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iPhone 4S drawdown ahead of Apple's next model is smaller than expected

post #1 of 29
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Suppliers are said to be less concerned about Apple's expected decrease in production of the iPhone 4S ahead of a new iPhone model, as sales of the 2011 smartphone remain strong.

Analyst Brian White with Topeka Capital Markets met with suppliers this week during a trip to the Computex trade show in Taipei, Taiwan. He said he did not sense much concern from those suppliers regarding the ramp down of iPhone 4S production ahead of a next-generation iPhone launch.

"In fact, the overall tone was a bit better than we expected and one company even seemed to be experiencing upside from this program in (the second quarter of 2012)," White wrote in a note to investors on Friday.

He has maintained his projection of 30.9 million iPhones sold in the June quarter, which would represent a sequential decline of 12 percent White's discussions with suppliers convinced him to hold on his estimate, while other analysts on Wall Street are trimming theirs.

For example, analyst Robert Cihra with Evercore Partners announced this week that he has trimmed his June quarter iPhone estimate to 28.8 million units, down from his previous prediction of 31 million. He noted that sell-through of the iPhone 4S is "solid," but he expects sell-in of the device to begin cycling down ahead of a sixth-generation refresh.

Antenna 3


Cihra also said he has been unable to pin down whether Apple's next iPhone will launch in the month of September or October. He said he considers a September launch to be "more likely than most."

The analyst has forecast a monster, record shattering quarter for Apple in December, with the next iPhone pushing handset sales to 49 million in the three-month span. He said the potential upside is well over 50 million based on what he called "aggressive early build plans and massive demand anticipated for the adoption of LTE and new form-factor."
post #2 of 29

Well, yeah. And we're over three months away from launch, so I can't imagine this has any sort of effect on it now… 

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post #3 of 29

bit early

post #4 of 29

And why are you posting this? You can't have any real rumors 3 or 4 months before launch. 

post #5 of 29
Quote:
Originally Posted by ldigges View Post
You can't have any real rumors 3 or 4 months before launch. 

 

Well, we do have these new parts showing up, and two years ago we saw the iPhone 4 in a near-complete state stolen from a bar a month before launch, so it's not completely impossible. You're probably right that we can't have any real supply chain rumors an entire quarter before launch.

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post #6 of 29
Quote:
Originally Posted by Tallest Skil View Post

Well, yeah. And we're over three months away from launch, so I can't imagine this has any sort of effect on it now… 

 

So what would you attribute to the decrease in sales from one quarter to the next?

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post #7 of 29
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Originally Posted by island hermit View Post
So what would you attribute to the decrease in sales from one quarter to the next?

 

Standard downward trend. Holiday quarters are always the biggest, and sales will go down as the year progresses. There's nothing to worry about unless we're outside the single-year cycle, I wouldn't imagine.

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post #8 of 29
Quote:
Originally Posted by Tallest Skil View Post

 

Standard downward trend. Holiday quarters are always the biggest, and sales will go down as the year progresses. There's nothing to worry about unless we're outside the single-year cycle, I wouldn't imagine.

 

Why would people not continue to buy the phone at a pace equal to the holiday quarter?

 

That's a rather lousy business model in my opinion. Letting sales lag sequentially for 3 quarters while you prepare for one crazy quarter.

 

Hmmmm... that sounds suspiciously like people are waiting for the next phone to come out.

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post #9 of 29
Quote:
Originally Posted by island hermit View Post
Why would people not continue to buy the phone at a pace equal to the holiday quarter?

 

Ask people. It's the same with any product.

 

Quote:
That's a rather lousy business model in my opinion. Letting sales lag sequentially for 3 quarters while you prepare for one crazy quarter.

 

Oh, they're not preparing for it any more than they prepare for anything else. More units always sell at holiday; that's just how it is.

 

Quote:
Hmmmm... that sounds suspiciously like people are waiting for the next phone to come out.

 

All products have a downward trend in sales as they age. Cars, electronics, upholstery… It's not some big conspiracy.

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post #10 of 29
I think a lot of people are erroneously comparing this year to last year's decline. Remember that there was a nearly 16 month wait for the 4s and also many people thought the new phone would release in June. This year most people think it will release in September or October with a total wait of 11 to 12 months for the new model. Last year had a lot of people wait until June and then when the phone didn't come out figured "hey I waited this long, might as well wait a little longer."
post #11 of 29
Quote:
Originally Posted by island hermit View Post

Why would people not continue to buy the phone at a pace equal to the holiday quarter?

