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A look into Apple’s core businesses in Q1 2012

Apple's executive team spoke to investors, analysts and the press yesterday following news that the Cupertino-based company had its best quarter in history. Participants on the call included CEO Tim Cook, Chief Financial Officer Peter Oppenheimer and Treasurer Barry Whistler.  The team highlighted its key businesses, including iPhones, iPads, Apple's App Store, Macs, Apple TVs, iPods and their retail segment.

Apple Sold 37 Million iPhones in Q1 2012

Sales of iPhones were up 128 percent compared to the same time last year, and revenue was up 133 percent compared to the first fiscal quarter of 2011. At the end of 2011, there were about 6 million iPhones in their sales channels. The welcomed boosts were partly due to the ending of AT&T Wireless's exclusivity agreements. In 2011, Apple began supporting both Sprint and Verizon, accounting for three of the top four carriers in the United States.

According to Oppenheimer, iPhones are becoming increasingly popular within corporate America, too. He claims "nearly all" of the companies on Forbes' Fortune 500 list support iPhones on their network. In addition, employers are deploying iPhones to employees rather than issuing a traditional Blackberry. Oppenheimer notes more organizations are deploying "mission critical" applications exclusively for their employees, boosting productivity in the field. Companies that support the iPhone include Facebook, Nike and St. Jude Medical Centers.

According to Cook, Apple's newest model, the iPhone 4S, outsold the iPhone 3GS and iPhone 4. The company is selling a record number of iPhone 3GS and iPhone 4 devices as it targets the entry-level Smartphone market. Apple saw strong international sales in 2011, especially in China, where demand for their premium Smartphones has been "staggering."

iPad Continues to Dominate Tablet Market

The iPad was one of the "hottest" items on consumers' holiday wish lists this year. Holiday iPad sales were up 111 percent year-over-year, and revenue was up 99 percent compared to 2010.   Despite the influx of next-generation Android tablets and the Kindle Fire, Oppenheimer remains positive and is "excited about the market opportunity." Essentially, the company doesn't feel threatened, at all. Oppenheimer noted iPad sales exceeded internal expectations by about 200,000 units.

Once upon a time, the stylus-controlled Tablet PC dominated enterprise business. Not anymore. According to Oppenheimer, nearly all Fortune 500 organizations are beginning to deploy iPads to their workforce. Growing sectors that are adopting the iPad include hospitals and schools, with 1.5 million iPads in use by education institutions.

While Android tablets aren't impacting iPad sales, Cook noted there is unsubstantiated evidence that iPads are cannibalizing Mac sales, although he speculates there is more cannibalization of Windows PCs compared to Macs. 

Cook believes the company's tablet is its key to success, and he claims the tablet market will one day surpass the PC market. Based on data from IDC, tablet sales are already outnumbering PC desktop sales. Cook doesn't believe limited functionality eReader-esque tablets, such as the Kindle Fire, are a threat. He notes users who want an iPad will buy an iPad.

App Stores and iCloud

Since its debut last week, 600,000 people have downloaded iBooks Author, and more than 3 million people have downloaded the standalone iTunes U app for iOS. Apple's MobileMe replacement, iCloud, also saw a jump in user engagement, with 85 million subscribers. Apple claims iOS app development remains strong, with 500,000 iOS apps, 170,000 of which are designed specifically for the iPad. Since launch, the App Store has paid out over $4 million to developers. During the holidays, more than 140 million apps were downloaded on Christmas Day.

Strong Mac Sales

Despite the possible discontinuation of the Mac Pro, sales of Apple's desktops saw an increase of 21 percent compared to the same time last year, with revenue up 12 percent. Apple's MacBook product line saw a bigger increase of 28 percent year-over-year, with MacBook revenue up 22 percent. Overall, while the PC market grew 0 percent in 2011, Apple's Mac business grew by 26 percent. Oppenheimer cited strong sales of their MacBook Pro, MacBook Air and iMac lines. He also noted that hard drive availability remains limited, and pricing continues to be higher because of the Thailand flooding last year.

Apple's TV

Apple TVs were a hot selling product during the holidays, with 2.8 million units sold last fiscal year, 1.4 million of which were from the most recent quarter. It isn't clear whether Cook still believes Apple TV is a "hobbyist" device despite record sales.

Apple iPod

Apple's iPod business continues to be cannibalized by iPhone sales. Apple iPod sales were down 21 percent year-over-year, and revenue was down by 26 percent. Despite the lower numbers, iPod sales were ahead of their expectations. Additionally, Oppenheimer remains optimistic about the iPod's future, noting it still has a 70 percent market share nearly 12 years since its original debut. Sales of the iPod Classic and Nano, however, continue to decline, with 50 percent of iPod sales coming from the iPod Touch.

Apple Retail and Regional Business

Internationally, Apple's strongest overseas growth is in Japan, with revenue up 148 percent compared to 2010. The Americas continue to be Apple's shining star, with revenue up 92 percent year-over-year. There are now 135,000 points of sale for Apple devices, up 35 percent from 2010. According to Cook, after China, Brazil could see major growth in the coming years. However, he notes the company has no plans to expand their retail presence there. In Apple's U.S. retail stores, it rolled out a new EasyPay self-checkout system and the ability to order items online and pick them up in store. Last quarter, 110 million people visited Apple stores, averaging 22,000 shoppers per week.

For more of Allvoices' coverage of Macworld | iWorld 2012, check out allvoices.com/macworld2012.