Cook's comments indicate Apple could rather be focusing on better meeting the demand for the company's current cheapest smartphone.
Different price points
Cook also said: "The most important thing to Apple is to make the best products in the world that enrich customers' lives. That's our high-order bit. That means that we aren't interested in revenue for revenue's sake. That's not what we're here for. We want to make only the best products.
"We've had a great track record of iPod doing different products at different price points and getting a reasonable share. I wouldn't view the things as mutually exclusive. But the high-order bit is making a great product."
Answering a question about the trend of smartphone screens getting larger, Cook said the iPhone 5's four-inch display is the best on the market and is the biggest smartphone screen that can be had, without sacrificing one-handed operation.
"We put a lot of thinking into screen size and believe we have picked the right one," said Cook. Such comments fly in the face of recent rumours of a larger screen iPhone 5S later this year.
In terms of iPads, Apple sold a record 22.9 million during the quarter (up from 15.4 million the year before). Oppenheimer also added that Apple was not able to make enough iPad Minis during the quarter. "We were constrained every week."
Cannibalisation
Mac sales were down to 4.1 million, from 5.2 million in the year-ago quarter. According to Oppenheimer and Cook, the company had manufacturing constraints on the new iMac which limited sales. "Mac sales would have been materially higher had it been able to ship more iMacs in the quarter," said Cook. He added that other contributing factors were that the company had one more week in last year's fourth quarter, and inventory was lower than the year before.
Cook also said overall "the market for PCs is weak" and there has been "some cannibalisation" of Apple's PC sales by its own iPad.
"We know iPhone has cannibalised the iPod business. We know that iPad has cannibalised the Mac. Our strategy is to never fear cannibalisation. If we do, somebody else [will cannibalise]," said Cook.
More LTE support
Apple's iPod sales were down compared to the previous year, with 12.7 million units sold (compared to 15.4 million). Apple said the iPod Touch accounted for more than half of all iPod sales during the quarter. Cook also said Apple sold more Apple TVs in the last quarter than ever before. When asked about potential product releases in this space, Cook would only say: "I have said in the past this is an area of intense interest for us. It remains that. There is a lot we can contribute in this space. ...I don't want to be more specific."
Apple's iCloud service has also grown to 250 million users (marking an increase of 60 million users since September last year) with a total of two billion iMessages being sent by those users per day.
Addressing the rumours of iPhone 5 component order cuts and the suggestions that this implied weaker demand for the device, Cook said he would "question the accuracy" of such rumours, adding that even if a certain data point is correct, it wouldn't necessarily reflect on the overall business.
Finally, Cook announced Apple will add 36 more carriers for LTE support next week. While he didn't name all of the carriers, he said they would be in regions like Italy, Switzerland, the Philippines and the Middle East. It will remain to be seen if SA makes it onto the list.
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