A year ago, tech industry observers were wondering if the shine was finally off Apple Computer. Sales were down, the company was taking its time releasing new products, and people were wondering if CEO Tim Cook was up to the task of leading the iconic company. Fast forward to this week, when Apple released a very positive 2nd quarter earnings report, and the company appears to be running like a finely-tuned watch. An Apple watch, probably. What do the Apple results tell us about overall consumer tech trends? Science and technology correspondent Renay San Miguel talks Apple profits with GPB's Bradley George.

• The bottom line for Apple’s earnings appears to be all about the new iPhone 6 and the company’s success selling them in China.
It helps when you have a new, bigger-screen iPhone that fits in with the trend started by the larger Samsung Galaxy 6 phones. Apple said it sold 40 percent more iPhones than it did during the same time last year, which may speak more to pent-up demand – after all, the headline in early 2014 about Apple was delays in refreshing products like the iPhone and the iPad. The company said it sold more than 61 million iPhones, mostly iPhone 6’s, and Cook said that the company was seeing more people upgrading to the newer phones than in previous iPhone cycles. Also, the company did very well in China, which is seeing a rapidly rising middle class snapping up the latest smartphones. That translated to a 71`percent increase in revenue from the region, which includes Hong Kong and Taiwan.

• Why is this particular iPhone resonating with consumers? It can’t just be the larger screen, can it?
As we do more video watching and game playing on these phones, a larger screen actually becomes a necessity, along with faster microprocessors that can handle the latest mobile graphics in games and apps. So the 5 and 6-inch screens of the iPhone 6 and 6-Plus, plus the upgraded internal specs, do make a difference. But I’m convinced it’s also about the larger storage that Apple offers now. Loading up phones with apps, your music library and the occasional HD movie can take up a lot of gigabytes, and the new iOS 8 operating system demand more storage. That’s why people are opting for the 64-gig version, which costs more but you can argue is worth it down the line. In fact, Wall Street were amazed at the fact that Apple was not only selling more phones, but more higher-priced phones. And the new iPhones offer Apple Pay, Apple Health and you can sync it easier with the new Apple Watch. Those sales, by the way, won’t be reflected until the next earnings report in the summer.

• But Apple did have some bad news that played into a larger trend involving tablets and its iPads,right?
It did. Apple said sales of its iPads were down 23 percent in the quarter. And for the second time in the last nine months, sales of Mac computers, especially MacBook Air laptops, actually did better than iPads. Now it’s not a bad thing to sell more Macs, since they’re more expensive and bring in better profit margins, and Apple did sell more Macs in China, which is seeing a decrease in overall PC sales. But Cook admitted in the earnings conference call with reporters that the larger iPhones and entry level MacBook Airs are probably eating into iPad sales overall. This is going to be a key year for tablets, which have hit a bit of a sales stall thanks to more larger phone screens. The trend appears to be that more people are wanting to refresh their phones rather than their tablet computers.

• What do we expect from Apple when it does report its sales on Apple Watches, which just started becoming available to the public on Friday?
The company said so far demand is exceeding supply, which can be a good thing as long as they can eventually meet that demand. But Apple also said it doesn’t expect the Watch to have a big impact on sales in the near term and will have lower profit margins than iPhones and Macs. With the Apple Watch, it will be about early adopters, press coverage – which so far has been positive - and the third-party developers building apps to run on the Watch. The only thing Cook said about early Watch sales was that he felt “really good” about the orders being placed, but no word on whether most of those were for the $349 starter version or the more expensive versions with more fashionable watch faces and wristbands.

Renay San Miguel hosts Sci-Tech Now Georgia on GPB-TV

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