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Apple Inc.                                                                                                                                   March
13, 2007

1 Infinite Loop

Cupertino, CA 95014

  To:

  Kathleen Collins

  Accounting Branch Chief

  United States Securities and Exchange Commission

  Division of Corporation Finance

  100 F Street, N.E.

  Washington, D.C. 20549

  Re:

  Apple Computer, Inc. (File No. 000-10030)

  Form 10-K: For the Fiscal Year Ended September 30,
  2006, Filed December 29, 2006.

Dear Ms. Collins,

We have reviewed
the questions in your letter dated February 28, 2007 regarding the above
referenced filing and have provided the attached responses. We have repeated
the text of your questions and followed each with our response.

Further, we acknowledge
that:

1.             Apple Inc. (formerly
Apple Computer, Inc. and hereinafter referred to as the “Company”) is
responsible for the adequacy and accuracy of the disclosure in the filings
referenced above;

2.             Staff comments or
changes to disclosure in response to staff comments do not foreclose the
Commission from taking any action with respect to the filings referenced above;
and

3.             The Company may not
assert staff comments as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United
States.

If you have any
questions regarding our responses, you may contact me at (408) 974-6614 or Joel
Greenberg, Senior Director of Technical Accounting and External Reporting, at
(408) 974-1888.

Very truly yours,

/s/ Peter Oppenheimer

Peter Oppenheimer

Senior Vice President

and Chief Financial
Officer

Form 10-K for the fiscal year
ended September 30, 2006 filed December 29, 2006

Consolidated Statements of
Operations, page 74

1.                 We
note that you include both products and services in your line item titled “net
sales” in your Consolidated Statements of Operations. We also note similar
classifications related to the corresponding cost of sales. Tell us how you
considered presenting separate line items for revenue earned from the sale of
your products and services, as well as cost of revenue, in your Consolidated
Statements of Operations. Refer to Rule 5-03(b)(1) and (2) of Regulation S-X.

The Company considers the
requirements of Rule 5-03(b)(1) and (2) of Regulation S-X when assessing the
presentation of net sales and related cost of sales in its consolidated
statements of operations. The Company’s service revenue and related cost of
sales were both less than 4% of net sales and cost of sales, in all three years
presented in the Company’s 2006 Form 10-K; therefore, the Company determined
presenting separate line items for service revenue and related cost of sales
was not necessary.

Form 10-K for the fiscal year
ended September 30, 2006 filed December 29, 2006

Note 1 —Summary of Significant
Accounting Policies

Revenue Recognition, page 80

2.                 We
note from your disclosure that you recognize revenue from the sale of your
products and services in accordance with SOP 97-2 and SAB 104.  Tell us your revenue recognition policy for
each of your product groups (e.g. iPod, Macintosh computers, displays, etc.)
including the accounting literature relied on for each product group.

As disclosed in Note 1 of the Company’s 2006 Form 10-K, net sales
consist primarily of revenue from the sale of hardware, software, peripherals,
digital content, and service and support contracts. For any product within
these groups that either is software (e.g., operating system software,
applications software or firmware), or is considered software-related in
accordance with the guidance in EITF 03-5 (e.g., Macintosh computers and iPod
portable digital music players), the Company accounts for such products in
accordance with the revenue recognition provisions of SOP 97-2. The Company
applies SAB 104 for products that are not software or software-related, such as
digital content sold on the iTunes Store and certain Macintosh and iPod
supplies and accessories. The Company advises the Staff it will further clarify
in its future disclosures for which products the Company applies SOP 97-2 and
SAB 104. The Company accounts for multiple element arrangements that consist
only of software or software-related products in accordance with SOP 97-2. If a
multiple-element arrangement includes deliverables that are neither software
nor software-related, the Company applies EITF 00-21 to determine if those
deliverables constitute separate units of accounting from the SOP 97-2
deliverables. If the Company can separate the deliverables, the Company applies
SOP 97-2 to the software and software-related deliverables and applies other
appropriate guidance (e.g., SAB 104) to the deliverables outside the scope of
SOP 97-2. For example, the Company would account for the combined sale of a
Macintosh computer, Logic Pro, the Company’s professional music creation and
audio production software application, and extended warranty agreement as a
multiple element arrangement and allocate revenue to each of the elements based
on their relative vendor specific objective evidence (“VSOE”) of fair value.
Please see the Company’s response to the Staff’s Comment No. 3 below for
discussion of how the Company establishes VSOE.

