Apple says iPhone 3G S pre-orders will be filled on time

[AppleInsider]

Despite warnings from AT&T that claimed high demand for the new iPhone 3G S would prevent it from shipping pre-orders by the June 19 launch date, Apple is still promising to satisfy all web pre-orders with a Friday delivery.

The Boy Genius Report cited internal sources at AT&T as saying that customers who had not ordered the new phone by June 15 would have to wait one to two weeks after the launch to receive their order or stand in line to buy one.

While availability of the new iPhone at AT&T stores is still uncertain, there appears to be no shortage on Apple's side. The company's website continues to take pre-orders for the product without reservation, informing users that their new phone will be shipped to arrive on time on the 19th, with free shipping to boot.

Early pre-orders are reportedly already shipping.

The introduction of the new iPhone 3G S at $199/$299, down from the original $499/599 for the first generation iPhone, and the slashing in half of the current iPhone 3G's price tag are expected spur demand significantly. While Apple will likely increase its market share as a result, concerns are being raised about the company’s ability to sustain its historically high margins.

On June 9, following the price-cut announcement at WWDC the previous day, Keith Bachman of BMO Capital Markets summarized the companies move, saying “Apple is playing the [price] elasticity curve.”

The key to keep margins from falling below the 34.8% level they reached in the year-ago period is for Apple to sell so many units that volume counteracts decreased per-unit revenue.

Gene Munster of Piper Jaffray told Marketwatch that, "historically, a 50% cut in iPhone pricing has increased demand by two times [over prior sales levels]. The bottom line is we are increasingly confident in our iPhone estimates."

New volume must be great enough to make up for the $1.3 billion projected loss from the cuts, according to Samuel Wilson of JMP Securities. The firm is warning investors to not expect increased margins this year, and estimates third quarter margins to come in at 33%.

In addition to greater volume of sales, the broader market created by the $99 entry level model and a revamped new version will drive the same economies of scale that enabled Apple to remain fiercely competitive in iPod pricing while retaining relatively high margins.

Undercutting Apple in price in the smartphone market will be even more difficult for competitors than matching or beating the price of the iPod was. Additionally, Apple's leading library of mobile apps also play a role in differentiating and adding value to the company's iPhones, tipping the scales for many buyers who might be open to considering other devices.

[ View this article at AppleInsider.com ]

[cameronj]

Originally Posted by AppleInsider

New volume must be great enough to make up for the $1.3 billion projected loss from the cuts, according to Samuel Wilson of JMP Securities. The firm is warning investors to not expect increased margins this year, and estimates third quarter margins to come in at 33%.

How interesting - is Mr. Wilson aware that the price cut is only $100, while Apple gets over $400 per iPhone? Even on the 3G selling for $99, it's only roughly a 20% price cut. Plus, according to the teardowns, the cost of production has fallen enough in the past 12 months that margins on the $99 8 GB iPhone 3G should be higher than they were for the $199 8GB iPhone 3G a year ago.

1.3 billion... let's see, that's $99 times 13 million. Kinda bizarre way to look at it - if Apple sells 13 million iPhones starting now, that will bring in revenue of around $7.2 billion assuming average rev per unit of $550.

I just find it pretty nuts that someone could look at the price cut, then assume 13 million sales, and STILL come out saying that it's a negative. Oh well...

[Bageljoey]

Originally Posted by AppleInsider

Gene Munster of Piper Jaffray told Marketwatch that, "historically, a 50% cut in iPhone pricing has increased demand by two times [over prior sales levels].

Can't argue with history.

He must have the sales figures for the last five or ten 50% iPhone price reductions right there in front of him...

[solipsism]

Any predictions on the opening weekend sales, end of quarter sales, end of fiscal year sales and sales up to CES 2010?

[DiscoNomad]

Good work Apple. Gotta love it.

[forced528]

I don't know where this comes from but I just spoke to AT&T sales and support. They are not advising customers who purchased the 3Gs with any delays. As a matter of fact, they cited that most existing iPhone 3G customers are interested in getting the 3.0 software update. Moreover, internal communication within AT&T stresses Apple's commitment to meet demand expectations.

