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7/19/2011
06:50 PM
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Apple Sets Revenue Record, Rattles Patent Saber

Celebrating an iPad 2 sales "frenzy," Apple warns it will defend its intellectual property when necessary.

Apple iPad 2 3G Teardown
(click image for larger view)
Slideshow: Apple iPad 2 3G Teardown
Apple reported its best quarter ever on Tuesday, thanks to booming sales of iPads and iPhones.

Apple's record fiscal Q3 revenue reached $28.57 billion, with a net profit of $7.31 billion, or $7.79 per diluted share. Compared to the same reporting period a year ago, iPhone unit sales during fiscal Q3 2011--20.34 million--grew 142% and iPad unit sales--9.25 million--grew 183%, more than making up for a 20% decline in iPod unit sales.

The company also saw a 14% unit increase in Mac sales--3.95 million--which CFO Peter Oppenheimer, on an investor conference call, noted was more than four times higher than research firm IDC's 3% estimated PC growth forecast.

"The thing that really excites us is that more customers chose to purchase an iPad than a Windows PC," said COO Tim Cook.

Cook brushed off a question about the extent to which iPad sales may be cannibalizing Mac sales by noting that while that's happening to a limited extent, "there's a lot more of the Windows PC business to cannibalize than the Mac."

Apple's financial strength matches the strong position the company is taking against would-be competitors. Asked about the apparent Android boom, said to have reached 550,000 activations daily, Cook expressed skepticism about Android statistics. "The Android activation number is a difficult one to get our hands around," he said, suggesting that Apple's numbers are far more transparent and easier to correlate with reported sales. With regard to potential iPad challengers, he added, "It also doesn't appear that the other tablets are getting any traction to speak of."

Those hoping for an end to the patent war that Apple and others are waging against Google's Android operating system are likely to be disappointed by Cook's remarks about Apple's approach to intellectual property.

Insisting that Apple loves competition, Cook nonetheless declared, "We want people to invent their own stuff," and promised to defend Apple's intellectual property portfolio when necessary.

Apple's ongoing challenge to Android phone maker HTC represents one such case. The U.S. International Trade Commission recently issued an initial determination that HTC's Android phones infringe two of Apple's patents.

At Google's Mobile Revolution conference in Tokyo on Tuesday, Google executive chairman Eric Schmidt suggested that Android's competitors in the mobile market are responding with lawsuits rather than innovation, according to Australia's News Limited website.

Schmidt said that Google would support HTC's fight against Apple, though he did not say how.

"We're thrilled to deliver our best quarter ever, with revenue up 82% and profits up 125%," said Steve Jobs, Apple's CEO, in a statement. "Right now, we're very focused and excited about bringing iOS 5 and iCloud to our users this fall."

More immediately, Apple confirmed that it will release Lion, Mac OS X 10.7, on Wednesday.

Black Hat USA 2011 presents a unique opportunity for members of the security industry to gather and discuss the latest in cutting-edge research. It happens July 30-Aug. 4 in Las Vegas. Find out more and register.

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