"This is a good problem--demand is fantastic,"said Tim Cook, Apple's chief operating officer in a conference call announcingrecord quarterly revenues and profits.
But it's still a problem, one of a handful Apple would nottalk about in detail. The company also alluded to "a future producttransition" which is one reason why it is forecasting a decline in salesfor its fall quarter.
The good news is Apple sold 9.25 million iPads in the lastthree months, double the number of the previous quarter and three times as manyas in the same quarter last year. The bad news is it could have sold more if itcould have made them.
"In the first weeks of July supply improved so thatsome SKUs in some countries are now in supply/demand balance," said Cook,refusing to forecast when the company would be able to meet global demand."We are working very hard to get as many units to customers as wecan," he said.
Cook also dodged a question about whether the company wasdiversifying its base of manufacturing partners beyond Foxconn that operatescity-sized factories for Apple in China. Supply chain management is "partof our secret sauce, so I don't want to share too much about it," he said.
An explosion at a Foxconn plantin China was expected to impact iPad manufacturing.
Tablets are cannibalizing notebook sales, but Cook did notquantify the effect. "We believe some customers chose an iPad instead of aMac, but even more chose an iPad over a Windows PC and there's more Windows PCsto cannibalize than Macs," he said.
Scattered showersahead?
Looking ahead, Apple predicts its revenues will fall from$28 billion this quarter to $25 billion next quarter while gross margins slipfrom 41 to 38%. The company expects iPhone, iPad, and Mac sales to continue torise, but alluded to a "future product transition which we are not goingto talk about" expected to be a drag on sales and margins.
Two thirds of the margin decline will come from "adifferent product mix" in the fall quarter, said Peter Oppenheimer,Apple's CFO. The rest of the decline would come from the future product transitionand increased marketing expenses for the back-to-school quarter, he said.
The product transition may come from the shift to iOS 5, duesometime this fall. If the launch comes late in the quarter it might slowiPhone and iPad sales until systems supporting it are released.
Apple also faces a Mac transition with a new version of itsoperating system, dubbed Lion, coming July 20.
The company may also be due for a refresh of its iPod linewhich continues to decline in sales by double digits. The newest member of thefamily, the iPod Touch, now makes up half the sales in the area.
Still on the distant horizon is a full blown Web-connectedTV product from Apple. To date it has released two major versions of Apple TV,a set-top box for streaming Web video, but no iTV product.
"Apple TV continues to do well, but we still call it ahobby here because we don't want anyone to think it's another leg of the stoollike the iPhone," said Cook. "We continue to invest in it because wethink there is something there," he said.
The best news for Apple is iPhone sales continue to grow,hitting 20.34 million in the last three months. Apple added 42 iPhone carriersin 15 countries in the last quarter, with much of the overall sales growthcoming from emerging markets such as Brazil, China, Mexico, and the MiddleEast.
"These are markets that Apple historically has not beenstrong in," said Cook.
Greater China--including Hong Kong and Taiwan--continues toexpand rapidly as a market for Apple, growing six-fold to $3.8 billion in salesin the current quarter compared to the same period last year. The region added$8.8 billion to Apple's sales in the last three quarters, Cook said.
"This has been a substantial opportunity for Apple, andI firmly believe we are just scratching the surface," said Cook.
Component supply also looks rosy to Apple. "Mostcomponents are in a positive supply situation with prices falling at or abovehistorical trends except hard disk drives that are constrained and thus facingless price declines," Cook said.
This story was originally posted by EE Times.
Apple still can't keep up with iPad demand
No comments:
Post a Comment