[solipsism]

Originally Posted by forced528

I don't know where this comes from but I just spoke to AT&T sales and support. They are not advising customers who purchased the 3Gs with any delays. As a matter of fact, they cited that most existing iPhone 3G customers are interested in getting the 3.0 software update. Moreover, internal communication within AT&T stresses Apple's commitment to meet demand expectations.

Welcome to the forums. Could you clean up your post, I’m not quite following what AT&T is advising and citing.

[mark2005]

Originally Posted by cameronj

How interesting - is Mr. Wilson aware that the price cut is only $100, while Apple gets over $400 per iPhone? Even on the 3G selling for $99, it's only roughly a 20% price cut. Plus, according to the teardowns, the cost of production has fallen enough in the past 12 months that margins on the $99 8 GB iPhone 3G should be higher than they were for the $199 8GB iPhone 3G a year ago.

1.3 billion... let's see, that's $99 times 13 million. Kinda bizarre way to look at it - if Apple sells 13 million iPhones starting now, that will bring in revenue of around $7.2 billion assuming average rev per unit of $550.

I just find it pretty nuts that someone could look at the price cut, then assume 13 million sales, and STILL come out saying that it's a negative. Oh well...

Agree. Actually, AT&T hasn't indicated any material changes due to the cuts so AT&T is likely still paying the same subsidy, which means if Apple was getting about $550-600 per 8GB 3G unit before, it's getting $450-500 per unit now on the 3G with the subsidy added in.

Anyway, if Mr. Wilson was assuming that Apple would've sold 13m units at $199 (thus the "loss" of $1.3B), then Apple would only need to sell an extra 3m units @ $99 (or $450) each to gain back the $1.3B in revenue.

More importantly, looking at gross profit, if Apple would've made $220/unit (37-40% margin) on each of 13m units for $2.86B before, and now makes $160/unit (32-35% margin), they'd only need to sell 17.9m units (38% more units) to have about the same gross profit. If Apple can double sales to 26m units per Munster's view, that's an additional $1.3B (on extra 8.1m units) in gross profit.

[al_bundy]

Originally Posted by cameronj

How interesting - is Mr. Wilson aware that the price cut is only $100, while Apple gets over $400 per iPhone? Even on the 3G selling for $99, it's only roughly a 20% price cut. Plus, according to the teardowns, the cost of production has fallen enough in the past 12 months that margins on the $99 8 GB iPhone 3G should be higher than they were for the $199 8GB iPhone 3G a year ago.

1.3 billion... let's see, that's $99 times 13 million. Kinda bizarre way to look at it - if Apple sells 13 million iPhones starting now, that will bring in revenue of around $7.2 billion assuming average rev per unit of $550.

I just find it pretty nuts that someone could look at the price cut, then assume 13 million sales, and STILL come out saying that it's a negative. Oh well...

it's growth

last 8 years or so growth at Apple was powered by the ipod. now people are replacing ipods with iphones and touches. there is still growth, but it's slower growth.

just like MS starting around 2000. they grew revenues and earnings by 10% a year on average, but that was a lot lower than the 1990's and so the stock tanked

and apple will probably be hiring a lot of people so it will hurt earnings even more

[mikelb]

Originally Posted by mark2005

Agree. Actually, AT&T hasn't indicated any material changes due to the cuts so AT&T is likely still paying the same subsidy, which means if Apple was getting about $550-600 per 8GB 3G unit before, it's getting $450-500 per unit now on the 3G with the subsidy added in.

Anyway, if Mr. Wilson was assuming that Apple would've sold 13m units at $199 (thus the "loss" of $1.3B), then Apple would only need to sell an extra 3m units @ $99 (or $450) each to gain back the $1.3B in revenue.

More importantly, looking at gross profit, if Apple would've made $220/unit (37-40% margin) on each of 13m units for $2.86B before, and now makes $160/unit (32-35% margin), they'd only need to sell 17.9m units (38% more units) to have about the same gross profit. If Apple can double sales to 26m units per Munster's view, that's an additional $1.3B (on extra 8.1m units) in gross profit.

