iPhones and iPads spur stellar Apple quarter

Combined sales of the iPad and iPhone reached almost 30 million during Apple's third quarter, helping push the company to record quarterly revenue and profits.

Surging sales of the iPad and iPhone have driven Apple to record-breaking results. Photo credit: James Martin/CNET News

Apple reported a net profit of $7.31bn (£4.5bn) in its quarterly earnings on Tuesday, up from $3.25bn year-on-year. Total revenue for the period was nearly $28.6bn, up from $15.7bn.

"We're extremely pleased with our record revenue and earnings and the tremendous customer response to our products," Peter Oppenheimer, Apple's chief financial officer, said in an investors' conference call. "We remain very excited about our new product pipeline and we look forward to releasing the Mac OS X Lion tomorrow."

The company sold 20.34 million iPhone handsets and 9.25 million iPad tablets during the three months to 25 June. It also saw a 14-percent year-on-year increase in sales of Macs, which totalled 3.95 million in the quarter.

Oppenheimer said Apple is seeing "strong adoption" of the iPad in businesses around the world. "In the 15 months since the iPad has shipped, we've seen iPads used in the enterprise in ways we could never have imagined," he said.

The iPod line was the only product to see a significant decrease in sales, falling 20 percent on the previous year. However, Apple said this was above expectations and noted that the iPod Touch accounted for more than half of all sales of the music player.

Surging iPad sales

Despite the strong sales of the iPhone, it is the surging sales of iPads in particular that should concern competitors, according to Carolina Milanesi, consumer technologies analyst at Gartner.

"Apple said on 6 June that they sold 25 million iPads to date. This meant that in April and May it sold 5.5 million. With 9.3 million sold for the quarter, that leaves close to four million sold in the month of June alone, almost as much as the whole of quarter one," Milanesi told ZDNet UK. "This should really wake up competitors to the harsh reality that iPad is in a different league."

Milanesi also noted that Apple is closing in on LG for the position of third-largest mobile phone vendor worldwide, and that enterprise adoption of the iPhone means that Apple can increase market share without reducing the price of the units.

Android challenge

However, Francisco Jeronimo, a mobile device analyst at IDC, insists that Apple faces a strong challenge from competitors such as Android in the coming months.

The company is already experiencing a slowdown in its market share in some developed countries.

– Francisco Jeronimo, IDC

"The company is already experiencing a slowdown in its market share in some developed countries, where the iPhone penetration is higher," Jeronimo said. "In Western Europe, for instance, Apple became the smartphone market leader in the quarter ending March with 21-percent unit share, but IDC estimates that, this quarter, its market share slipped to 18 percent as Android is still gaining popularity and rapidly expanding its presence among European consumers."

In the conference call, Oppenheimer hinted at the potential release of a new iPhone, expected to be the iPhone 5. "We also have a future product transition that we're not going to talk about today and these things will impact our September quarter," he said.

According to Jeronimo, a launch in September would be key in stopping the decrease — in certain regions — of Apple's mobile market share.

"A new product at a lower price will stop Apple's unit share from declining as it will attract more users to move from feature phones to smartphones by the popularity of the user experience and the affordability of the lower prices," he said. "It is important that Apple continues to attract first-time users, as this drives loyalty and future replacements for more premium versions of the iPhone."

Apple's recently announced iCloud service should also add to the appeal of the company's portfolio by making user management of content much simpler, Milanesi argued.

"How many people now have more than one Apple device even if it is a Shuffle and an iPhone or an iPad? iCloud will make managing your content on all those devices so much easier," she said.