Q1 iPhone Sales Estimate

  • Posted: 19 October 2011 03:57 PM

    Warning: This is a back of the envelope exercise.  You may have different thoughts.  If you do, I’d like to hear them.

    Apple announced over 4,000,000 iPhone units sold during the first 3 days of launch.  I don’t have the announcement in front of me, and don’t know if that number was exclusive to the 4S, or not.

    I assumed that over 4,000,000 units meant 4,100,000 units (it could have been higher).

    Whatever, I divided 4,100,000 by 3 to get a daily rate.  1,366,666 daily during the launch.

    I then discounted that launch volume by 70%, and assumed discounted daily rate for the remainder of the quarter (68 net of holidays) and got 27,880,000 post launch weekend.

    Adding launch weekend back into the fold I got 31,980,000 iPhone units for FQ1/2012.  This does not factor in channel fill inventory.  TC said inventory was in normal range of 4 - 6 weeks (IIRC).

    That’s an 87% QoQ growth rate.

    I have no data to support the above.  Its just a SWAG.  Thoughts?

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    Posted: 19 October 2011 04:17 PM #1

    Gregg Thurman - 19 October 2011 06:57 PM

    ... Adding launch weekend back into the fold I got 31,980,000 iPhone units for FQ1/2012.  This does not factor in channel fill inventory.  TC said inventory was in normal range of 4 - 6 weeks (IIRC).

    Mav estimated 29 mil iPhones.  You guys raise my hope.

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    Posted: 19 October 2011 04:37 PM #2

    A conservative forecast is to apply a year ago’s quarter growth rate (86%) to a year ago’s sales (16.2M), which yields 30.2M iPhones. Maybe I ought to be even more prudent.

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    Posted: 19 October 2011 04:48 PM #3

    Listen to the CC.  Tim Cook has something to say about smartphone rate of growth.

    If he’s wrong THIS quarter, now that Tribute to Steve time is over (after tomorrow anyway), I expect to see a shareholder proposal to replace Tim Cook before long.  Sure it’ll be a fringe element and it’ll never pass, not even close, but still…

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    Posted: 19 October 2011 04:56 PM #4

    Gregg Thurman - 19 October 2011 06:57 PM

    Warning: This is a back of the envelope exercise.  You may have different thoughts.  If you do, I’d like to hear them.

    Apple announced over 4,000,000 iPhone units sold during the first 3 days of launch.  I don’t have the announcement in front of me, and don’t know if that number was exclusive to the 4S, or not.

    I assumed that over 4,000,000 units meant 4,100,000 units (it could have been higher).

    Whatever, I divided 4,100,000 by 3 to get a daily rate.  1,366,666 daily during the launch.

    I then discounted that launch volume by 70%, and assumed discounted daily rate for the remainder of the quarter (68 net of holidays) and got 27,880,000 post launch weekend.

    Adding launch weekend back into the fold I got 31,980,000 iPhone units for FQ1/2012.  This does not factor in channel fill inventory.  TC said inventory was in normal range of 4 - 6 weeks (IIRC).

    That’s an 87% QoQ growth rate.

    I have no data to support the above.  Its just a SWAG.  Thoughts?

    Not sure of your number of days math, since we have an extra week of sales this qtr.  As far as sales rate.  I’m assessing my previous assumptions a bit.  The outstanding question IMO is what production rate does Apple target for the new iPhone 4S.  We can pretty much assume we will be supply constrained in the Dec qtr.  This last qtr Apple lost sales due to the delayed launch of the 4S. Last qtr finished with a decrease in inventory, but not nearly the drawdown like the iPhone 3GS to 4 , so we will most likely clear out the old SKUs this qtr and not replace much as Apple tries to meet carrier demand.  I previously used a 100% production increase as the YOY target which should bring us to 32M for iPhone in 2012.  I’m currently modeling 28.2M but since I’m still trying to understand last qtrs actual results, I will be updating down the road

         
  • Posted: 19 October 2011 04:57 PM #5

    awcabot - 19 October 2011 07:37 PM

    A conservative forecast is to apply a year ago’s quarter growth rate (86%) to a year ago’s sales (16.2M), which yields 30.2M iPhones. Maybe I ought to be even more prudent.

