back to article Apple profits almost double on iOS product sales leap

Apple sold buckets more iPhones and iPads in its second quarter, helping it almost double net income year on year to $11.6bn and driving up gross margins. The purveyor of magical and revolutionary shiny things turned in sales of $39.2bn for the quarter ending March 31, a 59 per cent rise on the year. However, net income leapt …

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Windows

Ouch, that must sting Microsoft

Wonder how Ballmer's feeling? Must be pretty lonely when you can't compete because you were asleep at the helm and sailed right past the opportunity. Wouldn't be surprised his shareholders revolted.

Still, we've a half-baked Windows 8 to look forward to. That'll really worry Apple.

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Anonymous Coward

Re: Ouch, that must sting Microsoft

Balmer must feel pretty good now Microsoft has proved to OEMs what happens when they try to go it alone with Android, WebOS, Qnx etc. It remains to be seen how successful Windows 8 turns out but beware of mistaking wishful thinking for reality. We'll know far better by this time next year.

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Gold badge

Re: Ouch, that must sting Microsoft

Anyone with any creativity and sense jumped from Microsoft to Google and other organisations.

Microsoft are just bashing out desperate clones of Apple. Windows 8's UI smacks of desperation, trying to emulate the iPad but grafting it onto their cash cow of Windows.

They need to stop using the Windows brand for everything, XBox 360 is successful and you can argue that it would be less successful if it was called Microsoft Windows Games System NT XP RT or some other lame branding.

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Re: Ouch, that must sting Microsoft

"Microsoft are just bashing out desperate clones of Apple. "

You know, one could make a case that this was what they did with DOS and Windows. And (moving the target from Apple to other companies) the whole Office suite.

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Anonymous Coward

Re: Ouch, that must sting Microsoft

I believe I have in face done that.

Oh your point was they were profitable doing that. Right. So what *did* happen? Why isn't that formula still working?

I know plenty of bright people who work for Microsoft but it's as if the whole is not as good as the sum of its parts.

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If I had that money I'd be balls deep in some serious patent litigation.

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JDX
Gold badge

I hope my stockbroker managed to buy me my AAPL shares today... up 6% post-market.

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Thumb Up

Good work

And if that looks good think what those numbers will be like when consumers have to choose between a Mac and Windows 8!

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Anonymous Coward

Well done Apple - well deserved.

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Anonymous Coward

interesting points

Gross margin at 47.4% is exceptional.

64% of revenue from international shows just how far Apple has come from being very US sales centred.

Almost 50 million iOS devices sold in one quarter, making over 350 million to date.

Looking forward to the iPad v Android v Windows 8 tablet clash come later this year.

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Gross margin at 47.4% is exceptional.

No, gross margin at 47.4% is obscenely greedy. You, the consumer, are paying this remember.

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Re: Gross margin at 47.4% is exceptional.

However, enough people are prepared to pay the price. If you don't like it, buy something cheaper.

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Re: Gross margin at 47.4% is exceptional.

Greedy would be if they held a gun to people's head, colluded with other tech companies, bought influence from the government, etc. In a free market, what people can/will pay depends partly on the production of the product, the value people place on it, and their available money. (I'd love a new Maserati, but around here I can get rental property for that.) Apple having that kind of gross margin shows that they are making something people want and do it pretty darned efficiently.

Of course, we all know that things like this don't last; other companies influence the market, market leaders get lazy or incorrectly guess the future, tastes change, etc.

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Re: Gross margin at 47.4% is exceptional.

>>Greedy would be if they held a gun to people's head,

Ah, the old gun to the head argument.

1) The problem is most people are ignorant. They do not realise that they are getting locked in to the walled garden. Does the sales staff in John Lewis explain the long term consequences of storing and buying all your media in iTunes before they flog you an iMac? Of course not.

2) Apple often changes the rules AFTER you've bought your shiny iWhatever. Usually very cynically after they've sold a couple of million of whatever it is (changing the rules on how you are allowed to buy epublications 6 months after launching the iPad, for example). So whilst they don't hold a gun to your head when you purchase your shiny gadget, they sure as hell do later on.

