Apple 2009 Annual Report Download - page 46

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Table of Contents
Fiscal Year 2008 versus 2007
Net sales during 2008 increased 35% or $8.5 billion from 2007. Several factors contributed to these increases including the following:
Segment Operating Performance
The Company manages its business primarily on a geographic basis. The Company’
s reportable operating segments consist of the Americas,
Europe, Japan and Retail. The Americas, Europe and Japan reportable segments do not include activities related to the Retail segment. The
Americas segment includes both North and South America. The Europe segment includes European countries as well as the Middle East and
Africa. The Retail segment operates Apple-
owned retail stores in the U.S. and in international markets. Each reportable geographic operating
segment and the Retail operating segment provide similar hardware and software products and similar services. Further information regarding
the Company’s operating segments may be found in Note 9, “Segment Information and Geographic Data”
in Notes to Consolidated Financial
Statements of this Form 10-K.
43
September 2009 and September 2008 and a stronger U.S. dollar, offset partially by a higher product mix of iPod touch.
•
Mac net sales increased $4.0 billion or 38% during 2008 compared to 2007, while Mac unit sales increased by 2.7 million units or
38%. Net sales related to the Company’s Mac shipments accounted for 44% of the Company’
s total net revenue. Higher Mac unit
sales, which contributed to the increases in net sales, were driven by higher sales of all of the Company’
s Mac portable products as
well as the popularity of the iMac, which experienced strong growth in net sales and unit sales in all of the Company’
s reportable
segments. Unit sales of the Company’s Mac portable products accounted for 62% of the Company’
s personal computer shipments in
both 2008 and 2007. Net sales and unit sales of the Company’
s Mac portable products both increased by 38% during 2008 compared
to 2007. This growth was attributable to strong demand for all the Mac portable products, particularly the MacBook, which had
double-digit growth in all of the Company’
s operating segments, and the addition of the MacBook Air, which was introduced to the
Company’s Mac portable product line in January 2008. Growth of the Company’
s Mac desktop systems was also strong, with
increased net sales and unit sales of 39% and 37%, respectively, during 2008 due primarily to strong sales of the iMac in all of the
Company
’
s operating segments.
•
Net sales of iPods increased $848 million or 10% during 2008 compared to 2007 whereas unit sales of iPods increased 6% compared
to 2007. The iPod unit growth was due to strong demand for the iPod touch, and to a lesser extent, higher unit sales of the iPod
shuffle due to a price reduction in February 2008. iPod net sales grew faster than iPod unit sales due to higher average selling prices
caused by a shift in overall iPod product mix to the higher priced iPod touch.
•
Net sales of iPhone and related products and services were $1.8 billion for 2008, with iPhone handset unit sales totaling 11.6 million.
Net sales of iPhone and related products and services were $123 million in 2007, which represented sales for one fiscal quarter.
iPhone revenue includes the portion of handset revenue recognized in the relevant period in accordance with subscription accounting
over the product’s currently estimated 24-
month economic life, as well as revenue from sales of iPhone accessories and from carrier
agreements.
•
Net sales of other music related products and services increased $844 million or 34% during 2008 compared to 2007, due primarily
to significantly increased net sales from the iTunes Store in each of the Company’
s geographic segments. The Company believes this
success is the result of heightened consumer interest in downloading third-party digital content, the expansion of third-
party audio
and video content available for sale and rent via the iTunes Store, and the launch of the iTunes App Store. The Company continues to
expand its iTunes content offerings around the world.