MacRumors

Research firm IDC yesterday released its estimates of global mobile phone and smartphone shipments for the third quarter of 2012, revealing that the iPhone 5 launch helped Apple gain market share over the year-ago period that saw customers holding out for the iPhone 4S launch. The few days of iPhone 5 sales in the quarter were not, however, enough to halt a continuing slide in market share over the past few quarters as Samsung in particular has maintained very strong growth at the top of the market.

In the smartphone market, Apple's shipments of 26.9 million iPhones were up a healthy 57.3% year-over-year, outpacing overall market growth of 45.3% and boosting Apple's share from 13.8% to 15.0%. Apple's share was, however, pegged at 16.9% in the prior quarter.

With Samsung still declining to release official sales number, IDC estimated the company's smartphone shipments at 56.3 million during the quarter, doubling year-over-year and pushing Samsung's leading share of the worldwide market to 31.3%. And with Nokia's share of the smartphone market imploding as it tries to reinvent itself on the back of Windows Phone 8, no other manufacturer besides Samsung and Apple has a market share above 8%.

iPhone shipments finished the quarter nearly flat from the previous quarter, reaching a total of 26.9 million units. Although the iPhone 5 was only on the market for one week in 3Q12, the aggressive rollout of the device resulted in more than 5 million iPhones sold in the first weekend of availability, which helped buoy Apple's shipment totals. iPhone sales weren't dampened by the introduction of its Maps software, which was not completely ready for use. Instead, the iPhone 5's larger screen and 4G LTE connectivity generated user interest. What remains to be seen is how Apple will fare during the holiday quarter, when the iPhone 5 will be available in more countries worldwide.

In the overall mobile phone market, Apple continues to ride the smartphone boom with its 57.3% annual unit growth easily outpacing the overall market's 2.4% growth. The performance enabled Apple to take 6.1% of the mobile phone market during the quarter, up from 3.9% in the year-ago quarter but down from 6.4% in the previous quarter.

With Apple providing guidance yesterday of $52 billion in total company revenue for the current quarter, it seems that the company is unsurprisingly projecting a significant boost in iPhone sales numbers as the iPhone 5 sees a full quarter of availability in the early launch markets and Apple works to extend the device to its goal of 100 countries by the end of the quarter.

Apple started pre-orders for the iPad mini and 4th Generation iPad early this morning at 3AM Eastern / 12AM Pacific. As noted in our forums, the initial stock of White iPad minis sold out quickly in the U.S. Within the first 17 minutes, ship dates for the white iPad mini slipped to 2 weeks from the original "Delivers 11/2". The black Wi-Fi iPad mini remains available for delivery by November 2nd.

Of course, its hard to tell how much of the stock out is related to high demand vs. low supply. We suspect stocks may have been low as others have noted that countries outside the U.S. listed "2 week" delivery times from the first moment the white iPad minis went on sale.

As typical, Apple will also offer the iPad mini in retail stores on launch day. Apple keeps a sizable stock of devices to be available on the official launch day of products. The Wi-Fi iPad mini will be available in retail stores starting on November 2nd. Meanwhile, the cellular version is promised by mid-November.

As instructed by a UK court, Apple has posted a small link in the footer of Apple.com/uk. The notice acknowledges the judgement that Samsung had not infringed on the iPad design with their Galaxy Tab. The text of the notice starts:

On 9th July 2012 the High Court of Justice of England and Wales ruled that Samsung Electronic (UK) Limited’s Galaxy Tablet Computer, namely the Galaxy Tab 10.1, Tab 8.9 and Tab 7.7 do not infringe Apple’s registered design No. 0000181607-0001

But Apple's notice is somewhat playful and goes on to quote directly from the judgement where the Judge describes that Apple's design is "cool" and ultimately the Samsung design is simply not as cool. The Judge wrote:

"The informed user's overall impression of each of the Samsung Galaxy Tablets is the following. From the front they belong to the family which includes the Apple design; but the Samsung products are very thin, almost insubstantial members of that family with unusual details on the back. They do not have the same understated and extreme simplicity which is possessed by the Apple design. They are not as cool."

