Saturday, April 30, 2011

ITC judge rules Apple did not violate Elan multitouch patent


Reuters reports that an International Trade Commission judge sided with Apple in a patent fight brought on by Elan Microelectronics Corp. Elan alleged that that Apple had infringed on one of its multitouch patents and used technology from the patent in the iPhone, iPad, and iPod touch.

Yesterday the ITC judge ruled in Apple's favor, stating there was no violation of Elan's patent. When the case began Elan had asked the judge to bar all iPhones, iPads, and iPod touches from being sold in the United States. Though this is a win for Apple, the judge's decision will not be final until the full International Trade Commission decides to uphold or reject the decision in August.

Friday, April 29, 2011

AT&T Offering the Black OtterBox Defender iPad 1 Case for $5

Update 04/30/2011 - The site shows the price at $10 and states it is "temporary out of stock", but they may replenish them; although it is unlikely. But since you are here, you might as well check any way.


I am sure this offer will not last long, so get this $90 case for $5.00 while you can. The OtterBox Defender Series encases the Apple® iPad in one of the highest quality, toughest protective solution available. Every feature of the device is fully accessible while it is completely enclosed in rugged protection. The innovative multi-layer design protects the iPad from bumps, drops, scratches and dust while keeping protected.


I just ordered mine. While this won't be my day to day iPad case, for $5.30 (with taxes) this was a no-brainer for me to have a tough case for when I need it.


Get it from the AT&T website.


Who wouldn't want to save $84.99 on a $90 iPad case? Even if I never used it personally and wanted to have it in case I sell my iPad, it is worth it for that purpose alone.

Here is a review of the case.


By Carl W. Brooks
Editor, iamthereforeipad.com


Crackle -- free app offers streaming Movies and TV shows to iPad

Crackle is a free app for the iPhone and iPad that offers free streaming movies and TV shows, including 10 episodes of Seinfeld.


The movies include The Da Vinci Code, Ghostbusters, Gridiron Gang,Snatch, 21, We Own the Night, and hundreds more from companies such as Columbia Pictures, Tri-Star, Screen Gems, and Sony Pictures Classics.


Crackle comes to you from Crackle.com, which also has free streaming and which is a division of Sony.

Crackle for iPad

Crackle for iPhone


By Carl W. Brooks
Editor, iamthereforeipad.com

White iPhone in stores now

Apple® announced that the white iPhone® 4 will be available beginning April 28, 2011. White iPhone 4 models will be available from Apple’s online store (www.apple.com), at Apple’s retail stores, AT&T and Verizon Wireless stores and select Apple Authorized Resellers.

“The white iPhone 4 has finally arrived and it’s beautiful,” said Philip Schiller, Apple’s senior vice president of Worldwide Product Marketing. “We appreciate everyone who has waited patiently while we’ve worked to get every detail right.”


iPhone 4 is the most innovative phone in the world, featuring Apple’s stunning Retina™ display, the highest resolution display ever built into a phone resulting in super crisp text, images and video, and FaceTime®, which makes video calling a reality.


Pricing & Availability
White models of iPhone 4 will be available in Austria, Australia, Belgium, Canada, China, Czech Republic, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Luxembourg, Macau, Netherlands, New Zealand, Norway, Singapore, South Korea, Spain, Switzerland, Sweden, Taiwan, Thailand, UK and the US, beginning Thursday, April 28 and in many more countries around the world soon. White iPhone 4 will be available for a suggested retail price of $199 (US) for the 16GB model and $299 (US) for the 32GB model with a new two year agreement through the Apple Store® (www.apple.com), at Apple’s retail stores, AT&T and Verizon Wireless stores and select Apple Authorized Resellers.

Only Apple can turn an embarrassing delay into a hyped product launch. Will you guys be buying one? Is the hype justified?


By Carl W. Brooks
Editor, iamthereforeipad.com

Latest iPad security threat: fake jailbreak code

An anonymous coder is messing with the heads of jailbreakers – the folks who develop and run code that lets your Apple iOS device load applications without having to rely solely on the company’s iTunes service. The twist: this code, by design, fails to jailbreak your iPad.

Someone with the Twitter handle @d0nfyxn, whose profile only says he is from Montreal, posted on Saturday what he claimed was an iPad 2 jailbreak, called A5-2LiB02, along with a YouTube video purporting to show it in action. Both the tweetstream and his own Facebook page for the jailbreak show early skepticism and then a mounting fury of denunciation.


Someone who really is a jailbreaker, a hacker and member of the iPhoneDevTeam who uses the handle @MuscleNerd, tweeted: “The fake JB [jailbreak] by @d0nfyxn was designed to fail: http://is.gd/LiAM1J (it could have been worse and wrecked your files)”

In response, d0nfyxn tweeted to MuscleNerd: “It was a test, people are too naive, long life to the dev team ... sincerely.”

Based on @d0nfyxn’s tweetstream, he seems to have begun posting on April 23, linking to videos and images purporting to show the jailbreak working successfully. Within two days he was defending his posts, insisting the video was not a fake but that the jailbreak code was very unstable. On April 25, he tweeted “I thought all that stabilize but not yet. Beta expected this week.” But the next day, he tweeted, “Release alpha version tomorrow ...”

The code apparently was designed to run on a Microsoft Windows PC, and enough people downloaded it that MuscleNerd tweeted: “I'm astonished how many Windows users are rushing to run a random EXE from known JB fraudster (malicious payload possible)” Jailbroken devices are by definition open to “unofficial” apps, which could be everything and only what they claim to be, but could also conceal a variety of malware attacks. In theory, requiring developers to pass muster, meet standards, and publish apps only through a vendors online catalog provides a level of protection for end users.

MuscleNerd reminded hackers and users that “The only iPad2 JB to date is @comex from that first week” (comex is another well-known hacker and iPhoneDevTeam member), but added “that initial JB isn't suitable for a general release. It was proof of concept for parts of it.”

IPAD NEWS: 12 awesome iPad apps for road warriors

The reactions on d0nfyxn’s Facebook page, by other Facebook users, range from baffled naiveté, through chilling threats, to obscene denunciation.

One user, David Borges sounded pleading: “Can someone just post screenshots with proof that it works, with a decent video with no tricks with cydia working and all that? is it so hard? Rghh”

Another user wrote “this exe has nothing jb related in it!!! why would you waste your time doing all this BS??? find something better to do dude!”

“You bring shame to the jailbreak community. Get a life man,” posted iPhoneBlogr.

“Hahaha why would a person go to the trouble of screwing with us I mean you did see what happened to Sony right?” was one comment posted by Kevin Lepp, referring to the notorious, and still-unfolding, hack of Sony’s PlayStation Network.

Source: John Cox for “Network World.

Foxconn workers arrested for leaking iPad 2 design before launch

Three Foxconn employees were arrested in late 2010 for violating Apple's trade secret agreement and leaking details about the design of the iPad 2, and were charged this week.

All three of the employees were arrested in China in December, over three months before the iPad 2 was unveiled by Apple CEO Steve Jobs.

The alleged leaks let accessory makers create designs, some of which were very close to what the final product was, including the rounded back, camera location and new speaker location.




An iPad 2 mock-up at CES 2011, three months ahead of Apple's official unveiling. (Credit: Engadget )


Foxconn is a major producer of Apple products like the iPhone, iPad and MacBook Air but made headlines last years after a slew of suicides at their factories.

It was then reported that worker's families were making more money from the suicide compensation than the workers were making in three years of labored salary.

By Carl W. Brooks
Editor, iamthereforeipad.com

Microsoft Profit Falls Below Apple’s After IPad Eats Into Windows Revenue

Microsoft Corp. (MSFT)’s Windows sales slumped last quarter as the iPad crimped demand for consumer laptops, marking the first time in 20 years that the software maker reported a smaller quarterly profit than Apple Inc. (AAPL)

Revenue in Microsoft’s Windows division fell 4.4 percent to $4.45 billion, the Redmond, Washington-based company said yesterday in a statement. That missed the $4.6 billion average prediction of analysts surveyed by Bloomberg. Net income was $5.23 billion, eclipsed by the $5.99 billion reported by Apple last quarter.

Consumer PC shipments dropped 8 percent in the quarter, Microsoft Chief Financial Officer Peter Klein said. Netbooks -- the cheap laptops that became popular during the recession -- plunged 40 percent, partially because of defections to tablet computers, he said. The decline overshadowed a better-than- anticipated performance from Microsoft’s Office unit and increased PC demand from corporations.

“You have to live underneath a rock not to know that the iPad has taken share from the netbook,” said Pat Becker Jr., principal of Portland, Oregon-based Becker Capital Management Inc., which holds Microsoft shares as part of its $2.5 billion in assets. “It’s a problem on the consumer side, and that’s a market where Microsoft continues to give up territory to Apple.”

Microsoft fell 1.6 percent to the equivalent of $26.37 at 11:29 a.m. in German trading. The stock declined as much as 74 cents in late U.S. trading yesterday after the report. The shares, down 4.3 percent this year, had closed at $26.71 on the Nasdaq Stock Market.

Less Than Apple

Net income rose to 61 cents a share, from $4.01 billion, or 45 cents, Microsoft said yesterday. Excluding a 5-cent per-share tax benefit, earnings matched the 56-cent average of estimates compiled by Bloomberg.

The results underscore the ascendance of Apple, which surpassed Microsoft as the world’s most valuable technology company last May. The last time Apple’s profit was bigger than Microsoft’s was 1991.

While PC shipments to corporate customers rose 9 percent, tablet competition accounted for some of the sluggishness in consumer sales, Klein said in an interview.

“It’s fair to say tablet is some of that,” he said.

Total PC sales declined 2 percent last quarter, Microsoft said. That the Windows business performed even worse adds to the concern over Microsoft’s performance, said Brendan Barnicle, an analyst at Pacific Crest Securities in Portland.

Office Sales

“That’s suggesting some market share loss, some real deterioration,” said Barnicle, who rates Microsoft’s stock “sector perform.”

Microsoft’s overall sales rose to $16.4 billion, compared with the $16.2 billion average projection. That reflected demand for such products as Office business-productivity software and programs for servers -- the computers that run networks.

“We are seeing businesses invest in technology,” Klein said. “They are buying hardware and they are buying Microsoft software.” Microsoft expects corporate PC shipments to outpace consumer sales for the rest of the year.

Sales in the business division, which sells Office software and is the company’s biggest unit, rose 21 percent to $5.25 billion, compared with the $4.9 billion average estimate of analysts. Revenue at the Server and Tools unit was $4.1 billion, compared with the $4 billion analysts projected.

“There is a tale of two cities going on here,” said Brent Thill, an analyst at UBS AG in San Francisco, who recommends buying Microsoft shares. “You have consumers who say an iPad is good enough for consuming data, but for the enterprise side, those enterprises are continuing with Microsoft. The thing that has hurt Microsoft is that tablets are no question the must-have item for consumers.”

Source: Bloomberg - By Dina Bass - Apr 29, 2011 5:33 AM ET

Thursday, April 28, 2011

iPad 2 Arrives in Japan, Hong Kong, Korea, Singapore & Eight Other Countries

CUPERTINO, California—April 27, 2011—Apple® announced that iPad® 2, the second-generation of its breakthrough post-PC device, will arrive in Japan on Thursday, April 28 and Hong Kong, Korea, Singapore and eight additional countries on Friday, April 29. iPad 2 will be available at Apple retail stores at 9 a.m. local time, select Apple Authorized Resellers, and online through the Apple Store® (www.apple.com) beginning at 1 a.m. Additionally, iPad 2 with Wi-Fi will be available in China beginning Friday, May 6.

iPad 2 features an entirely new design that is 33 percent thinner and up to 15 percent lighter than the original iPad, while maintaining the same stunning 9.7-inch LED-backlit LCD screen. iPad 2 features Apple’s new dual-core A5 processor for blazing fast performance and stunning graphics and now includes two cameras, a front-facing VGA camera for FaceTime® and Photo Booth®, and a rear-facing camera that captures 720p HD video, bringing the innovative FaceTime feature to iPad users for the first time. Though it is thinner, lighter, faster and packed with new features, iPad 2 still delivers up to 10 hours of battery life* that users have come to expect.

