Apple poured more fuel onto the iPhone fire yesterday, announcing it had sold 5.2 million iPhones in its fiscal third quarter, representing 626 percent unit growth over the year-ago quarter, when it sold 717,000 handsets.
But don’t blame Apple alone for the subsequent stream of eye-popping headlines. After all, its news release sported the rather subdued headline: “Apple Reports Third Quarter Results,” with a smaller subhead calling out that it had just produced the best non-holiday quarter for revenue and earnings in company history. Apple saved the real nuggets for the text of the release.
In a conference call with analysts, Apple wouldn’t reveal how many older iPhones have sold at the new $99 price, but said it saw a “significant acceleration” in total unit sales.
The problem is, Apple doesn’t have enough iPhone 3GS units in stock to meet demand in all the countries where it ships. COO Tim Cook said the company is working hard to fill the demand. More than 1 million new iPhone 3GS handsets were sold by the third day after its June 19 launch.
While it works on the demand/supply situation, Apple expects more great results from the iPhone 3GS. It’s shipping in only 18 of the 80-plus countries where it has distribution, so there’s a lot of room for growth.
As for the enterprise sector, Cook said the iPhone 3GS is doing particularly well with small and large businesses that allow people to buy the phones for individual use, in both corporate and government settings. Almost 20 percent of the Fortune 100 have bought at least 10,000 units or more, and multiple corporations and government agencies have bought more than 25,000 each. He described Apple as being “at the tip of the iceberg” in terms of what the iPhone can do with the business customer.
Apple also sees an opportunity in the overseas prepaid market and Cook said it has more to learn on that front.
Asked about the status of Apple’s relationship with AT&T, the exclusive carrier with the iPhone in the United States, Cook said “it’s an excellent relationship and we are very happy with it.”
In the coming quarters, Apple is likely to continue to face increased competition, especially from LG, Samsung, Palm, Research In Motion and HTC, says analyst Julien Blin of JBB Research. LG is gaining significant traction, especially in the low-end touchscreen smartphone market. Samsung will remain one of Apple’s biggest competitors, both in the feature and smartphone markets, he says.
Apple also will face more competition in the app store space, where Symbian could become a solid competitor, Blin says. Symbian is expected to launch its mobile app store program in October. “If Apple’s mobile app store remains a closed system, while competing mobile app stores become interoperable through Symbian Horizon, Apple could be in a difficult position,” Blin says.
Asked during the conference call about competing application stores, Cook said Apple’s App store offers more than 65,000 apps and more than 1.5 billion apps have been downloaded. Its latest numbers for Research In Motion (RIM) and Nokia put them between 1,000 and 2,000 each, and the latest published number on Android puts it at less than 5,000. “We feel extremely god about our competitive position and continue to believe that we are years ahead of other people,” he said.