>>(I'd love a new Maserati, but around here I can get rental property for that.)

The inevitable meaningless Apple car analogy in the same post as well. Well done sir!

Niche market, hand built sports cars are not a comparable product. You could, like most people, with a bit of saving buy an iPad. That is what Apple is relying on. Exotic sports cars are beyond the reach of anyone but the super rich and Maserati sure as hell aren't making 47.4% on each car.

What does Apple think it is going to do with all this money? What's the big plan? It can't simply be about share price surely. If it is, then it's even more cynically greedy than I thought. Fleecing your customers to make more billions you don't really need simply so you can say you're #1 is plain wrong. It's just egotistical.

Yeah, we'll hear the old "it's their legal duty to their shareholders to make money" etc, but 47.4% is taking the piss no matter what excuses are made by the loyal. You can be a healthy profitable company without screwing your customer base and you wouldn't be reading thousands of posts like this all over the place. I know I'd sleep better at night if I was the boss.

I guess it's just as well they have 47.4% mark up, if these things were cheaper then it would be game over for everyone else. I wonder why Apple aren't choosing to go down that route? Discuss :)

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JDX
Gold badge

Re: Gross margin at 47.4% is exceptional.

It's not greedy when competing products exist. If only one company is allowed to make something, the "you don't have to buy one" argument is weak, but in a competitive market you can get your tablet/phone elsewhere.

Supply & demand, nothing weird about it.

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Anonymous Coward

This is the first quarter with the new iPad and recon quite a few new products later this year - Apple tv's (not just the set top box), iPhone 5, mini iPad, subscription media streaming?

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Anonymous Coward

That margin should worry their competitors - they can afford to drop prices / improve specs while competitors struggle to even match their prices on things like the iPad and MacBook Air.

There is no tablet to match the spec of the new iPad - others come close to the iPad 2 perhaps but not significantly cheaper if at all.

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Trollface

That margin should worry their competitors - they can afford to drop prices

Ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha

Excellent joke, I'll give you an upvote for that.

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Anonymous Coward

Apple is going to take on Windows for the enterprise

No one is even close to their iPad market. The corporations don't want the fragmentation and data security issues in Android (although I use Android myself) for their enterprise developments on mobile OSs. I don't mean data security as in a hacker breaking in, but as in the Google themselves sifting through enterprise data. A bunch of companies are running Windows sessions on iOS through Citrix XenApp now. It won't be too long until they realize that they can just started publishing apps directly to iOS over a VPN. AOC just released a killer docking station.

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Bronze badge
Joke

Shame

It's a shame there's so much competition from Android or that could have been nearly 11.7bn profit :)

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Anonymous Coward

How big does Apple need to be...

...before the Reg decides to bin some of the facile sniping in favour of serious analysis? Note - I'm not saying favourable analysis. Just, every now and then, a snippet of journalism amongst the fruit-themed snark

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JDX
Gold badge

Re: How big does Apple need to be...

If only there were sites dedicated to financial analysis you could look at.

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Anonymous Coward

Re: How big does Apple need to be...

If only there were sites dedicated to facile sarcasm for you to lurk on

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Re: How big does Apple need to be...

I say the bigger they are the more snark required!

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JDX
Gold badge

If only there were sites dedicated to facile sarcasm for you to lurk on

Like a discussion forum of some kind? You're full of good ideas.

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Re: How big does Apple need to be...

Re "If only there were sites dedicated to facile sarcasm for you to lurk on"

There is, he's on it. It's called El Reg

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Anonymous Coward

>If I had that money I'd be balls deep in some serious patent litigation.<

I'd be balls deep in naked bodies, drugs and parties - on my own island, somewhere hot...

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Anonymous Coward

"Excellent joke, I'll give you an upvote for that."

It wasn't a joke - they do have a lot more room for manoeuvre - for instance selling the new iPad with better spec and (apparently costing them more) but for the same price. They can do such large deals / pre-pay for supplies to get absolutely the best price - most other vendors will be selling at much thinner margins to even try and sell at the same price as Apple on many products.

