Among the 11-inch laptops Consumer Reports reviewed, the MacBook Air scored a 62 out of 100 possible points, besting a Gateway machine that scored 52.

Among 13-inch laptops, the MacBook, MacBook Air and 3 models of the MacBook Pro took first through fifth place with scores that began at 76 (MacBook Air) and ended at 67 (MacBook).

Among 15- to 16-inch laptops, the MacBook Pro took first, second and third place, with scores of 78, 77 and 76, beating out Dell’s MacBook Pro-esque XPs 15 and HP’s Pavilion.

And, finally, among 17- to 18-inch laptops the MacBook Pro took first and second place with scores of 81 and 80. HP’s Pavilion ranked a close third with a score of 79.

The research house says the Mac saw a year-over-year sales increase in April 2011 of 9 percent. That’s nowhere near the 22 percent Y-O-Y growth Wall Street is looking for in the entire June quarter.

Why the descrepancy? Simple. April of 2010 is a hell of a tough comparison month.

The refresh of the MacBook Pro line on April 13 drove a 39 percent spike in Mac sales for the month. With no similar refreshes juicing demand in April of 2011, sales aren’t up quite as much.

Which doesn’t mean Apple won’t post that 22 percent increase investors are hoping for. As Piper Jaffray analyst Gene Munster notes, it’s far too early to make a call on the June quarter, particularly given the launch of new iMacs earlier this month.

In fact, according to NPD weekly data, Apple saw Y-O-Y unit growth in Macs of 35 percent during the first week of May following the May 3 launch of the new quad-core, Thunderbolt iMacs.

No wonder it was a blowout.

Posting second-quarter results after the bell Wednesday, the company reported earnings per share of $6.40 on revenues of $24.67 billion–an 83 percent increase over the same period a year ago. The Street had been looking for Apple to report earnings of $5.36 on sales of $23.34 billion, while unaffiliated analysts polled by Apple 2.0 had been looking for earnings of $6.33 on sales of $25.34. Gross margin was 41.4 percent compared to 41.7 percent a year ago.

It was the biggest non-holiday quarterly revenue and earnings in Apple history.

The company sold 3.76 million Macs during the quarter, a 28 percent unit increase over the year-ago quarter. It sold 18.65 million iPhones–113 percent more than it did a year ago. And it sold 2.8 million MacBooks. (see chart below).

But it sold just 4.69 million iPads; the Street had been looking for 6.2 million. Evidently the tsunami disaster in Japan and production shortages hamstrung sales. (Worth noting: the iPad 2 launched on March 10, 2011 in the States and on March 25, 2011 in 25 additional countries. Apple’s second quarter ended on March 26, 2011.)

“With quarterly revenue growth of 83 percent and profit growth of 95 percent, we’re firing on all cylinders,” CEO Steve Jobs said in a statement. “We will continue to innovate on all fronts throughout the remainder of the year.”

Looking ahead to the June quarter, Apple offered its typically conservative guidance: earnings of $5.03 per share on revenue of $23 billion. Analysts had been expecting earnings of $5.25 per share on revenue of $23.8 billion.

