2nd Quarter Conference Hilights

[MacRumors]

The 2nd Quarter Financial Conference Call took place today.

In the Question and Answer session, the following information was provided:

- Regarding Best Buy Pilot. It ran its natural course and its performance is undergoing analysis at this time.
- IBM's PowerPC 970 90nm was the sole constrained supply causing the Xserve G5 delays. This supply is expected to ramp up over this quarter.
- HP iPod to start shipments in Summer. Already shipping iTunes on HP computers.
- Some iTunes albums are priced higher than $9.99, but this is due to higher prices charged by record labels.

 

[Trowaman]

as stated in the other post I found the news of apple store london this year to be interesting, but, whatever.

 

[goof_ball]

Some good....some bad.

Hopefully IBM can get faster G5s out the door.

 

[klaus]

- IBM's PowerPC 970 90nm was the sole constrained supply causing the Xserve G5 delays. This supply is expected to ramp up over this quarter.

Well, all the rumors about "production problems" with the 90 mm 970 Fx, can now be buried 10 feet under the ground

up to the next rumor about delays!

Ps: congrats apple to great quarter results!

 

[szark]

Well, all the rumors about "production problems" with the 90 mm 970 Fx, can now be buried 10 feet under the ground

The 970FX is the 90 nm 970, so all of those rumors are apparently true.

...and that would also be causing delays in any PowerMac updates.

 

[captain kirk]

Some good....some bad.

Hopefully IBM can get faster G5s out the door.

I am starting to seriously worry that ibm is turning into crapperola. My guess is that ibm will not be able to meet Steveo's pledge of 3Ghz within 12 months. This doesn't make any sense given ibm's quality production methods etc. However it has now been proven, IBM could not deliver the 90nm G5's in volume on time, sounds like motorola to me. I guess all that remains now is for the next G5 revision to go to a 1.8 Ghz top of the line.

 

[klaus]

The 970FX is the 90 nm 970, so all of those rumors are apparently true.

...and that would also be causing delays in any PowerMac updates.

I meant problems concerning the processors itself, not supply problems. If I read between the lines correctly, they had trouble supplying sufficient processors, so the delay is caused by bad supply, not troubles with the processor technology itself.

Or am i missing something here

 

[klaus]

I guess all that remains now is for the next G5 revision to go to a 1.8 Ghz top of the line.

You mean 2.8 ghz right? They won't be going backwards

 

[vouder17]

The meeting was mainly Music related!!! Well at least the last half.
I wish someone would have asked something along the lines of why they haven't revamped the computer product line, and if this has affected there sales????

But still good results apple

 

[cuneglasus]

The 970FX is the 90 nm 970, so all of those rumors are apparently true.

...and that would also be causing delays in any PowerMac updates.

\

On the other hand that doesnt mean every rumor you hear about 970fx production problems is true.Most are just FUD.

And remember that the xserves were announced long before the 970fx went into production.A delay was to be expected.No one can predict a timetable that close.At this point it wouldnt even be honest to say the powermacs were delayed as they have only been shipping about 6 months.They are due for an upgrade,by Apple standards,only about now.

 

[Soc7777777]

i dont believe...

i dont believe that the constrained supply was just a production issue... i think there was also some type of problem with the technology... i mean how could supply delay you a couple of months???? thats a long time for 'supply' issues... all they would have had to do is start mass producing that chip, and for a company the size of ibm with its resources that wouldnt have been hard... i thing they had a problem coming up with a fully functional supply of the 970FX..

 

[ajb13]

Explanation

I meant problems concerning the processors itself, not supply problems. If I read between the lines correctly, they had trouble supplying sufficient processors, so the delay is caused by bad supply, not troubles with the processor technology itself.

Or am i missing something here

The delay is not as a result of bad processor technology. Problems in supplying 1st gen chips normally revolve around 2 factors. 1) Actual yield of usable chips on a wafer, and 2) reconfiguring the hardware to produce wafers that yield the optimum of usable chips.

So, the delay could be because they are curretly unable to get enough good chips out of a 300mm wafer, or that they are producing so many different chips ate the moment, that they do not have the resources to throw at generating G5's and need to reconfigure some hardware to handle the extra load.

Definitely one of the above.

 

[geerlingguy]

IBM needs to get on the ball!

Gee whiz. IBM needs to fix their problems asap and ship a few thousand chips to Apple! I want faster G5s... they won't begin full-scale production on faster chips until they have a steady line of 970FXs out the door.

