IPhone the Star of Last Quarter, Apple CEO Says

Development for Apple Watch “is right on schedule” and shipments are expected to begin in April, Apple CEO Tim Cook said Tuesday on an earnings call. Developers are hard at work on apps “all designed specifically” for the Apple Watch's user interface, he said. Cook has “very high” expectations for the Apple Watch, he said. “I'm using it every day and love it and I can’t live without it. So I see that we’re making great progress on the development of it. The number of developers that are writing apps for it" is "impressive and we’re seeing some incredible innovation coming out there.” The iPhone was the star of Apple’s Q1 ended Dec. 31, Cook said. That Apple sold on average 34,000 iPhones every hour that quarter is a volume that’s “hard to comprehend,” Cook said. Apple sold 74.5 million iPhones in the quarter, an increase of 23.4 million over last year, representing 46 percent unit growth, said Chief Financial Officer Luca Maestri. Sales of iPhones grew strongly in both developed and emerging markets, Maestri said, including a 44 percent increase in the U.S. and a 97 percent increase in Brazil, Russia, India and China, he said. The company's stock closed up 5.6 percent at $115.31 Wednesday. The introduction of the large-screen iPhone 6 Plus helped push iPhone average selling prices $50 higher than a year earlier, to $687, Maestri said. The downside of iPhone’s popularity was that iPhone “channel inventory” fell by 200,000 units in the quarter, “and we were not able to reach supply-demand balance until this month,” Maestri said. “This left us below our target range of five to seven weeks of channel inventory on a look-forward basis.” Apple works with "about 375 carriers, representing 72 percent of the world’s mobile phone subscriber base, and we have over 210,000 points of sale for iPhone across the globe,” said the CFO. Apple thinks its iPhone strength will be sustainable throughout calendar 2015, Cook said. “We are incredibly bullish about iPhone going forward,” he said. “We believe that it’s the best smartphone in the world. Our customers are telling us that. The market is telling us that. We’re doing well in virtually every corner of the world." Only a “small fraction” of the iPhone installed base has upgraded to iPhone 6 or iPhone 6 Plus, he said, suggesting sales momentum will continue. “We had the highest number of customers new to iPhone last quarter than in any prior launch,” including the “highest Android switcher rate in any of the last three launches in the three previous years,” he said. Asked to quantify that “small fraction” of iPhone users who have upgraded to an iPhone 6 or 6 Plus, it’s “a number that's in the mid-teens or barely in the teens,” Cook said. “There is an enormous amount left. And given there are fair amount of Android units out there, there is also an enormous amount of Android customers that could switch. And I’d also remind you that there is a lot of people that have not yet bought a smartphone. And I know it doesn’t feel like that when you’re sitting in the United States.”