NOTES FROM THE EARNINGS CALL

• CFO Peter Oppenheimer: This is the highest March quarter revenue and earnings in Apple’s history. “We’re thrilled with the iPad’s momentum.”
• Mac sales for the March quarter were up 28 percent year over year, a new record. This was the 20th quarter that the Mac outperformed the broader PC market.
• Wow. iTunes hit $1.4 billion, another new record.
• There are now over 100 million books in the iBooks store.
• iPhone is now on 186 carriers in 90 countries.
• 18.65 million iPhones sold during the quarter represent 113 percent growth, year over year.
• 88 percent of the Fortune 500 are testing or deploying the iPhone.
• “We sold every iPad 2 we made during the quarter.”
• There have been well over 10 billion app downloads to date and Apple has made some $2 billion in payments to the developers who created them.
• Apple Stores continue to do very, very well. Retail revenue is up 90 percent. Apple Stores sold 79,000 Macs during the quarter, up 32 percent. A new record.
• In the next few days, Apple expects the 1 billionth visitor to its retail stores.
• Tim Cook on Japan/supply constraints: We’re very saddened by the situation in Japan and our hearts go out to everyone there….We source many components from Japan–LCDs, optical drives, NAND flash, resin coatings, foil. The earthquake and tsunami caused disruption to many of these suppliers….But as a result of outstanding teamwork we did not have any supply or cost impact from Japan quake in Q2 and we don’t anticipate any in Q3. We’ve been working around the clock with our supplier partners in Japan to ensure there are no supply chain disruptions….We do need to caution that the situation remains unpredictable, though.
• Cook on iPad 2: Demand has been staggering. We’re amazed that we are still so heavily backlogged. Really, this is the mother of all backlogs … but we’re pleased with our manufacturing ramp-up and confident we’ll be able to produce a great number of iPad 2s during the quarter.
• Cook on the prospect of an LTE iPhone: The first generation of LTE chipsets forced a lot of design compromises that we are just not willing to make.
• Cook on the Mac’s international penetration: The Mac has seen enormous growth in Asia. Sales are 76 percent in Asia-Pacific. Doing very well in Japan as well.
• Cook on iOS devices creating an opportunity for the Mac in enterprise: The iPhone and the iPad clearly seem to be creating a halo effort for the Mac. In part that’s why we’re seeing such growth in Mac sales.
• Cook on future CDMA iPhone carriers: I don’t want to get into specifics about CDMA or GSM. But we’re constantly looking to add new carriers where it makes sense.
• Cook on Android: I read yesterday that the iOS platform outreaches Android by 59 percent in the US….IPhone’s integrated approach is inherently better than Android’s fragmented approach…Android turns users into system integrators…we feel very good about where we are and our future product plans.
• Cook on Steve Jobs:He’s still on medical leave, but we see him on a regular basis. As we’ve said before, Steve continues to be involved in major strategic decisions. I know he wants to be back full time as soon as he can.
• Cook on demand for the iPad 2:I wish we could have produced more iPad 2s because there were certainly a lot of people waiting for them.
• Cook on the Samsung suit: We are Samsung’s largest customer and we value them as a component supplier. I expect the relationship with them to continue. But we felt their mobile communications division crossed the line. We tried to work it out, but ultimately decided we needed to turn to the courts.

PREVIOUSLY

• iPad Will Rule Tablet Market For Years, Says Goldman
• Second-Quarter Mac Sales Likely to Be Magical, Revolutionary
• Apple Earnings: Expect Another Barn Burner
• Steve Jobs’s Finest Product–Apple–Won’t Break Down

How can I permanently delete my Facebook account?

A:

Facebook doesn’t make it easy. The company tries to hang on to defecting users by promoting a halfway measure called “deactivating” an account, which merely hides you from the Facebook membership but keeps your information on the social network’s servers in case you wish to “reactivate” later. This process can be performed with a few clicks. Facebook says this is the default choice because “many users deactivate their accounts for temporary reasons” and then wish to restore them. But permanent, irreversible deletion of an account requires you to submit a request and wait for Facebook to act on it. The company deliberately delays acting on such requests “in case you change your mind,” according to the site. Details are at: http://on.fb.me/5NCCC0.

Q:

Our daughter will be entering a middle-school program next year which will allow her to do a lot of independent work with assignments completed in a word-processing program and turned in online. Can you recommend a durable, inexpensive, user-friendly first laptop or netbook?

A:

I’d recommend either the 13″ MacBook or the 11″ MacBook Air, which are very durable, easy to master, speedy and highly unlikely to ever get infected with malicious software. Each costs $999. They come with the best built-in suite of software in the industry and a superb operating system, plus Apple’s support is highly rated. If they cost too much, there are similar-sized Windows alternatives for less, hovering around the $600-to-$700 range. Netbooks, of course, can be even cheaper, but there are fewer of them these days, and their reliability can be iffy.

You can find Mossberg’s Mailbox, and my other columns at the All Things Digital website, http://walt.allthingsd.com. Email mossberg@wsj.com.

Intel is hosting a press briefing tomorrow at which it will “discuss a new technology that is about to appear on the market” and according to CNET that new technology is Light Peak, a single universal replacement for the clutter of cables we currently use to connect our computers to their peripherals and one capable of carrying data at 10 gigabits per second in both directions simultaneously.

The event is rumored to coincide with an update to Apple’s MacBook Pro line, which is further juicing speculation that the new hardware will be the first to implement Light Peak. Apple’s reported name for the standard? Thunderbolt.

