How Many iPhones Did Apple Sell In The March Quarter?

  • Posted: 19 April 2012 10:37 PM #76

    DawnTreader - 19 April 2012 10:32 PM

    I’ll give you an example. Apple ended the December quarter with less than 6 million iPhones in the global channel. If Apple increases global channel supply to let’s say 7 or 8 million units at the end of the March quarter (iPhones considered sold by Apple because ownership has been transferred to the carrier that purchased the units(those additional units will be considered “sold” by Apple but will not be “activated” through sales to the end user until after the end of the quarter.

    True.  Sales filling the channel are sales except for those being delivered to Apple retail stores (they’re typically accompanied by an activation to be counted a sale)

         
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    Posted: 19 April 2012 10:51 PM #77

    I confess to having a knee-jerk reaction to anything that sounds remotely like “channel stuffing.” wink

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  • Posted: 19 April 2012 11:00 PM #78

    I liked Nicu Mahalache’s point that the online store was out of stock of the iPhone 4S in Hong Kong until mid-March.  His iPhone number is 38.775m.

    Link:

    http://seekingalpha.com/article/502491-apple-earnings-estimates

    Excerpt:

    iPhone sales represented 52.7% of revenue last quarter. I will explain why I think this number has gone up this quarter by another 5%. It has been estimated that the gross margin of the iPhone is more than 60%, by far the most profitable Apple product. One cannot understate the importance of getting the unit sales right as it will represent about three quarters of the total gross margin this quarter.

    Since the introduction of the iPhone 3G which was sold for the first time with carrier subsidy, just as most consumers were used to buy phones, the sales numbers have increased exponentially. That’s the reason for which we can better visualize that evolution in logarithmic scale. ASPs have a slightly upward trend and have stabilized around the $650 level.

    The iPhone 4S was introduced on October 14, almost three weeks into the first fiscal quarter, which had 14 weeks. Consumers stopped buying the previous version during Q4 which, together with the bump in Q1, is clearly visible in the graph. The 4S sold 37M units during the quarter, 4M during the first weekend. Assuming modest sales of previous models before its introduction, this leaves us with about 3M per week for the remaining 11 weeks. And the most important fact is that we can approximate the production rate by this number. Production has probably increased nicely during the quarter and continued the trend during the second quarter.

    As Apple released the new iPhone in October instead of June or July, using only y/y and q/q trends turns out to be the wrong approach this quarter. Another factor is that some large carriers have been added to the partners list.

    Here’s a better method I learned from Horace Dediu: just estimate production capacity (he uses this method for understanding longer term evolution). How do we know that Apple has sold all the iPhone 4S units it could build? Just check its online store from time to time to see where it is not in stock. It turns out that in Hong Kong, it was not in stock before mid-March. Hong Kong is a major distribution hub for Southeast Asia because its taxes are low and the gray market has developed for several years.

    We have already solved half the problem. Unfortunately, I have no information about the production ramp-up’s speed so I’ll have to guess that. Remember that the Chinese observe the New Year from 23-28 January, so we should probably count only 12 weeks for production.

    With a modest increase from the 3M per week figure and maybe an oversupply during the last two weeks of March, I think the worst-case scenario is 36.3M iPhones sold during Q2. With an average production increase of 15% per week, the best-case scenario adds up to 41.25M iPhones sold. ASP in the range $630 to $680 would imply over $25B of revenue from the iPhone alone this quarter or an annualized $100B of revenue. If the iPhone alone were a company, it would be in a very select club.

    [ Edited: 19 April 2012 11:07 PM by Trainspotter ]      
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    Posted: 19 April 2012 11:15 PM #79

    Yeh, that’s a good article - quite encouraging on a down day.  Thanks for the link, Train.

         
  • Posted: 20 April 2012 12:06 AM #80

    Mav - 20 April 2012 01:51 AM

    I confess to having a knee-jerk reaction to anything that sounds remotely like “channel stuffing.” wink

    Bringing inventory within 4 to 6 weeks of supply isn’t channel stuffing. Back to the examples. Let’s assume for a moment sell-through expectation in the June quarter are 32 million units. 2/3s of those sales are through carriers and not Apple’s direct channels. Apple desires five weeks of supply globally. That’s 21.5 million carrier unit sales or at the rate of 1.65 million units per week. Five weeks of supply is 8.25 million units. Apple ended the December quarter with less than 6 million units in the channel. That’s 2.25 million units added to the channel without “stuffing.”