If you read the MarketWatch article and see Mr. Wilson's statement in context, you'll see he is including the massive price-cuts for the MacBook Pro and MacBook Air laptops along with the iPhone when he makes his calculation of a $1.3 billion hole to be filled by increased units-sold volume. It makes a lot more sense.

[mark2005]

Originally Posted by mikelb

If you read the MarketWatch article and see Mr. Wilson's statement in context, you'll see he is including the massive price-cuts for the MacBook Pro and MacBook Air laptops along with the iPhone when he makes his calculation of a $1.3 billion hole to be filled by increased units-sold volume. It makes a lot more sense.

Ah! That would explain it...

[DogGone]

Originally Posted by mark2005

Ah! That would explain it...

I still think he's way off base. For the 1G iPhone Apple received a cut in the subscriptions from ATT. Apple then cut the price to help drive sales. For the iPhone 3G they switched to ATT providing the subsidies. Revenue from phones was estimated at ~450 each. In reality this hasn't changed. Apple just sell more phones.

Moving onto the MBP pricing. The drop in price was covered in some part to switching to a lower cost graphics card.

[LiamNYC]

Any word on separate lines / lack of lines for those who pre-ordered the phone for in-store pick-up at the Apple Store?

[solipsism]

Originally Posted by DogGone

I still think he's way off base. For the 1G iPhone Apple received a cut in the subscriptions from ATT. Apple then cut the price to help drive sales. For the iPhone 3G they switched to ATT providing the subsidies. Revenue from phones was estimated at ~450 each. In reality this hasn't changed. Apple just sell more phones.

While this is all true, we don’t yet know what the cost of the new iPhone is in comparison to the old. We know it has the same casing and display (at least in resolution), but the internals are quite different. iFixit will give us a basic idea of costs, but it’s certainly not absolute. I’d wager the cost of the CPU and GPU cost more than iPhone 3G’s, but is it more than the cost 2 years ago when that CPU and GPU were first introduced?

Moving onto the MBP pricing. The drop in price was covered in some part to switching to a lower cost graphics card.

The only machine that got a “lower cost graphics card” was the low-end 15” MBP and that was really just the removable of the discreet GPU while keeping the 9400M as it is. The entire notebook line was given a nice price reduction. Was is just because of the economy or has something like the production costs of the unibody construction finally paid for it’s R&D. If so, that would be something in such a short time, but there probably aren’t too many products that are milled exactly the same millions of times over a quarter. I certainly can’t think of any off the top of my head.

[mdriftmeyer]

Originally Posted by al_bundy

it's growth

last 8 years or so growth at Apple was powered by the ipod. now people are replacing ipods with iphones and touches. there is still growth, but it's slower growth.

just like MS starting around 2000. they grew revenues and earnings by 10% a year on average, but that was a lot lower than the 1990's and so the stock tanked

and apple will probably be hiring a lot of people so it will hurt earnings even more

Sorry but Microsoft in 2000 had 95%-97% of the entire global PC market. Let me know when Apple has that in Smartphones, not to mention PC sales.

[ldg8]

Originally Posted by LiamNYC

Any word on separate lines / lack of lines for those who pre-ordered the phone for in-store pick-up at the Apple Store?

I was told by my area Apple Store that there will be separate lines for pre-orders and regular retail buyers. Pre-orders will be filled first.

[Panu]

I ordered my iPhone 3GS on June 10, and got the shipping information during the night. UPS says the iPhone is in Shenzhen, China, and estimates delivery on June 17!

I live near an international airport, where UPS, FedEx, DHL, and my USPS sectional center are located. Even Saudi Air flies there. When the planes fly over my house in their final approach, I can almost tell what color tie the guy in seat 3E is wearing. I routinely get my mail and packages a day or two early, so it will be interesting to see whether Apple is right (June 19) or if UPS is right (June 17).

It's possible (and it has happened before) that UPS will put it on the delivery truck on June 17 but instruct the driver to deliver it on June 19. <drat!>

This is going to be an interesting week!

