Apple Leads Phone Market In RevenueApple Leads Phone Market In Revenue

Apple iPad 2 3G Teardown

Apple reported strong financial results for its fiscal 2011 second quarter on Wednesday. The company raked in $24.67 billion in revenue and earned a net profit of $5.99 billion. Those numbers are both up almost 100% compared to the year-ago quarter, when Apple pulled in $13.5 billion in revenue and $3.05 billion in profit.

In terms of device sales, Apple sold 3.76 million Macs, which it said represented a 28% increase over the year-ago quarter. The company also pushed a solid 9.02 million iPods during the quarter, up 17% from the year-ago period. Apple didn't provide a breakdown of iPod sales by model. For example, how many iPod Touches were sold compared to how many iPod Nanos, Shuffles, and Classics? That would be a good number to have, since it would give us a better idea of the footprint of the iOS operating system.

In a bit of a surprise, Apple didn't sell as many iPads as Wall Street had expected. Analysts pegged the number of iPads sold during the quarter to be at or about 6 million. Instead, Apple sold merely 4.69 million iPads. The company didn't provide a break down of how many original iPads versus iPad 2s were sold.

Apple sold a whopping 18.65 million iPhones worldwide--including 3.6 million to AT&T customers and 2.2 million to Verizon Wireless customers. Apple indicated that iPhone sales jumped 113%. To put that into perspective, Apple is selling iPhones at the rate of about 207,222 per day. Meanwhile, Google says that 350,000 Android handsets are sold each day. Clearly, all of the various models of smartphones running Android are in total selling in much greater numbers than the iPhone.

In total, Apple sold 23.24 million mobile computing products. The iPhone alone was responsible for $12.3 billion of Apple's $24.67 billion in quarterly revenue. That's just a smidge over half of Apple's business. Add in the iPad, and its iOS devices represent about $15 billion, or 60%, of Apple's earnings. Apple has fully surpassed Nokia as the world's largest supplier of mobile phones in terms of revenue. Apple's iPhone business, at $12.3 billion, easily bests Nokia's total of $9.6 billion in sales. Nokia still leads by volume, however.

"With strong volumes and high wholesale prices, the PC vendor has successfully captured revenue leadership of the total handset market in less than four years," Alex Spektor, a senior analyst with Strategy Analytics, said to Reuters.

The change in Apple's core business is striking. With 60% of its revenues being generated by iOS-based devices, it has transcended its computer-making roots to become a truly mobile company.

The question now is, where does Apple go from here?

The company's Worldwide Developers Conference is next on Apple's radar. It will use that event to showcase OS X Lion and hopefully iOS 5.0, too. The iPhone 5 will appear eventually, and Apple dropped a few hints about what we can expect. Apple's COO Tim Cook hinted (again) that the company is still not sold on the Long Term Evolution chipsets available at the moment. That means we can probably count out LTE in the next iPhone.

According to Verizon CFO Fran Shammo, the next iPhone will be able to work on AT&T's and Verizon's networks, meaning Apple may be making a dual-mode GSM/CDMA iPhone. That would give Apple just one device to sell to both networks. Apple hasn't corroborated Shammo's statement.

One thing Apple can't do is sit on its laurels. Android smartphones are already outselling the iPhone by 150,000 handsets per day--and that rate is still accelerating. By mid-summer, the number of available 4G-capable Android smartphones will be near a dozen. There are already a half-dozen decent competing tablets in the market, with more on the way. Apple needs to continue to add features to the iPhone and iPad to keep customers coming back.

In its press release, Apple CEO Steve Jobs said, "With quarterly revenue growth of 83% and profit growth of 95%, we're firing on all cylinders. We will continue to innovate on all fronts throughout the remainder of the year."