    [ Edited: 20 April 2012 12:08 AM by DawnTreader ]      
  • Posted: 20 April 2012 12:07 AM #81

    Mercel - 20 April 2012 01:37 AM
    DawnTreader - 19 April 2012 10:32 PM

    I’ll give you an example. Apple ended the December quarter with less than 6 million iPhones in the global channel. If Apple increases global channel supply to let’s say 7 or 8 million units at the end of the March quarter (iPhones considered sold by Apple because ownership has been transferred to the carrier that purchased the units (those additional units will be considered “sold” by Apple but will not be “activated” through sales to the end user until after the end of the quarter.

    True.  Sales filling the channel are sales except for those being delivered to Apple retail stores (they’re typically accompanied by an activation to be counted a sale)

    That’s correct. I factor about 2/3s of sales in the quarter will be outside Apple’s direct channels, at least for the sake of discussion. Please see above.

    [ Edited: 20 April 2012 12:11 AM by DawnTreader ]      
  • Posted: 20 April 2012 12:10 AM #82

    DawnTreader - 20 April 2012 03:06 AM
    Mav - 20 April 2012 01:51 AM

    I confess to having a knee-jerk reaction to anything that sounds remotely like “channel stuffing.” wink

    Bringing inventory within 4 to 6 weeks of supply isn’t channel stuffing. Back to the examples. Let’s assume for a moment sell-through expectation in the June quarter are 32 million units. 2/3s of those sales are through carriers and not Apple’s direct channels. Apple desires five weeks of supply globally. That’s 21.5 million carrier unit sales or at the rate of 1.65 million units per week. Five weeks of supply is 8.25 million units. Apple ended the December quarter with less than 6 million units in the channel. That’s 2.25 million units added to the channel without “stuffing.”

    Thanks for your detailed reasoning.  I’m going to sleep a bit easier after your analysis.

         
  • Posted: 20 April 2012 12:11 AM #83

    JRay - 19 April 2012 05:51 PM
    Gregg Thurman - 19 April 2012 05:45 PM
    terps530 - 19 April 2012 02:28 PM

    I have a question- does anyone know if iphone sales in China are subsidized to the public through their carrier, the way it is here?

    I was trying to find any iphone sales data in China, but what I did find is that the 4S costs 4988 yuan, which is almost $800 USD.  I am wondering is that what people have to pay there for the phone, or is it less through phone service?

    A couple articles say the iphone is the ultimate status symbol in China, and was only 5.7% of the market share (Android had 68% (both as of Q4 2011).  I wonder when that figure will start to balance out etc, and why.  That clearly will bring in HUGE amounts of money if/when it happens.

    Most handsets sold in China are not subsidized (pre-pay accounts).  However, Apple is working with its authorized carriers to shift its customers to post paid accounts.  This enables subsidies to be paid, reducing initial handset cost.  Apple’s efforts are paying off very well, but I don’t know what the mis is.  If anything the shift to post-paid will increase iPhone unit sales.

    Anyone at all concerned about the 200k of pre-orders at China Telecom? It was a very paltry number for a carrier that’s been waiting years for the iPhone. But I didn’t hear too many people concerned about it when it was announced.

    200K is not too shabby. I would’t expect China Telecom to sell more than 1M iPhones per quarter, similar to China Unicom, which took almost a year to sell 1M iPhones at first. The majority of iPhones are sold by resellers without contract which end up being activated on China Mobile. 

    Even though China Unicom and China Telecom subsidize handset cost, the full amount is due upfront, and the subsidy is applied as a discount to the monthly bill over the life of the contract.

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  • Posted: 20 April 2012 12:21 AM #84

    Big Al - 19 April 2012 07:56 PM

    Here are the launch dates for the iPhone 4S in countries which will have a big impact on additional Q2 revenues:

    Dec. 16th: Bahrain, Brazil, Chile, Egypt, Israel, Jordan, Kuwait, Malaysia, Morocco, Peru, the Philippines, Qatar, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, Tunisia, Turkey, United Arab Emirates, and Vietnam.

    Jan. 12th: Anguilla, Antigua and Barbuda, Bolivia, Botswana, British Virgin Islands, Cameroon, Cayman Islands, Central African Republic, China, Dominica, Dominican Republic, Ecuador, Grenada, Guam, Guinea Conakry, Ivory Coast, Jamaica, Kenya, Madagascar, Mali, Mauritius, Niger, Senegal, St. Vincent and The Grenadines, Trinidad and Tobago, Turks and Caicos and Uganda.