“You’ll have trouble finding one that doesn’t look like the MacBook Air,” he told Cnet. “I think the Macbook Air is a good mental image of what a clamshell laptop will look like. They’ll be thin because you won’t need any heat pipes, the fan, and extra batteries to lug around.”

That’s not a particularly original observation; Apple’s been touting the Air as the “Next Generation of MacBooks” since it first debuted. But it’s interesting that we’re now hearing it from C-level executives outside of Apple who seem perfectly willing to concede that the Air has redefined the concept of portable computers and parrot a theory put forth by Steve Jobs when he introduced the Air’s latest iteration: “We think all notebooks will look like these one day.”

I’ll be starting a two-year assignment with the Peace Corps in the near future. I would like to start a blog where I can record my daily activities for my friends and family to read. Do you have any suggestions?

A:

There are numerous free blogging services that offer templates, simple tools and a free address your friends and family can use to view your reports. Two that I have used and can suggest are Blogger, owned by Google, at blogger.com; and the independent WordPress, at wordpress.com.

Q:

In terms of battery life, does it make any practical difference if I leave my common programs on my MacBook Pro running when dormant versus shutting them down when I’m not using them and then firing them up as needed?

A:

I asked Apple about this, and the company said an open, but idle, application on a Mac notebook generally won’t use any or many processor resources, which means almost no impact on battery life, even if it performs periodic background actions like fetching mail.

Exceptions would be programs that do heavy-duty things in the background, like rendering videos. The company strongly advises making sure the laptop is in sleep mode when not in use, and keeping the screen at the lowest brightness level that works for you.

Also, you can check how much demand a program is placing on the processor by running the Activity Monitor, located in the Utilities folder in Applications.

Q:

Why would a GSM phone run in 3G-mode only on AT&T and not on T-Mobile?

A:

It’s true that both carriers use the same basic technology, called GSM. But, in some cases, phones (like the AT&T iPhone) are locked so that, unless you do serious hacking, you can use them on only one of the two networks.

In other cases, it might have to do with the frequencies used by a carrier. T-Mobile and AT&T use different frequencies for their 3G networks, and a phone might simply be built to support only the 3G frequencies used by one of the carriers and not the other.

You can find Mossberg’s Mailbox and my other columns at the new All Things Digital website, http://walt.allthingsd.com. Email mossberg@wsj.com.

According to DisplaySearch, Apple shipped 10.2 million mobile PCs in the fourth quarter of 2010–iPads, MacBooks and MacBook Pros–to claim a 17.2 percent share of the mobile PC market. That makes it the new global leader, a title it wrests from Hewlett-Packard, which shipped 9.3 million units during the same period for a 15.6 share and a second-place ranking. Acer ranked third, with 14 percent of the market and 8.4 million units shipped. Dell ranked fourth, with 5.9 million units shipped and a 9.9 percent market share.

An interesting rebalancing of market power and one that DisplaySearch believes is the result not just of first-mover advantage from the iPad, but notebook shipment growth that exceeds the industry average. Said Richard Shim, senior analyst at DisplaySearch, “Apple is currently benefiting from significant and comprehensive growth from both sectors of the mobile PC spectrum, notebooks and tablet PCs.”

[Image credit: Gizmodo commenter Ahubbuch]

“We strongly believe that one or more very strategic opportunities may come along, that we are in a unique position to take advantage of because of our strong cash position,” he said. “You know, we’ve demonstrated a strong track record of being very disciplined with the use of our cash. We don’t let it burn a hole in our pocket, we don’t allow it to motivate us to do stupid acquisitions. And so I think that we’d like to continue to keep our powder dry, because we do feel that there are one or more strategic opportunities in the future. That’s the biggest reason.”

That remark spurred all sorts of speculation about what sensible large-scale acquisitions Apple might make. And while it was certainly reasonable to conclude from Jobs’s remarks that Apple is preparing itself for some big M&A plays in the future, there was another equally plausible conclusion: What if by “strategic opportunities,” Jobs was referring to supply chain investments–money spent to overcome impediments to growth? Apple has done this before, most notably in 2005, when it arranged to purchase up to 40 percent of Samsung Electronics’ holiday NAND flash output for use in it iPods. It inked a similar iPhone-related deal in 2008, forcing Samsung to reduce its supply to other customers to fulfill its obligation to Apple. And there was another half-billion-dollar deal with Toshiba is 2009.