That's a rather lousy business model in my opinion. Letting sales lag sequentially for 3 quarters while you prepare for one crazy quarter.

Hmmmm... that sounds suspiciously like people are waiting for the next phone to come out.

I guess you don't have any experience at all with retail. For many companies, 50% or more of their annual sales occur in the Christmas quarter and then it plummets in the next quarter. It's not a matter of 'letting sales lag for 3 quarters'. It's a matter of consumers being more willing to spend money in the Christmas quarter - so you want to be positioned to take advantage of that. If Apple simply produced and shipped the same number of units each quarter, they'd miss out on millions of sales at Christmas.
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post #12 of 29
Quote:
Originally Posted by Tallest Skil View Post

 

Ask people. It's the same with any product.

 

 

Oh, they're not preparing for it any more than they prepare for anything else. More units always sell at holiday; that's just how it is.

 

 

All products have a downward trend in sales as they age. Cars, electronics, upholstery… It's not some big conspiracy.

 

What?!

 

You're kidding right.

 

You should review iPhone sales before you say that holiday quarters are always their strongest. (hint - it sometimes depends on the quarter in which the phone is released)

 

As far as business models... Samsung, for instance, just brought out the S3... mid season, to prop up mid year sales. They will bring out other models of phones later in the year. Of course their holiday quarter will be better but their sales don't lag sequentially after the holiday quarter. This is why they beat iPhone sales overall as the year progresses.

 

[ if people weren't waiting for the next iPhone my guess is that sales might drop after the initial release (nothing to do with the holiday quarter) and then hold more or less steady from that point until the next release... but that isn't the case.]


Edited by island hermit - 6/8/12 at 6:55am
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post #13 of 29
Quote:
Originally Posted by Tallest Skil View Post

 

Well, we do have these new parts showing up, and two years ago we saw the iPhone 4 in a near-complete state stolen from a bar a month before launch, so it's not completely impossible. You're probably right that we can't have any real supply chain rumors an entire quarter before launch.

Yeah, that was lost in a bar. That is a different story. Now we are talking supply line rumors. I agree with that. If we found an iPhone in a bar now, I would consider that real.

 

 


Tim Cook using Galaxy Tabs as frisbees

 

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Tim Cook using Galaxy Tabs as frisbees

 

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post #14 of 29
Quote:
Originally Posted by island hermit View Post

You should review iPhone sales before you say that holiday quarters are always their strongest. (hint - it sometimes depends on the quarter in which the phone is released)

 

Sorry the chart's only goes to 2010. I'll try to find a newer one:

 

500px-IPhone_sales_per_quarter.svg.png

 

Of course, that might just make your point, so I apologize in advance if it does. lol.gif

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post #15 of 29
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Originally Posted by jragosta View Post


I guess you don't have any experience at all with retail. For many companies, 50% or more of their annual sales occur in the Christmas quarter and then it plummets in the next quarter. It's not a matter of 'letting sales lag for 3 quarters'. It's a matter of consumers being more willing to spend money in the Christmas quarter - so you want to be positioned to take advantage of that. If Apple simply produced and shipped the same number of units each quarter, they'd miss out on millions of sales at Christmas.

 

More experience then yourself, obviously.

 

Check out iPhone sales since 2007. Top sales quarters are not always the holiday quarter... sometimes it depends on the release date of the phone.

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post #16 of 29

Ah, here we go.

 

20120124iPhonesales.jpg

These'd be fiscal quarters, right? 

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post #17 of 29
Quote:
Originally Posted by Tallest Skil View Post

Ah, here we go.

 

20120124iPhonesales.jpg

These'd be fiscal quarters, right? 

 

This looks like fiscal quarters.... where Q1 is the holiday quarter.

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post #18 of 29
Quote:
Originally Posted by island hermit View Post
This looks like fiscal quarters.... where Q1 is the holiday quarter.

 

Okay. Well, apologies, then; that's pretty odd. People really seem to like the iPhone 4, eh? 

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post #19 of 29
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Originally Posted by Tallest Skil View Post

 

Okay. Well, apologies, then; that's pretty odd. People really seem to like the iPhone 4, eh? 

 

I've always thought that Apple could do better with a different business model... but then the iPhone 4 gave me hope that they were onto something. It appears, though, that, as competition grows stronger, Apple's sales declines throughout the remainder of the year may increase.

