Apple 2006 Annual Report Download - page 59

Download and view the complete annual report

Please find page 59 of the 2006 Apple annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 143

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143

Mac OS X net sales during 2006 compared to 2005. The decrease in desktop net sales was due to the shift in product mix toward portable
Macintosh systems. Mac OS X sales have decreased from 2005 since the Company has not released a new version of Mac OS X since Tiger
began shipping in April 2005.
During 2005, net sales in the Europe segment grew $1.3 billion or 71% from 2004. Total Macintosh unit sales in Europe also experienced
growth during the current year by increasing 47% in 2005 compared to 2004. Consistent with the Americas segment, Europe experienced
strong net sales of desktop products, iPod, other music related products and services, and software and service sales. Demand in Europe during
2005 was particularly strong for the Company’s desktop computers, which experienced a year-over-
year increase of 56% from 2004. Similar to
the results of the Company’s other segments, net sales of iPods, peripherals and software were strong in 2005.
Japan
Japan’s net sales increased $288 million or 31% during 2006 compared to 2005. The Japan segment experienced increased net sales in iPods,
Macintosh portable products, and other music related products and services. Consistent with the Company’
s other segments, Japan experienced
increases in sales of iPods due to the introduction of the iPod with video-playing capabilities and the iPod nano in October and September of
2005, respectively. Japan also experienced strong sales of the Intel-based MacBook and increased sales from the iTunes Store. These increases
were partially offset by decreases in net sales of Macintosh desktop products, displays, and Mac OS X. The decreases in desktop products and
displays reflect the overall shift in product mix toward portable Macintosh systems. Mac OS X sales have decreased from 2005 since the
Company has not released a new version of Mac OS X since Tiger began shipping in April 2005. Total Macintosh unit sales during 2006
remained relatively flat compared to 2005. The relatively flat growth in Macintosh unit sales is partially attributable to Japan’s overall slow
consumer PC market growth. The Company is continuing to evaluate ways to improve its indirect and direct channel sales in Japan.
Japan’s net sales and Macintosh unit sales were up 36% and 8%, respectively, during 2005 compared to 2004. Japan experienced increased net
sales in desktop products, iPod, and other music related products and services. Desktop net sales and unit sales increased by 31% and 41%,
respectively, and iPod sales increased by 220% during 2005 compared to 2004. The overall increase in net sales was partially offset by a
decline in portable system net sales during 2005 compared to 2004, which the Company believes might have been attributable to a shift in sales
from portables to the iMac G5 and Mac mini, and a shift to the Retail segment as a result of opening two additional stores in Japan during
2005.
Retail
The Company opened 41 new retail stores during 2006, including a total of 10 international stores in the U.K., Japan, and Canada, bringing the
total number of open stores to 165 as of September 30, 2006. This compares to 124 open stores as of September 24, 2005 and 86 open stores as
of September 25, 2004.
The Retail segment’s net sales increased by 43% to $3.4 billion during 2006 compared to 2005. Retail segment Macintosh unit sales increased
45% during 2006 compared to 2005. With an average of 142 stores open during 2006, average revenue per store increased to $23.6 million
compared to $22.4 million during 2005 and $15.6 million in 2004. The current year increase was primarily due to strong sales of Macintosh
portable and desktop products, iPods, and other music related products and services. Sales of iPods increased primarily due to the introduction
of the updated iPod with video-playing capabilities in October 2005 and the iPod nano during September 2005. The increase in other music
related products and services was due to increased sales of Apple-branded and third-party iPod accessories. Macintosh portable and desktop
sales increased due to strong sales of the Intel-based MacBook, MacBook Pro, and iMac.
As measured by the Company’s operating segment reporting, the Retail segment reported operating income of $198 million during 2006 as
compared to operating income of $151 million during 2005 and
58