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5 things Apple’s earnings report may tell us about the mobile economy

When Apple (AAPL) reports earnings on Tuesday investors will be hoping for another blockbuster quarter from the Cupertino cash machine. Stakeholders throughout the mobile economy will be reading Tuesday’s report closely whether or not they own a slice of Apple. Here are some of the questions they’ll hope to answer:

Is the global semiconductor market starting to recover? During its January and April earnings calls this year, Apple said that commodity/component costs were lower than expected, boosting gross margins above expectations. The semiconductor market entered 2012 facing high inventory levels and weak demand, and many analysts did not expect an uptick until the second half of the year. Apple is likely to mention component prices in this week’s discussion of gross margins, and if so it will give an indication of whether prices are starting to firm.

Are Android tablets gaining ground on the iPad? Apple has ceded the number one spot in smartphone sales to Samsung, but still reigns supreme in the tablet market. Analysts are estimating sales of up to 20 million iPads during the most recent quarter, up from 11.8 million in the last quarter. But the iPad definitely has some stiff competition. On July 23, Amazon’s list of best-selling tablets showed 6 models outselling the iPad, including Amazon’s own Kindle Fire and two versions of Samsung’s Galaxy Tab 2. Samsung’s flagship tablet, the Galaxy Tab 10.1, was shot down by a federal court judge who found that it infringed on an Apple design patent, but the company responded quickly with the 10.1-inch Galaxy Tab 2, which has a slightly different design but is otherwise similar to its predecessor.

Are tablets supplementing laptops or replacing them? It’s no secret that tablets are depressing sales of personal computers, but so far Apple has seemed immune to this trend. During the January-March quarter, Apple sold 4 million Macintosh computers, a record surpassed only during the previous quarter, when it sold 5.2 million. The company launched its new MacBook Air and MacBook Pro in mid-June, just in time to provide a boost to sales for the quarter. But if Macintosh sales are below last year’s level (3.95 million for the April-June quarter), it could indicate that even the Mac is losing ground to the iPad and other tablets.

Are Chinese consumers spending less? Analysts estimate that Apple sold more than 6 million iPhones in Greater China during the first three months of the year, and Apple said Chinese iPhone sales were up 400% from the previous year. But during the second quarter of 2012, China’s economic growth rate fell 5 basis points (from 8.1% to 7.6%), and Nielsen reported that consumer confidence fell 3 points in the Asia-Pacific region. Any data Apple offers this week about Chinese iPhone purchases will offer an indication of how these macro trends are playing out in the retail environment.

How strong is U.S. K-12 educational spending this year? School districts are increasingly important customers for mobile service providers, infrastructure companies, and device manufacturers. On April 24, Apple CFO Peter Oppenheimer said the company was entering the “K-12 institution buying season.” Apple’s products have long been popular with educators, and this year school districts are allocating more of their technology budgets to tablet purchases. During the first three months of the year, iPads outsold Macs by more than 2-to-1 in the K-12 market. Any comments Apple makes on iPad purchases by school districts could be a leading indicator of overall spending from this segment for 2012.


Martha DeGrasse
Martha DeGrasse is the publisher of Network Builder Reports ( At RCR, Martha authored more than 20 in-depth feature reports and more than 2,400 news articles. She also created the Mobile Minute and the 5 Things to Know Today series. Prior to joining RCR Wireless News, Martha produced business and technology news for CNN and Dow Jones in New York and managed the online editorial group at Hoover’s Online before taking a number of years off to be at home when her children were young. Martha is the board president of Austin's Trinity Center and is a member of the Women's Wireless Leadership Forum.

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