Apple also updated its Mac Mini line computers. The entire line now features Intel Core 2 Duo processors. The $799 model includes a 2.0GHz Intel Core 2 Duo processor, 1GB of RAM, SuperDrive and a 120GB hard drive. The $599 model includes a 1.83GHz Intel Core 2 Duo processor, 1GB of RAM, Combo Drive and a 80GB hard drive. Both models are available immediately from the Apple Store.
Piper Jaffray's Gene Munster also revealed that ninety-five percent of buyers in San Francisco, New York and Minneapolis purchased the 8GB model. Also, about half of the 253 buyers surveyed were new customers to AT&T.
Apple's Mac Business
In total, Apple shipped 1.517 million Macs during the quarter, representing 36 percent yearly growth. This included 891,000 notebooks and 626,000 desktop systems.
Demand for MacBooks and MacBook Pros during the quarter was exceptional. Notebook sales grew 79 percent year-over-year and accounted for 59 Percent of Macs sold during the quarter. Notebook sales generated $1.354 billion in revenue.
Desktop sales accounted for about 40 percent of the Macs sold during the quarter, rising only slightly from the year-ago quarter in which Apple sold 614,000 units. Desktops accounted for $914 million of quarterly revenue.
“The Mac is clearly gaining market share, with sales growing 36 percent—more than three times the industry growth rate,”
Apple chief executive Steve Jobs said in a statement.
Mac distribution points have grown from 5800 to 8000 on a year-over-year basis.
Apple is still evaluating and plans to make decision on its Circuit City Mac pilot sometime this quarter. Meanwhile, the company said it plans to partake in some "unique merchandising" as it expands its Best Buy Mac pilot to around 200 stores throughout the year.
Both Mac and iPod margins were quite strong during quarter, benefiting from very favorable commodity environment (particularly memory).
Apple's Music Business
Apple shipped 10,549,000 iPods during the quarter, representing 24 percent growth year-over-year, and accounting for $1.689 billion in revenue. Apple's "Other Music Related Products and Services" added $653 million in revenue, up 35 percent year-over-year. iPod shuffle was especially popular during the quarter thanks to the addition of new models in four vibrant colors.
In the United States, iPod commands over a 70 percent share of the digital media player market. It holds over a 60 percent share in Australia and Canada, over a 50 percent share in Japan and Hong Kong, over a 40 percent share in the UK, Switzerland and Denmark, and about a 28 percent share in Germany. Apple ended the quarterly "comfortably" with iPod channel inventory of 4-6 weeks.
iTunes now has over 5 million songs, 350 TV shows, and 500 movies. iTunes accounts for over 85 percent of legal music downloads in the United States, according to Nielsen SoundScan.
Both the iPod and Mac were key to Apple achieving its 35.1 percent gross margin.
Apple's Consumer Electronics Business
"We're off to very good start" on Apple TV, the company said. It would provide no further details, likely as sales totals are still low given the device's relatively short time on the market.
Apple did say that it plans to leverage its proven capability in the area of software development to gradually add new software features and applications to both its iPhone and Apple TV products free of charge to customers.
Additional iPhone tidbits are available in a separate report on the aforementioned subject.
Apple's Retail Business
Apple's retail store revenues for the quarter totaled $855 million, up 34 percent from $636 million year-over-year. The stores generated $32 million in profit in addition to $174 million in "manufacturing profit."
The company opened a total of 7 news stores during to quarter to end with 177 stores. With an average of 172 stores open during the quarter, average store revenue was about $5 million. Over 21.5 million people visited Apple's retail stores during the quarter, which breaks down to 10,000 customers per store, per week. The stores sold 275,000 Macs, up more than 75 percent from the year-ago quarter.
Apple maintained that it is on target to launch new international retail stores in Glasgow, Scotland and Sydney, Australia sometime later this year.
In a surprise and much-welcomed announcement, Apple said it will be opening its third Manhattan retail store at 14th Street and 9th Avenue in the meatpacking district. No date was given.
Apple's Business and Mac Sales by Region
Apple Americas accounted for $2.447 billion in revenues, up 15 percent year-over-year. This included the sale of 605,000 Macs, up 22 percent year-over-year.
Apple Europe accounted for $1.249 billion in revenues, up 29 percent year-over-year. This included the sale of 433,000 Macs, up 37 percent year-over-year.
Apple Japan continued to "frustrate" Apple, accounting for just $283 million in revenues, down 8 percent year-over-year. This included the sale of 79,000 Macs, down 4 percent year-over-year.
Apple Asia-Pacific (plus FileMaker Inc.) accounted for $430 million in revenues, up 32 percent year-over-year. This included the sale of 125,000 Macs, up 89 percent year-over-year.