Pricing & Availability
iPad 2 with Wi-Fi will be available in Japan on April 28 and Hong Kong, India, Israel, Korea, Macau, Malaysia, Philippines, Singapore, South Africa, Turkey and UAE on April 29 for a suggested retail price of $499 (US) for the 16GB model, $599 (US) for the 32GB model and $699 (US) for the 64GB model. iPad 2 with Wi-Fi + 3G will be available for a suggested retail price of $629 (US) for the 16GB model, $729 (US) for the 32GB model and $829 (US) for the 64GB model. iPad 2 with Wi-Fi will be available in China on May 6, and further international availability will be announced at a later date.

iMovie® and GarageBand® for iPad apps are available for $4.99 (US) each from the App Store℠ on iPad or www.itunes.com/appstore. The Smart Cover is available in a range of colors in vibrant polyurethane for $39 (US) or rich leather for $69 (US).

*Battery life depends on device settings, usage and other factors. Actual results vary.

Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced iPad 2 which is defining the future of mobile media and computing devices.

Wi-Fi Version Available in China on May 6

By Carl W. Brooks
Editor, iamthereforeipad.com

Facebook, It’s Time For An iPad App

The other day I was browsing through the App Store on my iPad when I noticed something: both the top free and top paid applications for the device were apps for accessing Facebook. And as I kept going down the top apps lists, I kept seeing Facebook apps. In fact, of the top 40 apps (free and paid combined), a full 7 of them were ways to use Facebook on the iPad.



In other words, nearly 20 percent of the top apps being downloaded for the iPad are apps that allow you to use Facebook on the device. And not one of them is actually made by Facebook. Because they refuse to make their own iPad app for some seemingly illogical reason.

Facebook, it’s time.

Facebook not having their own iPad app is strange for a few reasons. First of all, they’ve been making an iPhone app since day one of the App Store. And in fact, it’s the most downloaded app of all time in the App Store. And they regularly update it and use it to release new features that aren’t available on the site yet (like event check-ins recently).

So it’s not like they hate iOS. Nor do they hate native applications. They also make apps for Android, Windows Phone, and other devices.

And it’s very clear that there’s a huge demand for a native Facebook iPad app. See: the information up top.

What’s crazy is that Facebook is letting other developers not affiliated with the company own this space. That’s great for those developers, but it’s potentially bad for Facebook. Most of the apps that promise a “native” iPad Facebook experience are simply Facebook’s touch-optimized site wrapped in skins. And most of them are mediocre — not to mention very ugly. And many of them even charge customers for those experiences!

That’s the way thousands (if not millions) of users are experiencing Facebook on a daily basis. These developers effectively own the Facebook brand on the device. In fact, many of them use “Facebook” in the title of their apps, which just leads to further confusion that they may be official apps. (I wonder how many customers think they’re paying Facebook money for these apps?)

Facebook has come down on this type of brand-jacking in the past in the App Store. But it keeps happening because there is so much demand for a Facebook iPad app. A search for “Facebook” in the App Store on the iPad brings up 989 results. Some are simply apps that use Facebook Connect and have it in their descriptions, but many of them are apps designed solely to give users a native app Facebook experience. And many do subtle things to try and trick users into thinking that they’re official apps.


It has been over a year and Facebook still has not gotten out in front of this problem.

Contrast this with Twitter which is proactively trying to take control of their user experience across platforms by telling third-party developers not to focus on making new Twitter clients. Obviously, that has caused some controversy since Twitter has long thrived on such community-built clients. But it also makes sense: Twitter wants to control the way users experience their product. It’s just hard to believe that Facebook doesn’t.

Or do they?

Even though Facebook has indicated time and time again that they’re not too interested in building a native iPad app, there are no shortage of whispers that (at least) one such app has been in testing for quite some time. Facebook CTO Bret Taylor has indicated that the iPad was an unfortunate casualty in the way Facebook’s device teams were broken up until recently. At the same time, he would only commit to the company being at work on a better tablet-optimized experience — not necessarily a native application.

In fact, Taylor and Facebook have been talking up the HTML5 benefits in recent months, as opposed to native app development. On paper, that sounds great. But Facebook has to realize that native applications are still going to be far superior to anything done with HTML5 for at least a few years. Even Facebook employee (and the guy who built Facebook’s iPhone app) Joe Hewitt clearly understands this.

Facebook’s actual website works pretty well on the iPad in the Safari browser, but it lacks key features such as new message notifications when you’re away because it’s not native. And there’s no way to upload media. And it can’t access some of the powerful APIs that native apps can access. And Facebook’s single sign-on aspect won’t work without a native app.

Again, Facebook needs an iPad app. And if I had to bet on it, I’d bet that despite their stubbornness on the issue, we will eventually see one. Some are projecting Apple to sell upwards of 45 million iPads this year. Facebook simply cannot ignore that. Imagine Friendly or one of the other popular Facebook iPad apps making up a sizable chunk of visitors. I can’t see Facebook allowing that to continue happening.

Finally, with a native iPad app, Facebook can actually innovate in the space. Just like Twitter pushed new ideas forward with their iPad app (which pointed towards the work they would eventually unveil for New Twitter), Facebook can play around with new types of touch interfaces and interactions on the platform.

A Facebook-built iPad app would be the most popular app on the device without question. It would be installed on nearly every device out there. It’s time for Facebook to stop playing around and build the damn thing.

Source: TechCrunch's MG Siegler

Top-Grossing iOS Games of Week: Tap Pet Hotel Reports Big First-Week Earnings

Who's got game? You have at least a few games on your iPad. Studies show that 81% of those under 25 years old play a game on their Smartphone at least once a month. 76% of those ages 25 to 44 years old play a game on their Smartphone at least once a month. 56% of those over 45 years old play a game on their Smartphone at least once a month. We know that the iPad has much better game play, so these numbers rise on the iPad. To keep you are play, here are this week's U.S. revenue charts toppers.

Tap Pet Hotel and Tap Zoo earning top iPhone sales, while NBA Jam and Final Fantasy III emerge as big sellers on the iPad.

These charts allow end users to see who is making the most money on the App Store that day. It differs significantly from the Top 10 Games chart, which is ranked by sales, and therefore is dominated by lower-priced titles that sell more copies.

You will notice some FREE games in the top grossing list, because some free games have in-apps purchases that obviously add up pretty quick as a whole.

Data comes courtesy of Apple's public sales information. All titles in the App Store's "Games" category are considered in chart rankings.

Zynga Poker and Kamagames' rival gambling app Texas Poker compete with Angry Birds and Words With Friends, meanwhile, as Smurfs' Village and Zombie Farm report increased microtransaction earnings after recent updates.

Here are this week’s top-grossing iPad applications:

1. Smurfs' Village (Free)
2. NBA Jam for iPad ($9.99)
3. Angry Birds Rio HD ($2.99)
4. Angry Birds HD ($4.99)
5. Final Fantasy III ($16.99)
6. Texas Poker (Free)
7. Trade Nations (Free)
8. We Rule Quests for iPad (Free)
9. Infinity Blade ($5.99)
10. Scrabble for iPad ($9.99)

Smurfs' Village tops iPad revenue earnings for the second week in a row, as Electronic Arts' new iPad version of NBA Jam premieres at second place.

Square Enix claims fifth place in today's rankings with its recently released iPad version of Final Fantasy III, while Z2Live's Trade Nations and Ngmoco's We Rule Quests compete with chart mainstays Infinity Blade and Scrabble in the latter half of the top ten.

Since many iPad owners are also iPhone users, I offer this week's top-grossing iPhone titles:

1. Tap Zoo (Free)
2. Tap Pet Hotel (Free)
3. NBA Jam ($4.99)
4. Zynga Poker (Free)
5. Angry Birds ($0.99)
6. Texas Poker (Free)
7. Words With Friends ($2.99)
8. Smurfs' Village (Free)
9. Angry Birds Rio ($0.99)
10. Zombie Farm (Free)

Pocket Gems dominates today's top-grossing charts with its App Store favorite Tap Zoo and Tap Pet Hotel, which claims second place in its first week of release. Electronic Arts' NBA Jam takes third following a multiplayer update and a weekend-long price drop.


By Carl W. Brooks
Editor, iamthereforeipad.com

Apple denies tracking iPhone and iPad users

The company says it has discovered bugs that resulted in too much location data being kept on the devices. Data are of nearby cellular towers and Wi-Fi access points, it says, not users' whereabouts.

Apple said it would fix two issues with the way the data was stored in the next few weeks.

Breaking nearly a week of silence to respond to a mounting outcry, Apple Inc. denied that it was tracking iPhone and iPad users but said that it had discovered bugs that resulted in too much location data being kept on the devices.

The company said that the controversy resulted in part because users had become "confused" by the technical complexity of the issue, and that the devices store geographical data in order to provide location-based services, such as map directions.

The locations stored by the iPhone and iPad are not a log of users' whereabouts, the company said Wednesday, but a database of nearby cellular towers and Wi-Fi access points that Apple already knows about. The devices can use that location data to, for example, calculate driving directions and offer coupons to local stores.

To tamp down the rising concerns, Apple even enlisted Steve Jobs, the company's chief executive who is currently on medical leave, to answer questions about the data collection. Jobs told the Wall Street Journal that the company was not tracking anyone and that an upcoming software update would reduce the amount of location data on the devices to about seven days' worth from as much as a year.

"Providing mobile users with fast and accurate location information while preserving their security and privacy has raised some very complex technical issues which are hard to communicate in a sound bite," the company said in a statement. "Users are confused, partly because the creators of this new technology (including Apple) have not provided enough education about these issues to date."

Apple's response came amid growing concern from a number of U.S. and foreign government officials as well as privacy advocates about the nature of the location data file. Rep . Ed Markey (D-Mass), who had asked the company to explain the location data last week, said in a statement Wednesday that he was pleased Apple was addressing the issue but signaled that he had questions about whether the company used the data to sell advertising to users.

Sen. Al Franken (D-Minn.), who had also sent a letter to Apple about the location tracking, has called for Apple and Google Inc. to attend a Senate subcommittee hearing on mobile privacy to be held May 10. Jobs said Apple would be present for the hearing.

Google has also been pressed to explain how and why its Android-based smartphones collect, store and transmit user location data.

Kevin Bankston, a senior attorney at the Electronic Frontier Foundation, an online civil liberties group, praised Apple for taking steps to reduce the amount of personal data on the phone but said consumer technology companies should be more upfront with their users about the data they collect.

"We shouldn't have to be in a constant battle with companies where the public is continually uncovering new privacy problems that the companies were opaque about before," Bankston said.

Apple emphasized that the data stored on the phone are not a user's exact real-time location, but an amalgam of Wi-Fi access points and cell tower locations "which can be more than 100 miles away from the iPhone."

The company, however, did not highlight that many Wi-Fi access points can be much closer, including in specific rooms in users' homes and offices. And as cellular networks have become larger and more sophisticated, companies have built many more towers so that each one can cover a smaller area more effectively.