Apple goes on to explain that the case was also tried in Germany and that in that court Samsung was found guilty. In the end, they write "So while the U.K. court did not find Samsung guilty of infringement, other courts have recognized that in the course of creating its Galaxy tablet, Samsung willfully copied Apple's far more popular iPad."

The link must remain on Apple UK website for a period of one month, and Apple is also required to run ads acknowledging the ruling.

Apple is now accepting pre-orders for the iPad mini and the fourth-generation iPad. U.S. customers can also order iPad mini + Cellular models on Verizon, AT&T or Sprint. Prices for the iPad mini are $329 (16GB), $429 (32GB), and $529 (64GB). Cellular models cost $130 more, and all models come in white or black.

Delivery for pre-orders of Wi-Fi models is expected on November 2nd. Alternatively, customers will be able to purchase at retail locations on that same date. Apple's online store is currently quoting "Mid November" shipping for cellular models in the United States, with other countries seeing "Late November" availability for those models.

Apple's Online Store has gone offline in preparation for iPad mini pre-orders. Pre-orders for the iPad mini and the fourth-generation iPad will likely begin at 12:01am Pacific and 3:01am Eastern on October 26th.

Customers can begin pre-ordering all models of iPad mini and all models of the fourth generation iPad on Friday, October 26 through the Apple Online Store in the US, Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Korea, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Singapore, Spain, Sweden, Switzerland and the UK.

iPad mini with Wi-Fi models will be available for purchase in retail stores on Friday, November 2, with pre-orders beginning to arrive that same day. iPad mini with Cellular models will begin shipping a few weeks after the Wi-Fi models, first in the U.S. on AT&T, Sprint and Verizon with other countries following later.

Fourth generation iPad preorders begin tonight as well, with similar availability to the iPad mini.

In September, The Wall Street Journal reported that Apple was in licensing negotiations with record labels to create a Pandora-like music service. The next day, the New York Post reported that talks were hung up over licensing fees.

Earlier today, it was Bloomberg breaking the story. The wire service reported the music service would launch in the first quarter of next year, and, just like last time, anonymous record company executives are pouring water on the deal, saying record companies still want Apple to improve its offer. This time, CNET has the story:

The negotiations are ongoing so the terms could change, but the sources said Apple has offered to pay a lower royalty rate than Pandora pays even though it wants to provide iTunes users with the ability to do more with the music than Pandora's customers enjoy. Pandora, the leading Internet radio service, pays a statutory rate set by Congress. Under the terms of this rate, Pandora must limit the way users interact with songs, such as capping the number of times they can listen to the same song or an individual artist.

In exchange for this greater flexibility with songs, Apple is offering a percentage of the ad sales generated by the service. CNET's sources say that some of the sector's leaders don't believe the cut Apple put on the table is big enough. Others in the music industry, however, argue it's good for the overall business if Apple takes on Pandora.

It seems likely that these negotiations are playing themselves out in the press, as well as behind boardroom doors.

Apple has increased the amount of money charged for App Store pricing tiers for a number of countries across the European Union. The lowest tier is now €0.89, up from €0.79. It is equivalent to the $0.99 tier in the U.S. MacStories has confirmed the following countries have seen a change in pricing:

- Italy
- Spain
- Netherlands
- Portugal
- Greece
- Poland
- Germany
- France
- Belgium
- Austria
- Czech Republic
- Denmark
- Luxembourg
- Hungary
- Russia

Additionally, several countries have seen App Store pricing change from U.S. dollars to local currencies. Apps in India are now being priced in Rupees, apps in Saudi Arabia are being priced in Saudi Riyals, and customers in the United Arab Emirates, Russia, Indonesia, Israel, Turkey, and South Africa are all seeing purchases listed in local currencies now.