[al_bundy]

Originally Posted by mdriftmeyer

Sorry but Microsoft in 2000 had 95%-97% of the entire global PC market. Let me know when Apple has that in Smartphones, not to mention PC sales.

they had the PC market, but very little of the server market. in 2000 the server products were Exchange, SMS Server and SQL 2000. Today there is a whole suite of server products that didn't exist 10 years ago. and the games division went from a few games to the powerhouse known as the X-Box.

but the stock still tanked because the rate of growth had slowed. same with Intel, Cisco and other companies. they all had high single digit or low double digit growth but the stocks tanked because it was slower growth than the 1990's. and they all released a lot of new products in the last 10 years

[walshbj]

My UPS tracking number says Scheduled Delivery June 17.

[ebolagp]

I ordered 2 phones from ATT (could not do 2 lines through the Apple Store) on June 11. What are the odds that I'll get my phone by the 19th? (The ATT site still says the order is "in process"...

[Galley]

I pre-ordered mine from ATT.com on the 9th, and it's still "in progress". What's odd is that the $318 authorization I had on my debit card disappeared a few days ago. Should I be worried?

[Radiotube]

Mine is expected to be delivered on June 17...

[ghostface147]

Tonight I am going to rebuild my current 3G phone, whose back panel almost shattered when it dropped from my truck to the concrete. Of course if I am unsuccessful, I guess I will be buying a new phone. Otherwise, I will pass on this 3G s model and wait until next year.

[BobbyTed]

FYI- Don't freak out like I just did when you get an email from Apple w/ a delivery date of say, the 22nd, like mine had. When you check the UPS tracking number, it will probably show a delivery date that is much better (at least if you live near a UPS hub like I do)...
From Apple:
Shipment Date: Jun 16, 2009 Delivers by: Jun 22, 2009

From UPS: Your package is on time with a scheduled delivery date of 06/17/2009.

[teckstud]

Originally Posted by ldg8

I was told by my area Apple Store that there will be separate lines for pre-orders and regular retail buyers. Pre-orders will be filled first.

There will be 2 lines:
1 for those paying $199 and $299
and the other line marked for fools.

[charlituna]

Originally Posted by LiamNYC

Any word on separate lines / lack of lines for those who pre-ordered the phone for in-store pick-up at the Apple Store?

my guess is two lines. one for those that reserved (and their names will be on a set aside phone or something) and one for those that didn't. and they will just take the next person from each group. it's not likely that the 'chance it' group will be that big since the only way to be sure to get the phone you want is to reserve it.

I have heard from several places that preorders are only good on the 19th. if you don't pick it up then, the stores can release the phone on the 20th.

[rahul910]

Ordered the phone from att.com on 6/9/09 and I called for status update, it said it was on backorder.

[ohernan]

Originally Posted by rahul910

Ordered the phone from att.com on 6/9/09 and I called for status update, it said it was on backorder.

I order mine from att.com on the 12th, just called to check status and it said it will ship by the end of the next business day. It was for a 32gb phone.

[rectbi]

Preordered mine as well........my first iphone! The Curve I've been using is failing, and I've been frustrated with the cruddy internet experience on the phone. I'm a little nervous about getting used to typing on the iPhone, but I do more reading than typing, and when I do the latter its usually short text messages rather than lengthy emails, so I'll probably be ok.

[jkoz]

Preordered a black 32GB 3GS from apple.com. Still says "Delivers by June 19" and is currently preparing for shipment. The Crystal Film covers that I ordered with it have apparently shipped already (not surprised as they're not really a brand new item). Really hoping that it delivers by Friday because I'm moving on Sunday back to school...

[Bageljoey]

Originally Posted by jkoz

Preordered a black 32GB 3GS from apple.com. Still says "Delivers by June 19" and is currently preparing for shipment. The Crystal Film covers that I ordered with it have apparently shipped already (not surprised as they're not really a brand new item). Really hoping that it delivers by Friday because I'm moving on Sunday back to school...

HA! I ordered the crystal film too--before I read about the oleophobic screen. I probably would have waited befor I bought it, but it is already in my hand.

FYI I also ordered the 32 black (on the 8th at 5:15PM EST) and it is also preparing to ship...

[jkoz]

Originally Posted by Bageljoey

HA! I ordered the crystal film too--before I read about the oleophobic screen. I probably would have waited befor I bought it, but it is already in my hand.

