Revenue

Research firm IDC is out today with its latest report on the smart-connected device market, and it includes worldwide shipments of desktop PCs, notebook PCs, smartphones, and tablets. IDC predicted the market in total grew 29.1-percent year over year in 2012, crossing 1 billion units shipped and hitting a total value of $576.9 billion. According to the report, Apple significantly closed the gap on Samsung during the last quarter of the year. It jumped from 15.1-percent in Q3 to 20.3-percent of unit shipments in Q4 2012. That brings the company up right behind market leader Samsung, which dropped slightly from 21.8-percent to 21.2-percent in the fourth quarter:

Looking specifically at the results for the fourth quarter of 2012 (4Q12), combined shipments of desktop PCs, notebook PCs, tablets, and smartphones was nearly 378 million and revenues were more than $168 billion. In terms of market share, Apple significantly closed the gap with market leader Samsung in the quarter, as the combination of Apple’s iPhone 5 and iPad Mini brought Apple up to 20.3% unit shipment share versus 21.2% for Samsung.

Not surprisingly, Apple dominated Samsung when it came to revenue share. It took in 30.7-percent of the market compared to just 20.4-percent for Samsung by revenue:

On a revenue basis for the fourth quarter, Apple continued to dominate with 30.7% share versus 20.4% share for Samsung.

Apple’s increase is likely thanks to strong iPad and iPad mini sales, as growth in the market was “largely driven by 78.4-percent year-over-year growth in tablet shipments.” IDC expected tablet shipments to outgrow desktop PCs by the end of this year, while the tablet market could surpass the portable PC market in 2014 and provide Apple with even more opportunity to outgrow Samsung for total connected smart device shipments this year and next:
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Fortune reported that Apple is likely to achieve record revenues in Q2—but the first fall in its earnings in a decade.

Apple’s revenues are expected to grow from $41 billion to $43 billion, another record for Q2, but margins are expected to have fallen substantially from a peak of just over 47 percent last year to ‘between 37.5 and 38.5 percent’ this year.

Margins tend to fall with new products, due to high initial investments and reduced yields when pushing the limits of what can be achieved (as with the new iMacs), and it’s this falling margin that has impacted Apple’s earnings per share…

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Asymco’s Horace Dediu has estimated that Apple’s iTunes business, initially intended only to cover its costs as a way of driving hardware sales, now earns the company annual profits of a cool $2 billion.

What started as just a music store now sells music, video, books, iOS software, and Mac software. Revenues have grown five-fold in 7 years, with total sales approaching $5 billion a quarter and notching up an estimated 23 billion transactions a year.

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[youtube=http://www.youtube.com/watch?v=L2i7Wr5xwDk]

As previously announced, today Apple is reporting its Q1 2013 earnings results. There is much uncertainty going into today’s call with Apple shares down significantly in recent months to roughly $500 since hitting a high of over $700 per share in September. With the iPhone 5 landing in a total of 100 countries last month, as well as iPad mini making its way to new markets, Wall Street estimates Apple will report between 47.5 million and 53 million iPhones sold and iPad sales between 23 million and 25 million. Compare that with Apple’s Q1 numbers last year: 37 million iPhones and 15.43 million iPads sold. Earlier this week Verizon reported 6.2M iPhone activations for the quarter, around half of which were iPhone 5 sales.

We’ll be providing blow-by-blow coverage of the earnings call in our live blog below at 2 PM Pacific/5 PM Eastern time. Stay tuned to 9to5Mac.com’s homepage for additional coverage:

Head below for updates…
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Analytics firm Distimo is out today with the full results of its year-end 2012 app analytics report (via Fortune). While Apple is still the clear winner in terms of revenue, Google Play showed significant growth in the last four months. Its daily revenue grew 43 percent in 20 major markets. Apple’s growth was smaller, increasing daily revenue by 21 percent, but Distimo’s numbers show Google still has a long way to go:

On a typical day in November 2012, the revenues in the Apple App Store exceeded $15M USD, while in Google Play the revenues are just below $3.5M USD in 20 of the largest countries in both app stores… Even though the growth in revenues in Google Play in the last four months is close to that of the Apple App Store in 2012, the growth in daily revenues in the Apple App Store was higher than the total daily revenues in Google Play when comparing absolute daily revenue values.

As for the most popular apps of 2012, Distimo said Asian publisher Naver was able to beat Draw Something’s record of 1 million users in nine day. Its app, Line Pop, got 1.75 million downloads in the first 72 hours. That’s something that took Facebook nine months to accomplish. The app also brought over 1 million in revenue for the developer in 12 days.