And according to COO Tim Cook, Apple just did it again–but on a much grander scale. During the first-quarter earnings call last week, Cook said the company had invested $3.9 billion to secure component supplies and capacity.

“We’ve historically entered into certain agreements with different people to secure supply and other benefits,” he said. “And the largest one in the recent past has been we signed a deal with several flash suppliers back at the end of 2005 that totaled over $1 billion because we anticipated that flash would become increasingly important across our entire product line and increasingly important to the industry. And so we wanted to secure supply for the company, and we think that, that was an absolutely fantastic use of Apple’s cash. And we constantly look for more of these. And so in the past several quarters we’ve identified another area and come to some recent agreements that [CFO Peter Oppenheimer] talked about in his opening comments, in that these payments consist of prepayments and capital for process equipment and tooling. And similar to the flash agreements, they’re focused in that area we feel is very strategic. And so I’d prefer not to go into more detail about what specific area it’s in, but it’s the same kind of thinking that led us to those deals that led us to the flash deal.”

For what particular components, he wouldn’t say. There are some likely candidates, though: The high-res LCDs used in the iPhone 4 and iPad; solid-state drives like the ones in the new MacBook Air, which are presumably headed to other portions of the MacBook line as well; or perhaps some new system on a chip that will infuse the next-generation iPad and iPhone with significant performance gains. I’m sure there are others as well. And all fit quite nicely into Jobs’s vision of “strategic opportunities.”

And by the end of fiscal 2012, said Reitzes, that installed base will have reached over 200 million devices, driven by what he called the “FaceTime networking effect” that encompasses the better part of Apple’s consumer product line–something the company’s rivals may not be able to duplicate with video conferencing apps of their own.

“While Android and competitive devices either have or are working toward incorporating a similar feature, we believe this particular feature benefits from Apple’s vertically integrated model,” Reitzes said. “Experiences across disparate hardware platforms tend to vary–with Apple’s one of the most reliable in our trials. Also, this feature allows Apple to mine the millions of iTunes users who have Apple ID’s–and provide an attractive feature across devices that can be put into use immediately. We believe the ‘FaceTime networking effect’ could enhance a halo effect on Macs and iPads as the feature becomes available.”

Oh, and that FaceTime-compatible iPad that Reitzes says Apple will sell 10 million of? He expects it to be announced over the next month with a shipping date near the end of March or early April. And like most folks, he assumes it will include a thinner and lighter design, front and rear-facing cameras, a USB port, and an iPhone-like high resolution display.

[Image credit: FacePlant]

The latest domestic sales data from NPD shows Apple on pace to sell between 4.1 million and 4.3 million Macs in the December quarter. Which would make for another record breaker in an ever-lengthening string of them. After all, Apple’s U.S. Mac sales are up 20 percent year-over-year for the first two months of the current quarter. And with international sales growing faster than domestic, the company will likely see between 22 percent and 28 percent year-over-year growth.

If that trend continues–and with the recent refresh of the iMac and MacBook Air lines, there’s no reason to think it won’t–2011 could end up being the “Year of the Mac” as well.

Industry sources are telling the occasionally reliable DigiTimes that Foxconn, Apple’s Chinese manufacturing partner, will begin shipping the next-generation tablet within the next 100 days in preparation for a spring debut that will follow the launch of the original iPad by about a year. The iPad 2 is expected to be thinner than its predecessor and manufactured with the same unibody approach Apple’s been using for the MacBook. It’s also expected to feature an LCD backlit display, a front-facing camera and Facetime video chat support. Finally, some reports suggest it is powered by one of Qualcomm’s multimode chips and will run on both GSM and CDMA-based networks around the world.

This being Apple we’re talking about, that evolution is likely already well under way and perhaps–perhaps–being engineered at the company’s massive new North Carolina data center. With its 500,000 square feet of data center space (currently, sources tell me that Apple is considering doubling that) the facility has been built for something. And what better use to put it to than the cloud services that might completely eliminate the need for high-capacity hard drives and give the Air storage to match its performance characteristics.