 

[eroyce]

Not surprising

The meeting was mainly Music related!!! Well at least the last half.
I wish someone would have asked something along the lines of why they haven't revamped the computer product line, and if this has affected there sales????

But still good results apple

It is not surprising that Apple did not discuss future products; every analyst call, someone asks about future products, and every time, Fred Anderson says the same thing "we do not comment on future product development". You were incorrect, one analyst did ask the question during they call, and as expected they answered "no comment". Were you really expecting anything else?
Also a correction on it being mostly music related. Things were decidedly mostly supply and gross margin related. Sure there was talk about music, but they also rebuffed those with similar "no comment on songs sold".

 

[tex210]

...due to higher prices charged by record labels.

I was hoping they weren't going to do that.
Now they will raise singles next.

 

[klaus]

1) Actual yield of usable chips on a wafer

Those wafers you talk about must be those circle shaped flashy boards they show at the g5 ibm movie right? So am I right to assume they can theoretically get 100 processors from one wafer (not a corrrect number). And it's possible that only 70% of the ones they can poor out of it, are 'working' ones.

Correct? Cause I don't follow the manufacturing of processors very closely to know all this ****

 

[bankshot]

- Some iTunes albums are priced higher than $9.99, but this is due to higher prices charged by record labels.

And I can't imagine why the record companies are doing this. For example, Joe Satriani's Is There Love In Space?, which just came out yesterday, is priced at $13.99. Yet for 7 cents more (including sales tax) I got a physical copy of the CD, liner notes, and a wristband to go see Joe play to 200 people at Tower Records tomorrow night, followed by an autograph session. Where's the value in buying it from iTunes? Hmm, I guess I could have had it at 2am after release instead of waiting til the store opened at 9am. Big whoop.

It's almost as if the record companies are deliberately doing this to make legal downloads fail. Are they still that afraid of having to adapt their business model to the new distribution method? It's insane. I almost think Apple should have stipulated that iTunes albums couldn't cost more than $9.99 per equivalent physical disc, rather than simply recommending it. But then they would have had more trouble convincing the record companies to sign on.

It'll be interesting how this all pans out over the next several years.

 

[Spagolli94]

And I can't imagine why the record companies are doing this. For example, Joe Satriani's Is There Love In Space?, which just came out yesterday, is priced at $13.99. Yet for 7 cents more (including sales tax) I got a physical copy of the CD, liner notes, and a wristband to go see Joe play to 200 people at Tower Records tomorrow night, followed by an autograph session. Where's the value in buying it from iTunes? Hmm, I guess I could have had it at 2am after release instead of waiting til the store opened at 9am. Big whoop.

It's almost as if the record companies are deliberately doing this to make legal downloads fail. Are they still that afraid of having to adapt their business model to the new distribution method? It's insane. I almost think Apple should have stipulated that iTunes albums couldn't cost more than $9.99 per equivalent physical disc, rather than simply recommending it. But then they would have had more trouble convincing the record companies to sign on.

It'll be interesting how this all pans out over the next several years.

I throw the jacket and liner notes away anyway.

I don't like to buy songs I don't like. iTunes I can preview and buy only the ones I want.

Then, whether I buy songs or the whole album, it automatically downloaded and it's on my iPod as soon as I plug it in.

Instant gratification is the main selling point of iTunes. The old fashioned way, you have to go to the store, then wait in line, come home rip the CD to your hard drive, etc. And on top of that, half the album usually sucks anyway.

I'm all for this new music revolution... I just wish Apple would be as enthusiastic about their hardware as they are about their music.

 

[pkradd]

iTunes/Pepsi

Fred Anderson, in response to a question, said information on how the iTMS/Pepsi promotion went will be addressed closer to the April 28 anniversary date of iTMS. He did say that iTMS made a small profit in the quarter but would not speculate on how it will do in the next (a usual response). He also said constraints of manufacturing capability of the XServe and iPod mini were not holding back supplies but processor shortfalls on the former and lack of mini drives for the latter were. The static problem he said was isolated and those people should contact Applecare. I did and will be returning my "crackling mini" to Apple Friday when I get the return shipping carton, probably tomorrow. It's under warranty (as are all mini's) at this time.

Predictions. Look for new 4th Gen iPods by the end of the month and announcements of iTMS in other countries.

 

[neutrino23]

Gee whiz. IBM needs to fix their problems asap and ship a few thousand chips to Apple! I want faster G5s... they won't begin full-scale production on faster chips until they have a steady line of 970FXs out the door.