Experts have said that Wi-Fi and cell-tower location data may soon be as specific as the highly precise GPS satellite data.

Apple said it would fix two issues with the way the data were stored, each of which it called a "bug." Those fixes would come in the next few weeks, the company said, and would include shortening the list of stored locations and enabling users to prevent the devices from keeping them in the first place.

By David Sarno, Los Angeles Times
Copyright © 2011, Los Angeles Times

Tuesday, April 26, 2011

Apple iPad 3 Unlikely for Fall 2011: Report

Apple's iPad 3 is unlikely to make an appearance in 2011, according to a DigiTimes report. That would contradict some rumors from earlier this year.

Apple is unlikely to release an iPad 3 in 2011, according to a new DigiTimes report.

If accurate, that would shoot down rumors from earlier this year that Apple intends to follow up the March launch of the iPad 2 with another tablet before the holidays. Although an "iPad 3" launch before the end of the year would represent a severe deviation from the company's usual roadmap, and its annual product refreshes, those rumors nonetheless proved highly tenacious.

Now comes the April 12 report in DigiTimes, citing unnamed "upstream component makers," that no iPad 3 is coming in the near-term, and that Apple is still deciding on possible panels for future tablets. Apparently, that planning remains in the initial stages, making any products "unlikely" to make a showing in 2011.

"The sources pointed out that they have not yet received any notice for next-generation iPad products and do not believe iPad 2 is a transitional product," reads the report. "With iPad 2's strong shipment order forecast from Apple, the sources believe iPad 3 will not appear in the short term."

In a Feb. 9 posting on his "Daring Fireball" blog, John Gruber posted a "theory" concerning the iPad's release roadmap. Discussing the summer launch of Hewlett-Packard's upcoming TouchPad tablet, he wrote: "Summer feels like a long time away. If my theory is right, they're not only going to be months behind the iPad 2, but if they slip until late summer, they might bump up against the release of the iPad 3."

Later that day, Gruber clarified his pronouncement: "How could Apple release a third-generation iPad just six months or so after the second one?" he wrote. "Maybe it won't be an actual next-generation model. Maybe it's more like an iPad 2.5, or iPad 2 Pro."

Theory or not, other publications promptly leapt on Gruber's postings like a defensive lineman on a loose football. By the morning of Feb. 10, the Washington Post's headline-"iPad 3 to have Fall 2011 launch? Some say it makes sense"-was front-and-center on Google News.

The iPad 3 theories contribute to what's already a media-fueled furnace of speculation over everything iPad-related. Apple's lack of official word on its upcoming products has a habit of driving analysts and bloggers into a frenzy. In the months ahead of each iPad's successive unveiling, the blogosphere buzzes with "news" and rumors of possible features and form-factors.

Although a widely circulated source of Apple news, DigiTimes' own predictions sometimes fail to pan out. For example, a Jan. 20 story suggested that the iPad 2 would boast 2,048-by-1,536 resolution, which in turn would play into Apple's larger plans for its ecosystem. "The larger resolution should provide the company's app developers more convenience," it read, "while all future applications will be able to run under any of Apple's machines including the 27-inch iMac."

The iPad 2's actual 1,024-by-768 resolution undermined that prediction, although analysts such as IDC research manager Tom Mainelli subsequently suggested that Apple's higher definition "Retina Display" screen could make an appearance in a future iPad, which itself might not make an appearance until 2012.

Source: eWeek

Monday, April 25, 2011

IPad Droped 500ft in G-Form Extreme Sleeve from Airplane is Unharmed

Those wacky guys over at G-Form are at it again.

Apparently, they aren’t content enough to drop a 12 pound bowling ball three feet on top an iPad in their case. Oh no. They had to up the ante.

As if that wasn’t a convincing enough reason to pre-order an Extreme Sleeve for your iPad, they had to go and do something completely extreme — drop it from 500 feet up in the air from an ultralight aircraft.

The result? iPad lived to play a video yet another day. I’m impressed, very impressed.

With all of these impact stunts, Some have began to call these guys "the computer industry version of Jackass". What else can they possibly do to prove this product works as advertised? I am sure this is not the last time we will hear from them or the G-Form Extreme Sleeve case for the iPad.

The cases are currently available for preordered at $59.95.

Are you impressed with the G-Form Extreme Sleeve yet? Let me know your thoughts in the comments.



By Carl W. Brooks
Editor, iamthereforeipad.com

Sunday, April 24, 2011

Major League Baseball’s iPad app, MLB.com At Bat 11

Major League Baseball’s iPad app is called MLB.com At Bat 11. MLB.com At Bat is $14.99 and is available in the App Store.


The app's GameDay screen has custom graphics representing every major-league park, courtesy of graphic assets borrowed from Sony’s MLB 11 The Show video game. The at bat batter wears the team’s official home or road uniforms. So when you’re watching a game taking place in San Francisco’s AT&T Park or Boston’s venerable Fenway Park, you’ll see that park in the background.


The app is visually rich, but the app has a very simplified look. The scoreboard has a block-letter typeface and its background insets are reminiscent of the hand-operated scoreboards of the past. Tapping on the video on the scoreboard will bring up the highlight reel. There is also a highlight link at the bottom of the screen.


The app displays detailed pitch-by-pitch data courtesy of Major League Baseball’s in-stadium pitch-tracking data collection system.


When the iPad was announced last year, one of the few apps displayed during the launch event was MLB At Bat. MLB Advanced Media had to scramble its development schedule to get that app (as well as its iPhone equivalent) ready for Opening Day 2010. This year marks the first time that the iPad app has been able to get a full offseason’s worth of development focus, and it marks a big step forward from last year’s edition.

Like last year, MLB.com At Bat 11 for iPad (like its iPhone counterpart) comes with live GameDay status information, access to live home and away audio streams for every game, and access to occasional free live TV streams. During a live broadcast, you have icon at the upper right that provide access to information like the Box score.


Subscribers to the MLB.tv streaming-video package will also get access to live game video, though as with all MLB video packages, local teams are blacked out. The service is $20 a month. (During the month of April, you get the paid service for free.)


Icons on the bottom of the Game Day screen provides in game information. Below is the lineup for the selected game.


You can quickly switch between live game. The app will check each time to verify that the game is not blacked out.


There’s a lot more going on under the hood at MLB. As we get closer to Opening Day, stay tuned to Macworld for more detail on MLB.com’s iOS apps and what happens behind the scenes at the league’s New York City multimedia hub.

Here is overall look at the game status across the entire league.


You can listen to audio of any live games. You can exit the app and surf the web, check email, etc while still listening to the game.


Get a quick glance at the MBL standings.


While watching a game, you can see who is currently in the field.


This is a look at a game that has not yet started.


The iPad and iPhone apps are still separate apps, and each costs $14.99. Without the $20 monthly subscription, you can watch one free televised game per day and listen to as many games on Internet radio as you'd like, but there's no way to purchase a package to watch all games for a specific team in the app or beam the games to an Apple TV via AirPlay.

I was able to display the live game on my TV with the VGA adapter. When displayed on the TV, the iPad was able to display scoreboard and or other data on the iPad without interfering with what was displayed on the TV.

If you are a fan of baseball, this may be the season ticket you and your iPad have been looking for.


By Carl W. Brooks
Editor, iamthereforeipad.com

Saturday, April 23, 2011

Great Deals on the iPad 1 are Still an Option for NOW

The first generation iPad still makes an incredible buy for those looking to purchase a tablet computer. Sure the iPad 2 is a nice tablet, but it doesn't take from the value of the iPad 1. For those that don't mind paying the full price of the Apple tablet, I recommend getting the iPad 2. If you want a great tablet at a reduced price, the iPad 1 can be picked up for an incredible value.

If you want a new iPad 1 tablet, you can pick one up at Sam's Club. I spotted a 65GB WiFi only iPad 1 today for only $569; compared to the original price of $699. A $130 savings in nothing to sneeze at; you can use the savings towards a case, stylus, software or anything else you will need to make it perfect for you.

64GB Wifi iPad at Sam's Club

They did have any other options at all, but paying $70 more than I paid for the 16GB WiFi only model to get 3 times the memory is a fantastic deal. The best thing about this deal is that this is a brand new iPad.

If you want an even bigger savings, you can get the iPad cheaper, but it will be refurbished. Apple offers some refurbished models in a few model models, including the 3G models.

The refurbished 65GB WiFi only iPad 1 is $529 or $49 cheaper if you don't mind it being refurbished. You don't have to worry about a refurbished iPad from Apple, because they make sure the battery and outer shell is brand new, new box and includes the manual, sync cable and power adapter. Plus it has the same 1 year warranty that a new iPad would include.

The lowest model, the 16GB WiFi is only $349. The largest model, the 64GB with both 3G and WiFi was not available at the time I checked, but the stock changes frequently. We have no way of telling how many iPad 1 will remain available, so if you are interested - act fast. I recommend getting the largest storage space you can afford.

Friday, April 22, 2011

Report: Apple adjusted top apps ranking criteria

Reports surfaced earlier today claim that Apple has changed its ranking algorithms for the App Store, shifting how applications make it to the top of the heap where they are more likely to pick up sales due to the extra visibility.

The change, which was picked up on by third-party analytics providers like Flurry last week and passed on to blog Inside Mobile Apps, is said to add other factors to an application's placement in the top sections of the App Store, besides raw download numbers alone

The change, which was picked up on by third-party analytics providers like Flurry last week and passed on to blog Inside Mobile Apps, is said to add other factors to an application's placement in the top sections of the App Store, besides raw download numbers alone.

Citing several applications that made dramatic jumps without a major update--including Facebook, Netflix, and Pandora--the report suggests Apple is now weighing how often applications are used (once downloaded) by daily and monthly users to better signify their ranking. Rival Google, the makers of the Android OS, and purveyors of the Android Market reportedly began the same practice earlier this month based on similar third-party findings.

Apple did not immediately respond to a request for comment.

While seemingly subtle, the move has a dramatic impact not just on games and applications, which depend on placement on Apple's list for new downloads and purchases but also the businesses that have sprung up to promote them. It could also provide more accuracy about what's hot at any given moment than downloads alone.

But that idea of apps effectively phoning home that data brings up concerns about what types of information Apple is tracking and using for listing and promotional purposes. This is at a time when Apple, Google, and app makers have been targeted by lawsuits for allegedly playing fast and loose with user privacy by allowing third-parties to track user activity.

To Apple's credit, the behavior necessary to track activity and send it back would still fall within the "collection and use of non-personal information" section found in the company's iTunes privacy policy:

We also may collect information regarding customer activities on our website, MobileMe service, and iTunes Store and from our other products and services. This information is aggregated and used to help us provide more useful information to our customers and to understand which parts of our website, products, and services are of most interest. Aggregated data is considered non-personal information for the purposes of this Privacy Policy.


The company also spells out its right to use cookies and other tracking technologies in various places, including "interactive applications," later on in the same document.

Race to the top
Similar to search engine listings, getting to the top of Apple's list can bring great rewards. Applications that break into the top 25 lists can get a dramatic number of downloads and purchases, an effect that can snowball and push some higher and higher. The process can also be beneficial to developers who produce "lite," and iPad versions of their applications, where visibility can push the application's counterpart to the top as well.