Were Apple to create the cloud-based version of iTunes that’s long been rumored–one from which users’ entire iTunes libraries could be streamed–and were it to bolster MobileMe’s iDisk and Gallery services with more-robust storage, even the 64GB Air might seem an attractive option to the high-end user. And Apple’s new N.C. data center, which is nearly five times the size of the one it operates in Newark, Calif., may well make both those things possible.

“We believe it makes sense to have a cloud service linking Apple devices to personal photos, videos, games, music and other entertainment–eliminating the limitations and expenses of excess storage,” writes Barclays analyst Ben Reitzes. “We believe such a service would only enhance the loyalty toward Apple and the benefits of using devices in its vertically integrated model.”

Saving to disk is slowly becoming a fixture of the past and, as Apple’s recently rejiggered Apple TV business model demonstrates, streaming is the future. Which makes perfect sense, when you think of the MacBook Air as the future of the notebook.

Great fun to listen to for Apple watchers. But not that meaningful, really–mostly positioning and spin. There was at least one important nugget, though: Apple has a specific shopping list, with some very big-ticket items on it.

Jobs wouldn’t lay those out, of course. But when asked if he planned on spending any of Apple’s $51 billion (!) in cash via a dividend or stock buyback, he explained that he had something else in mind. From my notes, a combination of direct quotes and paraphrase:

“We strongly believe that one or more very strategic opportunities may come along that we’re in unique opportunity to take advantage of because of our cash,” and we want to keep our powder dry “because we feel that there are one or more” opportunities in the future.

M&A guys, start your engines!

The “what will Apple do with all its cash” speculation story is a time-honored tradition–I seem to remember writing one four or five years ago, when Apple had $6 billion or so lying around, and discussing whether it made sense for Jobs to buy a music company like Universal.

But I don’t remember Jobs every signaling his desire to go shopping quite as openly as this before (feel free to correct me in comments if I have this one wrong). Two caveats:

• Jobs is famous for saying one thing and doing…something else. So don’t get too riled up about this.
• Just because Jobs is talking about spending money on “opportunities” doesn’t mean he’s talking about buying a company. He could be talking about big, hairy capital expenditures, like the billion-dollar server farm Apple is finishing up in North Carolina.

Still. It’s hard not to read or hear that quote and not think that he’s thinking about some very big buys. Like what?

A lot of folks will assume that Jobs is talking about buying a big content producer. Music doesn’t make any sense, because there’s little value left in that business. But if Jobs wants to make headway in the TV business, perhaps it makes sense for him to snag a big broadcaster or programmer to give him the leverage he needs with the Comcasts, Viacoms and Time Warners of the world.

Or you could make the same argument for other content makers, like game studios. The biggest one, Electronic Arts, has a market cap of a mere $5.21 billion. Jobs could give ERTS shareholders a hefty premium and still have plenty of walking-around money.

Or perhaps it makes zero sense for Apple to be in the content business, because it’s done just fine not being in the content business to date.

So then what?

Feel free to throw your own guesses in, but I’ll kick off with my own: It’s a company that has yet to compete with or brush up against Apple in any significant way. And it’s one that Apple seems unlikely to be able to move aside, even if it wanted to. And it’s one that’s already competing directly with Google, which has to make Jobs like it even more.

And, if you believe this L.A. Times report, Jobs is already strolling around Palo Alto with its CEO: What do you think of Apple buying Facebook? Discuss….

Earlier

Apple investors who got their first look at the company’s earnings numbers don’t like them–AAPL is trading down seven percent after hours. Let’s see if Apple executives can soothe their concerns during the earnings call.

You can listen in for yourself via this link, or follow along in my liveblog below:

Live Blog

Apple or Apple’s IR company trying some very, very mellow string and piano stuff while we wait.

CFO Peter Oppenheimer kicks off. “Outstanding results” for September quarter. Highest quarterly revenue, earnings.

Mac products and services: 3.9 mm Macs. Record quarter. 27% y/y growth. Double market growth for Q.

IMac, Macbook, Macbook Pro all good. Asia/Pacific performing best.

IPods: 9.1 million.

ITunes revenue more than $1 billion.

IPhone. “Extremely pleased” with 14.4 million unit sales; basically doubled y/y.

$8.6 billion in sales value of iPhones alone.

