Fourth, we decreased the entry price of the entry iPad to $399; and finally, the last factor to point out, the U.S. dollar has strengthened recently. We expect this to have an impact on the sequential compare, especially versus last year, where the dollar weakened against most currencies over the comparable time periods.
We've just reported the most amazing March quarter Apple's ever had. We feel very very good about our business and our new product pipeline.
I want to put something out just so it gets out on the call in case it's not asked, and talk a little bit about the gross margin guidance that we've provided for the June quarter.
We're pleased to be providing gross margin guidance of 41.5 percent for the quarter. We expect about 2/3rds of the sequential decline to be primarily driven by a higher mix of iPads and Macs, a full quarter selling the iPad lineup, and a loss of leverage on our revenue. We expect the remainder of the difference to be primarily driven by the items benefiting the March quarter gross margin that we don't expect to recur in June.
Cook: On the iPhone 4S, our target is to be between four and six, the addition of the 12.6 million allowed us to get within that range by the end of the quarter. We feel that we exited the quarter at supply and demand balance. Because our execution of the option was so good, the vast majority of supply/demand in the different countries was reached in the end of January.
We had the mother of all Januarys with really getting out the vast majority of the iPhone 4S backlog and launching China as well, so it was an incredible start to the quarter for us.
On lower price points
Oppenheimer: We're just learning about the elasticity of demand, and the $399 price point. It's doing well, but I have to tell you, the new iPad is on fire, and we're selling them as fast as we can make them. We'll learn more over this quarter especially as we get through the education buying season, which looks terrific for us, especially on the iPad.
Cook: On iPad 2, with the change in the entry price to $399, we're actually thrilled with the results that we've seen; although as Peter said, it's only been a few weeks and so it's too early to come to a clear conclusion. But from what we are seeing, this unlocked some education demand--that is, probably a more price-sensitive customer--also in several other countries there was a marked change in demand at that price point. And so on the early going, we feel great about it.
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