Tag Archives: Apple

Apple earnings: $46B in revenue, 43 million iPhones sold

Apple had a very good second quarter. The company reported earnings Wednesday that surpassed both Wall Street expectations and Apple’s internal guidance, thanks to stronger than expected iPhone sales. Apple sold 6.3 million more iPhones than it did in the same period last year, but it sold 2 million fewer iPads.

Apple on Wednesday reported second-quarter revenue of $ 45.6 billion and net income of $ 10.2 billion, which works out to $ 11.62 per share. The revenue figure is higher than Apple’s results from the second quarter in 2013, and profits continued to rise year over year. Analysts were expecting earnings per share of $ 10.19 on sales of $ 43.5 billion.

Apple’s gross margins are always an important number to watch. Gross margin was up at 39.3 percent compared to 36.7 percent in the first quarter and 37.5 percent at this time last year.

Here are the device sales numbers:

  • 44 million iPhones, as compared to 37.4 million sold a year ago.
  • 16 million iPads, down from 18.1 million sold a year ago.
  • 4 million Macs, which is about the same as last year’s reported figure of 4 million Macs sold in the 2nd quarter.

"Apple iPhone Sales (2010 to present)"

The surprisingly good quarter was driven by the iPhone. In a conference call with analysts and investors Wednesday afternoon, Apple CEO Tim Cook noted this was partially due to sales in markets outside the U.S., highlighting increased market share in both developing markets and emerging markets. Surprisingly, most of the discussion was not about the iPhone 5c, which was assumed to be the low-cost phone targeted at emerging markets. Instead, both Cook and CFO Luca Maestri spent time lauding the iPhone 4s as a major product for first-time iPhone buyers.

During the conference call, Maestri preemptively acknowledged the disappointing number of iPads sold by noting the year over year decrease was not as drastic as it seemed. Maestri explained that year over year sell-through decline was only 3 percent when taking into account channel inventory differences. Cook encouraged investors to take a long view of the tablet market, noting the iPad has already sold more than 210 million units.

“When I back up from the iPad, I see the iPad has absolutely been the fastest growing product in Apple’s history,” Cook said. “That doesn’t mean every quarter, every 90 days is going to be a number everybody’s thrilled with.”

One of the major topics of discussion was Apple’s international efforts, particularly in the greater China region, which includes Taiwan and Hong Kong. Apple saw sales in China rise from $ 1 billion to $ 9.3 billion, partially driven by the availability of the iPhone on China Mobile. However, Cook also pointed out that the Mac had double-digit growth and iTunes revenue more than doubled.

“It wasn’t just because we were able to come to an agreement with the world’s largest carrier,” Cook said. “That was certainly the key but as you can tell from the rest of these numbers, there are other things going on.” Apple plans to triple its number of retail stores in China.

Although Apple no longer refers to the Apple TV as a hobby, it still does not break out Apple TV sales numbers in the quarterly results. Cook noted that the company has sold about 20 million units. “The reason why I stripped off the hobby label is when you look at sales and content bought directly off Apple TV for 2013 that number is over a billion dollars,” Cook said.

Apple’s board of directors also announced a stock split: Apple shareholders will receive six additional shares for every share held on the June 2nd. Split adjusted trading will begin on June 9th. CEO Tim Cook said this was to make shares more accessible to small investors.

Apple also expanded its cash capital return program to over $ 130 billion. What else is Apple going to do with its extra cash? “We’ve made 24 acquisitions in 18 months,” Cook said. “We’re on the prowl.”

Unsurprisingly, investors liked that news. Apple’s shares rose more than eight percent in after-hours trading, to $ 565, a gain of around $ 41 or 7.75 percent.

This story is developing and was updated several times Wednesday as more information became available.

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Why can Nike dump the Fuelband? With friends like Apple, it doesn’t need its own hardware

If you want to track your fitness with Nike software, you’re probably going to have to use Apple products.

The news that Nike had laid off a majority of its digital sport hardware engineering team last week meant the reported end of Nike’s FuelBand, the oldest of the current generation of wearable fitness trackers. Nike will still be a player in the wearable space, but it will no longer be producing hardware, according to reports from CNET and Recode.

If Nike exits the physical wearable market, as now seems likely, Apple will be the primary sensor maker for Nike’s future wearable apps given the length and depth of the two companies’ close ties. Although there are a handful of Nike apps available for Android, there is no app (on any other mobile platform aside from iOS) that supports Nikefuel, which Nike describes as the “heart of the Nike+ ecosystem.” In many ways, this is the culmination of a process that’s been taking place between the two companies for the better part of a decade: Nike will design the fitness app experience, and the hardware will be made by Apple.

Apple and Nike have a long history

Apple CEO Tim Cook, who has been spotted sporting a FuelBand, sits on Nike’s board of directors. Nike has had partnerships with other innovative tech companies in the past, releasing a Nike+ Kinect game with Microsoft in 2012, and a GPS watch with TomTom in 2011. TomTom currently makes its own GPS watches, and the public face for Nike+ Kinect, Jay Blahnik, now works for Apple.

Apple CEO Tim Cook looks on, wearing a Nike Fuelband, before the Apple Store opens to sell the new iPhone on September 20, 2013 in Palo Alto, California. Photo by Justin Sullivan/Getty Images

Apple CEO Tim Cook looks on, wearing a Nike Fuelband, before the Apple Store opens to sell the new iPhone on September 20, 2013 in Palo Alto, California. Photo by Justin Sullivan/Getty Images

Nike is an important partner for Apple. The iPhone 5S includes an advanced motion coprocessor, the M7, which allows fitness apps to track motion without turning on the full power of the main processor. At the iPhone 5S announcement, the demo app was Nike+ Move, which is almost identical to the Nike+ FuelBand app but does not require an external wearable sensor. Currently, Nike+ Move is available only for the iPhone 5S.

