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Massive sales of next-gen iPhone could boost U.S. GDP

post #1 of 16
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A research note released by J.P. Morgan on Monday estimated that sales of Apple's next-generation iPhone may add between one quarter and one half a percentage point to fourth quarter annualized U.S. gross domestic product growth in 2012.

According to the firm's chief U.S. economist Michael Feroli, estimated domestic sales of the so-called iPhone 5 will be about 8 million units in quarter four, not including purchases of carry-over phones like the iPhone 4S.

Feroli goes through the calculations that arrived at the relatively large GDP contribution: by finding the difference between an assigned retail price of $600 per handset, similar to past launches, and an imported cost component of $200 per phone, a $400 per iPhone trade margin can be applied to the GDP.

"Thus, calculated using the so-called retail control method, sales of iPhone 5 could boost Q4 GDP by $3.2 billion, or $12.8 billion at an annual rate," Feroli writes. "This would boost annualized GDP growth in Q4 by 0.33%-point."

The economist goes on to note that while out-of-pocket prices may be lower due to carrier subsidies, usually about $350 per device, companies that sell the phone often report sales based on stand-alone prices.

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Source: iResQ


Even Feroli recognizes the GDP bump as "fairly large," noting the estimate should be "treated skeptically," but he believes the projection is in line with historical iPhone sales trends. For example, when the current-generation iPhone 4S launched in October 2011, retail sales outperformed expectations and contributed to a combined 37 million unit sales of all iPhone models in the fourth quarter of 2011.

From the note:

Essentially all iPhone sales occur either on-line or in retail stores. Over half of the 0.8% increase in core retail sales last October occurred in two categories: on-line sales and computer and software sales, which combined had their largest monthly increase on record. The incremental growth of Q4 sales at those stores over Q3, if due to the iPhone, would have added between 0.1% to 0.2%-point to Q4 growth, after subtracting the import drag.


Feroli expects the iPhone 5 launch to be "much larger," and reiterates the original 0.33 percentage point GDP increase is reasonable.

Apple is widely expected to debut the sixth-generation iPhone at a special event on Sept. 12 ahead of a rumored Sept. 21 launch date.
post #2 of 16

Let's hope the new phone sells then! (Ready to order.)

Where are we on the curve? We'll know once it goes asymptotic!
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Where are we on the curve? We'll know once it goes asymptotic!
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post #3 of 16

Apple/Verizon is gonna get my money in a couple days.  Whoo-hooo!

"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
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"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
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post #4 of 16
Yet another reason to buy Apple over Samsung. (as if it were an actual choice) 1smile.gif
post #5 of 16

I hope this next generation iPhone has a quad core processor.  Will make for great boot up times under jailbreak.  My 4s is kinda slow to boot up under the current jailbreak.

An Apple man since 1977
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An Apple man since 1977
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post #6 of 16
Quote:
Originally Posted by tylerk36 View Post

I hope this next generation iPhone has a quad core processor.  Will make for great boot up times under jailbreak.  My 4s is kinda slow to boot up under the current jailbreak.

maybe you should get an android phone.

post #7 of 16
Quote:

iPhone could boost U.S. GDP

 

Hahaha how bizzare, usa the land of the desperate. So at the end apple vs the rest of the world sue cases at u.s. courts is a corporate nationalism. That's why we win ;).

"I invented the rectangle"  - Steve Jobs

"We Bomb you" - USA

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"I invented the rectangle"  - Steve Jobs

"We Bomb you" - USA

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post #8 of 16
Idiotic view. The money spent on the iPhone won't be spent on other items. Or will you subscribe yet another debt?
post #9 of 16
Maybe the Wall Street analysts should leave the economics to the economists.....
post #10 of 16
But I thought it was canon on AI that Apple don't make excessive margins and that there isn't an Apple tax? So much for those misconceptions.
post #11 of 16
J.P. Morgan is probably more interested in selling Apple shares that getting this story right. The impact on the GDP will be more illusionary than real.

1. Because many of these iPhone purchases will come at the expense of some other purchase. And those high cellular contract prices will drain people's bank accounts for two years for this one quarterly blip.

2. iPhones are made from parts manufactured worldwide (generally where the labor is cheapest) and assembled in China. Apple really should put a label on them saying, "No U.S. citizens were employed in the manufacture of this product."

