Apple By the Numbers

For the three-month period ended March 31, 2007, Apple reported a 36% jump in Macintosh computer sales versus the prior year period. During the first calendar quarter of the year (Apple’s 2nd fiscal quarter), Apple shipped 1.517 million Macintoshes worldwide. During the same period Apple shipped 10.549 million iPod digital music players. The combined sales activity contributed to the most successful 2nd fiscal quarter in the company’s history. Revenue totaled $5.26 billion and net profits reached $770 million dollars. Gross margins, due to falling component prices, were an astonishing 35.1%.

On a High Note

The March quarter’s results propelled Apple’s share price to an all-time high of $102.50 during April and finished the month’s trading just shy of the century mark at $99.80. The April closing price pegged the company’s market overall cap (or the value of all outstanding shares) at $86.30 billion.

Leopard Caged

In April Apple announced that the release date for Mac OS X 10.5 has been extended to October. The company’s stated reason for the delay is the need to move talent from Leopard’s final development to the iPhone project. Consequently, the benefit of Leopard’s sales will be delayed to the 1st fiscal quarter of the next fiscal year.

The four-month delay in Leopard’s release provides more development time and will help ensure the iPhone meets its intended June debut date. The iPhone is now considered the most important new product from Apple since the launch of the original iPod in October 2001.

Matching SOX

Most of us have heard of the Sarbanes-Oxley Act or “SOX.” It was authored in 2002 in response to widespread accounting scandals throughout corporate America and promised much-needed reforms to stop abuse.

While SOX focused mostly of corporate governance and oversight, its provisions also changed the rules for many companies on income recognition and the prospect of deferred revenue realization on products sold under certain conditions rather than immediate recognition of sales revenue as income. Although the Act is now commonly called by its shortened and informal three-letter name, its provisions are far too long to discuss in brief, except to the extent that it impacts Apple’s accounting practices for the iPhone and Apple TV. Apple may be matching SOX and its deferred revenue recognition requirements as part of its product plans.

A New Apple Product Model?

In the quarterly conference call with analysts, Apple executives mentioned the company would be recognizing the sales revenue from the Apple TV and the iPhone as income over a 24-month period of time. The executives mentioned the company will be adding functionality to both the Apple TV and the iPhone during the two-year period in which it converts sales revenue from the products to income. Both income from sales and associated product expenses will be deferred accordingly. This matches SOX deferred revenue requirements for products materially upgraded after original sale over a determined life cycle. But it’s an unmatched approach to the sale of consumer electronics.

Is Apple establishing a new product model? The Apple TV and iPhone may be seen more as conduits for services rather than simple hardware or electronics devices. More will be revealed in the months to come. This change in sales and revenue accounting may portend a change in the manufacturer-customer relationship. A determined product or service life with free functionality upgrades during the service term may set fire to the conventional sales model the same way Apple ignited the personal computer revolution over 30 years ago.

Rabid For Avid

At April’s NAB 2007 conference, held in mid-April, Apple unveiled Final Cut Studio 2, the much-anticipated upgrade to Apple’s professional video production suite. With the new 8-core Mac Pro, FCS2, and Apple’s content management products, Apple is creating professional solutions rivaling the offerings from Avid at attractive comparative prices. Apple is apparently rabid to take sales from Avid.

Sharing the Wealth

Apple’s worldwide market share inched higher in the 1st calendar quarter of 2007, reaching a 2.6% stake versus a 2.1% worldwide share a year ago. While the share may seem comparatively small, it must be remembered Apple is a virtual product no-show in the sub-$1,000 PC market. Placing virtually all of Apple’s Mac sales in the top-tier of the PC consumer market indicates that high-discretionary income consumers are steadily moving to the Mac.

Sharing the Fun

Each month the editors of About This Particular Macintosh search the world and venture across the digital divide to bring you the best news, views, and reviews in our easy to read monthly format. Please join us each month as we celebrate what we call the “personal computing experience.”

Our May issue includes:

Bloggable: Always Use Digital Rights Protection

Steve Jobs announces that, in a joint agreement with EMI, Apple is going to sell music without digital rights management for $1.29 a track, and some folks attack him for it? It seems we’re back out of the Bizarro World, folks. Criticism, reaction, counter-criticism and some specialty analysis from fields outside our usual area of coverage, all in this month’s Bloggable.

MacMuser: Pimp My Robot

Everyone—even Mac users—has to vacuum their living space once in a while. Mark Tennent decided to let an iRobot Roomba do it for him.

Photoshop for the Curious: Moving Beyond Levels and Curves

Do you remember The Outer Limits? “There is nothing wrong with your television set. Do not attempt to adjust the picture.” Some might believe the same for their photographs. But, armed with tips for modifying and improving color in this month’s Photoshop For the Curious, you, too, can adjust your photos beyond their previously known limits.

Web Accessibility: What Browsers Can Do, Part 2

Firefox and Opera on the Mac let you take some control of a Web site’s appearance and functionality. Here’s how.

How To: XFX 6200 Upgrade For the Cube

How I re-flashed and installed a PC GeForce 6200 video card, adding dual-monitor support and 256 MB of VRAM to my old-school Mac Cube.

Desktop Pictures: AirFest

This month’s desktop photos by Lee Bennett come from the 2007 AirFest held last month at Tampa’s MacDill Air Force Base.

Cartoon: Cortland

More goings-on in the relationship of Cortland and Angie are revealed. Meanwhile, the council of supervillains returns to business, and Todd is clearly ready to do his work—if only he had any to do!

Review: Digital Photography Expert Techniques, Second Edition

The title of this book is quite misleading. It implies the art of capturing pictures with a camera. Instead, the book describes a professional’s workflow of techniques for using Photoshop CS2 to manipulate digital photos. An amateur photographer wanting to capture better photos in the first place should look elsewhere.

Review: Dock Extender

Just think of it as an extension cord for your iPod’s dock connector.

Review: Elevator

A design update to the Griffin iCurve that brings with it added portability.

Review: Pando 1.5.5.1

If you and your friends/colleagues regularly send large files back and forth, this peer-to-peer client has a lot to offer.

Review: PocketDock Line Out USB

This is one of those “Why didn’t I think of that?” products. A small and simple device to access a dock connector’s line audio output and USB (or FireWire) connection has been a long time coming.

Review: Yep 1.5.2

Think of it as iPhoto for PDFs.