Developer 2-D Boy, the makers of the World of Goo application, which currently sits inside the top 15 iPhone apps and in the top 30 for iPad, noted in February that nabbing the No. 1 spot on the charts provided sales that were orders of magnitude higher than No. 2. At the same time, the developer noted that the glory could be short-lived:

Having obsessively monitored World of Goo's App Store ranking and sales numbers after launch, one of the things we found surprising is that when World of Goo was hovering near the top of the charts we saw that the #1 app was selling about twice as much as the #2 app. This drove home the point that it's dangerous to judge the health of a distribution channel by how much the top selling game makes. If you're lucky enough to reach the top of the charts, unless you're Castle Crashers or Angry Birds, you're not going to stay there for very long.


That postmortem also noted that the same application, once it fell outside of the top 10, was still receiving a high amount of exposure from users.
To back up 2-D Boy's claims, applications like Rovio's Angry Birds series have managed to stay on the top of the curve, raking in sales month after month and hanging on to the top spot. But even there there's a chance to be knocked off by new challengers. Andreas Illiger's Tiny Wings, for instance, dethroned longtime chart topper Angry Birds earlier this year and has managed to stay in the top 5.

The business of promotion
What makes any under-the-hood changes of special interest is the business that's cropped up around promoting applications. Solutions like Flurry's AppCircle program and similar efforts from TapJoy and W3i give developers a way to boost downloads of applications in exchange for ad space within their applications, or a payments per installation. When done as part of a large promotion, such campaigns can push applications out of obscurity and onto the charts where they can begin to gain downloads and users organically.

How big are these networks? In an announcement about its new self-publishing program last month, TapJoy said it had more than 200 million mobile customers and 100 million social gamers who could drive downloads to the point of being able "to ensure that a game becomes a top hit." That same program could end up being less effective in the long run if the usage of that application is part of the ranking, quickly pushing off applications that pulled in big download numbers but failed to keep people using them.

Apple also has what can be called a "tepid" relationship with the analytics and advertising arms of such networks, including Flurry. In early 2010, ahead of the iPad's official unveiling, the company shared identifying details about Apple's then-unreleased tablet, including what kinds of applications Apple was testing and the version of iOS it was running. All of this was based on system data Flurry was grabbing from applications that were making use of its analytics technology and being tested within Apple's walls. As a result, Apple changed the rules of its software development kit to keep analytics from grabbing device data.

Coming back to the rankings issue though, the bottom line is that there's still very little proof outside of some out-of-character rank jumping to point that there has been an overwhelming shift in how much it takes for an application to get on and stay on the list. Just like any other ranking algorithm, there are factors in play that determine the scale and speed of those jumps. The real question remains what else is a part of the mix that determines what takes an app to the top, and if Apple is trying to keep that a moving target.

SOURCE: CNet

Should you be Concerned to use DropBox for your Cloud Storage?

Cory Doctorow wrote at 9:23 AM Thursday, Apr 21, 2011 on BoingBoing

Miguel de Icaza noticed that Dropbox's new security terms of service allows it to decrypt your stored files for law enforcement; but Dropbox has always claimed that it did not store the keys necessary to do this. This has been used as both a selling point ("we keep your files so safe, we can't access them") and an excuse ("don't ask us for help if you lose your crypto keys, we don't store them"), but it was, apparently, a lie. De Icaza worries that a company that lies about its crypto and security policy may not be trustworthy when it comes to files containing sensitive information:

If companies with a very strict set of security policies and procedures like Google have had problems with employees that abused their privileges, one has to wonder what can happen at a startup like Dropbox where the security perimeter and the policies are likely going to be orders of magnitude laxer.
Dropbox needs to come clear about what privacy do they actually offer in their product. Not only from the government, but from their own employees that could be bribed, blackmailed, making some money on the side or are just plain horny.

Dropbox needs to recruit a neutral third-party to vouch for their security procedures and their security stack that surrounds users' files and privacy. If they are not up to their own marketed statements, they need to clearly specify where their service falls short and what are the potential security breaches that

Unless Dropbox can prove that algorithmically they can protect your keys and only you can get access to your files, they need to revisit their public statements and explicitly state that Dropbox storage should be considered semi-public and not try to sell us snake oil.


Did Happy Owl Studio's Two Spoof Videos for iPad Case Go too Far?

I like Happy Owl Studio and I love their Wallet case for iPad - it is not your typical wallet nor your typical iPad case. My iPad 1 is carried inside the Happy Owl Wallet case daily along with my ID, credit cards, health insurance cards, and other cards including my monthly Smart Bus pass and cash. Access passes for my parking garage, work place and security gate at my residence, all fit snugly in my Happy Owl Studio wallet.

All the typical things that would be carried in a normal wallet, yet couldn't be carried in a typical iPad case. In addition to the things that would be in a typical wallet, I also carry things that couldn't be carried in a typical wallet like my Sprint MiFi modem, my passport, a clean cloth for my iPad screen, a stylus, a pen and a pair of earplug headphones. The case makes sense on many levels. I have to carry the iPad around anyway, so I don't have to concern myself with a separate wallet. It acts as a stand for hands-free viewing of the iPad. It hold important items that would otherwise have to be carried in pockets or another container of sorts. I couldn't be more happy with the case.

See my comparison video: The Wallet for iPad vs The Official Apple iPad Case

They also make an iPad case for women called the Clutch which offers the same features of the Wallet but with a pleated front, strap and prettier colors. They have recently reduced the price of their iPad 1 cases 50% to $39.99.

They are prepping for their iPad 2 lineup.

"Those of you who went through our iPad 1 case process with us last year already know something about this ;) But don't worry - we learned a lot last year! This year we can say with confidence that we will be delivering a product that is even better than our iPad 1 line... and yes, yes... Much sooner! We have expanded our offerings to include the new Shell line, which is the perfect compliment for Apple's Smart Cover. And of course we are coming back with our acclaimed Clutch and Wallet, redesigned to fit iPad 2 perfectly (with lots of little upgrades)."

I am sure the iPad 2 Wallet and Clutch will do good with the upgrades that include elastic on the phone and pen holders, reinforced D-rings for the straps, wider card slots, roomier pockets and support for "wake on open" and "Sleep on close" features.

They are even adding a new "Shell" line of cases that cover the back of the iPad 2 and work with the Apple Smart cover. I would imagine they would have to be able to match the colors exactly to the colors of the Smart Covers in order for these to do well.

I like to see new companies innovate and take advantage of the new trends. As much as I like the company and their products, I can't say the same about their choice for commercials: "I'm the Clutch" and "I have a Pocket".

The commercials feature two women: one representing "The Clutch" by Happy Owl Studio and the other representing the "iPad". It is a spoof of the Apple vs Microsoft commercials that Apple ran for years, but with a hug twist. The commercials begin with some dialogue highlighting the Clutch and then ends with both the women going to town of each others' lips in a crazy series of kisses.

Now I am a man who admittedly can stomach some kissing by two hot babes on occasion, but I have to admit this was just wrong on so many levels. I know it is a matter of taste, but was the iPad woman even hot? I think they purposely made the Clutch hotter than the iPad. My brain and decency will overrule any lust and eventually I would have to look at this objectively. What is the point of it? Shock value appears to be the motive. Who is the intended audience? It looks like it appeals to young immature men. Are they the buyers of the Clutch? They assume after they do their business, them men will rush over and buy the Wallet case. Are they just trying to make a viral video so that it spreads across the Internet and bring attention to their brand? This appears to be the case. I think they were doing good without it. Did they go too far? Does this offend women? What are your thoughts?

Thursday, April 21, 2011

Enable Find My iPad To Track a Lost iPad

Imagine the panic you would have if you lost your iPad? If you carry your iPad around wherever you go (like me), you are more vulnerable to either losing your iPad or even having it stolen. Fortunately Apple has made available the "find my iPhone" service. It used to be only included with the $99 per year MobileMe service, but they have made it a separate free feature. Because it is free, everyone who owns an iPad, iPod Touch, or iPhone should enable the service. Don't be fooled by the name of the service, it is for all iDevices.

Computerworld has a great article that provides step-by-step instructions for setting up the service and it is very easy to set up. In a nutshell, you go into the Mail, Contacts, Calendar settings and add a MobileMe account by providing your Apple ID and password. The Apple ID and password is what you setup at the Apple Store when you bought your iPad or created when you turned the device on for the first time. This is also the same credentials used to buy things (movies, music, apps, tv shows, etc) from iTunes. If you don’t subscribe to MobileMe, the settings default to the "Find My iPad" option.





After you enable the service, go to www.me.com to confirm that it is working. You log in using your Apple ID and password, and you will see the location of your iPad displayed on a map. In addition to seeing the location of your iPad, you have the ability to lock it, send a message to it, send a sound to it, or wipe your data from it.

Once setup and activated, the iPad can be located from any Internet connected device like a PC, Mac, desktop, laptop, smartphone, iPhone or another iPad. As long as you are able to connect to the Internet, open the web site and have your iTunes or App Store ID and password, you can locate the device and send the below commands.

The lost iPad has to connect to the Internet to be located. If the device is never connected to the Internet it can not be located. If it connect via the 3G service or the WiFi service, it can be located with the "Find my iPhone" service. You should always configure your iPad with a passcode and set it so that locks after a certain amount of time. If a person has your device and it is unlocked, they can erase everything (including the settings that make it trackable) and then you may never locate it.

Finally, if you own another iOS device, you can install the free Find My iPhone app that you can use to see the location of your iPad on that device.





The Play Sound option is useful if you lost the iPad in the house and what to listen for a sound to locate it or use to tell your spouse it is time to get off the device.

This is a free feature you should signup for and activate immediately after purchasing your iPad. Make sure you test it before you need it, somewhat you have experience before a real world opportunity arrives. So being prepared will keep your asking, "How do I find my iPad if it is lost?"
Here's to hoping you never have to use this knowledge beyond preparation and practice. Now where did I leave my keys?

By Carl W. Brooks
Editor, iamthereforeipad.com



Wednesday, April 20, 2011

iPad Details from Apple Inc Q2 2011 Earnings Call

During the April 20, 2011 earning call (full transcript here), Apple's business was discussed, but I will focus on the iPad specific information here.

Peter Oppenheimer, the SVP and CFO of Apple Inc. spoke about the iPad sales, "we are thrilled with the momentum for iPad... Revenue for the quarter was $24.7 billion, which was $11.2 billion over the prior March quarter's result, and represents the largest year-over-year quarterly revenue growth we've ever generated. This tremendous increase of 83% was fueled by, primarily, by record iPhone sales, very robust demand for iPads..."

"We continue to be thrilled with its momentum. We sold 4.7 million iPads during the March quarter launching iPad 2 in U.S. on March 11 and in 25 additional countries on March 25th. Customer enthusiasm has been tremendous for iPad 2 and we are working hard to get it into the hands of customers as quickly as possible."

"Including both the original iPad and iPad 2, we had distribution in 59 countries by the end of the March quarter. Given the very strong customer demand and despite the increased geographic distribution, iPod channel inventory declined by 400,000 from the beginning of the quarter implying sell-through of about 5.1 million. This resulted in ending channel inventory of below 850,000 which was below our target range of four to six weeks. We sold every iPad 2 that we could make during the quarter, and would have liked to end the quarter with more channel inventory. Recognized revenue from sales of iPad and iPad accessories during the quarter was $2.8 billion."

"Employee demand for iPad in the corporate environment remained strong and CIOs continue to embrace iPad at an unprecedented rate. In just over a year since its debut, 75% of the Fortune 500 are testing or deploying iPad within their enterprises."

"Some recent examples of enterprises that are deploying iPad include; Fortune 500 companies such as Xerox, AutoNation, Yum! Brands, ADP, Boston Scientific, Estee Lauder, Disney, Stryker, Prudential Financial, Rite Aid and USAA."

