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Apple's Blow Out

This article is more than 9 years old.

Demand was so strong for the iPhone 6 in Apple's first quarter that even bulls who expected the computer giant to beat estimates and knew the iPhone 6 was wildly popular were stunned by the magnitude of the numbers. Apple sold 75 million iPhone units in the quarter, skewed toward international markets and boosted by a doubling of Apple sales  in mainland China, despite the iPhone 6 launch delay into late October.

Apple first quarter revenues were $74.6 billion, about 15% above the Wall Street consensus of $65 billion. EPS was $3.06 per share, 18% above the consensus estimates of $2.60 per share. Apple's shares rose 6% in the aftermarkets.

The volume of iPhone sales was hard to comprehend. "Think of it this way, we sold 34,000 iPhones per hour, 24 hours a day, every day of the quarter,” said an astonished Tim Cook, CEO, during the conference call. The iPhone 6 was flying off the shelves literally.

Update on Apple Products

iPhone. The user profile for the iPhone 6 is different than other models. First, many iPhone 6 buyers are new to smartphones and live outside the US. Mobile operators in Europe and Asia are accelerating broadband rollouts for smartphones and tablets and sales are following closely behind the network upgrades.

Second, Apple had a high rate of Android switchers, more so than the last three previous launches. The iPhone 6 popularity with Android users means Apple may continue to gain share from Samsung. And third, upgrades to the iPhone 6 were a minor part of the overall sales, a percentage in the mid-teens.

Here's how the Apple device sales compared with those from a year ago:

  • 74.5 million iPhones, up from the 51 million
  • 21.4 million iPads, down from the 26 million
  • 5.5 million Macs, up from the 4.8 million

iPad. Tim Cook is bullish on the prospects of the iPads despite some headwinds like falling ASPs and long upgrade cycles. "We haven't tapped the full potential  yet. There might be cannibalization with the Mac, but we see the iPads as a strong standalone business over the long term," Cook said on the earnings call.

The iPad is rare in enterprises and market share is not the issue, bringing mobility to the corporate workplace is. Cook said, "The pipeline looks good."

Apple's partnership with IBM could bear fruit and push the iPad into the enterprise markets. Apple knows how to change the way people work while IBM knows verticals and understands how to develop apps for specific jobs. The apps have to have more functionality than plain-old word processing apps. Innovation is coming to the workplace.

Apple TV: So far, Apple has sold 25 M Apple TVs, and the product had a good quarter. The company continues to investigates rolls for the product. It streams TV programs, but can it be a hub for the house to handle security and manage all the sensors? Can it turn the lights on and off? Stay tuned.

Apple Watch: Expected to come out in April 2015. Apple developers are working on user interfaces and "glances", notifications and information for the tiny screen. Cook never takes his Watch off and loves the fitness app. He believes others will become addicted to Watch too.

The iOS8 platforms Apple Pay, Health Kit, Car Play and Home Kit were developed with Watch in mind. Cook foresees many new applications.

Apple Pay: Apple Pay is running above plan. The two methods, contact-less payment and in-app will play out in different geographies. Pay launched in October and Cook was  surprised so many merchants implemented during the hectic holiday season. Apple is working on international expansion. Each country is a different case with retailers and  banks subject to different laws and regulations. For Apple, there's plenty of heavy lifting to scale Pay.