Apple posts $1 billion quarterly profit: can its good fortune continue?
Apple has just announced a record net profit of $1 billion for the quarter ending December 30. This compares to a profit of $565 million for the same quarter a year earlier.
Will the iPhone help Apple to another $1 billion quarterly profit?
“We are incredibly pleased to report record quarterly revenue of over $7 billion and record earnings of $1 billion,” said Steve Jobs, Apple’s chief executive officer.
The company shipped 1,606,000 Mac computers and 21,066,000 iPod media players during the quarter, which represents 28 percent growth in Macs and 50 percent growth in iPods over the year-ago quarter.
“We’ve just kicked off what is going to be a very strong new product year for Apple by launching Apple TV and the revolutionary iPhone,” said Jobs.
What is going to be interesting is whether is whether this $1 billion profit is a one-off, or a sign of things to come. At least part of that will be determined by the success or failure of the iPhone.
Despite the issues with the iPhone trademark, Apple’s new iPod/cell phone hybrid, the iPhone, has been well received.
The iPhone is without doubt a very cool gadget, though at US$499 it’s not exactly cheap. While Steve Jobs may argue that the 4GB iPhone is cheaper than the combined cost of a smart phone and a iPod, many consumers won’t do that calculation when they consider buying it, particularly if they already have an iPod, or a smart phone.
The pundits are already questioning whether the phone is actually as clever as it looks. For example, Govindraj Ethiraj wrote:
“Apple may have a smart audio/video player but will it be an equally smart phone? Will the combined electronics hold up for sustained usage? The phone has no stylus or button operation and is entirely touch screen based. How will that pan out?”
And this from Frank Hayes :
“…Apple took a big pile of things that already work and then stitched them together into something new. But does Apple know what users will actually do with the iPhone? Nope.”
Good points, and yes of course there is a chance that the iPhone will fail. Personally, however, I’m still betting that the iPhone will be a massive success.
Apple’s real strength is as a marketer. Its managed to position itself and its products as “cool”. The iPod demonstrated that Apple is a company that can take a boring, tech gadget, like an MP3 player, and turn it into something sexy, sleek and cool that is desired by the masses.
Cell phones are alredy sold on sex appeal, but as we’ve already seen, the iPhone has already out-sexed the opposition.
Yes, price, is an obstacle, but Apple solved that problem with the iPod by introducing the nano and the shuffle. I’m sure we’ll see some cut-down, cost-reduced versions of the iPhone in due course.
In the same way that the iPod has come to dominate the media player market, the iPhone will also become a major force in the world of mobile communications.
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January 17th, 2007
I agree – the iPhone is about as close to a sure thing as you can get