MacDailyNews presents live notes from Apple’s Q410 Conference Call (Jobs goes off on RIM, Android!)

Live notes from Apple Inc.’s Fiscal Fourth Quarter Conference Call appear in reverse chronological order:

• End of conference call.

• Jobs: We have an advantage on iPad price because we make the A4 processor, we make the battery chemistry, we make a lot and we’ve learned something. We’ve eliminated the middle man in many cases. iPad is a product we’ve been training for for the last decade.

• Cook: Virtually every carrier is pressuring us for supply. They want more supply and we are working to meet it.

• Oppy: We are always working aggressively to lower our costs. We are happy with our gross margins, better than we expected.

• Cook: We maintain our focus on the consumer, but its the consumers in the enterprise that are pulling our products into business. We think this will continue to pay great dividends for Apple.
• Cook: About 2/3rds of Fortune 500 are deploying or trailing iPad. K-12 ed is also picking up interest on iPad. Early data potions look great. We are adding sales people to call on education specifically for iPad.

• Jobs: Our $50+ billion cash. We believe that one or more strategic opportunities may come along. We’d like to keep our ability to move if opportunities present themselves.

• Jobs: Hardware makers think the software will take care of itself, but it won’t. They fail to think in an integrated manner. Apple thinks about everything, the hardware, the software, everything.

• The reason we don’t make a 7-inch iPad is because we do not believe that you can make a great experience with that size screen. When we make decisions, it’s not about cost, it’s about the value of the product when you factor in the software.

• Jobs: Our goal is to make really breakthrough products in every market where we compete and to drive the cost down while offering better functionality. Relentless improvement at the same or better prices.

• Jobs: I imagine well be competing with Android for quite some time. We provide users with products that just work. Android is already quite fragmented for both users and developers.
• Jobs: Our goal is to make the best devices in the world, not to be the biggest. As you know, Nokia is the biggest and we admire then for what they do, but we don’t want to be like them.

• What drove the sequential downtick in margins: Apple expected a higher mix of iPhone 4 (lower gross margin that previous iPhone model), free bumper program, iPads, and new iPods with outstanding features.

• Jobs: We have already sold over 250,000 Apple TV units. We are thrilled with that. We think the $99 price is enticing and when AirPlay is ready, it will be another grate driver of sales.
• Jobs on Apple TV: We have gone to a complete streaming model on Apple TV. All of the content is rented or streamed from your computer and soon to be streamed from iOS devices.

• CFO Oppenheimer: Margin decline due to higher mix of iPad and new iPod sales.

• Jobs: I think right now, iPhone and Android are winning the battle for smartphone developers and users.

• Will Apple be able to maintain market share in tablets? Jobs: I have a hard time envisioning what the competitors can do. They are having a hard time with pricing, even with too small screens and they do not have over 35,000 iPad apps like we have in App Store. “We’re out to win this one.”

• Cook: iPhone demand went to an entirely different level, beyond what Apple anticipated.

• Jobs questioned on Flash: “Flash memory? We love flash memory.” (laughter)
• Jobs: We’re already shipping more iPads than Macs
• Jobs: I see iPad as a general purpose device and I see it as really big
• Jobs: The more time that passes, the more I’m convinced that with iPad, we’ve got a tiger by the tail here.
• Jobs: iPad is clearly going to affect notebook computers. Not a question of if, but of when. Appel is already seeing tremendous interest fro eductaion and, much to my surprise, in business. iPad is being grabbed out of our hands by businesspeople.

• Wow! We’ll clean up Jobs’ paraphrasing with actual quotes later.