To round out the year in review, Distmo breaks down revenue by category in the charts below: the top 10 most grossing cross-store publishers, the top 10 publishers and apps by downloads on the App Store, and the top five highest growing countries by revenue. There aren’t many surprises:
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Apple is all set to announce its fiscal Q4 financial earnings today, during a conference call with company executives scheduled for 2 p.m. PST/ 5 p.m. EST. iPhone 5 sales are expected to be a topic of conversation, of course, while recent predictions from 59 analysts provided an average estimate of 26.3 million iPhones total for the quarter. Today, Forbes posted revised estimates from 36 of the analysts that also includes predictions for iPhone, iPod, Mac, and other product sales.

A few things we already know from CEO Tim Cook’s announcements during the iPad mini event: 5 million iPhones 5s sold during opening weekend, 3 million new iPod nano and touch units sold, and 200 million iOS 6 devices. Cook also noted the company has now sold 100 million iPads in 2.5 years and more iPads in June than any PC manufacturers’ entire PC lineup.

In Q3 Apple reported revenues of $35 billion. As for Q4, Apple predicted during its last conference call that revenues for the fourth quarter would be around $34 billion with diluted earnings per share of about $7.65. Today, Forbes pointed us to updated estimates from Wall Street showing a consensus of $8.81 on sales of $36.02 billion.

Forbes has also posted revised estimates from 36 analysts (below). Among the 20 pros in the group, the average estimate is $8.75 on sales of $35.51 billion. The independents, on the other hand, have earnings of $9.66 on sales of $37.23 billion.

As you can see from the chart of the 36 analysts below (pros in blue), the high-end of iPhone estimates hit the 32 million-unit mark, while one independent has Mac sales as high as 5.70 million units:

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The image above represents the full pricing matrix for new devices expected to unveil in a few days at the Worldwide Developers Conference. You will notice the Mac Pros, Retina MacBook Pros, MacBook Airs, and iMacs that we discussed before at length.

We have more notes on the unlabeled parts below—including the newly identified RAM update:
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From 9to5Toys.com:

[youtube=https://www.youtube.com/watch?v=pdv0A5J0vy0]

MacUpdate has one of the better bundles we’ve seen on a wide-ranging set of Mac software. If you are like us and getting a new MacBook next week, you can load it up with software: You are getting a solid deal with the Parallels 7 headliner ($30 off retail), but then you get some great apps up and down the lineup basically for free including:

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5) Jaksta ($49.95)
6) Espionage 3 ($19.99)
7) Attachment Tamer 3 ($14.99)
8) Speed Download 5 ($25.00)
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10) A Better Finder Rename 9 ($19.95)
11) My Living Desktop 5 ($29.95)

The total value is $456.80 — MacUpdate is $49.99, as always.

Full release follows:

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We are sure these are the first of many, so go ahead and send yours to tips at 9to5mac.com.

Updated: We made a gallery. Thanks Andrew Stern, Jon Bauer and Nelson!

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Chart via

Apple had another blowout quarter this holiday and set records across the board.  iPhones, which many estimated optimistically at 30 million, leapt to over 37 million to create the biggest quarter ever.  iPads crossed 15 million for the first time, and even Apple’s venerable Mac line crossed 5 million units for the first time (likely helped by the popular MacBook Air lineup). iPods, if you needed a downside, were off by 20-percent —which is not terrible, because Apple did not upgrade most of the iPods available last Christmas.

Apple recorded revenues of $46.33 billion and record quarterly net profit of $13.06 billion, or $13.87 per diluted share.

(Click to enlarge)

“We’re thrilled with our outstanding results and record-breaking sales of iPhones, iPads and Macs,” said Tim Cook, Apple’s CEO. “Apple’s momentum is incredibly strong, and we have some amazing new products in the pipeline.”

“We are very happy to have generated over $17.5 billion in cash flow from operations during the December quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second fiscal quarter of 2012, which will span 13 weeks, we expect revenue of about $32.5 billion and we expect diluted earnings per share of about $8.50.”

The full press release follows, and do not forget the live blog coming shortly.

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Apple’s App Store is currently taking approximately four times more revenue generated by the 200 highest grossing apps in comparison to the Android Market. According to research firm Distimo’s recently published 2011 report, a significantly increasing portion of app downloads are originating in China.

Likely further increased by Apple’s recent announcement to begin accepting App Store payments in Chinese Yuan, Distimo said when comparing the United States and China, 30 percent of downloads are coming from China. This is up from approximately 18 percent reported by Distimo in January 2011.

