Question for you on the Macintosh side, if I could do a deeper dive on the education sector. Question for Tim, you guys have been pretty cautious regarding state spending here given the tax issues that you've quoted for the different states. So, what powered the upside in education specifically K-12 and higher Ed? And then also, if you could give additional color on what happened in the student buy versus your expectation as well, given the popularity of notebooks for students? Then I had one follow-up, if I could.

Tim Cook

Let me start with the last one first. The student buy, you can see those numbers trickling through our retail results and you can't see this, because we don't break it out separately, specifically helped our online results and the institutions buy through book stores. And so the back-to-school season, and the end result strongest ever and I will attribute a great piece of that to the individual business that you're talking about.

In terms of the institutional business, I've been worried about state spending. I'm still worried about state spending. We saw no material stimulus funding flowing last quarter. We saw a little, but it was a very small number. We may see more this quarter, but it's too early to tell. In terms of the institutional increase, institutions grew about 12%, and that increase was the big thing that pushed us over the zero mark there was the state of Maine order. And so, it was extremely key in the education institution achievement.

Bill Fearnley - FTN Equity Capital

Okay, thanks. And then on Mac inventory, just doing a deeper dive here on the air freight question, I know you won't talk about the product, but what's driving the increase in air freight? Is the timing of new announcements? Are you having issues with component availability? Are you running into manufacturing yield issues? You know, why the, why the up-tick here?

Tim Cook

Well, what's driving the air freight is that I haven't been able to figure out a way to move the holiday season and so we have to get all of these units into the channel for the holiday sales. And I'm sorry, I can't be more specific than that.

Bill Fearnley - FTN Equity Capital

Okay. Thanks, guys.

Tim Cook

We have to have a little bit of fun on these calls.

Nancy Paxton

Thanks, Bill. And that concludes our Q&A session today. A replay of today's call will be available for two weeks. As a Podcast on the iTunes store. The web-cast on apple.com/investor and via telephone. And the numbers for the telephone replay are 888-203-1112 or 719-457-0820. The confirmation code is 1248587. And these replays will be available beginning at approximately 5:00 p.m. Pacific time today. Members of the press with additional questions can contact Steve Dowling at 408-974-1896 and financial analysts can contact Joan Hoover or me with additional questions. Joan is at 408-974-4570, and I'm at 408-974-5420. And thanks again for joining us.

Operator

Ladies and gentlemen, that does conclude today's presentation. We do thank everyone for your participation.