Apple (NASDAQ:AAPL) blasted past its previous record iPhone sales in its fiscal fourth quarter, giving no indication that its momentum is slowing down. The company's strong performance prompted CEO Steve Jobs to point out to investors during the firm's quarterly earnings call that Apple beat Research In Motion (NASDAQ:RIMM) in terms of device sales (RIM reported in September that it shipped 12.1 million devices in the second quarter) and he "doesn't see them catching up with Apple any time in the future."
Apple sold 14.1 million iPhones in the quarter, nearly double the 7.4 million it sold in the year-ago quarter and higher than its previous record of 8.75 million units. Apple also sold 4.19 million iPads during the quarter, higher than the 3.27 million it sold during the tablet's first quarter of availability. The increase in iPad sales missed analysts' estimates of 4.7 million.
For the quarter Apple's revenues clocked in at $20.34 billion, soaring past the $12.21 billion it had in the year-ago quarter. Apple also bested its guidance of $18 billion, something typical of Apple, which usually posts conservative guidance. Apple scored a net profit of $4.31 billion, compared to $2.53 billion in the year-ago period. Gross margin was 36.9 percent compared to 41.8 percent in the year-ago quarter and down from 39.1 percent in the previous quarter.
Jobs said that while he doesn't usually participate on company earnings calls, he wanted to join the call to celebrate the company's first $20 billion quarter. Jobs used the call as a forum to champion Apple's advancements and dismiss its competitors. Specifically, Jobs criticized RIM for not being able to move beyond the company's comfort zone of developing smartphones targeted to the enterprise and he said it would be a challenge for RIM to create a competitive platform that as convenient for developers to create apps as Apple's iOS or Google's Android.
But RIM wasn't the Jobs' only target. He also was critical of Google for characterizing its Android platform as being open and Apple's iOS platform as being closed. Instead, he said that the fragmentation surrounding Android is making it difficult for developers and consumers. He said that because many OEMs install proprietary user interfaces on their devices, developers often have to deal with several different versions of Android. "Open vs. closed is a smokescreen," Jobs said. "What is best for the consumer? Fragmented or integrated? Android is becoming more fragmented every day."
Jobs also dismissed several of the new tablets that are expected to be launched in the coming weeks. He said that the tablets which are sporting a 7-inch screen will offer fewer benefits to consumers because of their size. "Seven-inch screens are tweeners. They are too big to be a smartphone, yet too small to be a tablet," he said.
Apple's future plans have been as much in the news as expectations of its stellar results. Recent reports in both the Wall Street Journal and New York Times have indicated that Apple is building a CDMA version of the iPhone that Verizon Wireless (NYSE:VZ) will launch early next year; both companies have declined to comment on the speculation.
Apple's monster iPhone sales numbers come amid a growing number of reports that indicate Google's Android platform is rapidly catching up, and in some cases, has surpassed Apple's mobile reach. According to Nielsen, Android was the second-most popular smartphone platform in the United States in the second quarter of the year, after BlackBerry, for consumers who had acquired a smartphone in the six months prior. According to Gartner, Android will capture 17.7 percent of the smartphone market this year, slightly more than RIM's BlackBerry platform, which will have a 17.5 percent share. Symbian will remain on top with 40.1 percent this year, while Apple's (NASDAQ:AAPL) iOS will come in fourth with 15.4 percent of the market in 2010.
While the iPhone has been a key part of Apple's earnings the past several year, the iPad has introduced a new element for analysts, investors and industry watchers to consider. The company recently expanded the number of is retail distribution points for the iPad, which should help it compete against tablet competitors like Samsung's Android-powered GalaxyTab. Verizon announcing will start selling the WiFi version of the iPad tablet bundled with its MiFi product starting Oct. 28, a move that intensified speculation that Verizon soon will start selling the iPhone.
AT&T Mobility (NYSE:T), currently the exclusive built-in 3G service provider for the iPad (and for the iPhone), also will sell the tablet in its retail stores. Apple has been steadily expanding its retail partners for the iPad ahead of the holiday shopping season. Sam's Club will start selling the iPad soon, and Wal-Mart said the device will be available in all of its stores by mid-November. Best Buy and Target also sell the device.
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Sue Marek contributed to this report.
Correction, Oct. 19, 2010: Due to a reporting error, this report originally misstated the results of Nielsen's smartphone research. Android was the second-most popular smartphone platform in the United States in the second quarter of the year, after BlackBerry, for consumers who had acquired a smartphone in the six months prior. It was not the most popular smartphone platform in the first six months of 2010.