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Apple increases holiday quarter iPhone orders by 20 percent

post #1 of 13
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Demand for the iPhone 3GS this holiday season is expected to cause a shortage of image sensors, as Apple has increased orders for parts for its handset by 20 percent.

According to Taiwanese trade publication DigiTimes, OmniVision Technologies, the manufacturer of CMOS image sensors used in the iPhone 3GS, has warned its clients that there will be a limited supply of hardware during the holiday season. Supply constraints are pinned chiefly on demand for the iPhone 3GS, and are not expected to relax until late November.

"Apple has increased fourth-quarter orders for the iPhone 3GS to its Taiwan-based manufacturing partners Foxconn Electronics (Hon Hai Precision Industry) and Primax Electronics by 17-20%, noted the sources," the report said.

Apple officials said in the company's fourth quarter earnings call that they intend to meet overwhelming demand for the iPhone 3GS in the coming holiday season.

"I was really happy that we were able to solve the bulk of these (supply issues), the vast majority of them in September or in early October," Apple executive Tim Cook said during the company's quarterly conference call. "So I feel good about how we're positioned now."

Though supply constraints for the device were an issue during the September quarter, the Cupertino, Calif., company still managed to sell a record 7.4 million iPhones.

"For much of the quarter, most of the countries where we're selling the iPhone 3GS was in very low inventory as demand outstripped the supply," Cook said.

he was reluctant to make any seasonal forecasts for iPhone sales publicly, noting that Apple is still new to the handset business. In addition, he said significant growth of the platform year-over-year has made predicting even more difficult.

"The things that we look at in terms of coming up with our forecasts would be the popularity of the iPhone 3GS has been phenomenal," he said. "We were very surprised by the demand. We were selling in 64 countries by the end of the quarter. We'll roll out some others this quarter, notably China."

In addition to the debut of the handset on China Unicom, Apple is also expanding the iPhone to multi-carrier agreements in numerous countries. In the U.K., wireless carrier Orange will offer the iPhone starting Nov. 10, and Vodafone is set to follow in early 2010. In Canada, carriers Bell and Telus Corp. are also set to begin selling the device in November.
post #2 of 13
Palm CEO, 2006: "We've learned and struggled for a few years here figuring out how to make a decent phone. PC guys are not going to just figure this out. They're not going to just walk in."

Nokia CEO, 2008: "The iPhone is a niche product."

My. How things change.
post #3 of 13
Quote:
Originally Posted by anantksundaram View Post

Palm CEO, 2006: "We've learned and struggled for a few years here figuring out how to make a decent phone. PC guys are not going to just figure this out. They're not going to just walk in."

Nokia CEO, 2008: "The iPhone is a niche product."

My. How things change.

In terms of global phone sales, iPhone is still moderately niche, but that doesn't mean it's insignificant.

I don't get the 20% increase in orders... if there were already supply issues previously, how can production scale up with that, unless there was underproduction previously? If that is true, then Apple has potentially lost sales due to poor invetory management (very unlike them).

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post #4 of 13
,,,,there was probably not enough to go around .
post #5 of 13
Quote:
Originally Posted by anantksundaram View Post

Palm CEO, 2006: "We've learned and struggled for a few years here figuring out how to make a decent phone. PC guys are not going to just figure this out. They're not going to just walk in."

Nokia CEO, 2008: "The iPhone is a niche product."

My. How things change.

that just never gets old, eh?
post #6 of 13
Quote:
Originally Posted by Zoolook View Post

In terms of global phone sales, iPhone is still moderately niche, but that doesn't mean it's insignificant.

I don't get the 20% increase in orders... if there were already supply issues previously, how can production scale up with that, unless there was underproduction previously? If that is true, then Apple has potentially lost sales due to poor invetory management (very unlike them).


not like toshiba can wish flash memory into being. there are manufacturing constraints
post #7 of 13
Quote:
Originally Posted by Zoolook View Post

In terms of global phone sales, iPhone is still moderately niche, but that doesn't mean it's insignificant.