FYI I also ordered the 32 black (on the 8th at 5:15PM EST) and it is also preparing to ship...

Oh damn! I didn't read about that until you just mentioned it. Oh well. It'll help with scratches, I had a couple on my 2G after having it for two months and that didn't make me happy.

I ordered it yesterday afternoon (15th) around 12PM EST after figuring out with my finances that it would work. Especially after realizing that if I sell my 16GB 2G that I can probably get close to, if not the money I paid for the 32GB 3GS.

[brucep]

http://blog.nielsen.com/nielsenwire/...-3g-price-cut/

[Bageljoey]

Originally Posted by jkoz

Oh well. It'll help with scratches, I had a couple on my 2G after having it for two months and that didn't make me happy.

This will be my first iPhone, so I don't really know what to expect from the screen in terms of scratching. I think I read that the new screen is more scratch resistant, but I cannot remember for sure.

I guess it would be stupid to wait before putting the screen cover on to see if the screen scratches. If it didn't, then I just wasted my money and if it did then I just wasted my money and scratched up my screen.
Anybody else have screen protection advice/opinions?

[nvidia2008]

Originally Posted by Bageljoey

This will be my first iPhone, so I don't really know what to expect from the screen in terms of scratching. I think I read that the new screen is more scratch resistant, but I cannot remember for sure.

I guess it would be stupid to wait before putting the screen cover on to see if the screen scratches. If it didn't, then I just wasted my money and if it did then I just wasted my money and scratched up my screen.
Anybody else have screen protection advice/opinions?

For peace of mind get a screen protector and a appropriate case for your iPhone 3G/S. You'll thank me later. You can always take it out later if you want to "free it up" from time to time.

Otherwise, just InvisibleShield it. http://www.zagg.com/

[jkoz]

Originally Posted by nvidia2008

For peace of mind get a screen protector and a appropriate case for your iPhone 3G/S. You'll thank me later. You can always take it out later if you want to "free it up" from time to time.

Otherwise, just InvisibleShield it. http://www.zagg.com/

Would you say that this is better than what we just bought?

If yes: Can we return what we've just bought?

[silentshout]

I ordered one just hours after the keynote and Its now a day before release...still no email with shipping confirmation and my apple order page still says prepared for shipment. doesnt seem like I will be getting mine on time...

[erik3306]

Originally Posted by silentshout

I ordered one just hours after the keynote and Its now a day before release...still no email with shipping confirmation and my apple order page still says prepared for shipment. doesnt seem like I will be getting mine on time...

I am in the same boat. There must be other people in the same situation. Did you try calling them to find out what was going on? I sat on hold for a half hour yesterday before giving up. Might try again this morning.

[ebolagp]

Originally Posted by erik3306

I am in the same boat. There must be other people in the same situation. Did you try calling them to find out what was going on? I sat on hold for a half hour yesterday before giving up. Might try again this morning.

ok, so I have a question for you guys... I preordered two phones from ATT on 6/11, but they are still "in progress" and I an pretty sure at this point that they will not make it to my house before next Monday.

Now, this would not generally be an issue, but I am heading out of town for a couple of weeks and will not be able to get it. ATT customer service told me that they cannot cancel the order at this time.

So... What is to stop me from going to an Apple store this weekend and picking up a pair of phones and then returning the ATT phones to an ATT store when they arrive. My credit card has not been charged for the ATT preorders and the ATT website still shows me as being eligible for upgrade pricing... (all this assumes, of course, that the Apple store doesn't sell out of phones before I can get there...)

[pmz]

Originally Posted by Bageljoey

This will be my first iPhone, so I don't really know what to expect from the screen in terms of scratching. I think I read that the new screen is more scratch resistant, but I cannot remember for sure.

I guess it would be stupid to wait before putting the screen cover on to see if the screen scratches. If it didn't, then I just wasted my money and if it did then I just wasted my money and scratched up my screen.
Anybody else have screen protection advice/opinions?

The iPhone screen does not scratch. At least, not in any imaginable usage scenario.

I've had both the 2G and 3G as long as they've existed, never used a screen protector, dropped them plenty of times, and the screen is immaculate.

No reason to worry about scratches. ITS GLASS.