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Piper: over half million "missing" iPhones likely in channel

post #1 of 68
Thread Starter 
With Apple having announced iPhone shipments far in excess of reported activations, the ongoing debate about exactly what happened to all those other "missing" units continued on Friday, with investment bank Piper Jaffray weighing in with its own explanation.

According to the firm, Apple sold 3.7 million iPhones during the three-month period ending December, 2 million of which were confirmed by AT&T to have been activated on its US wireless network during that same time.

Taking a closer look at the remaining/missing 1.7 million units, analyst Gene Munster said in a research note that believes another 350,000 were sold throughout Europe during the same time period and another 838,00 were sold with the intent that they'd be unlocked.

Munster arrived at the latter figure by using Apple's own estimation from back in October than approximately 22 percent of US iPhone sales were being purchased with the intent that they'd later be unlocked from AT&T's network. The analyst, however, rounded that estimation up to 25 percent of the 3.7 million units given that unlocking has since "become easier."

That still leaves 512,000 iPhones which are unaccounted for, but Munster maintains that these units are likely spread across the company's US and European distribution channels and that the level of inventory is "consistent with Mac and iPod levels over the past 3 years."

Specifically, he believes 220,000 units are spread between Apple and AT&T outlets in the US, with the other 292,000 peppered around authorized resellers in the UK, France and Germany.



While slightly less than the 670,000 in channel inventory estimated earlier this week by Bernstein analyst Toni Sacconaghi, Munster's figure is well within the same ballpark.

The end result: there are likely only several hundred thousand units unaccounted for -- rather than nearly 1.5 million -- because they comprise Apple's normal level of channel inventory, estimated by Munster to be approximately 5 weeks in the case of iPhone.
post #2 of 68
And I thought losing my keys was bad!
From Apple ][ - to new Mac Pro I've used them all.
Long on AAPL so biased
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From Apple ][ - to new Mac Pro I've used them all.
Long on AAPL so biased
"Google doesn't sell you anything, they just sell you!"
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post #3 of 68
Anything to fudge the numbers so that Apple shareholders don't realize that iPhones are more popular unlocked than locked. I certainly wouldn't have one if not for the dev team.
post #4 of 68
Quote:
Originally Posted by AppleInsider View Post

According to the firm, Apple sold 3.7 million iPhones during the three-month period ending December, 2 million of which were confirmed by AT&T to have been activated on its US wireless network during that same time.


The firm would appear to be wrong, then. \

Apple sold 3.7 million iPhones from the US launch (June) through December, not "during the three-month period ending in December", i.e. calendar Q4.

In calendar Q4 (i.e. fiscal Q1), Apple sold 2.3 million iPhones, according to their own press release:

http://biz.yahoo.com/prnews/080122/aqtu214.html?.v=16


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post #5 of 68
I can confirm that there are quite a few unlocked iPhones in Belgium, where the iPhone is not even officially sold. Then again, being sandwiched between France and Germany, it is perhaps not that surprising.
post #6 of 68
Well the numbers are all very imprecise, but one thing to consider is that the AT&T figures end in December. If Steve meant that 4 million were sold by the time of the keynote, and if his figure of 20,000 iphones / day is correct, then the 15 days in january would account for 300,000 more iPhones.
post #7 of 68
Quote:
Originally Posted by jbella View Post

Well the numbers are all very imprecise, but one thing to consider is that the AT&T figures end in December. If Steve meant that 4 million were sold by the time of the keynote, and if his figure of 20,000 iphones / day is correct, then the 15 days in january would account for 300,000 more iPhones.

That's why the article said 3.7 million iphones, instead of 4 million.
post #8 of 68
Actually, they're all in my garage. My mate Lord Lucan is looking after them.
post #9 of 68
Quote:
Originally Posted by AppleInsider View Post

....analyst Gene Munster said in a research note that believes another 350,000 were sold throughout Europe during the same time period and another 838,00 were sold with the intent that they'd be unlocked.....

Note that these figures are totally unsubstantiated. Interesting guess, nonetheless. My estimate in the other thread was 800,000 unlocked. (I made this estimate in the other thread before Munster spoke out.
post #10 of 68
I think hes forgetting the amount of iphone that are on sale up here in Canada
throughtout the local computer stores Unlock phones intalking about.

Hope they justBring the DARM iPhone to Canada Soon
post #11 of 68
i think its all the $$$ and apple wins anyway. its just that since iphone is new they just want the item to really take off, but remember apple is a software company after all, and if they want they could encrypt the Baseband so hard that hackers will just give up on it, but i guess its not a good idea for them to do it just yet but its possible they could do it anytime they want. remember although the SDK is coming out the baseband will still be restricted
post #12 of 68
There are 1500 on eBay, 150 on Craigslist, and I have a used one in my desk drawer. There are also at least 50 videos of broken iPhones on YouTube and dont forget the ones that are sitting at the Apple & AT&T store on display. That is at least 1,000 more so that adds another 2,700 to the MIA list.
post #13 of 68
I'm sure plenty of them "fell off the back of a truck" & to be sold at a reasonable price.