During Apple's fourth quarter earnings call today, CEO Tim Cook explained the company's pricing philosophy for the iPad mini in some detail. The following is a portion of our rough transcript:

When we set out to build it, we didn't set out to build a small, cheap tablet. We set out to build a smaller iPad that offered the full iPad experience. The difference between us and the competition is profound. 35% larger screen than 7" tablets. 2 great cameras. Fastest communications with dual bank Wi-Fi. Fit and finish of our precision enclosure is breathtaking when held in your hands. That's what we've done, the iPad mini has higher costs and gross margin is significantly below our corporate average. Height of the cost curve, but we want to make a large number and we're going to work to try to get down the cost curve and get more efficient with manufacturing as we've done with our other products.

One of the things we try to do is to create a product that people will love for months and years and continue using. That's what iPad Mini is designed to do. You can see that more broadly on iPad by looking at the usage statistics. Over 90% of web traffic from tablets is from iPads. Apple will not make a product that somebody may feel good about for the moment, but then won't use when they get home. That's not the experience we want our customers to have. I would encourage you to use an iPad mini and I don't think you'd be using anything other than an iPad once you do that.

Apple today announced financial results for the third calendar quarter and fourth fiscal quarter of 2012. For the quarter, Apple posted revenue of $36.0 billion and net quarterly profit of $8.2 billion, or $8.67 per diluted share, compared to revenue of $28.27 billion and net quarterly profit of $6.62 billion, or $7.05 per diluted share, in the year-ago quarter. Apple had provided guidance for this quarter of $34 billion in revenue and earnings of $7.65 per share.

Apple reported total revenue of $156.5 billion and net profit of $41.7 billion for fiscal 2012, both company records. In fiscal 2011, Apple earned $25.9 billion on $108.2 billion in sales.

Gross margin for the quarter was 40.0 percent, compared to 40.3 percent in the year-ago quarter, and international sales accounted for 60 percent of revenue. Apple's quarterly profit and revenue were both company records for the September quarter. Apple also declared another dividend payment of $2.65 per share payable on November 15 to shareholders as of the close of trading on November 12. The company now had $124.25 billion in cash and marketable securities.

Quarterly iPhone unit sales reached 26.9 million, up 58 percent from the year-ago quarter, and the company sold 14.0 million iPads, up 26 percent year-over-year. Apple sold 4.9 million Macintosh computers, a unit increase of 1 percent over the year-ago quarter, as well as 5.3 million iPods, representing a 19 percent unit decline year-over-year.

“We’re very proud to end a fantastic fiscal year with record September quarter results,” said Tim Cook, Apple’s CEO. “We’re entering this holiday season with the best iPhone, iPad, Mac and iPod products ever, and we remain very confident in our new product pipeline.”

Apple's guidance for the first quarter of fiscal 2013 includes expected revenue of $52 billion and earnings per diluted share of $11.75.

Apple will provide live streaming of its Q4 2012 financial results conference call at 2:00 PM Pacific, and MacRumors will update this story with coverage of the conference call highlights.

Earnings Call Highlights

- New September quarter records for iPhone, iPad and Mac unit sales. Highest Sept quarter revenue and profit ever.
- Sold 4.9 million Macs, 1% growth year over year compared to IDC estimates of 8% contraction of global computer market.
- Portables make up 80% of Mac unit mix, highest ever.
- 3-4 weeks of Mac channel inventory, off from 4-5 weeks of preferred.

- iPod Touch accounts for more than half of iPods sold.
- iPod share is 70%+ of market, still top mp3 player in most countries.

- iTunes Store produced record results of $2.1 billion.
- New iTunes launching soon.

- 58% year over year growth of iPhones, versus 35% for smartphone market over the quarter.
- Demand for iPhone 5 continues to outstrip supply.
- 9.1 million iPhones in channel inventory, up 800k from last week. Below target 4-6 weeks of iPhone channel inventory.
- Touting how Canon and Amtrak use the iPhone, as well as reporters from BBC, CTV and the Wall Street Journal.