Growth in China is even more impressive when looking at just iPad numbers with China now accounting for 44 percent of all downloads from the two countries. Distimo reported late last month that App Store downloads for the top 100 paid apps in China nearly doubled just days following Apple’s decision to accept Yuan.

During Apple’s fourth quarter earnings call, CEO Tim Cook called the progress in China “amazing” and said the country represents “enormous opportunity.” As of that time, revenues from China accounted for 16 percent of Apple’s revenue for the September quarter – approximately $4.52 billion.

Some of the other interesting numbers reported by Distimo, include: 50 percent of App Store revenue for iPhone is now generated by freemium apps and in-app purchases for the 200 highest grossing apps; there are currently 79,077 games for iPhone, 28,683 for iPad, and 46,045 for the Android Market.

While the report noted App Store downloads have been on the decline for the year, downloads peaked following the release of the iPad 2 and iPhone 4S. Distimo attributed the increase to what they call the “anticipation effect” for Apple’s new devices.

Distimo put together their App of the Year Award based on total downloads worldwide across all platforms. Not surprisingly, Angry Birds took the top spot, followed by Facebook, Skype, Google Maps, and iBooks. Check out the full top 10 below.

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ZDNet just published a story claiming Apple’s percentage of revenue has “been on the decline for years”. The story claims that percentage is currently 2.2 percent of sales which seems pretty low compared to other technology players (especially when Apple is so innovative).

But this isn’t factoring in how items such as a reported $200 million investment in Siri technology, a new CEO, and investments in the company’s 175-acre Spaceship campus contribute to overall growth…

Thanks to commenter Glenn who points out this perfect quote from Steve Jobs:

“Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it.” — Steve Jobs, Fortune, Nov. 9, 1998

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Walmart has just announced their Vudu movie streaming service is now available to iPad users via a web app (opposed to an iOS app), which effectively allows the company to go behind Apple’s back rather than partake in their App Store revenue sharing model. The app also works on other iOS devices, but hasn’t yet been optimized for the smaller screen. They’ve also announced their iTunes competitor, mp3.walmart.com, will be closing indefinitely starting August 28, 2011. However, the announcement notes the Walmart Soundcheck music streaming service will remain available, making us wonder if they have plans on implementing an iPad-specific version much like they’ve done with Vudu…

This isn’t the first time we’ve seen content providers trying to avoid sharing profits with Apple. In fact, just yesterday we told you about the new Kindle Cloud Reader app that is accessible via the web, much the same as Vudu. While not sharing revenue is an obvious benefit of bypassing the App Store, TechCrunch points out there are many other advantages as well.

For instance, by avoiding the App Store’s restrictions, Vudu will be able to push out new updates whenever they see fit, rather than having to wait for Apple’s approval. It seems like more and more developers have been pushed away from the traditional iOS app model due to stringent approval policies and the unpredictability of Apple’s ever-changing process.

The real question is.. do these web apps compare to the experience offered by native apps?

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Apple’s beautiful Bejing Retail Store

Apple felt incredibly bullish on China in today’s conference call, rattling off numbers that even Tim Cook admitted they wouldn’t have believed if they had been told a year ago.  How big is China for Apple?

In the year ago quarter, Apple counted $630 Million in revenues from China.  Today, Apple grew that by a factor of six to $3.8B of the total $28+B of their total revenues for the quarter.  That’s 13.3% of Apple’s total business by revenue which now comes from China.

To put that in perspective, $3.8B would have been over two-thirds of Apple’s 2007 (iPhone release) same quarter revenue and more than Apple’s whole global revenue for June ’05.

But ‘we’re only scratching the surface’.

Cook talked again about pre-paid phones (which are dominant in China) and a deal with the 600M-user China Mobile which is said to be in the wings.  Apple is also said to be exploring a cheaper iPhone offering which would appeal to a much broader swath of the Chinese market (Indian too).  This comes against a backdrop of Google Chairmen Eric Schmidt who is also bullish on Asia for Android.

Apple is also being aggressive in their China retail stores, choosing to open larger flagship stores which take more time to build.  CFO Peter Oppenheimer mentioned that the Hong Kong Flagship store at the IFC would be opening this quarter.  But Apple has an order of magnitude more stores opening up across China.  Apple now sells through four stores.  They have over 30 planned just for the next year.

If Apple’s growth in China stays on the current pace, which ‘scratching the surface’ seems to at least partially imply, China will account for over $20B in revenue at this time next year – which could start approach Apple’s US revenues even if Apple continues to grow globally as it has.

Below is an edited transcript of Cook’s remarks on China from Macworld:
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