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Apple Earnings Prove the Post-PC Era Is Upon Us
Apple Earnings Prove the Post-PC Era Is Upon Us

By Jennifer LeClaire
October 29, 2013 1:15PM

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The macro story is this: tablets like the iPad and smartphones including the iPhone are overtaking PCs and Macs. Even still, Apple is making strategic investments in its Mac Pro line, understanding that the market may be dipping but not disappearing, said Roger Entner, a principal analyst at Recon Analytics.

Tech giant Apple posted big gains in iPhone sales, setting a new September quarter record. Although some will point to the company’s entry into new markets for its success, there is nevertheless a post-PC world story to tell -- and Apple is telling it well.

The company posted quarterly revenue of $37.5 billion and quarterly net profit of $7.5 billion, or $8.26 per diluted share. These results compare to revenue of $36 billion and net profit of $8.2 billion, or $8.67 per diluted share, in the year-ago quarter. International sales accounted for 60 percent of the quarter’s revenue.

How did Apple do it? The company sold 33.8 million iPhones, a record for the September quarter, compared to 26.9 million in the year-ago quarter. Apple also sold 14.1 million iPads during the quarter, compared to 14 million in the year-ago quarter. Meanwhile, the company sold 4.6 million Macs, compared to 4.9 million in the year-ago quarter.

So what does all this really mean for Apple and for the greater tech industry?

Apple’s Macro Story

We caught up with Roger Entner, a principal analyst at Recon Analytics, to get his take on Apple’s earnings from a technology perspective. He told us Apple has the macro story right: tablets and smartphones are overtaking PCs and Macs. Even still, Apple is making strategic investments in its Mac Pro line, understanding that the market may be dipping but not disappearing.

“The new Mac Pro desktop is a massive step forward,” Entner said. “What is holding computing back -- and that is true from desktop computers to laptops to tablets and to phones -- is heat. The more we compute the more power we need and as a side effect the hotter the device becomes. If we find ways of running things cooler with less power we can run them faster.”

Entner said the Mac Pro is cooler and extremely silent, more silent than any previous Apple desktop. As he sees it, the company is ahead of the curve in terms of solving the heat problem in computing devices. That could help its longevity in the post-PC era.

Apple’s Achilles Heel?

On the mobile front, Entner called the iPad Air a category-defining machine, even a quantum leap. He’s been waiting for years for a reason to upgrade to the new tablet and the iPad Air justifies the spend with another "massive step forward." Where Apple may need to adjust its strategy, though, is with the iconic iPhone.

“Apple only has three SKUs: iPhone 5s, 5c, and 4s. If you don’t like one of those then you are out of luck. And if you want a larger device or a smaller device, you are out of luck,” Entner said. “The trend with mobile handsets has moved to larger screens and Apple is not playing there right now -- and is not going to play there for at least another year.”

Entner is convinced Apple went too small with the iPhone 5. And he said it has nothing to do with a so-called post-Steve Jobs Apple. The company may have decided to stay small based on its ability to scale apps to the screen. In any case, Samsung is proving that the market has shifted.

“People love to have the bigger screen,” Entner said. “Unfortunately, since Apple has a two-year form factor upgrade cycle they are stuck. They were a little bit late last year and they are definitely late this year on the form factor screen size. That’s what’s holding them back.”

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