After years of false starts, the Apple "Switch" campaign appears to be finally paying off: In the latest quarter, the company's Macintosh computers garnered almost 3 percent of the worldwide PC market for the first time in a decade and exceeded 5 percent in the US. Apple sold 1.764 million Macs in the quarter, representing growth of 33 percent year over year. Overall, the PC market grew just 12 percent in the quarter.

Apple earned a profit of profit of $818 million on revenues of $5.41 billion in the quarter. This represents a sharp increase in earnings from the same quarter a year earlier, when Apple posted a profit of $472 million on revenues of $4.37 billion. Gross margins were an outrageous 36.9 percent.

"We're thrilled to report the highest June quarter revenue and profit in Apple's history, along with the highest quarterly Mac sales ever," said Apple CEO Steve Jobs, noting that the company sold 150,000 more Macs in the quarter than it did in its previous best-selling quarter.

Apple also sold 9.8 million iPods in what is traditionally a slow selling period for the company's consumer electronics devices. This is up 21 percent from the same quarter a year ago, when Apple sold 8.1 iPods.

Apple was relatively quiet about the heavily hyped iPhone, which went on sale just two days before the quarter ended and got off to a rough start on that opening weekend thanks to technical glitches. Tuesday, wireless carrier AT&T announced that customers activated just 145,000 iPhones first two days of sales, far below analysts estimates, which went as high as 700,000 units. According to Apple, it actually shipped 270,000 iPhones in the period (not all were sold to customers), still well below estimates. But that figure suggests that perhaps half of all initial iPhone customers--who paid an average of $585 for the device, including fees but not including a two-year contract--were unable to use their devices for about 24 hours when they brought them home. Apple apologized for the snafu and said that the activation system had been since fixed.

The company did, however, say iPhone sales are on track. The company expects to sell 1million iPhones by the end of the current quarter and 10 million by the end of 2008. "iPhone is off to a great start," Jobs noted.