Apple Earnings Call: iPhone Comments

The following are excerpted iPhone-related comments from the Apple earnings call transcript (Seeking Alpha). . .

Apple CFO Peter Oppenheimer:

We are thrilled to have sold almost 7.4 million handsets in the September quarter. That’s a new company record and an increase of 7% over the prior September quarter when we increased channel inventory by 2 million handsets following the introduction of the iPhone 3G and the dramatic expansion of geographic distribution. iPhone sell-through in the quarter increased 38% year over year . . .

We are looking forward to selling iPhones in China beginning later this month as this very large market represents a great opportunity to expand iPhone's reach even more broadly. We also plan to expand our carrier relationships in the U.K. and Canada.

The Apps store continues to be an unparalleled success, with over 85,000 apps available and over 2 billion customer downloads to date, including over half a billion downloads in the September quarter. In addition to adding more apps at an amazing pace, we have continue to enhance the Apps Store experience with iPhone OS 3.1 which includes new features such as genius recommendations and a streamlined way to organize apps within iTunes.

Recognized revenue from the iPhone handset sales, accessory sales and carrier payments was $2.3 billion during the quarter compared to $806 million in the year-ago quarter, an increase of 185%. The sales value of iPhones sold during the quarter was $4.5 billion.

Question (multiple carriers, pricing changes):

[If] you start to go to multiple carriers can you talk a little bit about the pricing of the phone when you go from exclusivity to multiple carriers? And obviously, not specific but any sort of color we can have in terms of pricing dynamics change on the phone from you to the carrier?

COO Timothy D. Cook:

Our pricing is confidential . . . so it’s not something I could comment on in detail but generally speaking from markets where we’re already selling I would not expect to see a wholesale price difference as we bring on other carriers. However, the end user price is really set by the carriers themselves so you may or may not see a street price difference.

Question:

So when you go from exclusive to multiple carriers, you wouldn’t necessarily see change in pricing that you are charging the carrier? Is that correct?

COO Timothy D. Cook:

That’s correct.

Question (competition for the iPhone):

There’s a lot of obviously wannabes that are coming to market in the season, particularly Android and many of them are offering touch screens and richer browsing and media and app stores and are being given carrier support. How do you think about maintaining your momentum and differentiation amidst that kind of environment?

COO Timothy D. Cook:

Well, Mike, we feel great about how we ended the fiscal year with selling 7.4 million, as Peter talked about in the preamble. And that put us over 20 million -- almost 21 million for the fiscal year, which was up 78% from before. And so we have significant momentum.

Also when you look at the ecosystem that we’ve got with iTunes and the Apps store with the Apps store having over 85,000 apps, which is a country mile more than anyone else, plus the very strong product pipeline that we have, we feel very, very good about sitting up and competing against anyone.

Frankly I think that people are really just trying to catch up with the first iPhone that was announced two years ago and we’ve long since moved beyond that.

Question (iPhone enterprise performance and Europe):

I have a question on I guess the enterprise business. . .  [On] your iPhone business, any color you can share with us, the break-out between consumer and enterprise? At least qualitatively and how that has been trending?

COO Timothy D. Cook:

The iPhone is either being deployed or being piloted in well over 50% of the Fortune 100 and from an international point of view, if you look at Europe, this is true in about 50% of the Financial Times 100. And so we feel very good with the progress that we've made since the iPhone 3GS was announced.

Also, another very key market for us, that some people call enterprise, is that over 350 higher-ed institutions have approved iPhones for their faculty, staff, and students. And in addition to both of these, we continue to be very happy with our sales in the government arena.