- iPad sales were ahead of Apple's internal expectations. Strong year over year growth across all geographies.
- Talking about enterprise companies using iPad including Volkswagen (more than 30 internal iPad apps).

- Sold 44 million iOS devices in September quarter.
- New quarterly record for app sales.

- Made a number of improvements to Maps in the past month, won't stop improving.

- $4.2 billion for Retail stores. Up 18% year over year. Store's best iPhone launch ever. New quarterly record for Mac sales, moving 1.1 million Macs. 18 new stores in 10 countries including 1st store in Sweden. 390 stores total. 94 million visitors vs 77.5 million last year. 19,000 visitors per store per week.

- Tax rate of 25.2% for fiscal 2012.
- Cash of $121.3 billion at end of the quarter, up $4 billion from prior quarter.
- Paid $2.5 billion in cash dividend in August.
- $2.65 / share dividend comes out in November.
- Entered share repurchase program, may also repurchase shares in open market share transactions.

- Strongest product pipeline ever.

Q&A

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Bloomberg reports that Apple appears to hoping to wrap up deals for an online music service in the next few weeks, targeting a launch for the first quarter of next year.

Apple Inc. and major music labels have intensified negotiations to start an advertising-supported Internet radio service by early next year, according to people with knowledge of the talks.

Talks are centered in part around how to share ad revenue and a deal could be reached by mid-November, with Apple starting a service within the first three months of 2013, said the people, who asked not to be named because discussions are still in progress.

The report says that executives from Vivendi, Universal, Warner, and Sony have all visited Apple's headquarters in recent weeks to learn more about Apple's plans.

Advertising is said to be a central issue in the negotiations, with Apple seeing the service as a way to strengthen its iAd offerings while music labels are seeking a share of that ad revenue and the ability to insert their own advertising into listeners' streams.

Rumors of a potential streaming music service from Apple have been circulating for quite some time, but gained significant steam last month when The Wall Street Journal and The New York Times filed reports outlining Apple's plans to compete with Pandora and other similar services. But unlike those services, which operate under compulsory licenses that restrict users' abilities to skip tracks the frequency with which tracks can be played, Apple is seeking to strike its own licenses with music labels that would permit more flexible usage.

Philip Elmer-Dewitt has put together his list of analyst predictions ahead of Apple's quarterly earnings report this afternoon. The list includes estimates from 36 analysts: 16 "independent" and 20 "institutional" who work for large investment houses or research organizations.

As usual, the independents are much more bullish than the institutional analysts. The independent consensus expects earnings per share (EPS) of $9.66 on revenue of $37.23 billion. The institutional consensus is EPS of $8.75 on $35.51 billion in revenue. This is a 5% difference on revenue and a 10% difference on EPS, a smaller gap than we've seen in recent quarters.

Last quarter the company earned $8.8 billion in profit on revenue of $35 billion. For this quarter, Apple issued guidance of $34 billion in revenue with profits of $7.65 per share. The company typically exceeds its guidance by a significant margin.

Apple will announce its earnings for the fourth fiscal quarter of 2012 (third calendar quarter of 2012) and host a conference call regarding the release this afternoon at 5:00 PM Eastern / 2:00 PM Pacific. The earnings release itself typically comes in around 4:30 PM Eastern. MacRumors will have live coverage of the proceedings.

Though the September quarter is the final quarter of Apple's fiscal year, AllThingsD quotes JP Morgan analyst Mark Moskowitz:

"Our view is that September quarter numbers do not matter," J.P. Morgan analyst Mark Moskowitz said in a Wednesday research note to clients. "Apple can miss or beat. It does not matter. … In our view, the two important iPhone and iPad launches set the stage for big numbers to be reported in late January 2013 as relates to December quarter results."

Digitimes reports that one of the primary reasons that Apple was unable or unwilling to launch the iPad mini at a price below $329 is ongoing difficulties with touchscreen production as Apple transitions to new "GF2 Dito" technology.

