Update: The call is all done -- the full liveblog is after the break. We didn't learn too much apart from the fact that Apple's selling every iPhone and iPad it can make (Tim Cook repeated this over and over), and that Apple's setting aside $175 million in revenue to cover the free iPhone 4 cases. Of course, given that Apple added an additional $4.1 billion in cash to its warchest this quarter for a total of $45.8 billion, that's pretty much pocket change, but there's the number.
Peter: Don't put a lot into these third party cost breakdowns. It's amazing the cost categories and components that they miss.
Tim: I'm not answering this question. AT&T is our best friend forever.
Tim: We don't want to get into the terms of our commercial agreements, so I'm not answering that.
Tim: That's a very good question. Most people focus on cannibalization as a negative, but internally we focus on synergy effect between products. As iPod sales took off, we saw an increase in Mac sales. Could that happen with iPhone and iPad? We'll see -- I don't want to predict it. The Mac has outgrown the market 17 straight quarters, but share is still low, so there's still enormous room to grow as we sell more iPhone and iPads. This is where it's great to have a lower share -- if the iPad cannibalizes PCs, there's a lot of PCs to cannibalize.
Tim: There's still extraordinary opportunity left for all of our products. The Mac grew 70-some percent in Asia. 174 percent growth in China, almost double in Hong Kong. Even in a country like Spain where the economy is difficult, the Mac grew 53 percent.
Tim: The entire phone market will eventually be a smartphone market -- Steve said that a long time ago. Our growth as a company -- whether you look at Mac, iPod, or iPhone -- we're growing faster internationally than domestically, but we're growing quickly in the US as well. It's just that the international numbers are absolutely killer.
Tim: I want to make sure we talk about the financials, so I'm punting that for another day (He really said this.)
Tim: We have a little ying and yang when we announce new portables without new desktops -- but I think we'll see a shift to more mobility and portables over time.
Tim: We value the input of every developer, so we're not going to say every concern is misplaced. We value every kind of feedback.
Peter: (Loooooooong pause.) We're thrilled with the App Store. Here are some statistics and boiler you already know. Did you know we care deeply about our developers? That should distract from your question.
Tim: The vast majority of apps are approved within seven days. The others are all buggy, and we hate porn.
Tim: We're selling every iPad we can make, and it looks good in every country we've launched in so far. (He's been saying this a lot, no?) It looks like to me that it's more than an early-adopter phenomenon. It's the fastest of any product that I know of or have been involved with. It's special. It's not secret that the competition is working on things, but we're happy with what we have. In the US, we have a very competitive data rate and a competitive device price, that seems to be what people what. Yes, someone could jack the price rates up, but I'm not sure anyone wants another contract. We'll see -- we could both learn something.
Tim: I haven't seen the Android results for June, but iPhone sales were up 61 percent despite the drawdown of the previous unit and the transition to the new model. We're growing faster than the market.
Peter: Two impacts. We will need to defer revenue for the iPhone 4s that we've sold where we've not delivered the bumpers and we haven't heard from the customers. Our estimate is $175 million. We will expense the cost of the bumpers when we ship them to customers -- our most important objective is to take care of every customer and delight them.
Peter: We were aggressive on the iPad, we're selling them as quick as we can make them. We are always working to become more efficient and ride down the cost curves. I don't see that being any different on the iPad as it is on the other products.
Peter: iPod selling prices were down about $7, due to the back to school promotion and the stronger dollar. We were up on touch sales in the mix, but I don't have the exact numbers in front of me.
Tim: I never feel like I'm fighting a losing battle. We're selling every iPhone 4 that we make.
Tim: We have fewer 3GS's than before, and they're still being sold in most of the countries we sell the 3GS in.
A: Yes, it is extremely boring.
Peter: The factors that we cited last quarter on a collective basis were as we thought. The biggest difference was that we sold more iPhones and more accessories.
Peter: It's on schedule, we expect to have it done by the end of the calendar year.
Peter: We just launched iAd in the early part of July, and we're going to learn a lot this year and build. Nothing else to share.
Tim: That's a good question and one that we talk about. It's too early to tell, but we're thrilled that we set a record in Mac sales. For us, it's a jaw dropper.
Peter: We're not going to disclose that, but all the models are selling well, and the average selling price of the iPad was $624.
Tim: We honestly don't know is the answer. We've been pleasantly surprised at how fast this product has gotten out of the shoot. Compared to how fast the iPod sold a million, it's a big difference. The iPad isn't following a typical early adopter curve, it's already mainstream. Our gut tells us this is a huge market and the iPad is defining it.
Tim: As Steve said, the return rate for iPhone 4 is less than that of the iPhone 3GS.
Tim: My phone is ringing off the hook from people who want more supply. It's hard to test the real effect of what you're asking, because we're selling every unit we can make.
Tim: Let me be very clear on this -- we are selling every unit we can make.
Peter Oppenheimer: We did have some adjustments that occurred in our supply chain and product costs that benefited us in June. As for the September quarter, we just delivered the iPhone 4 and iPad, and these products have a higher cost structure than previous products. While the margin is attractive, things are going to have to play out.
Tim Cook: High demand is never a problem! We thought one million iPads was a pretty bold move. Basically what we're doing is increasing capacity as fast as we can -- I'm fairly confident we'll be able to increase capacity. It's not something profound we won't be able to do.
Tim Cook: Nothing significant on the Mac or the iPod, but the iPad and the iPhone are significantly different. We're selling both of those products as fast as we can make them. We're working around the clock to get supply and demand in balance -- it's a good problem to have.
First Q: What are you hearing from corporations in terms of enterprise adoption?
Tim Cook: 80 percent of the Fortune 100 is adopting the iPhone, and we're doing well with the Fortune 500 and education as well. In terms of the Mac, we're still selling principally to consumers and education, but we're doing okay in enterprise. 50 percent of the Fortune 100 is deploying or testing the iPad.