 

I'm hoping that I'm right about increased screen size/new look being the panacea to cure these ails and that sales quarters will again increase throughout the year.

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post #20 of 29

Methinks that while 4s sales will taper off a bit due to the level of customer demand, overall it will remain strong despite a new model coming out.  The 4s just might become one of 2 models of iPhone.  Apple will probably now have 2 models (or sizes) of iPhones, like they do with MacBooks, iMacs, etc. - a 3.5" and a new 4".  That will keeps sales of the 4s going for some time.

 

Of course Apple could repackage the 4s as a "3.5" iPhone 5" to companion the "4" iPhone 5".  Along those same lines, we might soon see two models or sizes of the iPad as well. If you look at all of Apple's products, there seems to be a trend moving toward 2 'models' of everything.

post #21 of 29
Quote:
Originally Posted by Tallest Skil View Post

Well, yeah. And we're over three months away from launch, so I can't imagine this has any sort of effect on it now… 

 

Especially when you consider how long it took to hit every world market and there's no reason for them to assume that Apple will pick up the pace this year and slam them all out together. So even if the US supply is cut back there's still Asia etc to fill. 

post #22 of 29
Quote:
Originally Posted by logandigges View Post

Yeah, that was lost in a bar. That is a different story. Now we are talking supply line rumors. I agree with that. If we found an iPhone in a bar now, I would consider that real.

 

You shouldn't. Look at last year's supposed 'lost' prototype stories. Never substantiated, not even the whole 'what was said to the guy' was ever proven. The local media started to suspect that the truth was far from the claims and basically everything beyond someone asking the cops to go with him to a house where he suspected his stolen phone was to be false. If someone could go to that much to get a little fame they could go to other lengths, like fake a back plate confirming the rumors going around and say they were 'accidentally' sent it with their other repair parts from Apple or it was given to them by someone in the know (i.e., stolen from the production factory)

post #23 of 29
Quote:
Originally Posted by Tallest Skil View Post

 

Okay. Well, apologies, then; that's pretty odd. People really seem to like the iPhone 4, eh? 

 

You two take a breath. You are both right and wrong.

 

In general, holiday quarters will always be the best for any retail company, often to the degree that the holiday quarter will meet or beat the combined sales for the rest of the year. As said because folks tend to be more generous during the holidays and companies play on this with more sales etc particularly those that require multiple unit purchases ($15 or 2 for $20 gigs)

 

HOWEVER when a company has a item or items that are major sales draws like the iPhone and iPad are, they will see an uptick in sales during the quarter it releases no matter when that is. People want the latest and the greatest and they want it now.

 

The iPhone right now isn't seeing quite the down swing because folks have figured out that Apple's not likely to blow it out of the water every year with the updates. Small steps each year so that if you follow your contract and buy every other year you see a major upgrade. With the carriers dropping their mid contract options we'll see more of this. Add to this that many folks bought their iPhone in June of 2010 and if they aren't obsessed with the absolute newness thing they are inclined to buy, especially if something goes south with their current phone like the battery or it gets dropped. I mean why would you fork out $99 to $149 to do an out of warranty replacement when $199 gets you a phone on a contract you have no issue with extending. 

post #24 of 29
Quote:
Originally Posted by island hermit View Post

 

I've always thought that Apple could do better with a different business model... but then the iPhone 4 gave me hope that they were onto something. It appears, though, that, as competition grows stronger, Apple's sales declines throughout the remainder of the year may increase.

 

I'm hoping that I'm right about increased screen size/new look being the panacea to cure these ails and that sales quarters will again increase throughout the year.

 

Apple doesn't focus on the quarters so much as the overall year. They know that they'll have some downs in sales but if the year is solid and they never fall under the operating budget needs, that's okay. 

 

Besides if you look at their calendar we are finishing up their Q3 at the end of this month. Just in time for them to have possibly launched, a complete computer revamp and their Back to School Promo. Those could bring in sales enough to avoid a huge Q4 dip. Especially depending on exactly what the promo is. And with schools hopefully adopting more iPads this year Apple could offer up some kind of bulk price to the schools or even allow some kind of special discounts to the students. Something like the school registers into something kind of system that they are requiring students to provide their own iPad for the coming school year. Parents present proof that their kid goes to that school and can purchase said iPad using the school's bulk discount of like 5-10% off. 