• Jobs: 7-inch tablet makers will learn a tough lesson and try to make 10-inch tablets next year, abandoning users and developers in the process.
• Jobs: The current crop of 7-inch tablets are DOA.
• Jobs: Even Google says not to use the Android Froyo in tablets, yet some 7-inch tablet makers are in it anyway. And they will have virtually no apps.
• Jobs: The 7-inch tablet is too big to compete with an iPhone and too small to compete with an iPad.
• Jobs: We have done the testing. That is why the 10-inch screen size is the MINiMUM size for a good tablet experience
• Jobs: 7-inch tablets are only 45% as large as iPad’s screen (screens are measured diagonally) This size isn’t sufficient to make quality tablet apps.
• Jobs: We think integrated (not matter how many times Google mischaracterizes it as “closed” will triumph over fragmented (which Google touts as “open.”)
• Jobs: We think the “open” vs. “closed” argument obscures what’s really important: What’s best for the user?
• Jobs: Open systems do not always win: Take Microsoft’s “PlaysForSure.” It failed.
• Jobs: Apple is not fragmented, has 3x as many apps and one App Store is easy for developers and users
• Jobs: Android Developers are presented with a daunting challenge of hundreds of OS software versions and devices. At least four Android app stores will be a mess for both users and developers.
• Jobs: Android is very fragmented; proprietary UIs, etc. User is left to figure it all out.
• Jobs: Google characterization of Android as “open” is disingenuous.
• Jobs: 275,000 iOS devices activated per day on average

• Jobs: With 300,000 apps now in App Store, RIM has a high mountain to climb
• Jobs: We have now passed RIM and I do not see them catching us anytime soon
• Jobs: 91% YOY unit growth in iPhone sales
• Apple CEO Steve Jobs attends earnings call to mark Apple’s first $20 billion quarter

• Apple expects 25.5% tax rate for 2011.

• In fiscal 2010, Apple generated 5 times the revenue and 10 times the earnings vs. 2005

• 7.5 million iPads sold so far
• 40 million iPhones sold
• 13.6 million Macs sold in fiscal 2010

• Apple to open 40-50 stores in fiscal 2011 with roughly half being outside U.S.
• 74.5 million visitors during quarter and increase of 62% YOY.
• Apple now has 317 stores worldwide, 84 outside U.S.A.
• 24 retail stores opened during quarter
• Apple Retail: 3.57 billion vs. 2.04b, 874,000 Macs sold a record (+30%)

• iAd: Apple very happy with results so far.
• Over 200,000 registered iOS developers.

• iOS device sales of over 25 million during the quarter.

• iPad ASP about $645. 3-4 weeks of channel inventory, below target of 4-6 weeks.

• iPhone demand is strong. Apple believes they could have sold even more iPhones if they could have made them

• Record 3.89 million Macs during the quarter, a 27 percent unit increase over the year-ago quarter.
• 14.1 million iPhones in the quarter, representing 91 percent unit growth over the year-ago quarter.
• Apple sold 9.05 million iPods during the quarter, representing an 11 percent unit decline from the year-ago quarter.
• Latest NPD monthly data: iPod remains market share leader with over 70% of market.
• 4.19 million iPads.

• Revenue of $20.34 billion (vs. $12.21 billion)
• Net quarterly profit of $4.31 billion (vs. $2.53 billion)
• $4.64 per diluted share (vs. $2.77)
• Gross margin was 36.9 percent compared to 41.8 percent in the year-ago quarter. • International sales accounted for 57 percent of the quarter’s revenue.

96 Comments

  1. Samsung and other 7in. screens –> steve says you need to provide sandpaper to sand down users fingers to match functionality in that space. haha –> tweeners

    don’t use froyo for tablets says google… wait until next year… LOL!

  2. Samsung and other 7in. screens –> steve says you need to provide sandpaper to sand down users fingers to match functionality in that space. haha –> tweeners

    don’t use froyo for tablets says google… wait until next year… LOL!

  3. … Happy 401k ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

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    … Make $$$$ as Apple Inc. is not even close to peaking. Tsunami Global expansion is happening!

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  4. … Happy 401k ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

    BUY AAPL stocks!!! $$$$ No Brainer!

    … Make $$$$ as Apple Inc. is not even close to peaking. Tsunami Global expansion is happening!

    Go APP ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

  5. Holy CRAP! Steve just threw down the glove! Told RIM that they are never going to catch up. Told Android phone manufacturers that Google’s “open” strategy is the wrong one. Told all the supposed tablet competitors that they are all DOA! Not your normal discussion in a quarterly earnings conference call.

    Wow!

  6. Holy CRAP! Steve just threw down the glove! Told RIM that they are never going to catch up. Told Android phone manufacturers that Google’s “open” strategy is the wrong one. Told all the supposed tablet competitors that they are all DOA! Not your normal discussion in a quarterly earnings conference call.

    Wow!

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