Apple 2004 Annual Report Download - page 35

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operating system in April 2003 and higher sales of iPod services and accessories consistent with the increase in iPod net sales and
unit sales during 2003.
•
Although total Macintosh unit sales were down 3% in 2003, unit sales of the Company's portable systems were relatively strong
primarily due to the 69% or 247,000 unit increase in PowerBook unit sales, slightly offset by a 4% or 30,000 unit decrease in
iBook unit sales. The increase in PowerBook net sales of $468 million or 56% was due primarily to the success of the Company's
new 12-inch, 15-inch and 17-inch models that were introduced during 2003. The decline in iBook consumer portable sales during
2003 was primarily due to a lower average price per unit. Portable systems represented 42% of all Macintosh systems sold in
2003 versus 33% in 2002, which reflected an overall industry trend towards portable systems.
•
The Company's average net sales per Macintosh unit sold increased 2% to $1,491 in 2003 as a result of various changes in overall
unit mix towards relatively higher-priced PowerBook systems and increases direct sales primarily from the Company's retail and
online stores, offset by somewhat lower year-over-year pricing on comparable Macintosh systems for most of the Company's
Macintosh product lines in response to industry pricing pressure, particularly with the Company's iBook consumer portable
systems. PowerBook and Power Macintosh systems accounted for 42% of total unit sales in 2003 versus 36% in 2002.
•
Net sales of software increased $55 million or 18% during 2003 compared to the prior year and reflected higher net sales of
Apple-branded application and server software and third-party software. Net sales of Apple-branded application and server
software increased due to the introduction of several new software titles during fiscal 2003 including Final Cut Express, iLife, and
Keynote, as well as from higher sales of software related to recent acquisitions including PowerSchool and Emagic. Growth in net
sales of third-party software during 2003 was particularly strong in the Americas Segment due to strong sales of software by the
Company's online store and its Retail segment.
•
Service and other sales rose $55 million or 24% during 2003 which primarily resulted from significant year
-
over
-
year increases in
net sales associated with APP extended maintenance and support services, as well as the Company's Internet related services.
Increased net sales associated with APP were primarily the result of increasing attach rates over the last several years. Increased
net sales associated with Internet services were due to increased net sales of the Company's .Mac Internet service.
Offsetting the favorable factors discussed above, the Company's net sales during 2003 were negatively impacted by the following factors:
• Total unit sales of desktop systems fell 15% during 2003 compared to 2002. iMac systems unit sales declined 16% from 2003 to
2002 resulting from a shift in sales away from desktop systems in favor of portables. Also, the flat panel iMac form factor
available during fiscal 2003 was in the eighth quarter of its life cycle by the end of 2003.
• Unit sales of Power Macintosh systems fell 13% during 2003 compared to 2002. For the first nine months of 2003 compared to
the same period in 2002, unit sales of Power Macintosh systems decreased 24%, which was representative of the decline of Power
Macintosh systems sales experienced by the Company during recent years and was also believed to be attributable to delays in
purchasing pending the release of the Power Mac G5. As expected, this trend reversed in the fourth quarter of 2003 with unit sales
increasing 26% during the quarter as compared to the same period in the prior year due largely to the new Power Mac G5, which
the Company introduced in June 2003 and began shipping at the end of fiscal 2003. The decline in Power Macintosh sales over
the previous several years also reflects the shift in sales to portable systems, particularly PowerBooks. In addition, the Company
believes that weak economic conditions over the past
32