Heaping praise on iPhone 4 (justified) and stressing iPhone’s move into corporate market, rattling off blue-chip customers.

IPad. “Thrilled” with momentum. “Great enthusiasm” from customers.

65% of Fortune 100 deploying or piloting iPad. Lists some of them.

125 million iOS device sales last month.

200,000 registered iOS developers.

“Very happy” with results of iAd so far.

On to Apple stores. More records here.

Expects to open 40-50 stores next year, 50% of them outside U.S.

IPhone sales mix “better than expected”–boosted overall margin.

$51 billion cash hoard. [Deep, longing sigh from everyone in media, tech business.]

For the year: 5x revenue and 10x earnings compared with five years ago.

“Very enthusiastic” about lineup, “extremely confident” in new product pipeline.

Rare appearance from Steve Jobs!

Had to drop by for first $20 billion quarter.

“We’ve now passed RIM, and I don’t see them catching up to us in the foreseeable future.”

They have to move into software/platform development, and I don’t think they can.

So what about Google?

Apple is activating 275,000 iOS devices per day on average over the past 30 days; peaked at 300k iOS devices some days. 300,000 apps in app store.

Unfortunately, there is no solid data on how many Android handsets sold each quarter.

Google loves to characterize Android as open, Apple as closed. “We find this a bit disingenuous.”

Windows is “open.” But Android is “very fragmented.” OEMs like Motorola install own stuff to make their phones stand out. We don’t do that.

Shout out to “Twitterdeck” ( I think he means Tweetdeck) and their challenges running 100 versions of Android client. “Compare this to iPhone, where there are two versions of the software…to test against.”

Meanwhile, at least four app stores on Android. “This is going to be a mess for both users and developers.”

Apple’s app store has 3x apps compared with Google marketplace.

“Even if Google were right, and the real issue was closed vs. open, it’s important to remember that open systems don’t always win.”

For instance: Microsoft’s [miserable] “PlaysForSure” strategy, RIP.

Google’s “open” argument is a “smokescreen.” Real issue is what’s best for customer–”fragmented vs. integrated.”

Integrated is a huge advantage for us, because it’s better for customers, and better for developers. “We are very committed to the integrated approach no matter how many times Google tries to characterize it as closed.”

Now! On to our tablet competitors:

First of all, only a few credible competitors.

Second, most of them are pushing 7.5″ screen. That means they are just at 45% size of our 10″ screen. “You heard that right….This size isn’t sufficient to create great tablet apps.”

Extolling features of iPad size vs. teeny tiny tablet competitors: They’re “tweeners”–too small to compete with iPad, too big to compete with smartphones.

IPad has 35,000 apps. New crop of tablets will have “near zero.”

Competitors having a hard time coming close to iPad pricing, even with their puny screens. We make our own everything, and this results in an “incredible product, at a great price.” Our competitors will “likely offer less, for more.” They’ll be “DOA. Dead on arrival.”

Questions and Answers

Supply constraints on iPad?

COO Tim Cook: We’ve got a handle on it. And note that we’re expanding distribution in the U.S. and internationally, with more countries to come.

Question about margins I didn’t quite catch.

Oppenheimer: Sold more iPhones than planned, and commodity prices came down, so that helped.

Q for Steve. Please talk about “iPad opportunity.” Size of business, etc., two years or more down the road?

Jobs: “The iPad is clearly going to affect notebook computers. The iPad proves it’s not a question of if, it’s a question of when.” Already seeing “tremendous” interest from education and “much to my surprise, from business.”

“The more time that passes, the more I am convinced that we’ve got a tiger by the tail here.” We’ve trained tens of millions of people on this OS via the iPhone. “I see it as really general purpose, and I see it as very big.”

Could it be the second biggest business after the iPhone?

“I try not to predict, I try to report.” We’re selling more iPads than Macs.

What about Flash? Any update?

“Flash memory? We love flash memory” [hohoho]

A question on iPhone demand, which I missed.

Q: Steve, “You are the tablet market.” Do you see tablet competitors cutting into your market in the same way you cut into RIM’s market? Won’t that fragment the market?

“I have a hard time imagining what those strategies…are.” Pricing won’t work. “Flash hasn’t presented any problem at all; as you know, most video on the Web is now presented in HTML5.” The iTunes store is dominant and “we’re not done” working on stuff for the future.

