[NewsPoster]

Apple is drawing a "huge number" of Android users over to iOS, the company has revealed during its investor conference call about its latest quarterly results. During the call, CEO Tim Cook noted the number of Android switchers buying Android devices in the first half of this year is the highest of any six-month period in Apple's history. However, financial metrics for the company will continue to decline in the next quarter, such as the iPhone's average selling price -- among other figures raised by Cook as well as CFO Luca Maestri to an audience of investors, analysts, and the media.

Cook and Mastri worked tirelessly to shine the best possible light on disappointing quarterly results, including a perspective that may carry some weight with analysts: casting the iPhone 6 upgrade cycle as an outlier of growth based on long-pent-up demand for bigger-screen iPhones. The pair repeatedly compared the iPhone 6s upgrade cycle to the iPhone 5s upgrade cycle of two years ago, noting that for an "s" product, the latest iPhone was doing similarly to the March and June quarters of the iPhone 5s.

In the last quarter, 52.1 million iPhones were sold, which is down 16 percent year-on-year, but Cook insisted the smartphone business is "healthy and strong," with an install base of over one billion active devices. The upgrade rate for the iPhone 6s is said to be slightly higher than that of the iPhone 5s, but dramatically lower than the rate of upgrades to the iPhone 6. Aside from Android switchers, Cook also highlighted the sales to users in emerging markets, with sales in India up 56 percent year-on-year, and sales up in Japan while slightly down in the rest of the Asia-Pacific region.

While it is not included in this quarter's results, Cook also mentioned there was a terrific customer response to the iPhone SE, claiming there to be strong demand that exceeds supply. The iPad Pro 9.7 response has also been great for the company, he said, with the suggestion that the next quarter will offer the best iPad revenue comparison in two years.

Service growth is growing independently of unit shipments, with service revenue jumping 20 percent. The App Store increased its revenue by 35 percent, while Apple Music now has 13 million paying subscribers, up two million in the two months since Apple reported 11 million paid users. Cook suggests the music business has hit an "inflection point" following a number of quarters of declining sales of music files, partly driven by the addition of the subscription streaming Apple Music service.

The services business overall brought in a total of $6 billion in revenue, thanks in large part to growth in the App Store. According to Cook, the average customer spend in the App Store hit an all-time record in the last quarter.

Apple Pay is also enjoying tremendous growth, with it performing five times the number of transactions compared to the same period last year. There are one million new Apple Pay users each week, with 10 million contactless-ready retail locations in the supported countries -- including 2.5 million in the US alone, set to expand with the introduction of the service in more markets.

The Mac is continuing to attract new customers, with over half claimed by Apple to be new to the platform, though the company is still reducing its channel inventory for Macs, iPads, and iPhones for the next quarter. In China, it is said that 80 percent of all Mac purchasers were first-time buyers.

For the Apple Watch, specific sales figures were again not given, but it was noted that unit sales of the wearable device in its first year exceeded that of the iPhone in its first year of sale in 2007, a figure Cook has mentioned before (Apple sold around 5.4 million iPhones in its first full year. Now available in 60 countries, the Watch has so far met Apple's sales expectations, with Cook said the device expected to have a relatively similar seasonality to the iPod, meaning that around 40 percent of its sales happen in the December quarter.

By the end of the conference call, the stock had fallen in after-hours trading $8.75 to $95.60 on news of the (widely expected) revenue drop.

[Inkling]

Apple is also losing future customers. A friend who has owned Macs since the mid-1980s just contacted me. The hard drive in his iMac has died and he's discovered what an incredible pain it is to replace. My reply was essentially: "Welcome to the new world of Macs. They're becoming impossible to fix or upgrade. Apple thinks we're rich enough to treat a $2,000 iMac as if it were an electric toothbrush."

[Charles Martin]

Attaching an external drive to a USB 3 or Thunderbolt port is "an incredible pain?"

Oh wait, you're likely referring to a "customer" who hasn't bought a Mac since before Obama was president. Yeah, that'll teach Apple a hard lesson.

[Doodpants]

I thought he was referring to someone whose internal hard drive has died, and wants to replace it, rather than just leave the dead drive in there and add an external drive to compensate. I don't see how that's an unreasonable desire.

[DiabloConQueso]

It's not an unreasonable desire, but with the tiniest bit of research (something that is common sense when purchasing a thousand-dollar item) this would be apparent to the customer at the time of purchase.

Plus, adding an external hard drive is a great workaround to get back up and running quickly when disaster strikes, so that you can be productive until a more convenient time arises to replace the internal.

[sgs123]

There's a very annoying audio-playing John Deere ad on this page that will not let me mute audio or let me scroll it off screen to read the article. It's in the box above the "Apple Watch price cut sale spike".

BTW, Macnn ads are getting increasingly annoying to the point I find myself needing to use Reader to see the articles.

[Mike Wuerthele]

I have yet to see a John Deere ad, which I'd expect, as we don't have any in our rotation. Can you get me a screenshot, please?

[Steve Wilkinson]

Heh, and Cook had just said (not long before) that Apple had no interest in lower cost devices. While I suppose one could take that to mean true low-end 'budget' devices... maybe we need to be paying more attention to what he's saying they won't do. (Maybe he is a bit like Jobs after all.)

I just can't wait to see what that 'strong demand' for the SE turns out to be. I think certain people thought I was crazy for saying a true 4" iPhone would be 30% of the line (i.e.: 4" 30%, 4.7" 60%, 5.5" 10%). The SE makes this tough now... as, will the lower price make it even a higher percentage? Or, the lack of it being a true iPhone lower that? I think I'm going with the former, even as much as I'd have liked a true version.

Inkling - I think RAM would be a better pain-point than the storage device, but I get what you're saying overall. IMO, the problem is more on the software front. And, yes, we've been over this again and again and all the MacNN folks say it's just the chase after the big pie slice (to which I keep saying if Apple is actually so stupid to *only* chase the big pie slice and fail to recognize the importance of their history, then yes, it's over... even though they'll, no doubt, sell lots of Kardashian-iPhones for many years to come.)

[sgs123]

Mike, sorry, there's an Amazon ad in that slot now (I used Reader to read the article and left the page). I had been searching for lawnmower blades on Amazon and Google before it happened, so I suspect that's the vector. If it happens again, I'll definitely grab a screenshot.

[Mike Wuerthele]

If you get a wacky ad here, its slipped past us. Feel free to send [email protected] what you think is a bad ad.