"Combining iPhone, iPad and iPod touch, we reached just under 189 million cumulative iOS device sales through the end of the March quarter. In March, we introduced iOS 4.3 with new features including faster supply and mobile browsing performance with the Java Nitro Script engine, iTunes Home Sharing, enhancements to AirPlay, and the Personal Hotspot feature for sharing in iPhone 4’s cellular data connection over Wi-Fi."

"In closing, we’re thrilled with the results and accomplishments of our record March quarter. We're extremely pleased with customer response to iPad 2, and are working hard to get it into the hands of customers as fast as we can. We remain very confident in our strategy and are very excited about our new product pipeline."

After the above announcement, the call was opened to questions. Here are the iPad specific questions and answers.

Bill Shope - Goldman Sachs, "I guess digging into another area of supply, looking at your iPad 2 constraints since launch in March, can you give us some color on where the constraints lie and how you're doing in terms of getting supply back in line with demand?"

Tim Cook - COO, "Well, the demand on iPad 2 has been staggering, and we're still amazed that we are still heavily backlogged, not only at the end of the quarter, but also up-to-date. However, I can tell you that I am extremely pleased with the progress of the manufacturing ground, and we were so confident that we rolled out to 25 additional countries at the end of last month, and we are shipping to an additional 13 countries next week and we are planning to add even more countries through the quarter. So, I'm very confident that we could produce a very large number of iPads for the quarter."


Ben Reitzes - Barclays Capital, "I guess my other question was with regard to the iPad constraints, when do you think that you will be to equilibrium or have channel inventory where you need it to be? You were able to say that you increased production a lot for the iPhone. When can you say at least the same thing for the iPad where you feel like you've alleviated the shortage?"

Peter Oppenheimer - SVP and CFO, "Ben, what I would say to this is that, I'm confident we are going to produce a very large number for the quarter. Whether that will be enough to meet demand? I don't know. Demand has been staggering. I am not ongoing to predict when supply and demand will come into balance. I can only be confident on the supply side."

Tim Cook - COO, "Mike, I just saw yesterday, it’s interesting (you should part of) the U.S. The comScore data released yesterday reported that the iOS platform outreaches Android by 59% in the U.S. So, this is a enormous percentage. On a worldwide basis, we just had 18.6 million iPhones, which is up 113%, which is materially faster than the market rate of growth and we launched the iPad 2 and sold everyone of them that we would make. As we said before, we're gaining traction in enterprise with iPhone and iPad with astonishing 88% and 75% respectively of the Fortune 500 companies deploying or testing these. We've got the largest App Store with over 350,000 apps for iPhone and over 65,000 iPad-specific apps on iOS versus what appears to be fewer than 100 on Android. So, we feel very, very good about where we are and we feel great about our future product plan. We've also paid over $2 billion to developers, and we've had well over 10 billion applications downloaded, and so our business proposition is very, very strong. As we said before, we continue to believe and even more and more everyday that iPhone’s integrated approach is materially better than Android’s fragmented approach where you have multiple OSs on multiple devices with different screen resolutions and multiple app stores with different rules, payment methods and update strategies. I think the user appreciates that Apple can take full responsibility for their experience whereas fragmented approach turns the customer into a systems integrator and few customers that I know who want to be a systems integrator."

Gene Munster - Piper Jaffray, "Then, separately, it's great to see Steve attending the iPad 2 event, and since going on medical leave, how closely has he stayed involved with the Company's decisions and do you have any idea when he might return?"

Tim Cook - COO, "He is still on medical leave as you say, but we do see him on a regular basis, and as we've previously said, he continues to be involved in major strategic decisions and I know he wants to be back full times as soon as he can."

Toni Sacconaghi - Sanford Bernstein, "I wanted to revisit the supply question on both iPhone and iPad. So, last quarter, you were chasing iPhone demand, and you said you're going to work as hard as possible to try and make sure you catch up with your demand, and given the inventory build it sounds like you're comfortable and you've gotten there. On the iPads side, it's a little less clear to me. You made I guess over 7 million iPads in the last quarter, in fiscal Q1. This quarter, including the inventory drawdown, maybe there were 5.1 million made. So, was this – I mean, you've proven that you have the capacity or the relationships to build a lot more. Was this simply a forecasting error on the iPad side, and can you comment about linearity of demand and why you couldn't have kept production at a similar rate to the prior quarter and been able fulfill a lot more?"

Tim Cook - COO, "Let me mention a few things for you to consider Toni. First off, product transitions are never simple, and as you can probably appreciate, we are in a position that we have to call them for many, many weeks in advance in terms of how many of the current product we want to produce and the dates at which we will announce the new product. We drew the channel down on the current product or the original iPad I should say, by 570,000 units during the quarter and we added at the end of the quarter 170,000 of the new iPad 2s although most of that was in transit at the end of the quarter. So, the net reduction was 400,000, and so our sell through was about 5 million for the quarter. Again, this has to be planned quite a ways in the future. I think the key point here is – also the dates, just to remind you, we sent out an invitation to the event towards the end of February. We had the event in early March. We placed the units on sale in the United States on March 11 and our quarter ends about two weeks thereafter. So, there was some expectation of a new product and we would have obviously factored that into our thinking about the product transition as we planned a number of the original unit to build. So, I think the key point here is that I am extremely pleased with the progress that we are making on the manufacturing ground. We have gotten off to a materially better start and produced a lot more units than we did on the original ramp of the first iPad, and that when we're so confident with our ability to supply that we've already put on 25 additional countries at the end of March and we will be placing on 13 more next week, and we'll do even more as we step through the quarter."

Chris Whitmore - Deutsche Bank, "Just a follow-up on the iPad question. Can you give us a split of iPad 2 versus iPad 1 as a percentage of the 5 million you shipped in the March quarter?"

Tim Cook - COO, "We purposely aren't giving that because we don't want to help out any of our competition. But I would tell you, I wish we could have produced a lot more iPad 2 because there were certainly a lot of people waiting for."

Peter Oppenheimer - SVP and CFO, "It's a difficult funding environment for schools here in the U.S. We don't see any evidence of share lock and Macs are very popular in schools and iPads are proving to be as well. On a year-over-year basis, we would expect to see a sequential – I am sorry, a year-over-year very significant increase in Mac sales, and are very confident about the product line as we head into the back-to-school season."

Tim Cook - COO, "One thing I would add to that is, this was surprising to me, and I think to several people here is, K-12 is sort of even more conservative than enterprise on a (.Net) technology. Last quarter, we were about a one-to-one ratio of iPads to Mac which is I think very amazing with the short life of the iPads and really demonstrates (what time) the opportunity that probably is there."

Shaw Wu - Sterne, Agee & Leach, "Just on the iPad, in terms of the selling model, does it make sense or is there interest in terms of having it subsidized by service providers at some point?"

Tim Cook - COO, "The iPad today is subsidized in a few markets. It's subsidized in Korea if people sign a 24-month contract. It's subsidized in Japan with a 24-month contract, and a couple of European countries, but the vast majority of people that are using the iPad on 3G are doing so on pay as you go plan and no commitment plan, and yes, carriers can do that, but I think that many customers prefer the pay as you go plan."

Apple Reports Second Quarter Results

Record March Quarter Drives 83 Percent Revenue Growth, 95 Percent Profit Growth
(Read full Transcript here)

Record iPhone Sales Grow 113 Percent

CUPERTINO, California—April 20, 2011—Apple® today announced financial results for its fiscal 2011 second quarter ended March 26, 2011. The Company posted record second quarter revenue of $24.67 billion and record second quarter net profit of $5.99 billion, or $6.40 per diluted share. These results compare to revenue of $13.50 billion and net quarterly profit of $3.07 billion, or $3.33 per diluted share, in the year-ago quarter. Gross margin was 41.4 percent compared to 41.7 percent in the year-ago quarter. International sales accounted for 59 percent of the quarter’s revenue.

Apple sold 3.76 million Macs during the quarter, a 28 percent unit increase over the year-ago quarter. The Company sold 18.65 million iPhones in the quarter, representing 113 percent unit growth over the year-ago quarter. Apple sold 9.02 million iPods during the quarter, representing a 17 percent unit decline from the year-ago quarter. The Company also sold 4.69 million iPads during the quarter.

“With quarterly revenue growth of 83 percent and profit growth of 95 percent, we’re firing on all cylinders,” said Steve Jobs, Apple’s CEO. “We will continue to innovate on all fronts throughout the remainder of the year.”

“We are extremely pleased with our record March quarter revenue and earnings and cash flow from operations of over $6.2 billion,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the third fiscal quarter of 2011, we expect revenue of about $23 billion and we expect diluted earnings per share of about $5.03.”

(Read full Transcript here)

By Carl W. Brooks
Editor, iamthereforeipad.com

Apple Inc Q2 2011 Earnings Call Transcript - April 20 2011

Apple Inc. AAPL
Q2 2011 Earnings Call Transcript

Executives
  • Peter Oppenheimer : SVP and CFO
  • Tim Cook : COO
  • Nancy Paxton : IR

    Analysts
  • Kathryn Huberty : Morgan Stanley
  • Mark Moskowitz : JPMorgan
  • Bill Shope : Goldman Sachs
  • Maynard Um : UBS
  • Richard Gardner : Citigroup
  • Keith Bachman : Bank of Montreal
  • Chris Whitmore : Deutsche Bank
  • Brian Blair : Wedge Partners
  • Ben Reitzes : Barclays Capital
  • Toni Sacconaghi : Sanford Bernstein
  • Scott Craig : Bank of America Merrill Lynch
  • Andy Hargreaves : Pacific Crest
  • Shannon Cross : Cross Research
  • Mike Abramsky : RBC Capital Markets
  • Shaw Wu : Sterne, Agee & Leach
  • Gene Munster : Piper Jaffray

    Transcript Call Date 04/20/2011

    Operator: Please stand by, we're about to begin. Good day, everyone, and welcome to this Apple Incorporated Second Quarter Fiscal Year 2011 Earnings Release Conference Call. Today's call is being recorded.

    At this time for opening remarks and introduction, I would now turn the call over to Ms. Nancy Paxton, Senior Director of Investor Relations. Please go ahead, ma'am.

    Nancy Paxton - IR: Thank you. Good afternoon, and thanks to everyone for joining us today. Speaking today is Apple's CFO, Peter Oppenheimer; and he will be joined by Apple's COO, Tim Cook; and Treasurer, (Gary Wipfler) for the Q&A session with analysts.

    Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements, including without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, stock-based compensation expense, taxes, earnings per share and future products. Actual results or trends could differ materially from our forecasts.

    For more information, please refer to the risk factors discussed in Apple's Form 10-K for 2010, the Form 10-Q for the first quarter of fiscal 2011 and the Form 8-K filed with the SEC today, along with the attached press release. Apple assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

    With that, I’d like to turn the call over to Apple's CFO Peter Oppenheimer for introductory remarks.

    Peter Oppenheimer - SVP and CFO: Thank you, Nancy. Thank you for joining us. We are very pleased to report the highest March quarter revenue and earnings in Apple's history. We set a new all-time quarterly record for iPhone sales, and a new March quarter record for Mac sales, and we are thrilled with the momentum for iPad.

    Revenue for the quarter was $24.7 billion, which was $11.2 billion over the prior March quarter's result, and represents the largest year-over-year quarterly revenue growth we've ever generated. This tremendous increase of 83% was fueled by, primarily, by record iPhone sales, very robust demand for iPads, and strong growth in Mac sales. Operating margin was an all-time high of almost $7.9 billion, representing 31.9% of revenue. Net income was almost $6 billion, which represented 95% growth over the year-ago quarter's earnings and translated to earnings per share of $6.40.

