Nancy Paxton

Thanks, Ben. Could we have the next question, please?

Operator

Your next question will come from Shannon Cross with Cross Research.

Shannon Cross - Cross Research

A question with regard to channel inventory and what you are seeing in terms of, I mean, iPod, iPhone, Macs, just comments from the retailers. Again, I know its October and as you said, it’s a bit foggy but any sort of thoughts on how things are positioned that you can give us, in more detail than maybe what you provided earlier?

Timothy D. Cook

Shannon it is Tim. In the Mac area, as Peter said in his opening comments, we began and ended the quarter between three and four weeks of inventory and that’s below our target, as you know, of four to five weeks. In the iPod, we began and ended between four and six weeks, which is right in our target range and on the iPhone, we were shipping to carriers in 51 countries by the end of the quarter and we had over 30,000 points of distribution. With the 44 countries that we had launched prior to the end of August, the weeks of inventory that we had at the end of the quarter for those countries was less than six weeks. For the remaining seven countries where launches occurred in late September or early October, we don’t have enough data yet to quantify the weeks of inventory. However, to be precise, at the end of the quarter I can tell you that we had about 2 million iPhones in total channel inventory across all of the 51 countries and we feel that this inventory is about right.

Shannon Cross - Cross Research

Okay, and I’m curious, any idea on how much the Mac refresh would have impacted sales last quarter as you sort of cleared the channel?

Timothy D. Cook

I think if you look at the Mac, there are two things that I believe impacted the Mac sales last quarter and possibly a third. The first is that U.S. K to 12 institutional sales were down 7% year-on-year to about 200,000 units, and this is due to state and local budget constraints. California in particular was down 28% year-on-year. That 7% contraction was a significant change from what we had seen in the first three quarters of the fiscal year which were up 29%. In particular, purchases of 1,000 units or more were down significantly, both sequentially and year-over-year. If the unit sales had grown last quarter in K to 12 at 29%, which is what we had been seeing going into the quarter instead of contracting by 7%, then Mac unit sales would have been 75,000 units higher and so this was a big issue for the quarter from a Mac perspective. The second thing that we believe was that customers were delaying purchases because of the portable transition. As you know, there were rampant rumors and lots of press reports about a potential portable transition and we saw some slowing towards particularly the final weeks of September and the initial weeks of October. However, once announcing last week, we saw a considerable rebound in sales and we are very, very optimistic about those results.

Shannon Cross - Cross Research

Okay and then just a final question for Steve, any chance we can get you to make this a recurring event?

Steven P. Jobs

Not likely, I’m sorry.

Shannon Cross - Cross Research

Okay, thanks.

Steven P. Jobs

Peter and Tim do such a good job that I don’t think I could add much.