The Company (Apple) recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. Product is considered delivered to the customer once it has been shipped and title and risk of loss have been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped. For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, the Company defers revenue until the customer receives the product because the Company retains a portion of the risk of loss on these sales during transit.
It seems like a small thing, but it is important to keep in mind when evaluating the mobile market, especially as it matures and multiple sales channels are employed. In order to present the clearest possible picture of how demand for Apple’s products stands in relation to its competitors, we will be referring to Apple’s announced numbers as “shipped” from now on.