    Turning to the details of the quarter, I'd like to begin with our Mac products and services. We establish a new March quarter record with sales of 3.76 million Macs, representing 28% growth over the year ago quarter. We're extremely pleased with this very strong growth, particularly given IDC's most recently published estimate of a 3% contraction for the PC market overall.

    This result makes the March quarter the 20th consecutive quarter that we've outperformed the PC market. We experienced strong Mac sales growth in each of our operating segment, most notably in the Asia-Pacific segment where Mac sales increased 76% year-over-year.

    The growth in Mac sales was fueled primarily by the continued great popularity of the MacBook Air, which was updated in the December quarter, as well as very strong sales of MacBook Pro. We updated the entire MacBook Pro family during the March quarter with the next generation processors and graphics, high-speed Thunderbolt I/O technology, and a new FaceTime HD camera. The new MacBook Pro lineup offers twice the speed of its previous generation and customer response has been excellent.

    We began and ended the quarter with between three and four weeks of Mac channel inventory.

    During the quarter, we released a developer preview of Mac OS X Lion, which takes some of the best ideas from the iPad and brings them back to the Mac. Lion features Mission Control, an innovative new view of everything running on the Mac, Launchpad, a new home for all your Mac app, full screen apps that use the entire Mac display, and new Multi-Touch gestures. Lion is scheduled to ship the customers this summer and we look forward to showing more of its great features at our Developers Conference in June.

    Moving to our music products, we sold 9 million iPods compared to 10.9 million in the year-ago quarter. Though lower year-over-year, total iPod sales were ahead of our expectations with iPod touch continuing to account for over half of all iPods sold. iPod’s share of the U.S. market for MP3 players remains at over 70% based on the latest monthly data published by (MTD) and iPod continues to be the top selling MP3 player in most countries we track based on the latest data published by GfK.

    We ended the quarter within our target range of four to six weeks of iPod channel inventory. The iTune Store turned in its best quarter ever with revenue of almost $1.4 billion, thanks to record revenue from music, video, iOS apps and books. We were very pleased to begin offering a full catalogues of 17,000 e-books from Random House on the iBookstore during the March quarter. The iBookstore now includes e-books from more than 2,500 publishers in over 20 category and customers have downloaded over 100 million books.

    I would now like to turn to the iPhone. We were thrilled to have sold a record 18.6 million iPhones compared to 8.8 million in the previous March quarter. This represents 113% year-over-year growth, which is significantly ahead of IDC's latest published estimate of 74% growth for the global smartphone market overall in the March quarter. Recognized revenue from iPhone handset and accessory sales was $12.3 billion during the quarter compared to $5.45 billion in the year-ago quarter, an increase of 126%.

    We continue to experience very strong year-over-year iPhone sales growth in all of our operating segments with sales in both the Americas and Asia Pacific regions more than doubling year-over-year. We were able to make a significant increase in our capacity once again, allowing us to expand distribution and get much needed supply to our channel partners. We were very pleased to begin selling iPhones on the Verizon network in the U.S. in the March quarter and we were also happy to add SK Telecom in Korea as well as Saudi Telecom in Saudi Arabia. Including some carrier consolidation we ended the quarter with iPhone distributions to 186 carriers in 90 countries.

    We ended the quarter with about 5.2 million iPhones in channel inventory, a sequential increase of about 1.7 million to support new carrier launches and existing channel partners. This placed us within our target range of four to six weeks of iPhone channel inventory.

    iPhone is continuing to see strong growth within the enterprise segment. Today 88% of the Fortune 500 are testing or deploying iPhone. With strong employee demand and custom app development, (human) adoption, we are seeing great scale of iPhone deployment in businesses worldwide. In fact, hundreds of private and public companies worldwide are supporting thousands of iPhones on their corporate networks. Some examples include, Cisco, Prudential, Boston Scientific, General Motors, American Airlines, Deloitte, Yum! Brands and Xerox.

    Turning to iPad, we continue to be thrilled with its momentum. We sold 4.7 million iPads during the March quarter launching iPad 2 in U.S. on March 11 and in 25 additional countries on March 25th. Customer enthusiasm has been tremendous for iPad 2 and we are working hard to get it into the hands of customers as quickly as possible.

    Including both the original iPad and iPad 2, we had distribution in 59 countries by the end of the March quarter. Given the very strong customer demand and despite the increased geographic distribution, iPod channel inventory declined by 400,000 from the beginning of the quarter implying sell-through of about 5.1 million. This resulted in ending channel inventory of below 850,000 which was below our target range of four to six weeks. We sold every iPad 2 that we could make during the quarter, and would have liked to end the quarter with more channel inventory. Recognized revenue from sales of iPad and iPad accessories during the quarter was $2.8 billion.

    Employee demand for iPad in the corporate environment remained strong and CIOs continue to embrace iPad at an unprecedented rate. In just over a year since its debut, 75% of the Fortune 500 are testing or deploying iPad within their enterprises.

    Some recent examples of enterprises that are deploying iPad include; Fortune 500 companies such as Xerox, AutoNation, Yum! Brands, ADP, Boston Scientific, Estee Lauder, Disney, Stryker, Prudential Financial, Rite Aid and USAA.

    Combining iPhone, iPad and iPod touch, we reached just under 189 million cumulative iOS device sales through the end of the March quarter. In March, we introduced iOS 4.3 with new features including faster supply and mobile browsing performance with the Java Nitro Script engine, iTunes Home Sharing, enhancements to AirPlay, and the Personal Hotspot feature for sharing in iPhone 4’s cellular data connection over Wi-Fi.

    The App Store continues to be incredibly successful with over 350,000 apps available and well over 10 billion downloads to-date. In February, we announced the new subscription service available to all publishers of content-based apps including magazines, newspapers, video and music. Publishers set the price and length of subscription, and customers select the subscription and length they want with one click; and it was also a great pleasure to announce in March that we have made more than $2 billion in payments to developers since opening the App Store.

    I'd now like to turn to the Apple retail stores. We are approaching the retail stores' 10th anniversary on May 19, and we're on the verge of achieving a major milestone. In the next few days, we will be thrilled to welcome our 1 billionth visitor. Store traffic continues to be amazingly strong, and in the March quarter, we hosted a record 71.1 million visitors in our stores, compared to 47 million visitors in the year ago quarter, an increase of 51%.

    Retail revenue was $3.19 billion compared to $1.68 billion in the year ago quarter, an increase of 90%. Capitalizing on the February MacBook Pro update, the stores delivered another record Mac quarter, selling 797,000 Macs compared to 606,000 Macs in the year ago quarter, an increase of 32%, and about half the Macs sold in our stores during the March quarter were to customers who had never owned a Mac before.

    To further enrich our Apple retail customer experience, we recently launched a program called Personal Setup. When customers buy a Mac, iPad, iPhone or iPod touch, our teams help the customers setup the product in the store so that they are up and running before they leave. Personal Setup includes the customer's e-mail, contact, calendar, applications and more. In the March quarter, our stores setup over 1 million products.

    We operated 323 stores during the quarter. Average revenue per store was $9.9 million compared to $5.9 million in the year-ago quarter, an increase of 67%. International retail store sales remained strong with our average international store volume exceeding our very productive average U.S. store volume. Retail segment margin more than doubled year-over-year to $807 million compared to $373 million in the year ago quarter. We anticipate opening 40 new stores in fiscal 2011, nearly three quarters of which will be outside the United States, including our fifth store in China.

    Total Company gross margin was 41.4%, which was 290 basis points higher than our guidance. More than half of this difference came from better product mix than planned, particularly higher iPhone sales. The remainder was largely a result of leverage on the higher revenue and lower than expected commodity, service, and other costs.

    Operating expenses were $2.34 billion, and included $236 million of stock-based compensation expense. OI&E was $26 million and the tax rate for the quarter was 24.2% below our guidance of 25.5% due to changes in our full year forecast of foreign earnings, R&D tax credit, and state taxes.

    Turning to cash, our cash plus short-term and long-term marketable securities totaled $65.8 billion at the end of the March quarter compared to $59.7 billion at the end of the December quarter, a sequential increase of $6.1 billion.

    Cash flow from operations was $6.2 billion, an increase of 157% year-over-year. The increase in cash is net of approximately $900 million in combined prepayments and capital expenditures related to the strategic supply agreement that we referred to in our last quarterly call.

    As we move into the June quarter, I’d like to review our outlook, which includes the types of forward-looking information that Nancy referred at the beginning of the call. We expect revenue to be about $23 billion compared to $15.7 billion in the June quarter last year. We expect gross margins to be about 38% reflecting approximately $55 million related to stock-based compensation expense. We expect OpEx to be about $2.5 billion, including about $255 million related to stock-based compensation expense.

    We expect OI&E to be about $70 million and we expect the tax rate to be about 25%. We are targeting EPS of about $5.03.

    In closing, we’re thrilled with the results and accomplishments of our record March quarter. We're extremely pleased with customer response to iPad 2, and are working hard to get it into the hands of customers as fast as we can. We remain very confident in our strategy and are very excited about our new product pipeline.

    With that, I would like to open the call to questions.

    Nancy Paxton - IR: Thank you, Peter. We ask that you limit yourself to one question and one follow-up. Operator, may we have the first question please.

    Transcript Call Date 04/20/2011
    Operator: Bill Shope, Goldman Sachs.

    Bill Shope - Goldman Sachs: Can you comment, Peter, on whether or not you’re seeing any supply chain disruption from the recent earthquake in Japan, and if so, how should we think about that in terms of that being factored into your guidance?

    Tim Cook - COO: Let me sort of step back and talk about Japan in general and surely try to hit all of your questions in advance. First of all, this is an incredible tragedy and our hearts go out to everyone involved. Apple as a company has a very long history and has many strong ties to people in Japan, and we're very, very saddened by the situation, and we've undertaken various actions to assist in the relief effort, and the economic impact that we'll address today pales in comparison to the human impact. Regarding our business in Japan, we had some revenue impact in Q2, but it was not material to Apple's consolidated results. We believe revenues will be approximately $200 million less than Q3 and this has been factored into the guidance that Peter provided to you earlier in his comments. Regarding our global supply chain, as a result of outstanding team work and unprecedented resilience of our partners, we did not have any supply or cost impact in our fiscal Q2 as a result of the tragedy and we currently do not anticipate any material supply or cost impact in our fiscal Q3. To provide a bit more color on this, we source literally hundreds of items from Japan and they range from components such as LCDs, optical drive, NAND flash and DRAM to base materials such resins, coatings and foil that are part of the production process that's several layers back in the supply chain. The earthquake and subsequent tsunami and the associated nuclear crisis caused disruption for many of these suppliers, and many unaffected suppliers have been impacted by power interruptions. But since the disaster, Apple employees have literally been working around the clock with our supplier partners in Japan, and have been able to implement a number of contingency plans. Our preference from the beginning of this tragedy has been to remain with our long-term partners in Japan, and I have to say they have displayed an incredible resilience that I have personally never seen until now. Further, there are some supply risks that are beyond the current quarter, and although we know of no issue today that we view as unsolvable, the situation is still uncertain and there is obviously no guarantees. For this reason, it's difficult to predict whether the issues created by the tragedy would impact revenues beyond Q3. However, I'll be happy to address Q4 on our next call in July.

    Bill Shope - Goldman Sachs: I guess digging into another area of supply, looking at your iPad 2 constraints since launch in March, can you give us some color on where the constraints lie and how you're doing in terms of getting supply back in line with demand?