Q: Smartphones–”Do you see that as a zero-sum game?”

Jobs: As you know, most phones in the world aren’t smartphones. They’ll convert over time, so there will be room for multiple competitors, but “eventually it will turn into a zero-sum game, or close to that.”

Q: For Oppenheimer: Another margins question.

A: We do see a small sequential decline. Higher-than-expected mix of new iPods and new iPads. We’ve been very aggressive on pricing there, and that’s what’s pushing down margins.

Q: Steve, how’s your Apple TV “hobby” coming? And what’s up with streaming media?

Jobs: We don’t talk about unannounced products, but I’m happy to tell you what we know about Apple TV. We have moved to streaming. It’s all streaming. Everything is rented, and/or soon to be streamed from iPad or iPhone.

So far we’ve sold 250,000 new Apple TVs. “I’m thrilled with that.” And with Airplay set up, “it will give people another big reason to buy it.”

Another margin/guidance question. Seems to be the same one repeated each time, with the same answer.

Q for Steve: Key risks for company?

The goal is to make the best devices in the world. “It’s not to be the biggest. As you know, Nokia’s the biggest… but we don’t aspire to be like them.”

Android is the biggest competitor. Outshipped us in June quarter as we transitioned. We’re waiting to find out what happened in this quarter. “I don’t know how we’ll find out” though.

Our approach is to create products that “just work” and “their approach is very different from that.”

Questions for Steve and Tim: Aspirations for iPhone and iPad. In Mac, you didn’t aspire to high market share; in iPod, it was the opposite–you own that market. In the past, Tim you’ve described iPhone business as closer to the iPod model. Steve, you sort of said something different. Please resolve that difference: Biggest, or best?

Jobs: “Nokia makes $50 handsets. We don’t know how to make a great handset for $50.” We want to make “breakthrough, best products,” and “drive costs down” while making them better through “relentless improvement.”

We have a very low share in the phone market. Single digits. And a very high share in tablets. But we don’t think about it that way.

The reason we won’t make a seven-inch tablet isn’t because of price point, “it’s because we don’t think you can make a great tablet with a seven-inch screen.” And as a software company, we think of software first. Developers don’t want to build for all these different platforms and devices, and on this small screen. “It’s not about cost, it’s about value, when you factor in the software.”

Q: Okay, but if the market moves toward lower-functionality smartphones and “dramatically lower price points,” then you’ll cede share, right?

Jobs: “You’re looking at it wrong.” You’re looking at it as a hardware guy who doesn’t really know about software. You assume that software “can come alive on this product that you’re dreaming of. But it won’t” because developers want to build for better products, with faster processors and better screens.

Q: You have about $50 billion in cash. What are you going to do with that? Why not return it to shareholders?

Jobs: “We strongly believe that one or more very strategic opportunities may come along that we’re in unique opportunity to take advantage of because of our cash” and want to keep our powder dry “because we feel that there are one or more” opportunities in the future.

Missing next question about iPhone and iPad penetration into corporate market.

[Market not sold on Apple's story yet, btw: Stock still down 5.84%.]

Question for Oppenheimer. Guess what? It’s about gross margins. Any change in manufacturing, etc? Any color at all?

Oppenheimer: Don’t provide product-specific gross margins. Always trying to lower costs, though. “We were happy” with gross margins for quarter. Down slightly because of product mix, as I’ve said over and over.

Q: Talk about demand from carriers to pick up iPhone 4.

Cook: The pressure I’m feeling is about supply. That’s the problem. At the country level, we have 166 relationships in 89 countries. In many countries, we went to more than one carrier. Latest one of those is Germany.

IPhone 4 in 85 of 89 countries. Will be in all 89 by end of year.

What happens to margins and subsidy when you go nonexclusive?

We don’t give information out on specific markets, but you can see that our ASPs have stayed above $600.

For Steve: Why do you have advantage in price on iPad, as opposed to PC?

Jobs: We engineer so much of it ourselves. Everything from chip to battery to enclosures. We’ve learned so much. We’ve learned a lot, developed a lot of our own components, where competitors have to go through middlemen. “This is a product we’ve been training for for the last decade.”

Call is over. You can hear the whole thing on a podcast later this evening.