I share your sentiment but I am not ready to criticize IBM for being lackadaisical. I sometimes work at the edges of semiconductor failure analysis. Bringing out a 90nm process with the various technologies that IBM uses is nothing short of astounding. Waiting is hard but once they have this process nailed down we'll see a good supply of very tasty chips.

 

[szark]

Those wafers you talk about must be those circle shaped flashy boards they show at the g5 ibm movie right? So am I right to assume they can theoretically get 100 processors from one wafer (not a corrrect number). And it's possible that only 70% of the ones they can poor out of it, are 'working' ones.

Correct? Cause I don't follow the manufacturing of processors very closely to know all this ****

Yes, you are correct in your understanding of what ajb13 meant in terms of wafer yields.

(Unlike me, who was incorrect in his understanding of what you said before. )

 

[bankshot]

I throw the jacket and liner notes away anyway.

I don't like to buy songs I don't like. iTunes I can preview and buy only the ones I want.

Right, I agree that this is a big selling point of iTMS. Apple does enforce a $0.99 price per song that is available for individual download, so I don't really have a problem with that. But I'm talking about whole album pricing. Presumably if you're buying the whole album, then this advantage for iTunes goes away - you get the same music whether you buy it from iTunes or get the CD from a store. Then factors like price, convenience, liner notes, CD quality vs. AAC quality, gaps vs. no gaps in playback, etc do come into play. I'd say that for most people, the CD wins on everything but price and absolute convenience. And in the specific case I mentioned, those weren't nearly enough of an advantage to go with iTunes.

Then, whether I buy songs or the whole album, it automatically downloaded and it's on my iPod as soon as I plug it in.

Instant gratification is the main selling point of iTunes. The old fashioned way, you have to go to the store, then wait in line, come home rip the CD to your hard drive, etc.

I suppose the instant gratification is a selling point for casual music consumers, or for people who are just casual fans of a particular artist. For an artist I don't really care about but I kind of like a few of their songs, that's great. But for anyone whose music I really love, I'm more than likely going to enjoy all of the songs on the album. Then the CD easily beats an iTunes album purchase even when the CD costs more. And when the CD costs the same or less than the iTunes album, that's just nuts. This is what I'm talking about.

And on top of that, half the album usually sucks anyway.

And if half the album sucks, then you buy the songs you want and this whole issue (album prices) doesn't apply.

 

[Hattig]

I am starting to seriously worry that ibm is turning into crapperola. My guess is that ibm will not be able to meet Steveo's pledge of 3Ghz within 12 months. This doesn't make any sense given ibm's quality production methods etc. However it has now been proven, IBM could not deliver the 90nm G5's in volume on time, sounds like motorola to me. I guess all that remains now is for the next G5 revision to go to a 1.8 Ghz top of the line.

Intel were 6 months late with Prescott and still isn't producing many ... the 90nm switch is proving to be difficult for everyone, not just IBM.

 

[pizzafunghi]

G5 Dealys -> Glue Problems

the french site http://croquer.free.fr/ comes up with the rumor the delays happened because of problems concerning the glue, used to connect two parts of somthing they call "daughter cards".
So far what I understand of it.
Any French speaking People around?

* Plus grave. Apple a été obligé de démonter toutes les cartes filles des G5 et de les renvoyer en usine.

IBM a découvert très tardivement un problème sur les PPC 970FX. Dans le processus de fabrication, une colle est utilisée pour assembler deux couches. C'est une nouveauté du process SSDOI. La colle utilisée depuis le début de la fabrication des processeurs se détériore rapidement à la chaleur provoquant la casse du CPU. Depuis ils ont modifié la formule et relancé la fabrication des processeurs. Mais Apple devra tous les changer sur ses cartes filles.

 

[Hattig]

i dont believe that the constrained supply was just a production issue... i think there was also some type of problem with the technology... i mean how could supply delay you a couple of months???? thats a long time for 'supply' issues... all they would have had to do is start mass producing that chip, and for a company the size of ibm with its resources that wouldnt have been hard... i thing they had a problem coming up with a fully functional supply of the 970FX..

It takes AMD 100 days to go from wafer to packaged processor. AMD aren't that small a fab! In fact it is rumoured that the IBM fab shares a lot in common with the AMD fab for 90nm.

Making a processor isn't a case of popping the wafer in and a few dozen processors coming out the other side a few minutes later!