Nike’s first foray into the digital activity tracker market was a product called Nike+iPod, released in 2006. That consisted of a piezoelectric sensor that tucked into a shoe and a dongle that attached to an iPod nano, and the software was eventually expanded to include the 2nd generation iPod Touch and iPhone 3GS. Eventually, Apple integrated enough sensor capabilities into the iOS platform so that the separate dongle was no longer needed. Now there are seven different apps available on the App Store which include the Nike+ brand. Only one now requires separate hardware — Nike+ FuelBand.

There is still no NikeFuel app for Android. In previous statements, Nike has said there isn’t an Android app in development. And while Nike hasn’t ruled it out, it seems unlikely. If Nike wants to stop the fragmentation of its sensors, there is no easier way to do that than to make Apple products the preferred hardware for the platform. In fact, this is Apple’s advantage over other handset makers — because there are so few iPhone models, there is no need to finely calibrate sensor readings for a multitude of devices.

Nike’s platform, built on top of Apple’s platform

Nike’s expressed plan is to make its Fuel fitness tracking system into a platform for other developers on which to build applications. This makes sense — hardware is difficult and expensive, and requires specific engineering expertise and supply chain mastery in order to produce decent margins. Other companies may have good hardware or data expertise, but are unlikely to grab the attention of the toned and tan. Fitness trackers are bought with high hopes, but many end up forgotten after a few weeks, like a diet.

Nike CEO Mark Parker and Apple CEO Steve Jobs during the May23, 2006 unveiling of a partnership between Nike and Apple. Photo by Mike Ehrmann/WireImage

Nike CEO Mark Parker and Apple CEO Steve Jobs during the May23, 2006 unveiling of a partnership between Nike and Apple. Photo by Mike Ehrmann/WireImage

While Nike has never released sales data for the FuelBand, a report estimated the entire fitness tracker to be worth $ 330 million in 2013, and the FuelBand only accounted for 10% of brick-and-mortar sales during that period, according to a report from the NPD Group. Nike revenue for the third quarter of 2013 was $ 7 billion, so it appears the FuelBand was not moving the dial. Taking into account research and development costs, it’s possible the FuelBand was a money pit.

But as the world’s largest sportswear designer, Nike already has the attention of fitness fanatics, and knows the exact kind of marketing will best hook athletes into a new product category. It’s that kind of large, committed user base that will compel competitors, like Strava and MyFitnessPal, to build features on top of the Nikefuel API, whereas they may not have considered the FuelBand platform important because there is a limited install base. To better reach potential partners, earlier this month Nike opened up a new tech office in SOMA, the heart of San Francisco’s tech district.

While it might not make competitive sense for some of the smaller fitness apps to team up with Nike, if there’s a large contingent of customers who associate Apple’s fitness features with Nike+, they might not have a choice.

By making Nike hardware and Apple hardware one and the same, Nike not only gains a huge installed user base, but Apple gets a user-facing feature no other handset maker can match: fitness from a world-famous fitness company.

Nike Fuelband close-up. Image from Flickr/Angel Navedo

Nike Fuelband close-up. Image from Flickr/Angel Navedo

Nike’s hardware exit has been a long time coming

Nike executives have been hinting at their plans to get out of the hardware market for some time. Talking to Fast Company earlier this month, Steven Olander, the Nike vice president of digital sport — the department which just lost 80 percent of its staff — said,

When Nike developed the FuelBand SE, people asked if we were becoming a technology company. But that was never the intention. We weren’t so much excited about the thing as what the thing enabled, which is motivating people because they have a way to measure how active they are–we have a saying that you can’t improve what you can’t measure.

Last year, Nike CEO Mark Parker said at a Fast Company conference:

It’s really important to understand what we do well . . . what we bring to the party, so to speak, and actually amplify that and not to expect us to really go in and compete with the latest, greatest development of sensor technology.

Apple’s strength is is making slick, well-engineered hardware that sells well. Now these devices, as a matter of course, have advanced sensor technology built in.

Nike’s strength is making fitness cool. Regardless of whether Apple introduces a wearable product this year, or simply introduces new features like the rumored Healthbook app, Nike’s fitness software will be a big part of it.

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Apple reportedly looks to integrate Shazam into Siri

Apple(appl) is working with Shazam to integrate song identification into an upcoming iOS update, according to a report in Bloomberg.

Shazam’s app, which is available for Android as well as iOS, uses a device’s onboard microphone to record sound and match it against a database, returning the name of the song and artist. If Apple integrates it with iOS, we can expect similar functionality built into Apple services like Siri and iTunes Radio. According to the report, Siri will gain the ability to answer questions like “What song is playing?” Shazam’s app already has excellent iTunes integration — after identifying the song, the most prominent link on screen is to the iTunes store.

Although Shazam was an early iOS hit and has been a featured app on iTunes in the past, it has never been higher than the 13th most downloaded iPhone app. If it were to be integrated into iOS, there would be a good number of users who might discover the addictive ability to identify previously unknown music.

In December, Shazam added automatic TV show and music recognition to its app, which allowed users to keep Shazam running in the background while it identifies songs playing on a stereo or shows on television. Shazam has also tried to position its app as a sort of audio-based QR code reader for television advertising: during the most recent Super Bowl, users could Shazam a Bud Light advertisement and gain access to a limited download of Afrojack’s single “Ten Feet Tall.”

 

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