3. Given that we don't make iPhones (or any other Apple product) here, it might be better to apply these sales to something called the Gross Retail Sales Product. The only value we add is the shipping and retail sales.

4. Apple's design and development costs have already been expended and thus can't add to our 4th quarter GDP.

5. Apple retail workers are so poorly paid, mention of them is best passed over.

6. Like almost every other retail business, Apple's not going to bring its overseas profits home to invest here given that doing so would bring on them our corporate taxes, which are among the highest in the world. According to KPMG.com, our corporate tax rate is 40%. Compare that to Sweden at 26.3%, Switzerland at 21.17%, the Czech Republic at 19%, Canada at 26%, China at 25%, and Singapore at 17%. And many of those have been trending down. Canada's was $36.1% in 2005. Ours is stuck like a rock at 40%.

The result is that what China makes in the U.S. returns to China, where it is invested. What Apple makes in China, however, stays in China to be invested there. That's one of the roots of our economic woes. And that's a result of the 'bash big corporations' rants of one of our major political parties and one of our two presidential candidates. I think you know which.

Like I said, J. P. Morgan wants to sell stock.
post #12 of 16
Quote:
Originally Posted by Inkling View Post

2. iPhones are made from parts manufactured worldwide (generally where the labor is cheapest) and assembled in China. Apple really should put a label on them saying, "No U.S. citizens were employed in the manufacture of this product."
3. Given that we don't make iPhones (or any other Apple product) here, it might be better to apply these sales to something called the Gross Retail Sales Product. The only value we add is the shipping and retail sales.

 

Rather ironic that the arch villain, Samsung, actually manufactures processors, used by Apple,  in Texas, and consequently probably has a bigger US based manufacturing effort than Apple.

post #13 of 16

Some of the logic of the article (and the comments) is right and some is just silly.

 

In theory if consumers around the world purchased X iPhones this quarter, then X * (cost of iPhone - overseas costs of producing iPhone) would be part of GDP this quarter.  I don't know where the $200 figure comes from for the overseas costs part, but let's assume that's right.  And let's assume a $600 cost.  So for every iPhone $400 is added to US GDP.

 

However, for every iPhone sale that comes at the expense of a US phone manufacturer (is there another major one besides Motorola?), it's a wash more or less.

 

Having said that, most iPhone sales come at the expense of a Samsung, HTC, RIM (are they sill around?) or other foreign phone maker.  So in that sense, GDP is increased by $400.

 

Of course, GDP isn't really calculated by looking at actual sales of every item in the economy.  It's not like everyone company in America sends data to the Commerce Department so they can update the GDP numbers.  I don't know how they do it, but it's done at a much more gross level than that. 

post #14 of 16
Agree with blitz1, this is as dumb an analysis as I can imagine. They pay people to write these reports?
post #15 of 16
Quote:
Originally Posted by Inkling View Post

J.P. Morgan is probably more interested in selling Apple shares that getting this story right. The impact on the GDP will be more illusionary than real.
6. Like almost every other retail business, Apple's not going to bring its overseas profits home to invest here given that doing so would bring on them our corporate taxes, which are among the highest in the world. According to KPMG.com, our corporate tax rate is 40%. Compare that to Sweden at 26.3%, Switzerland at 21.17%, the Czech Republic at 19%, Canada at 26%, China at 25%, and Singapore at 17%. And many of those have been trending down. Canada's was $36.1% in 2005. Ours is stuck like a rock at 40%.
The result is that what China makes in the U.S. returns to China, where it is invested. What Apple makes in China, however, stays in China to be invested there. That's one of the roots of our economic woes. And that's a result of the 'bash big corporations' rants of one of our major political parties and one of our two presidential candidates. I think you know which.
Like I said, J. P. Morgan wants to sell stock.

 

My understanding is that most of Apple's profit (by Apple's own foreign subsidiaries) are actually re-invested in US assets.  While the corporate taxes in the US by US companies are high, the capital investments from foreign investors, ie, Apple's subsidiaries, are exempt from capital gains taxes.

post #16 of 16
Remember when this website was about Macs and didn't follow the effect of Apple on the national or global economy? (sigh) Those were the days.
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