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The Mac keeps driving Apple

Some 48 hours removed from the light and heat of Apple's third-quarter earnings announcements, a couple of things deserver further examination. And no, I'm not talking about the "Did someone just cough? Sell! Sell! SELL!" mentality that seems to have gripped the investment community.

What still stands out about Apple's third-quarter performance--for me, at any rate--is just how well the company's Mac business did. In case you missed Monday's announcement, Apple said that it sold a little bit less than 2.5 million Macs during the three months ending in June. That's the most Macs Apple has sold in any quarter ever. And if it sounds like I'm repeating myself, that's because I am--this is the fourth time in the last five quarters that Apple has set a new standard for Mac sales.

Apple bested its Mac sales record without making too many radical changes to its product line. Yes, the just-completed quarter was the first full quarter in which the MacBook Air was on sale--the ultra-thin portable began shipping about a third of the way into Apple's second quarter. And that doubtlessly helped the company move 1.5 million laptops during the June quarter, a 37 percent gain from last year's portable shipments. Otherwise, apart from some chip changes to the MacBook and MacBook Pro lines as well as a similar processor bump to the iMac, Apple's Mac offerings didn't undergo any radical changes. That suggests to me that the company continues to reap the benefits from its switch to Intel-supplied chips and that its current lineup has struck a chord with consumers.

That's especially significant given the uncertain state of the economy right now. During Monday's conference call with analysts, Apple chief financial officer Peter Oppenheimer declined to comment on the current economic situation, saying he preferred to leave the forecasting to others. That's probably a sound strategy, though you don't exactly need to have a seat on the Federal Reserve board to conclude that people aren't exactly feeling bullish about the economy right now and, therefore, probably less inclined to spend money on pricey consumer items like computers. Still, that doesn't seem to be affecting Apple any, as Mac revenue grew 43 percent during the June quarter.

Given that, it's hard to make sense of the Wall Street-centered gasping over Apple's expected September performance. Oppenheimer, who's notorious for low-balling these sorts of things, told analysts that the company expects to see fourth-quarter revenue of $7.8 billion, a 25-percent improvement over the year-ago quarter's results. But because that predicted growth isn't as big as analysts wanted it to be--and because Apple is expecting flat earnings growth from a year ago--Apple's stock got pummeled earlier this week.

Of course, Oppenheimer mentioned something else about fourth-quarter expectations, which is the second thing that stood out for me from Monday's earnings announcement. Namely, the company expects a dip in gross margins because, among other factors, it's planning "a significant product transition."

The Internet is doubtlessly abuzz with speculation about just what constitutes a "significant product transition," and if I was foolhardy enough to talk about the state of the economy, I'm certainly not going to pass on the chance to add my two cent's worth of blather about potential products to the mix. Because Apple mentioned this product transition in the context of costs going up--in other words, it costs companies a little bit more to ramp up production of something new--I'm going to assume this is a transition from an existing product to something that's largely new, as opposed to something with just a few minor tweaks. The question remains, however, what exactly that might be.

I can venture two guesses. Fall is the perfect time for Apple to refresh its iPod lineup. Last September saw the company overhaul the iPod nano, rebrand the iPod classic, and introduce the iPod touch, for example. In September 2006, the iPod line underwent a similar reshuffling, as Apple also introduced feature-length movies to the iTunes Store. So it's not too ridiculous an assumption that another iPod-related move might be in the cards for this fall. Where Apple takes the iPod now that the touch essentially has all the capabilities of an iPhone save for the calling features--well, that requires more brainpower than I'm able to muster.

The other guess at what Apple might have cooking involves last week's Centrino 2 unveiling by Intel. My colleague James Galbraith already raised the possibility of these new chips--which offer better battery life, faster clock speeds, and improved graphics capabilities--finding their way into the Mac. So I don't think it's a leap of faith to conclude that Apple might have some new laptop offering in mind that not only incorporates the advances of the Centrino 2 but also more the environmentally-friendly objectives Apple has already rolled into some of its products.

That is just one man's guesses, though. I'm sure you have some ideas of your own.