Direct sales -- retail, online, direct to education and enterprise, and the iTunes music store -- accounted for 50 percent of Apple's sales during the quarter.
Apple capitalized about $27 million related to software development during quarter. Capital expenditures for the quarter were $105 million.
Apple's cash stockpile rose over $700 million during the quarter to $12.6 billion. Apple should be doing something with all that cash, but it isn't -- yet. Although it continues to discusses options such as share buybacks internally, it has "nothing to announce at this time."
The company shipped 1,517,000 Macs and 10,549,000 iPods during the quarter, representing 36 percent growth in Macs and 24 percent growth in iPods over the year-ago quarter. International sales accounted for 43 percent of the quarter’s revenue, according to Apple.
“The Mac is clearly gaining market share, with sales growing 36 percent — more than three times the industry growth rate,” said Steve Jobs, Apple’s CEO in a prepared statement.
Final Cut Server
Media asset management, workflow automation, automated encode and publish. It includes a cross platform interface so PC users aren't left out of the game. Cost is $999 for 10 concurrent users, $1999 for unlimited concurrent users. It will be available this summer.
Final Cut Studio 2
Includes Final Cut Pro 6, Compressor 3, Motion 3 and Soundtrack Pro 2. There's also a new kid included in the FCS2 family, Color, which provides real time application color grading. Color is the result of Apple's acquisition of FinalTouch. The cost of FCS2 stays at $1299. Current Final Cut Studio users can upgrade for $499, and users with any older version of Final Cut Pro can upgrade for $699.
According to said Rob Schoeben, Apple’s vice president of Applications Product Marketing:
“Final Cut Studio 2 was specifically designed to enable the rapidly growing community of over 800,000 Final Cut editors worldwide to animate, mix, grade and deliver their work as a natural extension of the editorial process,Final Cut Studio 2 is the most powerful production suite on the planet.”
FCS2 is available for ordering right now, but it won't ship until May.
"We can't wait until customers get their hands (and fingers) on it and experience what a revolutionary and magical product it is," Apple said. "However, iPhone contains the most sophisticated software ever shipped on a mobile device, and finishing it on time has not come without a price -- we had to borrow some key software engineering and QA resources from our Mac OS X team, and as a result we will not be able to release Leopard at our Worldwide Developers Conference in early June as planned."“While Leopard’s features will be complete by then, we cannot deliver the quality release that we and our customers expect from us. We now plan to show our developers a near final version of Leopard at the conference, give them a beta copy to take home so they can do their final testing, and ship Leopard in October. We think it will be well worth the wait. Life often presents tradeoffs, and in this case we’re sure we’ve made the right ones.”
The other interesting bit of news that seems to have squeaked-by unnoticed in this statement is that it mentions that iPhone will be released in "late" June and not by WWDC as many had predicted.
In any case, the slim Blu-ray burner is available now for $799.95
"At this historic milestone, we want to thank music lovers everywhere for making iPod such an incredible success. iPod has helped millions of people around the world rekindle their passion for music, and we're thrilled to be a part of that."
Of course, it's still a little creepy that Apple refers to the device as 'iPod' instead of 'the iPod,' as if it's some sort of scroll wheel-toting 2nd cousin they're introducing us to, but we won't hold it against Apple until they start posting iWeb photo montages of iPod having a good time at various tourist destinations throughout the world.
There isn't much more to say about the sales milestone for now, but check out the press release if you're into quotes about Apple's success from the likes of Mary J. Blige, John Mayer, and Lance Armstrong.
According to comments by Intel's Bill Kircos: "We are indeed shipping a 3.0GHz Xeon version [and] expect to see faster gigahertz speeds for our high-end [Core 2] Extreme PCs very soon, too. For now, the product is in limited production and Apple has chosen to adopt it. We will introduce another 3.0GHz Xeon SKU later on as well."
Indeed, it appears Apple had waited for the 3GHz Quad-Core Xeon to become available before launching the 8-Core Mac Pro.
While rumors of an 8-core Mac Pro began back in October, the available chips at that time maxed out at 2.66Ghz. Only in March was it revealed by Intel that a 3GHz version would be coming "later this year".
It appears Apple is the first to use the as-yet unannounced 3GHz Xeon (Clovertown) chips.
The new model is available for shipping in 3-5 business days for basic configurations from the US Apple Store.
Update: The 8-core configuration has been added to the international stores. Pricing can be found on the online Apple Stores, e.g. United Kingdom, Germany, France, Australia, Japan.
The new prices are reflected at the Apple Store
Update: The international stores have been updated to reflect the price drops, with some prices altered well in excess of the equivalent US dollar amount, e.g. the 20" Cinema Display on the UK Store has dropped £130 (~$250).