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Apple's iPhone, iPad sales jump driven in part by lower price points

Anticipation over Apple?s financial results reached new highs this week in light of the recent weakness that the company?s stocks have shown. However, once again Apple did not disappoint, reporting significant increases in iPhone and iPad sales.

In a conference call with analysts to discuss the results, Apple executives pointed to the broad appeal of the iPad. Executives also discussed the success of Apple?s new pricing strategy and carrier subsidies.

?We just reported the most amazing March quarter that Apple has ever had,? said Tim Cook, CEO at Apple, Cupertino, CA. ?We feel very good about our business and our product line.

?Customers are loving the new iPad,? he said. ?The new iPad is now available in over 40 countries and we saw very strong growth of iPad sales around the world, with sales more than doubling in each of our segments.?

?IPad continues to open doors to new customers with whom Apple previously had no relationship.?

Meeting customer demand
Following a spectacular run up in its stock value, the smartphone and tablet maker saw its stock value drop by 10 percent over the past couple of weeks. Despite the drop, Apple?s shares are still up over 40 percent this year and are likely to get another boost following the strong second quarter results posted yesterday by the company.

Part of Apple?s success is being drive by the iPad. Apple said sold 11.8 million iPads during the quarter, a 151 percent unit increase over the year-ago quarter.

The newest iPad was the company?s fastest roll out ever in part because the manufacturing ramp up for the launch insured there was enough product in the pipeline to meet customer demand. As a result, Apple was able to sell 3 million units of the new iPad in the first few days that it was available.

IPad is being driven by growing momentum in the education, business and government sectors as well as with consumers around the world.

Apple also said it sold 35.1 million iPhones in the second quarter, up 88 percent from the same period a year ago.

The number of Macs sold was also up, by 7 percent, while the number of iPods sold declined 15 percent.

The strong sale helped drive up revenues, which totaled $39.2 billion, up from $24.7 billion in the same quarter a year ago.

The company also reported that there are over 600,000 apps in the Apple App Store, over 200,000 of which are for the Pad.

Carrier subsidies
One of the topics during the call was wireless carriers, who are increasingly vocal about how their subsidization of expensive smartphones such as the iPhone is impacting their profits.

If carriers were to end their subsidies for the iPhone, this could impact future sales but the company said it is not concerned because carriers want to provide their customers with what they want to buy and the iPhone is the best smartphone in the world.

The iPhone offers several advantages to carriers, according to Apple, including that it has the lowest churn rate, offer better data efficiency than other phones and is the best option for enticing customers using a feature phone to upgrade to a smartphone.

The company also pointed out that the subsidies are not that large relative to the payments carriers receive from customers during the life of a two-year contract.

The price is right
During the conference call, Apple said its recent experiments with a broad range of price points for the both iPhone and the iPad have been successful.

With the release of the newest iPad, Apple decreased the entry price on the older model iPad to $399.

The company made a similar move in the fall when it lowered the entry level price for the iPhone.

?We are thrilled with the results we have seen,? Mr. Cook said. ?This unlocks some education demand [for the iPad] and in several countries, there was a marked change in demand at that price point.

?On the iPhone, we continue to be happy with the moves we made in pricing a few months ago,? he said. ?Both of them contributed to our ability to achieve 35 million in sales, which is our second highest quarter of all time.?