    Tim Cook - COO: Well, the demand on iPad 2 has been staggering, and we're still amazed that we are still heavily backlogged, not only at the end of the quarter, but also up-to-date. However, I can tell you that I am extremely pleased with the progress of the manufacturing ground, and we were so confident that we rolled out to 25 additional countries at the end of last month, and we are shipping to an additional 13 countries next week and we are planning to add even more countries through the quarter. So, I'm very confident that we could produce a very large number of iPads for the quarter.

    Operator: Richard Gardner, Citigroup.

    Richard Gardner - Citigroup: I was just hoping to get a little bit more color on what drove the iPhone strength in the quarter if you could by region or carrier; you mentioned that you added SK telecom, and I'm not sure shipments if there were material during the quarter. Then Peter, the follow-up to that I guess is, how do we think about iPhone seasonality going into the June quarter, giving all of the moving parts? We have a full quarter of Verizon in the June quarter, you've got some potential carrier expansion benefit and yet you have a product refresh hopefully coming midyear. So I was hoping you could help us think about that a little bit for the June quarter.

    Tim Cook - COO: In terms of iPhone, we did actually very well everywhere – I'd call out two places that where it was just off the chart. The U.S. grew 155% year-over-year, obviously adding Verizon and beginning to offer iPhone to their enormous customer base was a key in that. However, as you heard from AT&T's announcement this morning, AT&T did extremely well during the quarter. So the U.S., as a geography grew at 155%, and that's about three times IDC's forecast of growth for the smartphone market which was about 48%. Also, we continue to be on a tear in China. Greater China saw iPhone sales being up over three times, almost 250% and this catapulted revenue for the first half or first fiscal half in Greater China to just under $5 billion, which is up almost four times year-over-year. So we're extremely happy with how we're doing in China.

    Peter Oppenheimer - SVP and CFO: Rich, I hit the second part of your question. As I commented in my prepared remarks, we were able to increase the iPhone channel inventory by just over 1.7 million units in the March quarter and we ended within our target four to six-week range of inventory. In terms of the June quarter, I would expect to see a significant year-over-year increase in sales.

    Richard Gardner - Citigroup: Any comment on the sequential, Peter?

    Peter Oppenheimer - SVP and CFO: No, I think I'll leave it at year-over-year. I would expect this be up significantly.

    Operator: Katy Huberty, Morgan Stanley.

    Kathryn Huberty - Morgan Stanley: Just following on the iPhone discussion, what if anything did you learn about the price elasticity curve for the iPhone with the $49 3GS price point in the market this quarter?

    Peter Oppenheimer - SVP and CFO: Katy, it was very popular. It did very, very well.

    Kathryn Huberty - Morgan Stanley: Then also from the perspective of some positive feedback on LTE phones that are out from your competitors, how do you think about the maturity of those networks, an Apple sense of urgency to get products out for those faster networks and what if any bottlenecks exists?

    Tim Cook - COO: I was asked this question or a similar question when we launched the iPhone with Verizon, and what I said then and I still see it as being the case today, and I think you can see this in the product that had been shut, is that the first generation of LTE chipsets, forced a lot of design compromises with the handset, and some of those we are just not willing to make. So, we're extremely happy with the iPhone 4 and iPhone 3GS, and hitting 18.6 million units was something much larger than we thought we could do this quarter and we're happy to have gotten it out to three more large carriers.

    Operator: Shannon Cross, Cross Research.

    Shannon Cross - Cross Research: Could you talk a bit about the international penetration of Mac? Perhaps, Tim, comparing your adoption curve in the U.S. to where we are internationally and if there is any difference in terms of the type of computers that your customers are purchasing internationally?

    Tim Cook - COO: If you look at it Shannon, the growth on the Mac has been enormous in Asia. The last quarter we were up 76% in Asia-Pacific, and this is many multiples of the growth that the region is seeing for the market. I believe the IDC forecasted, it's around 6%, and so we're seeing enormous growth in the Mac there. Japan also did quite well on the Mac for the quarter and the U.S. had a surprisingly strong quarter in the Mac, being up around - Americas was 25%, the U.S. was up just slightly higher than that. Our market share is obviously less outside the U.S. in most places than it is in the U.S., and so I think that speaks very, very well to the opportunities that the Mac has. We've now had 20 quarters in a row where we've outgrown the PC market, and the momentum is still there, and we seem to be the only guys that are really focused on building innovative products in that space.

    Shannon Cross - Cross Research: Has there been any difference between sort of portable desktop purchases internationally or is it sort of trending in line with what you've seen in the U.S.?

    Tim Cook - COO: There are several of the international countries that are extremely portable-focused, and you can see that we had enormous growth in our portables for the quarter. However, part of that is that we had a launch of the new MacBook Pro line. But honestly I see popularity in both the iMac and the portable factor and believe there is a great future for both of them.

    Operator: Keith Bachman, Bank of Montreal.

    Keith Bachman - Bank of Montreal: Peter, could you talk a little bit about the forces impacting your sequential decline in gross margins by, call it, 350 basis points? What are the forces that you want to call out and things that we should be thinking about?

    Peter Oppenheimer - SVP and CFO: Sure. Sequential decline is primarily being driven by the higher mix of iPad. I pointed out in my prepared remarks a moment ago, the iPhone channel inventory increased by 1.7 million units in the March quarter. It (exit) within our four to six week range. Conversely, the iPad channel inventory fell by 400,000 units and we were below our four to six week inventory range. So, those are the forces I would highlight.

    Keith Bachman - Bank of Montreal: Then, perhaps one for Tim on my follow-up related to Shannon's question, how are you seeing different opportunities in the large enterprises with your MacBook in traditional markets of U.S. and Western Europe given the seemingly greater receptiveness towards your iPhones and what will be the tablets, and I think, in other words, is that opening doors to go ahead and get the Macs in with CIOs?

    Tim Cook - COO: It clearly seems to be creating a halo effect for the Mac, and I think that's one reason we see the growth that we're seeing on the Mac. You know it's amazing when you see the 28% year-over-year versus the worldwide market on – and PCs contracting by three points. It's an astonishing delta.

    Operator: Ben Reitzes, Barclays.

    Ben Reitzes - Barclays Capital: Can you talk about the ASP trends for the iPad and the iPhone, what were they in the quarter, and are there any dynamics that would change that as we move throughout the year or at least into the June quarter?

    Peter Oppenheimer - SVP and CFO: Ben, this is Peter. For competitive reasons, I don't want to provide any more precise ASPs for either of these products. We just don't want to help our competitors, but on the data front, you know, we provide you both the iPhone and iPad units that we shipped and revenues which include the accessories so you can make your own estimates.

    Ben Reitzes - Barclays Capital: I guess my other question was with regard to the iPad constraints, when do you think that you will be to equilibrium or have channel inventory where you need it to be? You were able to say that you increased production a lot for the iPhone. When can you say at least the same thing for the iPad where you feel like you've alleviated the shortage?

    Peter Oppenheimer - SVP and CFO: Ben, what I would say to this is that, I'm confident we are going to produce a very large number for the quarter. Whether that will be enough to meet demand? I don't know. Demand has been staggering. I am not ongoing to predict when supply and demand will come into balance. I can only be confident on the supply side.

    Operator: Scott Craig, Bank of America Merrill Lynch.

    Scott Craig - Bank of America Merrill Lynch: Tim, can you may be talk a little bit about the CDMA phone and may be specifically which new markets you are looking at entering with CDMA over the next couple of quarters? Then with regards to the facility investments, can you may be talk with the magnitude of spending you expect as you go through the year with the partners? I mean, in investments both on the CapEx side that you’re making as well as overall investments?

    Tim Cook - COO: On the carrier side, I don't want to get into specifics about CDMA or GSM for that matter, but we are constantly looking at where we should bring on incremental partners. As we have said earlier, we brought on three this quarter, three large ones with Verizon SPT and Saudi Telecom. That's on top of the ones that we brought on in December where we added, O2 and Vodafone in Germany. So we are constantly looking and adding where it makes sense and you can keep confidence that we'll continue to do that.

    Peter Oppenheimer - SVP and CFO: Scott, on your capital question, couple of updates. We expect to spend in our fiscal '11 about $5.7 billion in capital expenditures, that's unchanged from what we told you last quarter. We expect about $700 million of that to be in our retail area and $5 billion on outside of retail. Some of the bigger areas outside of retail and the biggest is in the operations area. We talked about on the last call arrangements we had done with three suppliers. We expect to spend about $3.5 billion during fiscal '11 and fiscal '12 with those three suppliers on those deals in the form prepayments and capital expenditures. As I said in my prepared comments, we expended $900 million of that in the March quarter. We expect to spend the remainder across fiscal '11 and fiscal '12.

    Operator: Mike Abramsky, RBC Capital Markets.

    Mike Abramsky - RBC Capital Markets: It may not be a perfect analogy, but wondering with the rise of Android what might be some of the similarities and differences you see versus the rise of Windows PCs in the 1990s versus Mac and I am just wondering if you think in the U.S., particularly Android could become a possible headwind to your U.S. smartphone business and how do you maintain such incredible growth in the face of that shift?

    Tim Cook - COO: Mike, I just saw yesterday, it’s interesting (you should part of) the U.S. The comScore data released yesterday reported that the iOS platform outreaches Android by 59% in the U.S. So, this is a enormous percentage. On a worldwide basis, we just had 18.6 million iPhones, which is up 113%, which is materially faster than the market rate of growth and we launched the iPad 2 and sold everyone of them that we would make. As we said before, we're gaining traction in enterprise with iPhone and iPad with astonishing 88% and 75% respectively of the Fortune 500 companies deploying or testing these. We've got the largest App Store with over 350,000 apps for iPhone and over 65,000 iPad-specific apps on iOS versus what appears to be fewer than 100 on Android. So, we feel very, very good about where we are and we feel great about our future product plan. We've also paid over $2 billion to developers, and we've had well over 10 billion applications downloaded, and so our business proposition is very, very strong. As we said before, we continue to believe and even more and more everyday that iPhone’s integrated approach is materially better than Android’s fragmented approach where you have multiple OSs on multiple devices with different screen resolutions and multiple app stores with different rules, payment methods and update strategies. I think the user appreciates that Apple can take full responsibility for their experience whereas fragmented approach turns the customer into a systems integrator and few customers that I know who want to be a systems integrator.

    Operator: Gene Munster, Piper Jaffray.

    Gene Munster - Piper Jaffray: A question first on iPhone. Demand obviously has been phenomenal and if we look down the road of the opportunity in the post versus the prepaid markets, are there any considerations that you can share in terms of the UA in terms of price or subsidies or growing market share in this large prepaid market?

    Tim Cook - COO: Gene, our focus has very much been on China. We wanted to understand that market and understand the levers there. As I said before, iPhone sales were up over three times during the quarter. In the first half, we did over – just slightly under $5 billion in Greater China in revenue, which – it is about 10% of Apple, to put it in perspective. It wasn't but a couple of years ago that that number would have been less than 2. So, it's a sea change. That's certainly not a, what I would call, a classic postpaid market by any means of imagination. So, we had some ideas about other countries as well. I am not in a position that I want to share those today, but we purposely put the bulk of our emphasis from an emerging market point of view on China to really learn and then we're going to take that learning to other markets.

    Gene Munster - Piper Jaffray: Do you know if China more than – do you know more than half of China is prepaid?

    Tim Cook - COO: I think considerably more than half of China is prepaid Gene. I think the first digit was over the nine.

