No New Toaster – Refrigerators

Apple CEO lays out his vision for the future of computer hardware

Apple turned a record profit yet again last quarter, but it wasn’t just the figures making headlines as CEO Tim Cook used the company’s earnings call to deliver some pithy analysis of what kinds of hardware the tech industry should and shouldn’t be working on.

CEO Tim Cook

On total revenue of $39.2bn, an increase of 88% over the same period in 2011, Apple made $11.6bn in the quarter to March - nearly double the $6bn it earned in the same span last year. Sales of the iPhone, which hasn’t been updated since October, exceeded even the most optimistic expectations, hitting 35 million - again up 88%. Sales of the iPad were up 151%, to 11.8 million.

That figure was lower than some analysts had predicted, however, leading to the use of words like ‘disappointing’ in news reports. Some of those pointed to the 15.4 million iPads sold in October to December 2011, but failed to mention that that quarter was a week longer than the most recent period, which ended just after the arrival of the new iPad.

‘We’re thrilled with sales of over 35 million iPhones and almost 12 million iPads,’ Cook said in a statement. The new iPad is off to a great start, and across the year you’re going to see a lot more of the kind of innovation that only Apple can deliver.’

It was indeed the company’s more innova­tive products that drove revenue, with Mac sales recording their lowest annual growth for several years. But the rise was still a very respectable 7%, against a stagnant PC market, with four million units sold. During the conference call with press and analysts following the results announcement, Cook referred back to the stellar figures of 12 months ago, when Mac sales rose by 28% year-on-year; after such a buying spree, a cyclical fallback was inevitable, he implied.

During the second quarter, Apple sold 35.1 million iPhones (up 88 percent year over year) and 11.8 million iPads (up 151 percent year over year)

With the whole Mac range believed to be waiting for Intel’s Ivy Bridge chips, the first of which have just appeared, to enable its next speed bump, many users would be waiting to see what happened before buying a new machine. The Mac nonetheless beat the average growth in PC sales, which was just 2%, for the 24th consecutive quarter.

International sales - those outside the US - accounted for 64% of Apple’s revenue for the period, up from 59% last year. Many of those new sales were in China, highlighting the growing importance of that market to Apple. Revenue from Greater China, which includes I long Kong, was $7.9bn for the quarter, compared with $13.3 billion for the full year last year.

Cook confirmed that Apple is focus­ing on this source of earnings: ‘China has an enormous number of people moving into the higher income groups, middle class, if you will. And this is creating a demand for goods... And so I think there’s a tremendous opportunity for companies that understand China, and we’re doing everything we can to understand it and serve the market as good as we can.’ If you winced at ‘good’ there, just be grateful you didn’t hear him use ‘compare’ as a noun.

During the earnings call, Cook also re­vealed that Apple has no plans to launch a MacBook Air/iPad hybrid, as has been suggested. Answering a question about netbooks that could also serve as tablets, Cook responded: ‘Anything can be forced to converge. But the problem is that prod­ucts are about trade-offs, and you begin to make trade-offs to the point where what you have left at the end of the day doesn’t please anyone.

‘You can converge a toaster and a refrig­erator, but those things are probably not going to be pleasing to the user...

‘So - we’re not going to that party. Oth­ers might. Others might from a defensive point of view, particularly. But we’re going to play in both.’

Cook also revealed that, in contrast to Steve Jobs’ comment to biographer Walter Isaacson that he was prepared to ‘go ther­monuclear’ on the issue of Android infring­ing Apple patents, he would rather settle intellectual property disputes amicably. ‘I’ve always hated litigation, and I continue to hate it. We just want people to invent their own stuff. And so if we could get to some kind of arrangement where we could be assured that’s the case and a fair settlement on the stuff that’s occurred, I would highly prefer to settle versus battle... The key thing is that it’s very important that Apple not become the developer for the world. We need people to invent their own stuff,’ he emphasised.

Tim Cook, seen here during the launch of the iPhone 4S, holds strong views on the separation of notebook and tablet

Both cook and chief financial officer Peter Oppenheimer remained tight-lipped when asked about iC'loud, Apple’s replacement for MobileMe. Oppenheimer revealed that there are now 125 million users signed up to the service, but wouldn’t divulge details of how many had paid for iTunes Match, the optional facility to store the user’s music collection on Apple’s servers. iCloud’s predecessors, MobileMe and .Mac, were notoriously un­popular and error-prone.

‘The feedback that we’re getting from customers on iCloud is just it’s off the charts. They’re loving it. And the fact that we could be here on the conference call with you in April just five or six months after introduc­ing the service and have 125 million people around the world using it every day, I think, speaks for itself,’ said Oppenheimer, who also chipped in on several other questions to mention that customers loved things.

Asked about revenue from the service, his own area of expertise, Oppenheimer said the idea of iCloud wasn’t to earn revenue but to ‘increase the customer delight from the entire ecosystem and platform of our iOS devices and the Mac.’ Apple is spending an estimated $lbn building the data centre that supports the delightful iCloud.

Apple’s cash pile grew by $14 billion dur­ing the quarter, to top $100 billion and its shares rose sharply in after-hours trading before falling back slightly.

Forget the Olympics – it’s a srint, not a marathon, as Apple’s geek games sell out in just two hours

Developers on the west coast of the US were among those left disap­pointed when Apple released tickets for its annual meet-up for Mac and iOS programmers, the Worldwide Developer Conference (WWDC).

Worldwide Developer Conference

With the June event’s dates re­vealed for the first time on 25 April, tickets went on sale through Apple’s website, priced at $1,599, at 5.30am Pacific Standard Time and were sold out two hours later. Silicon Valley woke up to find it had missed the boat.

One iOS developer, Rick Harrison, told Wired magazine he was ‘com­pletely appalled when I woke up at 7:45am and checked Twitter to see that WWDC tickets had already gone on sale, and sold out.’ Others suggested Apple should hold a lottery.

WWDC tickets sold out within a week in 2010 and a day in 2011. Around 5,000 people attend the conference. In an attempt to stem the tide, Apple had limited purchases this year to one per person and five per organisation. It also insisted tickets must only be used by the original purchaser, leading one developer to offer to change his name legally to that of anyone who would sell him a ticket.

Apple was typically unforthcoming about plans for the event itself. ‘We have a great WWDC planned this year and can’t wait to share the latest news about iOS and OS X Mountain Lion with developers’ was all that senior VP Phil Schiller would say.