Form 10-K for the fiscal year
ended September 30, 2006 filed December 29, 2006

Note 1 —Summary of Significant
Accounting Policies

Revenue Recognition, page 80

3.                 We
note in your disclosure that for arrangements that include multiple elements,
revenue is allocated to each element based on the relative fair value, which is
generally determined by vendor-specific objective evidence (VSOE) of fair value
based on the price charged when each element is sold separately.  Tell us how you established VSOE of the
undelivered elements in your multiple element arrangements and the general
terms for those elements (e.g. the initial term for PCS and maintenance).  For instance, describe the process you use to
evaluate the various factors that affect your VSOE.  Does the price charged for the individual
elements vary from customer to customer or geographic location. If so, please
explain how the company determined that they can reasonably estimate fair value
of each undelivered element.  Tell us how
you considered the guidance in paragraphs 10 and 57 of SOP 97-2 related to your
multiple element software arrangements.

As noted in the
Company’s 2006 Form 10-K, the Company designs, manufactures, and markets
personal computers and related software, services, peripherals, and networking
solutions. The Company also designs, develops, and markets a line of portable
digital music players along with related accessories and services. The Company
sells its products worldwide through its online stores, its retail stores, its
direct sales force, and third-party wholesalers, resellers, and value-added
resellers. In addition, the Company sells a variety of third-party Macintosh
and iPod compatible products including application software, printers, storage
devices, speakers, headphones, and various other accessories and supplies
through its online and retail stores.

The Company’s
business consists primarily of high volume, low dollar transactions that are
non-negotiable, which differs from certain large enterprise software companies
that often have low volume, high dollar transactions that are negotiated. The
vast majority of the Company’s sales do not entail any form of negotiation on
behalf of the customer or the Company, as the typical sales transaction is
based on the price clearly marked in the Company’s retail stores, online store
and distributor price list; consequently, because there is no basis for
negotiation, the price charged for elements on a stand-alone basis rarely
fluctuates. Additionally, the Company rarely discounts single element
transactions; therefore, for each individual product, the vast majority of all
items sold on a stand-alone basis are sold at the same price.

In the Company’s
largest market, the United States, the vast majority of the Company’s sales of
any particular product to resellers are at the same price. The Company
typically sells products at specific prices based on non-negotiable
reseller price lists. Additionally, for sales to resellers in the Company’s
other major markets, Japan, Europe, and Asia Pacific, the Company sells its
products based on a Dealer Acquisition Cost (“DAC”) that specifies the prices
at which products should be sold to distributors and from which the Company
rarely deviates.

From time to time
the Company offers promotional pricing, typically offering discounts only on
multiple-element transactions. As a matter of practice, the Company generally
changes prices only with new product introductions or when products are
discontinued.

Unlike many
companies that focus on providing hardware and software solutions for large
enterprise customers for hundreds of thousands of dollars, the Company’s most
popular products include the consumer targeted Macintosh line of personal
computers and iPod line of portable digital music players. As noted in the
MD&A section of the Company’s 2006 Form 10-K, the average selling price per
Macintosh unit sold and iPod unit sold in 2006 was approximately $1,400 and
$200, respectively. Sales of these products are largely

to individual
consumers, who have very little to no leverage in negotiating pricing;
consequently, the price for these products sold on a stand-alone basis
generally remains within a narrow range.

As previously
discussed, the Company’s net sales consist primarily of revenue from the sale
of hardware, software, peripherals, digital content, and service and support
contracts. For multiple element transactions, the undelivered elements consist
primarily of the Company’s extended warranty service and support contracts offered
through the AppleCare Protection Plans (“APP”) and the Company’s .Mac offering.
To a significantly lesser extent, the Company also has other undelivered
elements including software maintenance generally offered only to education and
business customers, which is further discussed in the Company’s response to the
Staff’s Comment No. 5.

