Apple CEO Tim Cook's first quarter in charge will go down as one of the greatest corporate debuts of all time, as the leading consumer electronics company blew away previous sales records and set out a course to continue its incredible growth. It wasn't just the sale of 37 million iPhones or 15 million iPads that had investors and analysts gushing with excitement this week.
"Those numbers are just unimaginable," Michael Obuchowski of First Empire Asset Management said in a research note. Even the record profit of 13 billion dollars on record revenue of 46.33 billion dollars didn't tell the whole story. Nor did the fact that the Apple's subsequent share surge Wednesday allowed it to leapfrog Exxon Mobil to reclaim the title of the world's most valuable company.
Rather it was the underlying trends that positioned Apple as the artful giant of the tech world, ready to establish and conquer new markets with a slew of innovative new products. For instance, it sold more iPads than Hewlett Packard - the world's largest computer maker - sold PCs, underscoring the prediction of Cook that "there will come a day that the tablet market is larger than the PC market." The success of the iPad was all the more significant because it came in the first quarter that the pioneering tablet computer faced its first real competition - from a much cheaper tablet offered by web retail giant Amazon. But according to Cook it was like a race between a Honda and a Ferrari.
"I think people really want to do multiple things with their tablets, so we don't see these limited-function tablets and e-readers as being in the same category as iPad. We don't think people who want an iPad will settle for a limited-function device," Cook said in a conference call.
Cook, who made his reputation as a logistics guru in the background of Jobs' creative powers, insisted that the company will keep on innovating in the Jobsian tradition, saying that there were some "incredible products" in the pipeline. Analysts expect these to include a new iPad in March, a new iPhone later in the year, and possibly Apple's next monster hit, an iTV.
But he did signal a slight mistake in his number-crunching, telling analysts that he underestimated demand for the iPhone 4S and the company could have sold many more if it had increased production. Still the performance of the iPhone 4S was far from shabby.
It even managed to halt the seemingly relentless advance of chief competitor Android, as the iPhone doubled its share of the US smartphone market to almost 45 per cent in the quarter. "Overall, Apple sales are now growing at a faster rate than Android across the nine countries we cover," said Dominic Sunnebo, of research firm Kantar Woldpanel ComTech.
The question is: Can Apple keep up the pace of growth? If Cook is right, the success story is just beginning, as the company enters a cycle of virtuous feedback. "One product leads to the other," said Cook, with the iPhone functioning as the "gateway drug" which subsequently entices people to get an iPad and then a Mac.
Apple is already the third largest computer manufacturer in the US and its global Mac sales grew 26 per cent in the last quarter, bucking the downward trend of the PC industry. Of course, if you count iPads and iPhones as computers - which they obviously are - Apple is far and away the world's biggest computer company.
The success of the company's cloud storage system iCloud, which launched in the fall and now has over 85 million customers, ensures they will stay locked in the Apple ecosystem, able to seamlessly access their information on any Apple device - iPhone, iPad, Mac or iTV, Cook explained. "It is not a product, it is the strategy for the next decade," he said.
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