Apple ships 7.4M iPhones in Q3, says corporate demand 'is very strong'

Apple shipped 7.4 million iPhones in its fiscal third quarter, setting a record for the company and improving upon the 6.9 million devices it shipped in the quarter following the launch of the iPhone 3G last year. The iPhone numbers contributed significantly to Apple's most profitable quarter ever.  

The company had a net profit of $1.67 billion, up 47 percent from the $1.14 billion profit it had in the year-ago quarter. The smartphone and computer maker also booked $9.87 billion in revenue, up 25 percent from $7.9 billion in the year-ago quarter. Apple's gross margin was 36.6 percent, up from 34.7 percent in the same period last year.

Apple's iPhone shipments include its 3G device, launched last year and currently available from AT&T Mobility for $99, and the new 3GS device, introduced July 19 and available starting at $199. Apple said it sold over 1 million units of the iPhone 3GS, which added video and MMS capabilities, in its first weekend of availability.

Apple Chief Operating Officer Timothy Cook said employee demand for the iPhone in the corporate market "is very strong." He indicated that the iPhone is either being deployed or "piloted" in more than 50 percent of the Fortune 100 companies in the U.S. In Europe, the same trend is occurring in about 50 percent of the Financial Times 100, Cook said. "And so we feel very good with the progress that we've made since the iPhone 3GS was announced," he said, according to a transcript from Seeking Alpha.

Cook said another key market for Apple--that some people call the enterprise--is higher education institutions. He said more than 350 higher-ed institutions have approved iPhones for faculty, staff and students. "In addition to both of these, we continue to be very happy with our sales in the government arena," he said.

Further, Apple executives indicated that the company struggled to meet demand throughout the quarter, implying the company could have sold more iPhones than it reported. "I would have liked to have had more, honestly, because we were still short in some countries at quarter end. As I indicated, it was early October before we were able to get supply and demand balanced in some countries," Cook said.

And research firms appear to be backing up that claim. According to market research outfit iSuppli, the iPhone is "dramatically outperforming" the overall smartphone market. The firm said worldwide smartphone unit shipments are set to rise by 11.6 percent this year over the previous year, while shipments of Apple's iPhones are set to soar by 37 percent during the same period.

Industry watchers pointed to a number of elements likely to add momentum to Apple's iPhone push, including the company's recently announced deal to sell the iPhone in China, the world's largest wireless market, a move away from exclusivity deal with carriers and growth in the enterprise sector. JD Power and Associates last week ranked the iPhone No. 1 in customer satisfaction for smartphones in business.

Cook also had some choice words for competitors scrambling to cash in on smartphones such as Pre maker Palm, BlackBerry maker Research In Motion, Windows Mobile vendor Microsoft and Google via its Android platform. "Frankly I think that people are really just trying to catch up with the first iPhone that was announced two years ago, and we've long since moved beyond that," he said.

For more:
- see this conference call transcript
- read this NYT article
- take a look at this release

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