This is certainly true for the Macbook Air clones, iPads (both '2' and 'new' - although there is no competitor yet for the 'new' iPad) and the iPhone. For example Xoom 2 16Gb £329 - iPad 2 16Gb £329.

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All true except surely Samsung can give itself as good a price as it gives Apple for components?

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Yes but Samsung would rather sell their LCD to an external company and make a bigger profit margin than sell to the internal Galaxy department.

Now that Samsung has setup the LCD arm as a separate business, I suspect that the above is even more relevant.

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Anonymous Coward

"All true except surely Samsung can give itself as good a price as it gives Apple for components?"

Apple don't buy everything from Samsung - but you would think Samsung could compete more - i.e. when Apple do but many of the major components from them.

The other difference is Samsung sell you the hardware - Apple get to sell you the media, apps and probably also subscription services in the future.

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Anonymous Coward

@Neill Mitchell

Neill you were probably just trolling but I'll bite:

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Ah, the old gun to the head argument.

1) The problem is most people are ignorant. They do not realise that they are getting locked in to the walled garden. Does the sales staff in John Lewis explain the long term consequences of storing and buying all your media in iTunes before they flog you an iMac? Of course not.

---

Actually most people realize if they buy Adobe Photoshop for Windows, they cannot run it on a Mac if they choose to replace their Windows machine with a Mac at some point in the future. Most people realize their 8-track collection won't play on their CD player. Most people who purchase vinyl today realize they need a record player and an amp with inputs that support the RIAA curve. And most people have no problem with the walled garden. The problem is because they don't see it negatively like you do, they don't call it a walled garden (at most they call it an ecosystem, or the Apple Store) so you then assume they don't understand. Truth is they do understand and have no problem with it and that's what bothers you. They know Angry Birds purchased on their iPhone won't work on an Android phone if they choose to change platforms in the future. I think all people know about, and don't mind, the walled garden.

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2) Apple often changes the rules AFTER you've bought your shiny iWhatever. Usually very cynically after they've sold a couple of million of whatever it is (changing the rules on how you are allowed to buy epublications 6 months after launching the iPad, for example). So whilst they don't hold a gun to your head when you purchase your shiny gadget, they sure as hell do later on.

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True they have changed the rules, although it's almost always benefitted the user. Free upgrades to uncompressed/higher quality audio. Increasing the number of computers and idevices that movies and software can be installed on. Etc. Hey, they don't even remote wipe things from my iPhone when they remove them from the app store unlike competitors. I still have MAME running on my iPhone and no, it's not jailbroken. It was available on the app store for about 10 hours and yes, I still have my copy and can install it on additional/new idevices.

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>>(I'd love a new Maserati, but around here I can get rental property for that.)

The inevitable meaningless Apple car analogy in the same post as well. Well done sir!

Niche market, hand built sports cars are not a comparable product. You could, like most people, with a bit of saving buy an iPad. That is what Apple is relying on. Exotic sports cars are beyond the reach of anyone but the super rich and Maserati sure as hell aren't making 47.4% on each car.

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Considering Maserati's volume they better make considerably more than 47.4% margins on each car or else they will go out of business!

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What does Apple think it is going to do with all this money? What's the big plan? It can't simply be about share price surely. If it is, then it's even more cynically greedy than I thought. Fleecing your customers to make more billions you don't really need simply so you can say you're #1 is plain wrong. It's just egotistical.

Yeah, we'll hear the old "it's their legal duty to their shareholders to make money" etc, but 47.4% is taking the piss no matter what excuses are made by the loyal. You can be a healthy profitable company without screwing your customer base and you wouldn't be reading thousands of posts like this all over the place. I know I'd sleep better at night if I was the boss.

I guess it's just as well they have 47.4% mark up, if these things were cheaper then it would be game over for everyone else. I wonder why Apple aren't choosing to go down that route? Discuss :)

---

Ack! you were a troll. Well I'll say if anyone ever does come up with a product that can compete with Apple, they can lower their margins and compete on price if they so chose. It makes sense to charge a premium when you are the only game in town. No need to race to the bottom. We all see where that got Dell.