    Jan. 27th: Indonesia, Costa Rica

    March 9th: China Telecom

    Also, maybe a good indicator to assess China’s impact:
    http://www.macrumors.com/2012/03/21/china-surpasses-u-s-ios-and-android-activations-for-first-time/

    Big Al:

    Nice work!

         
  • Posted: 20 April 2012 12:25 AM #85

    Mav:

    From Big Al’s list:

    Dec. 16th: Bahrain, Brazil, Chile, Egypt, Israel, Jordan, Kuwait, Malaysia, Morocco, Peru, the Philippines, Qatar, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, Tunisia, Turkey, United Arab Emirates, and Vietnam.

    Jan. 12th: Anguilla, Antigua and Barbuda, Bolivia, Botswana, British Virgin Islands, Cameroon, Cayman Islands, Central African Republic, China, Dominica, Dominican Republic, Ecuador, Grenada, Guam, Guinea Conakry, Ivory Coast, Jamaica, Kenya, Madagascar, Mali, Mauritius, Niger, Senegal, St. Vincent and The Grenadines, Trinidad and Tobago, Turks and Caicos and Uganda.

    Jan. 27th: Indonesia, Costa Rica

    March 9th: China Telecom

    ————————————

    How many additional units will the territories mentioned above deliver in the March quarter than the December quarter?

    Add all of those units to an expected pick-up in global channel supply.

         
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    Posted: 20 April 2012 12:32 AM #86

    population of each country in millions, rounded down.

    1
    203
    16
    82
    7

    6
    2

    28
    31
    29
    101
    .8
    138
    26
    49
    23
    66
    10
    78
    8

    90
    —————end of Dec 16th group

    sry for the blank lines.  must be some invisible characters in there which I could not delete, so added an extra blank line in 3 places

    [ Edited: 20 April 2012 12:35 AM by Tetrachloride ]      
  • Posted: 20 April 2012 01:10 AM #87

    I want to get back on track. Supply will govern sales. Counting people, counting units, counting what your best friend’s neighbor’s girlfriend’s 15 year-old said he saw purchased at Best Buy on Sunday afternoon will not deliver good numbers.

    I’m concerned about how many iPhones Apple could produce and ship in the quarter with a much higher percentage of units sold through distribution systems outside of Apple’s direct channels. I also look at regional revenue growth patterns. I do expect a strong Asia-Pacific quarter with a sequential decline in unit sales of the iPhone in the States.

         
  • Posted: 20 April 2012 04:46 AM #88

    DawnTreader - 20 April 2012 04:10 AM

    I want to get back on track. Supply will govern sales. .

    Precisely. That’s how Apple runs the business. And the day they stop doing that is the day they begin to lose control. Control means knowing how many you will make, knowing the supply chain is able to make them, and knowing where they will be sold. And therefore being able to transition to a new product with terrifying (for competitors) speed and precision.

    FUD stories in the media can nearly always be discounted, even though they may be based on fact.  So bends in the road appear. Management will steer the company round them. For example, QCOM apparently hasn’t enough TSMC foundry capacity to fulfil sales. Who says Apple haven’t contracted direct with TSMC for capacity?

    [ Edited: 20 April 2012 04:55 AM by sleepygeek ]      
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    Posted: 20 April 2012 05:41 AM #89

    I happen to think a little reexamination of our estimation models now and then is healthy, though I think most all of us share that view.

    As part of my attempt to increase my estimates’ accuracy, I also like to be able to combat a highly incomplete analysis with additional facts and context.

    I’m still sticking to my 38M number for many reasons including my complete inability to comprehend how Apple could SLOW DOWN production of an iPhone of all things in its first full quarter.

    [ Edited: 20 April 2012 05:50 AM by Mav ]

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    Posted: 20 April 2012 05:44 AM #90

    Tetrachloride - 20 April 2012 03:32 AM

    population of each country in millions, rounded down.

    1
    203
    16
    82
    7

    6
    2

    28
    31
    29
    101
    .8
    138
    26
    49
    23
    66
    10
    78
    8

    90
    —————end of Dec 16th group

    sry for the blank lines.  must be some invisible characters in there which I could not delete, so added an extra blank line in 3 places

    That’s an addressable population of 994.8M.  Extremely helpful, Cl4, presuming your math to be correct LOL.  Many thanks.

    I think we just found 5-10 million more iPhones under the couch.  Rather easily, really.

    [ Edited: 20 April 2012 05:48 AM by Mav ]

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.