The sources said the DITO film sensor is having mass production issues, which has been a big contributor to why the device is approximately 40-50% more expensive compared to other 7-inch tablets that have OGS or G/G structures.

The sources said that GF2 touch screen modules are only about roughly US$5 cheaper than G/G ones for the 9.7-inch iPad models.

Apple's transition to the new touch structure was mentioned by KGI Securities analyst Ming-Chi Kuo back in late August, with Kuo noting that hurdles experienced in that transition were one of the primary reasons that prevented Apple from launching iPad mini earlier than it did.

Today's report also notes that supply chain sources are continuing to see orders for the iPad 2 extending as far as the first quarter of next year, suggesting that Apple will indeed keep that model available for some time. One analyst had speculated last week that Apple might drop the iPad 2 in favor of the iPad mini in order to maintain a streamline product lineup, but at its media event this week the company was clear that the iPad 2 at $399 Wi-Fi/$529 cellular remains an integral part of its iPad portfolio even as the third-generation iPad has been discontinued.

iFixit has already performed one of its traditional high-quality teardowns on the new 13-inch Retina MacBook Pro, noting that while those looking to repair their machines face many of the same challenges seen with the 15-inch model, there are a few changes that improve accessibility somewhat.

One of the most interesting changes relative to the larger model is a battery layout that leaves the area underneath the trackpad free of battery cells. In place of battery cells in that location, Apple has elected to mount the 13-inch model's flash storage, a move that allows access to the trackpad for replacement if necessary.

Another one of iFixit's major criticisms of the 15-inch Retina MacBook Pro design was the glued-in battery cells that were found to be extremely difficult and time-consuming to remove without puncturing the cells. In the new 13-inch model, two of the six battery cells are housed in a metal tray that includes no adhesive, while the remaining four cells still required roughly 15 minutes of work to pry loose from the case.

The teardown of the 13-inch model otherwise yields few surprises compared to the larger 15-inch model, and the similar challenges of soldered RAM, proprietary screws, integrated display, and glued-in battery have led iFixit to award the 13-inch model a repairability score of 2 out of 10, one point higher than the 15-inch model.

Apple has posted a new television ad for the 13" MacBook Pro with Retina Display. The spot showcases a number of different Apple apps including Mail, Final Cut Pro, Aperture, and iTunes. The new machine is aimed at "the pro in all of us."

Introducing the new 13" MacBook Pro.

With the stunning Retina display.

For the pro in all of us.

Colocation data center Macminicolo has already gotten its hands on the new Mac mini, putting all three stock models through benchmarking tests and sharing initial impressions of the machines.

Geekbench results, which focus strictly on processor and memory performance, show a marginal increase in performance for the entry-level machine compared to the previous generation, with more substantial gains coming in the higher-end models tapping into quad-core Ivy Bridge processors. Early impressions of the latest models include:

- Don’t look now, but the new Mac minis are getting comparable to the last gen Xserve and 2010 Mac Pros as far as benchmarks. Tech progress marches on.
- All Mac minis now come standard with 4GB of RAM. Thank goodness. As of last week, the base Mac mini had 2GB of RAM and that was brutal with Mountain Lion.
- The Mac mini can officially be upgraded to 16GB now. It’s been possible for over a year, but it had to be done after ordering. Now, Apple offers the 16GB of RAM.
- The base mini is still i5, but the middle and high end minis are quad core i7 Ivy Bridge processors. That middle mini is the most interesting. Many customers prefer the quad core for things like an Xcode build server or for plenty of cores to spread between virtual machines. That $799 Mac mini is going to be very popular.
- The machines now come with 1600MHz DDR3 Memory. Seriously, 16GB of 1600MHz RAM in such a small machine. It’s really quite amazing.

Another colocation center, Mac Mini Vault, has also taken a look at the new Mac mini, noting that their machine arrived running a custom Build 12B2080 of OS X 10.8.1. The company also performed a quick teardown of the machine, noting that Apple has tweaked the fan design since last year's model and also made some changes to the wireless antennas.