APP is a
separately priced service that generally extends the standard warranty service
coverage on certain Macintosh products to three years. APP includes telephone
assistance, certain repairs, web-based support resources, and diagnostic tools.
As APP can be purchased up to one year after the purchase of a Macintosh
personal computer, the Company has numerous stand-alone APP transactions, which
serve as the Company’s basis for establishing VSOE of fair value. Total revenue
recognized in fiscal year 2006 from APP was approximately $444 million. All
revenue related to APP is deferred and recognized over the applicable extended
contract period.

The Company’s .Mac
offering is a suite of Internet services that for an annual fee provides users
with a set of Internet tools including a virtual hard drive, an email service,
various tutorials and other features that are available to subscribers. The
prices charged for one-year subscriptions to the .Mac service fall within a
very narrow range, and serve as the basis for establishing VSOE. Total revenue
recognized in fiscal year 2006 from .Mac was approximately $98 million. All
revenue related to the .Mac offering is deferred and recognized on a
straight-line basis over the applicable contract period.

The Company
generally determines VSOE of fair value for undelivered elements such as APP
and .Mac based upon the price it charges similar customers when these items are
sold separately, consistent with the guidance in paragraphs 10 and 57 of SOP
97-2. VSOE varies across class of customer (e.g., individual consumers,
resellers, education customers) and geography; however, within each class of
customer and geography, the price charged for a product or service on a
stand-alone basis falls within a narrow range (typically greater than 90% of
stand-alone transactions are within 15% of the median price). To establish that
the Company has VSOE of fair value, the Company compiles historical information
over a specified time period and evaluates whether a significant majority of
the transactions sold on an individual basis for a specific customer class and
geography falls within a narrow range around the median price for all
individual sales within said customer class and geography. The Company
considers all transactions that fall within such range to be priced using VSOE.

Form 10-K for the fiscal year
ended September 30, 2006 filed December 29, 2006

Note 1 —Summary of Significant
Accounting Policies

Revenue Recognition, page 80

4.                 We
also note that if the Company offers specified upgrade rights, you defer
revenue related to the fair value of the specified upgrade right until the
future obligation is fulfilled or when the rights to the specified upgrade
expires. We note in a recent Wall Street Journal article that some customers,
who bought certain new Macintosh products based on a microprocessor from Intel
Corp., would now be able to use hardware that supports a faster new variant of
a wireless technology. We further note that for several months, you shipped
computers with the wireless hardware while the final technical specifications
were not complete enough to include the software that supports the
technology.  Tell us whether the
customers who purchased these Macintosh products without the updated software
were guaranteed the rights to such software when available.  Tell us how you determined whether these
rights were unspecified or specified upgrades and how you accounted for these
sales. If you determined that these rights were specified upgrades, tell us how
you considered the guidance in paragraphs 36 through 38 of SOP 97-2 in
accounting such sales and explain how you were able to establish VSOE for these

rights. Also, tell us whether the
customers were informed that they would be required to pay additional fees to
implement these upgrades at the time they purchased the hardware or explain
when and why the decision was made to charge the additional fees. Furthermore,
tell us the amount of revenue recognized for Macintosh products without the
updated software for each period presented.

As disclosed in
Note 1 of the Company’s 2006 Form 10-K, the Company does not generally offer
specified or unspecified upgrade rights to its customers in connection with
software sales. If the Company offers specified upgrade rights, the fair value
of the specified upgrade right (determined based on stand-alone sales) is
deferred until the future obligation is fulfilled or when the specified upgrade
right has expired. The circumstances related to the Company offering 802.11n
software to customers as referenced in the Staff’s Comment No. 4, did not
constitute a specified or unspecified upgrade right as further described below.

In August 2006,
the Company began selling certain Macintosh personal computers with a new
wireless networking card that was capable of communicating via several wireless
standards as defined by the Institute of Electrical and Electronics Engineers,
Inc. (“IEEE”). Similar to those used in some previous Macintosh models, this
card provided wireless networking capabilities using the 802.11a/b/g industry
standard specifications as defined by the IEEE. The new card also included
latent support for a draft of the 802.11n standard, which was still under
discussion and not accepted by the IEEE. However, the Company was unsure
whether it would ever make available the 802.11n functionality in these systems
due to the unsettled status of the 802.11n draft standard. As such, the
existence of this new card’s support for the draft 802.11n was not disclosed to
the Company’s customers nor was this functionality ever marketed. In fact,
these