    Or you could take the average of the prior 3 YoY growth rates and apply that to last year’s results.

                                                              31,090,000

    There are lots of formulas, most using past performance.  What I like is that even with change of formulas the results are quite similar.

    But I’m wondering if the apparent greater demand for the 4S won’t skew results to the upside.

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    Posted: 19 October 2011 05:21 PM #6

    My quick chicken scratch number (subject to revision) is just under 33M (most of which will be higher ASP iPhone 4s’s).

    Gregg Thurman - 19 October 2011 07:57 PM

    I’m wondering if the apparent greater demand for the 4S won’t skew results to the upside.

    FWIW: I think that it won’t simply be *apparent* higher demand for the iPhone 4s, but there will actually be higher demand for them in reality.  That will proving a nice boost to the ASP.  I think in the current lineup the iPhone 4 is the bastard stepchild.  It will continue to sell well in geo’s that don’t have the 4s yet, but as soon as the 4s is available the 4 doesn’t really fill a niche anymore.

    The “free” 3GS is “free” and that is a magic word with consumers, but the 4s is such an improvement over the 4 I don’t know anyone that wouldn’t pay the extra $100 for the 16GB 4s

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  • Posted: 19 October 2011 05:22 PM #7

    pats - 19 October 2011 07:56 PM

    Not sure of your number of days math, since we have an extra week of sales this qtr.  As far as sales rate.  I’m assessing my previous assumptions a bit.  The outstanding question IMO is what production rate does Apple target for the new iPhone 4S.  We can pretty much assume we will be supply constrained in the Dec qtr.  This last qtr Apple lost sales due to the delayed launch of the 4S. Last qtr finished with a decrease in inventory, but not nearly the drawdown like the iPhone 3GS to 4 , so we will most likely clear out the old SKUs this qtr and not replace much as Apple tries to meet carrier demand.  I previously used a 100% production increase as the YOY target which should bring us to 32M for iPhone in 2012.  I’m currently modeling 28.2M but since I’m still trying to understand last qtrs actual results, I will be updating down the road

    This extra week occurred end of September.  I counted days forward starting with the launch Friday and deducted holidays (assuming nearly all countries celebrate Christmas and some some sort of Thanksgiving Day).

    Max iPhone 4 unit sales occurred during FQ3/2011 (20.338 million units).  The quarter began on March 27 and ended on June 25, a total of 91 days.  That would make the maximum daily run rate we are aware of 223,500.  But by this period iPhone production was on cruise control as all channels were filled to equilibrium, so I’m thinking Foxconn wasn’t working at potential.  Given that Apple will be selling 3 separate models, now required three separate lines, I think its safe to say that production capacity has been increased.  By how much we don’t know, but a 50% increase would not be unreasonable given the iPhones past growth rates.

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  • Posted: 19 October 2011 05:30 PM #8

    ChicagoBob - 19 October 2011 08:21 PM

    My quick chicken scratch number (subject to revision) is just under 33M (most of which will be higher ASP iPhone 4s’s).  I think in the current lineup the iPhone 4 is the bastard stepchild.  It will continue to sell well in geo’s that don’t have the 4s yet, but as soon as the 4s is available the 4 doesn’t really fill a niche anymore.

    The “free” 3GS is “free” and that is a magic word with consumers, but the 4s is such an improvement over the 4 I don’t know anyone that wouldn’t pay the extra $100 for the 16GB 4s

    What I hear you saying is that as the 4S becomes available in more areas (countries) then iPhone 4 unit sales will decline.

    If the primary draw of the 4S is SIRI, I think the lack of native language capability will hold 4S adoption back, in non-English speaking countries.  I don’t see wide spread adoption for some time.  But, IMO, your overall thesis is correct.

