Apple has released its third quarter financial results, and overall it was a very good quarter, with the company showing an profit of $61 million, up from $19 million in the equivalent quarter of 2003. There were three interesting points:
- A record quarter for PowerBook sales. I have figures for PowerBook sales going back to 1999, and the 220,000 units shipped this past quarter makes it the best I know of, by quite a long way – the next best is 195,000 in Q1 of this year. This, coupled with the 240,000 iBooks sold – which is itself the second highest figure ever for that product line – means that over half of all Macs sold are now laptops.
- The iMac did reasonably well – 243,000 units – but still lags a long way behind the sales of the old CRT iMac. Given Apple’s openness about the specs of the next iMac, due in September, I believe that Apple is highly confident that the new machine will be a big success, probably indicating a new and much more “populist” design. While the dome-shaped LCD iMac has been a favourite among the Philippe Starck-worshipping crowd, it’s been less popular with ordinary users.
- iPod sales were also a record, with 860,000 units sold, meaning that the company has now sold close to 3.5 million iPods. That’s a huge number, and has implications for the success of the iTunes Music Store, which now has a lot of captive customers. Interestingly, the revenue earned from iPod – $249 million – was down on last quarter, despite increased unit sales. This indicates that the company shifted a lot of the lower-cost iPod mini, skewing the revenue down a little.
All this adds up to good news for Apple in terms of revenues and profits. If you assume that the company matches its performance for Q4 2003 in Q4 2004 (something that’s not assured, given the lack of an iMac for most of the upcoming quarter), then Apple is set to have its best year since 2000, with around $7.6 billion revenues, compared to $7.9 billion in 2000. However, underlying that is reduced profits – in 2000, the company made some $786 million profit, whereas it will be lucky to make $200 million in 2004.
This level of reduced profits can’t be explained totally by the proportion of the company’s revenues taken up by the (relatively low margin) iPod, as overall revenue from non-iPod products was up, and indicates either increased investment elsewhere (the bricks and mortar stores, iTunes Music Store, higher R&D) or lower margins on its main products. What it certainly indicates is that Apple has less scope than ever before to launch a truly low-priced iMac, so I’d expect the company’s new model to be either at the same price as the old one, or – if it’s significantly cheaper to manufacture – slightly cheaper.