iPod boom drives Apple to record growth

THE RISE and rise of the Apple iPod music player has pushed the company's earnings to record growth, well beyond Wall Street's highest expectations, with sales of the digital music player also driving sales of the company's computers to new users.

'In selling more than a million Macs, we're clearly seeing it,' Apple chief executive Steve Jobs said. 'We're thrilled. This was Apple's biggest revenue increase in its history.'

Apple's net profit for its first quarter was $295m (£156 million), a 360% increase on the $63m of a year ago.

Apple sold more Macintosh computers than it has for four years. Chief financial officer Peter Oppenheimer said the company sold 337,000 of its iMac G5 computers alone in the quarter, at an average price of $1359, up from $1105 a year ago.

Overall, the company's million computer sales represent a 26% increase over last year.

Apple's computer sales growth is now twice the industry average and has defied analysts' assumptions that it would struggle to increase market share over Microsoft Windows-based PCs. Revenue rose 74% to $3.49bn from $2.01bn, outstripping analysts' expectations of $3.14bn. But the iPod is still the star of the show, Apple shipping 4.58m iPods in a quarter that included the run-up to Christmas.

Sales of the iPod accounted for nearly 40% of overall revenue.

The company has now sold more than 10m iPods since the product was launched in 2001.

On top of the that, Apple's iTunes music store made a small profit during the quarter, having so far sold 230m songs.

Oppenheimer said that after a strong quarter the company was expanding the number of Apple retail stores from 101 to 125.

The programme of opening stores has been highly successful. Its retail chain chalked up revenue of $561m in the quarter, an average of $5.9m per store, compared with $4m in the same quarter a year ago.

The stellar result comes just a day after Apple announced a raft of new products, including cheaper stripped-down versions of the iPod and iMac, to capitalise on the products' popularity and try to make inroads into Windows' mass appeal.

Having proved that it can come up with a product such as the iMac with mass market appeal, the company's strategy is to position itself in the consumer electronics market and persuade Windows users, who may also have bought iPods, to switch operating systems.

Currently Apple has only 3% of the overall personal computer market.