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    Posted: 19 October 2011 05:30 PM #9

    Mace, that was one of only a few ways I could get the numbers to fit…Oppenheimer’s own guidance.

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    Posted: 19 October 2011 05:44 PM #10

    Gregg Thurman - 19 October 2011 08:30 PM

    If the primary draw of the 4S is SIRI, I think the lack of native language capability will hold 4S adoption back, in non-English speaking countries.  I don’t see wide spread adoption for some time.  But, IMO, your overall thesis is correct.

    True.  I think its reasonable to discuss how much of a draw Siri is. 

    IMO: the rest of the phone is such a major upgrade over the 4, I don’t see how anyone considering paying $99 out of pocket for a 4 wouldn’t be willing to pay $199 for a 4s.

    I think there are 3 iPhone markets:

    1) the “free” 3GS market;
    2) the iPhone 4s market;
    3) the iPhone 4 market - which is going to decrease steadily and only exists where there is no iPhone 4s market.

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  • Posted: 19 October 2011 05:47 PM #11

    ChicagoBob - 19 October 2011 08:44 PM

    True.  I think its reasonable to discuss how much of a draw Siri is.

    It may not be that much if this is true.

    http://www.ijailbreak.com/ipad/siri-functioning-on-iphone4s/

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    Posted: 19 October 2011 05:51 PM #12

    Most users don’t jailbreak.  This won’t materially impact iPhone 4S sales, because the 4S isn’t really meant for iPhone 4 users anyway.

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    Posted: 19 October 2011 06:18 PM #13

    Gregg Thurman - 19 October 2011 08:30 PM
    ChicagoBob - 19 October 2011 08:21 PM

    My quick chicken scratch number (subject to revision) is just under 33M (most of which will be higher ASP iPhone 4s’s).  I think in the current lineup the iPhone 4 is the bastard stepchild.  It will continue to sell well in geo’s that don’t have the 4s yet, but as soon as the 4s is available the 4 doesn’t really fill a niche anymore.

    The “free” 3GS is “free” and that is a magic word with consumers, but the 4s is such an improvement over the 4 I don’t know anyone that wouldn’t pay the extra $100 for the 16GB 4s

    What I hear you saying is that as the 4S becomes available in more areas (countries) then iPhone 4 unit sales will decline.

    If the primary draw of the 4S is SIRI, I think the lack of native language capability will hold 4S adoption back, in non-English speaking countries.  I don’t see wide spread adoption for some time.  But, IMO, your overall thesis is correct.

    I think the 4S value proposition exists beyond SIRI.  I would hope Apple is working hard to add additional language support.  The Nuance Recognizer supports 56 languages, and Text to Speech in Lion supports 22 languages so maybe the additional languages will come as additional countries are supported.  Some people are willing to pay extra for a better camera, some might take advantage of the extra speed of the network/processor combination and let’s not forget that international sales make up the majority of sales and the unlocked prices in USD are more like $400, $550, $650.  Many countries people BYOH and just purchase a SIM so the new line-up opens some additional price points.

         
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    Posted: 19 October 2011 06:34 PM #14

    My Estimate: 35 million+

    Contributing fators:

    - iPhone 4s delayed until Q1
    - rapid rollout of iphone 4S to international markets
    - As per TC yesterday: “defferred carrier additions from Q4 to Q1”
    - Continued rapid growth of overall smartphone market
    - no contrained production due to similar form factor of new model
    - iphone 3GS dropped to free on contract
    - iphone 3GS & 4 dropped to cheaper prices for benefit of massive Prepay market worldwide
    - extra week in the Quarter

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    Posted: 19 October 2011 06:48 PM #15

    FYI: I’m sticking with my chicken scratch 33M number.

    However, I did a little doodling with those numbers and can see a solid argument that there could be 40M iPhones sold this quarter.  While it is towards the far end of the bell curve, its not as insane as it sounds at first.

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