MacBook has Apple walking on AirApril 23, 2008: 7:47 PM ET
iPod growth has stalled. The iPhone is basically doing as expected. So in Apple's financial results, the real surprise was the MacBook Air.
This time, gadgets didn't save the day for Apple (AAPL). Even after adding a pink iPod nano to its lineup in time for Valentine's Day, the company sold just 100,000 more iPods in the first three months of this year than it did a year before. iPhone sales came in 26 percent (or 600,000 units) lower than the holiday quarter, which isn't a great sign.
Mac computer sales, on the other hand, fell only 1 percent compared to the holiday quarter. This is huge. The holidays are the biggest single season for every PC retailer, and for Apple's Mac sales, it's as though Christmas came twice. The star in the Mac family would have to be the MacBook Air, the ultra-thin laptop unveiled in January that has been the top-selling computer at its online store for much of the year. "The customers love it," said Tim Cook, Apple chief operating officer.
While singing the Air's praises, Cook also downplayed the iPhone's sales skid. "We expected iPhone to decline more on a sequential basis than it did," he said. "As we got toward the end of the quarter we started to experience some stock-outs." He blamed some of those shortages on a "significant" number of people who are buying phones in U.S. Apple stores to unlock them for sale overseas.
The constrained iPod and iPhone sales leave Apple investors in the unfamiliar position of relying on computers again (gasp!) to provide growth. That used to be a dangerous proposition; before Apple moved to Intel (INTC) processors for its computers, Mac sales would routinely spike for a couple of quarters with a new design and then trail off.
Now that seems to have changed. Apple has found a comfortable groove selling black and white consumer laptops, and metallic professional laptops, and – MacBook Air aside – sales are less driven by sleek new designs. In the most recent quarter, Apple appears to have grown computer sales at 3.5 times the industry average, well above competitors like Hewlett-Packard (HPQ) and Dell (DELL). But how long can this Mac revival last?
There's little reason to expect it must stop anytime soon. The current quarter includes the "Dads and Grads" season when consumers traditionally buy electronics for Father's Day and graduations, and that could help laptop sales. Next quarter includes the back-to-school season, when Apple typically updates the iMac desktop line. And Microsoft's (MSFT) Windows Vista operating system isn't soon scheduled for any overhauls that would make it look better next to Mac OS X.
The bottom line is that Apple's stock could well hold on to the 40 percent it has gained since investors got spooked and dumped it in January. That is, if its MacBooks can keep walking on air.