 

Of course things like this aren't likely to bring in sales that match Q1 for 2012 which had the iPhone and holiday but if they avoid a total bottom out that's good enough. 

post #25 of 29
Quote:
Originally Posted by charlituna View Post

 

Apple doesn't focus on the quarters so much as the overall year. They know that they'll have some downs in sales but if the year is solid and they never fall under the operating budget needs, that's okay. 

 

Besides if you look at their calendar we are finishing up their Q3 at the end of this month. Just in time for them to have possibly launched, a complete computer revamp and their Back to School Promo. Those could bring in sales enough to avoid a huge Q4 dip. Especially depending on exactly what the promo is. And with schools hopefully adopting more iPads this year Apple could offer up some kind of bulk price to the schools or even allow some kind of special discounts to the students. Something like the school registers into something kind of system that they are requiring students to provide their own iPad for the coming school year. Parents present proof that their kid goes to that school and can purchase said iPad using the school's bulk discount of like 5-10% off. 

 

Of course things like this aren't likely to bring in sales that match Q1 for 2012 which had the iPhone and holiday but if they avoid a total bottom out that's good enough. 

 

So you are saying that Apple isn't interested in doing even better?

 

[hope the shareholders don't get wind of this]

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post #26 of 29
Quote:
Originally Posted by charlituna View Post

 

You two take a breath. You are both right and wrong.

 

In general, holiday quarters will always be the best for any retail company, often to the degree that the holiday quarter will meet or beat the combined sales for the rest of the year. As said because folks tend to be more generous during the holidays and companies play on this with more sales etc particularly those that require multiple unit purchases ($15 or 2 for $20 gigs)

 

HOWEVER when a company has a item or items that are major sales draws like the iPhone and iPad are, they will see an uptick in sales during the quarter it releases no matter when that is. People want the latest and the greatest and they want it now.

 

The iPhone right now isn't seeing quite the down swing because folks have figured out that Apple's not likely to blow it out of the water every year with the updates. Small steps each year so that if you follow your contract and buy every other year you see a major upgrade. With the carriers dropping their mid contract options we'll see more of this. Add to this that many folks bought their iPhone in June of 2010 and if they aren't obsessed with the absolute newness thing they are inclined to buy, especially if something goes south with their current phone like the battery or it gets dropped. I mean why would you fork out $99 to $149 to do an out of warranty replacement when $199 gets you a phone on a contract you have no issue with extending. 

 

Not always true. TS pointed out sales of the 4... just kept rising.

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post #27 of 29

This isn't really surprising, considering how Apple has staggered the release of the 4S among smaller telecoms worldwide. Many providers will be getting the 4S around the same time AT&T, Verizon, and Sprint are launching the 5. It's a good bit of strategy on Apple's part, and I'd rather see them dominating the industry through these sorts of tactics than with lawsuits and BS patents.

post #28 of 29
Quote:
Originally Posted by island hermit View Post

 

Not always true. TS pointed out sales of the 4... just kept rising.

There has been some confusion in this thread with some posters thinking about U.S. sales, which are more seasonal, and some posters thinking about world sales. The world sales were strongly influenced by Apple's continuous roll-out of the iPhone around the world, so each quarter saw a boost from sales from new countries.

 

This phased strategy has helped keep demand in line with sales for nearly the whole calendar year until the next iPhone release.

post #29 of 29
Quote:
Originally Posted by Macky the Macky View Post

There has been some confusion in this thread with some posters thinking about U.S. sales, which are more seasonal, and some posters thinking about world sales. The world sales were strongly influenced by Apple's continuous roll-out of the iPhone around the world, so each quarter saw a boost from sales from new countries.

 

This phased strategy has helped keep demand in line with sales for nearly the whole calendar year until the next iPhone release.

 

Huh? I'm looking at "overall" sales.

 

Going down each quarter is not the "best" strategy to me.

 

Apple needs to find a more consistent sales pattern... the "4" sales pattern was much more acceptable to me. Maybe the success of the 4S launch was too much of a good thing.

 

Personally, I think that the launch of iPhone v.6 is going to prove what I am trying to say here.

 

[if the drawdown in the U.S. is so great that international sales can't keep overall sales treading water... need I say more.]

 

[I'm really surprised that nobody has brought up the fact that even at 30 million in sales the 4S would still be doing 50% better than the best month for the 4... c'mon you guys! Har!]


Edited by island hermit - 6/8/12 at 7:33pm
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