    Gene Munster - Piper Jaffray: Then, separately, it's great to see Steve attending the iPad 2 event, and since going on medical leave, how closely has he stayed involved with the Company's decisions and do you have any idea when he might return?

    Tim Cook - COO: He is still on medical leave as you say, but we do see him on a regular basis, and as we've previously said, he continues to be involved in major strategic decisions and I know he wants to be back full times as soon as he can.

    Operator: Toni Sacconaghi, Sanford Bernstein.

    Toni Sacconaghi - Sanford Bernstein: I wanted to revisit the supply question on both iPhone and iPad. So, last quarter, you were chasing iPhone demand, and you said you're going to work as hard as possible to try and make sure you catch up with your demand, and given the inventory build it sounds like you're comfortable and you've gotten there. On the iPads side, it's a little less clear to me. You made I guess over 7 million iPads in the last quarter, in fiscal Q1. This quarter, including the inventory drawdown, maybe there were 5.1 million made. So, was this – I mean, you've proven that you have the capacity or the relationships to build a lot more. Was this simply a forecasting error on the iPad side, and can you comment about linearity of demand and why you couldn't have kept production at a similar rate to the prior quarter and been able fulfill a lot more?

    Tim Cook - COO: Let me mention a few things for you to consider Toni. First off, product transitions are never simple, and as you can probably appreciate, we are in a position that we have to call them for many, many weeks in advance in terms of how many of the current product we want to produce and the dates at which we will announce the new product. We drew the channel down on the current product or the original iPad I should say, by 570,000 units during the quarter and we added at the end of the quarter 170,000 of the new iPad 2s although most of that was in transit at the end of the quarter. So, the net reduction was 400,000, and so our sell through was about 5 million for the quarter. Again, this has to be planned quite a ways in the future. I think the key point here is – also the dates, just to remind you, we sent out an invitation to the event towards the end of February. We had the event in early March. We placed the units on sale in the United States on March 11 and our quarter ends about two weeks thereafter. So, there was some expectation of a new product and we would have obviously factored that into our thinking about the product transition as we planned a number of the original unit to build. So, I think the key point here is that I am extremely pleased with the progress that we are making on the manufacturing ground. We have gotten off to a materially better start and produced a lot more units than we did on the original ramp of the first iPad, and that when we're so confident with our ability to supply that we've already put on 25 additional countries at the end of March and we will be placing on 13 more next week, and we'll do even more as we step through the quarter.

    Toni Sacconaghi - Sanford Bernstein: If I could turn to another topic, which is just your overall guidance for next quarter on the revenue and EPS side, i.e., if I look back at your last eight quarters, Q2 to Q3 last eight years, seven of the eight you've been flat to up in revenues and eight out of eight you've been up in EPS sequentially from Q2 to Q3. On both of those metrics, you're providing guidance that is dramatically down double-digits. Can you comment on forces at work? Obviously, you're typically pretty conservative in your guidance, but what are the things that are kind of underpinning those directionally, those assumptions particularly since you're pointing to a dramatic increase in iPads.

    Peter Oppenheimer - SVP and CFO: Let me start with top line. I would highlight two things, first of all, our sequential revenue guidance of $23 million is a 7% decline, and it had been up in prior years, and two things to point out. First of all, in our most recent March quarter, we were able to increase the iPhone channel inventory by 1.7 million units and within our target range, and that had not occurred in any of the prior years. Second, last year we launched the iPad in the year-ago June quarter, and it was a fabulous launch contributing $2.2 billion in revenue without a comparison to the prior March quarter, and we obviously have that comparison this year. On a year-over-year basis, I am very pleased to be providing revenue guidance for growth of 46% year-over-year, and EPS growing almost as quickly at 43%.

    Operator: Chris Whitmore, Deutsche Bank.

    Chris Whitmore - Deutsche Bank: Just a follow-up on the iPad question. Can you give us a split of iPad 2 versus iPad 1 as a percentage of the 5 million you shipped in the March quarter?

    Tim Cook - COO: We purposely aren't giving that because we don't want to help out any of our competition. But I would tell you, I wish we could have produced a lot more iPad 2 because there were certainly a lot of people waiting for.

    Chris Whitmore - Deutsche Bank: Secondly, to follow up on the sequential revenue guidance question, can you provide any color what you expect for Macs, particularly as we enter the educational buying season? Have you seen any pressure on school budgets that is creating a little caution with respect to your Mac business?

    Peter Oppenheimer - SVP and CFO: It's a difficult funding environment for schools here in the U.S. We don't see any evidence of share lock and Macs are very popular in schools and iPads are proving to be as well. On a year-over-year basis, we would expect to see a sequential – I am sorry, a year-over-year very significant increase in Mac sales, and are very confident about the product line as we head into the back-to-school season.

    Tim Cook - COO: One thing I would add to that is, this was surprising to me, and I think to several people here is, K-12 is sort of even more conservative than enterprise on a (.Net) technology. Last quarter, we were about a one-to-one ratio of iPads to Mac which is I think very amazing with the short life of the iPads and really demonstrates (what time) the opportunity that probably is there.

    Operator: Brian Blair, Wedge Partners.

    Brian Blair - Wedge Partners: For the last several years, we've seen a new iPhone in June and we've seen a new iPod models in September. Can you maybe just share some of your views on how you historically view that one year time horizon for new products and maybe talk about what might cause that kind of a timeline to change?

    Tim Cook - COO: We never comment on announced products. So I don't have anything to share from that perspective.

    Brian Blair - Wedge Partners: You touched on it a little bit, but could you maybe give some updated thoughts on how you view the supply/demand balance right now for the iPhone? You talked a bit about it with iPad, but one of the things that's really stuck out to me in the last few quarters is your – it's just the demand has been so great globally, especially as you've added new carriers, but you still haven't met demand for the iPhone. Can you maybe just give us some updated thoughts on that?

    Tim Cook - COO: By the end of the quarter, we were in supply/demand balance in almost all of our major markets, and I would say as of today we are in supply/demand balance virtually everywhere. The other products, the Mac is in supply/demand balance and the iPod is in supply/demand balance, and the iPad has the mother of all backlog that we are working very, very hard to get out to customers as quickly as we can.

    Operator: Andy Hargreaves, Pacific Crest.

    Andy Hargreaves - Pacific Crest: Can we just go back to the supply stuff real quick? Can you clarify would it require some kind of new disruption to cause problems beyond fiscal Q3 or (where) comment just that we could run low on inventory and if production doesn't get at full capacity, there would be issues later in the year?

    Tim Cook - COO: Sorry, I wasn't trying to be unclear. I am saying that as of today, we currently do not anticipate any material supply or cost. In fact, as far as that goes in our fiscal Q3, that's the quarter that we're in now that ends in the June. Beyond June, there are risks, but there's no issue that we're aware of today that we view as unsolvable. However, new things could happen and I am sure you've been paying attention in the news, there's aftershock, there's still uncertainty about the nuclear plant, there's power interruption. If that stayed at the level that is today, I am not as worried. I would worry if something happen and took a turn for the worst and obviously, I can't predict that and certainly hope that it does not occur.

    Andy Hargreaves - Pacific Crest: Then just on iPhone. You talked a lot about the number of new Mac customers every quarter. Can you give us any help on what the mix is of replacement sales versus new customers or what your total user base is there?

    Tim Cook - COO: It's a number that we haven't given out before and so, it's a number that we hold tight to the (best).

    Operator: Shaw Wu, Sterne, Agee & Leach.

    Shaw Wu - Sterne, Agee & Leach: Just two quick ones. Just back on components, it seems if you look at other vendors and spot pricing, component pricing has actually been increasing. Just wanted a little more color why Apple has been able to beat that. I know you're a very well run company obviously, just a little more color on that.

    Tim Cook - COO: Certainly, spot market (does bite), this is particularly true if you follow the NAND flash and the DRAM market. However, we do not typically buy in the spot market, and so for that reason we see very minimal impact. Beyond Q3, I am saying I am not sure because it's tough to see that far, but for Q3, we feel very good. Companies that buy on the spot market would obviously be seeing something extremely differently than we would.

    Shaw Wu - Sterne, Agee & Leach: Just on the iPad, in terms of the selling model, does it make sense or is there interest in terms of having it subsidized by service providers at some point?

    Tim Cook - COO: The iPad today is subsidized in a few markets. It's subsidized in Korea if people sign a 24-month contract. It's subsidized in Japan with a 24-month contract, and a couple of European countries, but the vast majority of people that are using the iPad on 3G are doing so on pay as you go plan and no commitment plan, and yes, carriers can do that, but I think that many customers prefer the pay as you go plan.

    Operator: Maynard Um, UBS.

    Maynard Um - UBS: Two questions. Last year when you gave gross margin guidance for the fiscal third quarter, I think one thing you mentioned was a new product transition that would impact the gross margins. Just curious if that's also a factor? You didn't mention that. Secondly, if you could just talk a little bit about the suit against Samsung, and just wondering how that might impact anything on your component supply relationship.

    Peter Oppenheimer - SVP and CFO: I'll take your gross margin question. It's hard for us to comment on gross margin changes year-over-year because we're in different product cycles, commodity environment, different mixes and other factors, so I prefer just to talk about it sequentially and I gave you really the biggest drivers of the change that we see. We expect to have a sequential increase in terms of our mix of iPad sales, and also expect our revenues to be down sequentially a little bit and to lose some leverage. So, those are the factors that I think are important on a sequential basis for gross margin.

    Tim Cook - COO: On your question on Samsung, we are Samsung's largest customer, and Samsung is a very valued components supplier to us, and I expect the strong relationship will continue. Separately from this, we felt the Mobile Communication Division of Samsung had crossed the line, and after trying for some time to work the issue we decided we needed to rely on the courts.

    Operator: Mark Moskowitz, JPMorgan.

    Mark Moskowitz - JPMorgan: Tim, you mentioned earlier about the success of the iTunes here. Can you talk a little philosophically about what could be the next to really optimize that platform in terms of cloud-like capabilities? Then, Peter, the question for you is really around the OpEx. How should we think about OpEx? Does your guidance already imply that you'll have to increase some (S&M) employees to serve these greater reach of enterprises or is that already kind of in the model?

    Peter Oppenheimer - SVP and CFO: I'll take both your questions. We don't talk about what we'll do in the future, so I am quite limited to what we can say about the future of iTunes. We operate the most popular store in the world giving customers a fabulous experience. We have the largest library and have provided more content to more customers than anybody. We're very confident about what we're doing and what we will do in the future. I can't take it beyond there. In terms of OpEx, we've provided guidance for the June quarter of about $2.5 billion, and that includes our thinking for the investments that we're going to make in the quarter for the business. We are investing in engineering, in our retail stores, we're investing in our indirect distribution, which would include covering the enterprise, and infrastructure investments that we need to support the terrific growth that you've seen from the Company. I'm glad that we are making good investments that are paying off, but also continuing to provide leverage in the model.

    Nancy Paxton - IR: A replay of today's call will be available for two weeks as a podcast on the iTunes Store, as a webcast on apple.com/investor, and by telephone, and the numbers for the telephone replay are 888-203-1112 or 719-457-0820. Confirmation code is 821-8881. These replays will be available beginning at approximately 5.00 pm Pacific Time today. Members of the press with additional questions can contact Steve Dowling at 408-974-1896, and financial analysts can contact Joan Hoover or me with additional questions. Joan is at 408-974-4570, and I'm at 408-974-5420. Thanks again for joining us.

    Operator: Ladies and gentlemen, that does end today's presentation. We do thank everyone for your participation.