Apple breaks iPhone sales record again

Computerworld - Apple today said it sold a record 18.6 million iPhones in the first three months of 2011, the third consecutive quarter the company's smartphone has set sales records.

Apple posted record revenues of $24.7 billion for the quarter -- also the third quarter running that it's broken the $20 billion mark -- which represented an 83% increase over the same period last year.

Profits were just shy of the $6 billion Apple recorded last quarter, but 95% higher than the first quarter in 2010.

Executives boasted that the firm generated the highest revenues for a January-to-March quarter in company history.

"It was really solid across the board," said Brian Marshall, an analyst with Gleacher & Co.

The highlight, Marshall said, was obviously the iPhone, which contributed nearly 50% of Apple's total revenues for the quarter, the largest slice ever for the smartphone.

"iPhone sales were a hair's breath from making Apple a phone company," said Ezra Gottheil of Technology Business Research, referring to the smartphone's revenue impact. "But that's the adoption curve on new technology. The iPhone is screaming out of there, and it's a heck of a business, and will be for at least the next year or two."

Apple sold a record 18.6 million iPhones, up 113% over the same period last year and a 15% increase over the final quarter of 2010, which was the previous record. On a revenue basis, the iPhone's contribution was 49.9% of total revenues, two-and-a-half times that of the Mac or more than four times that of the iPad.

Marshall expressed disappointment in iPad sales, which sold 4.7 million units, a 36% drop from the prior period and well off his projection of 5.3 million. Most other analysts had forecast even larger sales for the tablet, with some predicting as many as 8 million would be sold.

"Clearly, demand for the iPad 2 was much greater than Apple expected," said Marshall, talking about the continued problems the company has had meeting demand.

Apple declined to separately report sales numbers for the new iPad 2, which launched last month, but CFO Peter Oppenheimer claimed that Apple could have sold more if it had them. "We sold every iPad 2 we could make," he said.

Later, Apple COO Tim Cook called the iPad 2 demand "staggering," and said that orders were bogged down in the "mother of all backlogs."

Currently, the lag time between ordering and shipping is between one and two weeks on Apple's Web site.

Cook said that the company was working hard on matching supply with demand, but refused to predict when Apple would be able to make enough tablets. "I'm confident that we'll build a large number of iPads this quarter, but when we will match demand, I don't know," Cook said.

Marshall's betting that Apple will solve the supply problem quickly, perhaps as early as the current quarter, which ends June 30.

During the Q&A section of the call, Cook was asked why Apple -- which sold 7.3 million first-generation tablets in the last three months of 2010 -- couldn't meet demand for the iPad 2. Was it a forecasting error, an analyst asked.

"Product transitions are never simple," Cook answered. "And remember, we have to call [manufacturing numbers] many many weeks in advance."

Marshall bought that explanation. "I do think it was the transition," he said. "The iPad 2 is 33% thinner and 15% lighter. It's not that easy to build them."

Gottheil also didn't believe Apple made a error in forecasting. "Anytime there are people still queued up for a new product, I can't see how you screwed up," Gottheil said.