I think your issue is that you value things differently than I do. When I need a product (or tool, really, which is what a phone, computer, tablet are), I look for what meets my needs and then see how much it costs and figure the cheapest I can get it is a fair price even if the company is making 48% margins. Let's look at something other than electronics and exotic cars. I'm currently in the market for a chainsaw with an 18" bar. Now at Amazon I can see I can get into a Poulan 18" chainsaw for about $150 USD. Unfortunately in that price range they are getting bad ratings. I've had problems starting chainsaws (and really many different types of 2-stroke engines) in the past and I do not want to deal with any sort of difficulty getting the thing started or keeping it idling without stalling. That's part of my criteria/requirements. Which has me now looking at a Stihl MS 250 C-BE which costs $350 USD which you cannot order from Amazon and have to purchase from a local dealer. To me, that's more than I want to pay, however, if it's the least expensive chainsaw that meets my requirements, then that's what I'll get. I'm sure by some logic of yours you would argue that's too much to spend on a chainsaw and Stihl is charging margins that are too high to support their dealer network. I would argue if it costs $350 to get what I wanted, then it must be a fair price, even if it's more than I want to pay.

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Re: @Neill Mitchell

Why an AC?

I'm not an Apple troll, I dislike any company that makes indecent levels of profit at the expense of the consumer.

I guess it's all got to end sometime. This current level of corporate greed is unsustainable and it's driving a culture of want over need that is just utterly depressing.

You are over simplifying the walled garden argument. Who cares less about paying pence for Angry Birds? An entire games collection would cost pretty small beer money to buy the ones you really care about on another platform. A lot more people will care about discovering their entire purchased media collection is locked. An awful lot of people are not tech savvy enough to realise that their shiny gadget purchase will result in single vendor lock in. Don't get me wrong, I'm not just saying this about Apple, but their garden has the highest and thickest walls. I know a number of people who now regret ever installing iTunes. Even Mac fans. Luckily I bit the bullet and decided to cut my losses to a dozen or so albums a number of years ago when I realised what was going to happen if I stayed with it. It seemed like such a great idea when it first was launched. It was Steve's greatest move and we all fell for it.

Yes, if you buy Adobe for the PC you do not expect to get a free Mac copy. But again, there is a world of difference between top end desktop apps and your media library containing thousands of items. How often do you buy Adobe? Once every couple of years? You know it is a major investment and you choose carefully accordingly. How often do you buy an album or eBook?

If you have an 8-track music collection, you can buy a bit of inexpensive kit to transfer it to CD or mp3. Ditto vinyl (not that a vinyl aficionado would ever consider such a move!).

You kinda lost me on the chainsaws I'm afraid, but that's probably just me :)

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B 9

Re: @Neill Mitchell

I can convert my music from iTunes to MP3 any time I want. Is your bitterness and disingenuous argument the results of your inability to convert from mp4 to mp3? If that is the case then the walled garden is more accurately surrounding your ability to comprehend, rather than Apple's business model.

This may be a big issue to you, but I suspect it's more because you've CHOSEN to make it a big deal, rather than an issue that really affects your life from day to day. If you want to be perpetually pissed off then go ahead, but the outrage seems to be self invented rather than a real problem that consumers are upset about (witness the record sales announced yesterday). And spare me the inevitable "sheep" argument, the consumers are buying what works for them, just like any other purchase they make.

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Re: @Neill Mitchell

> I know a number of people who now regret ever installing iTunes. Even Mac fans.

Really? I always thought iTunes was pre-installed on OSX, so you will forgive me if I doubt your argument.

As the iTunes store only dishes out DRM-free music these days (same as pretty much everywhere else), I can't see much of an argument around lock-in for that.

You *are* locked in for video and eBooks, but I don't know of anywhere that this isn't the case, unless you know of somewhere. Preferably somewhere that the selection isn't just a dozen 30 year old B movies.

And, yes, apps are probably the biggest issue; but in this case I am willing to concede that the walled garden may well be a good approach - wildflower meadows are nice, but walled gardens help keep out weeds.

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Anonymous Coward

"I'm not an Apple troll, I dislike any company that makes indecent levels of profit at the expense of the consumer."

The consumer is better for Apple - by both innovation and quality of products that have forced others to improve theirs.

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