Apple Q1: Apple Watch ships in April; IBM deal to pay off for iPad

Apple's first-quarter earnings were far better than Wall Street had hoped. Apple executives broke out further details on the follow-up analysts conference call.
Written by Zack Whittaker, Contributor
Tim Cook shows off the iPhone and Apple Watch at a September event
(Image: CNET)

Another quarter, another records smashed -- again.

Apple's fiscal first quarter earnings blasted Wall Street expectations. Things looked good across the board. The company sold more iPhones than any other three-month period in its history. Its iPad beat Wall Street's estimates even if it's on a year-over-year decline. And, if you thought the Mac would get swept up in the PC market's decline, then think again.

And, the company's rising star, the rebranded Services unit, which includes iTunes purchases and Apple Pay, performed far better than analysts hoped.

On the follow-up conference call, Apple chief executive Tim Cook and chief financial officer Luca Maestri followed up its earnings report with an analysts and press conference call. Here are the highlights.

Apple Watch to ship in April

Cook quickly confirmed the first big mystery of the year so far. Apple Watch will begin shipping in April.

Expectations for the company's debut wearable are "very high," Cook said, admitting that he uses it every day.

"The number of developers that are writing apps for it are impressive, and we've seen some incredible innovation," he said.

Addressing a concern that the watch would land later in the year, Cook said he considers the "first four months" to be early in the year, so he was "happy" with the expected date.

IBM deal progressing, may offset iPad declines

Cook said the IBM deal is helping Apple to "win" new customers -- particularly with its iPad division.

To recap, Apple and IBM have begun to roll out more than 100 exclusive industry-specific apps for iPhones and iPads. So far, the deal has seen 22 apps developed for seven crucial vertical industries. Apple said it's adding three more verticals, including healthcare.

Cook confirmed the deal is on track for its 100 apps target by the end of this year.

He also added that he thinks the iPad, which continues to decline year-over-year (but this fiscal quarter beat analyst expectations) will pick up in the wake of the Apple-IBM deal. He added that he was "very optimistic" on iPad over the long-run, particularly for first-time buyer rates. He said even in developed markets, like the U.S., U.K., and Japan, around 50 percent are buying an iPad for the first time.

Cook said he feels "very, very good" about what's in the pipeline. A larger enterprise-focused iPad? Who knows.

Apple Pay adoption strong

Apple Pay, which now features along with iTunes and in-app purchases as part of the company's "services" division, is now available at 200,000 places in the U.S.

He added that the contactless payment service available on the newest iPhones is so popular, it accounts for than two of three contactless payment dollars. But it's early days, Cook added, noting that are "new businesses to pitch" and "new regions to target."

"In terms of how [Apple Pay] evolves, we haven't even completed the first inning yet," he added.

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