I don't get the 20% increase in orders... if there were already supply issues previously, how can production scale up with that, unless there was underproduction previously? If that is true, then Apple has potentially lost sales due to poor invetory management (very unlike them).

Yeah, and after "rice" all other food is moderately niche. What's your point? (other than to go through some twist to say the iPhone IS significant (ie, not insignificant)
post #8 of 13
I sure hope that is up 20% from EOQ, because a 20% gain on 7.4mm isn't where I am hoping for AAPL to be for the quarter. I would love to see them at 11-12mm units, which puts them at 50-60% growth Q/Q.

Great buying opportunity for AAPL today, not sure if I am ready to pick up more yet though. ROW sales for the iPhone should really drive growth, and we already have ~$1 in deferred profits to realize.
post #9 of 13
Quote:
Originally Posted by isaidso View Post

Yeah, and after "rice" all other food is moderately niche. What's your point? (other than to go through some twist to say the iPhone IS significant (ie, not insignificant)



Quote:
Originally Posted by al_bundy View Post

not like toshiba can wish flash memory into being. there are manufacturing constraints

Sure, so the apparent 20% increase in orders is just a paper announcement. If production is already at 100% capacity and there are shortages now, this story makes little sense.

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post #10 of 13
Quote:
Originally Posted by Zoolook View Post

In terms of global phone sales, iPhone is still moderately niche, but that doesn't mean it's insignificant.

I don't get the 20% increase in orders... if there were already supply issues previously, how can production scale up with that, unless there was underproduction previously? If that is true, then Apple has potentially lost sales due to poor invetory management (very unlike them).

It's now 13.3% of worldwide smartphone sales, 30% in the US. That's no longer niche. The percentage of overall phone sales doesn't matter, because it doesn't compete there.

It's likely that if Apple has a very good quarter now, it will go even higher, getting closer to Rim, which isn't considered niche either.

There is more than one way to have a supply shortage.

Th first, which is what Apple experienced, is when they underestimate demand, and so manufacture less product than they could have sold.

The second, which is happening to a certain extent now, is where they increase production to meet that demand, and run up on supply issues from their suppliers.

With China coming on line, and other companies selling the phone, I wouldn't be surprised if Apple sells over 9 million phones this quarter, assuming that there are no supply issues to their retail outlets around the world.
post #11 of 13
Quote:
Originally Posted by anantksundaram View Post

Nokia CEO, 2008: "The iPhone is a niche product."

It most certainly is niche. Its that profitable niche at the top that no one else can seem to get back into. hehe
Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #12 of 13
Quote:
Originally Posted by aaarrrgggh View Post

I sure hope that is up 20% from EOQ, because a 20% gain on 7.4mm isn't where I am hoping for AAPL to be for the quarter. I would love to see them at 11-12mm units, which puts them at 50-60% growth Q/Q.

Great buying opportunity for AAPL today, not sure if I am ready to pick up more yet though. ROW sales for the iPhone should really drive growth, and we already have ~$1 in deferred profits to realize.

I think that anything over 10 million units would be well beyond anyones' expectations. Last year, it was 6.8 million. I'm hoping for over 9, maybe 9.4 to 9.6 at a high.

But, if Apple could get enough supply 11 would be a nice gift.
post #13 of 13
Quote:
Originally Posted by Zoolook View Post





Sure, so the apparent 20% increase in orders is just a paper announcement. If production is already at 100% capacity and there are shortages now, this story makes little sense.

Production is continuous. So is production at suppliers. Also, it's rarely at 100%. 90% is generally considered to be "full' capacity. There is machine downtime that must be taken into account, along with other little productions slowdowns.

In addition, some manufacturers have more production lines that can be changed over at some notice. It's possible that we will see that happen as the month passes, if demand is high enough.
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