You are coming to a sad realization, cancel or allow?
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post #14 of 68
Nobody cares where the iPhones went. Please stop filling up my RSS reader with this piddle.

Why can't someone get bit by a shark so I don't have to hear about iPhones that people have purchased but haven't begun using yet?
post #15 of 68
I live in Hong Kong and I see iPhones all over the place even though they're not 'officially' available yet...and they sell for about $US600

Personally, I'm waiting for v2 when the iPhone works properly with all the features it should have had in the beginning.
post #16 of 68
I was recently in Teheran, of all places
it is a pity I can't pictures here, otherwise I would have posted a picture of a shop in downtownn Teheran with a poster on the window pane notifying that the shop has the latest iPhone update for sale

by the way while I did not buy Leopard yet, friends in Teheran use a Leopard bootleg, bought there for about 10 dollar
post #17 of 68
This analysis is seriously flawed. As any first year accountancy student will know, if you post stock as sold, the exchange and securities commission will come down on you like a ton of bricks. That would be worse than Enron!!!!!!
I just can't believe an organisation like Piper would make such a basic mistake.

Mike
post #18 of 68
Everywhere in the world you can find iPhone.
The best way to ship worldwide is http://www.myus.com/
I have one official and one unofficial (ofcourse) for testing software activation etc.

Like me more and more will come.

iPhone will be 20 million unit/sales as soon as start Italy/Japan the 2 biggest contries for mobile telephones penetration and very attentive to design.
post #19 of 68
I also say: unlockers, unlockers, unlockers...

If you don't believe me, check ebay in as many countries as you like. Here in Germany, unlocked iPhones are still selling at a rate of 100/day on ebay alone. And that's with an official one available! (People really don't like these plans...)

So the iPhones are in unlocker's channels. They've stocked up on breakable ones before 1.1.2 came around.
post #20 of 68
This is so ridiculous -- do these people NEVER travel?? I would bet almost all of the "missing" iPhones are in daily use across the world -- the last couple months I have been in Spain, Italy, and all over Canada and there are iPhones absolutely everywhere -- people use them in all the wireless cafes and you see them just everywhere. This entire "opinion" is just a sham to cover up the million or so unlocked iPHones out there.
post #21 of 68
Quote:
Originally Posted by Mike A View Post

This analysis is seriously flawed. As any first year accountancy student will know, if you post stock as sold, the exchange and securities commission will come down on you like a ton of bricks. That would be worse than Enron!!!!!!
I just can't believe an organisation like Piper would make such a basic mistake.

Mike

That's why Apple used the word "shipped" in their SEC filings.

Any first year accountancy student would ignore Steve Jobs' Keynote speech and go directly to the filings.
post #22 of 68
Quote:
Originally Posted by RonAnnArbor View Post

This is so ridiculous -- do these people NEVER travel?? I would bet almost all of the "missing" iPhones are in daily use across the world -- the last couple months I have been in Spain, Italy, and all over Canada and there are iPhones absolutely everywhere -- people use them in all the wireless cafes and you see them just everywhere. This entire "opinion" is just a sham to cover up the million or so unlocked iPHones out there.

From Hong Kong to Madrid, there are hundreds of thousands of iphones --- sitting on the shelves of some cell phone stores --- those are technically "unsold" yet. It's inventory of the grey market.
post #23 of 68
Quote:
Originally Posted by samab View Post

That's why Apple used the word "shipped" in their SEC filings.

Any first year accountancy student would ignore Steve Jobs' Keynote speech and go directly to the filings.


Yah. I've noticed that a lot of the news coverage has shifted from saying Apple "sold" x amount of phones to Apple "shipped" x amount of phones now. \

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post #24 of 68
Do analysts live in the real world of 2008?
Do they really think that what is sold in the US stays in the US?

It looks a bit ridiculous to read that these iPhones are described as "missing" in the first place.

Even in Steve Jobs' keynote a year ago he described it as the best iPod yet. That would sell tens of thousands right there.
post #25 of 68
Quote:
Yah. I've noticed that a lot of the news coverage has shifted from saying Apple "sold" x amount of phones to Apple "shipped" x amount of phones now.

Not true:this is the actual release:

Apple shipped 2,319,000 Macintosh® computers, representing 44 percent unit growth and 47 percent revenue growth over the year-ago quarter. The Company sold 22,121,000 iPods during the quarter, representing five percent unit growth and 17 percent revenue growth over the year-ago quarter. Quarterly iPhone(TM) sales were 2,315,000.

The Macs were shipped, everything else sold.
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post #26 of 68
Quote:
Originally Posted by asdasd View Post

Not true:this is the actual release:

Apple shipped 2,319,000 Macintosh® computers, representing 44 percent unit growth and 47 percent revenue growth over the year-ago quarter. The Company sold 22,121,000 iPods during the quarter, representing five percent unit growth and 17 percent revenue growth over the year-ago quarter. Quarterly iPhone(TM) sales were 2,315,000.

The Macs were shipped, everything else sold.

Read the 10K SEC filing (page 38):

"Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. Product is considered delivered to the customer once it has been shipped, and title and risk of loss have been transferred. For most of the Companys product sales, these criteria are met at the time the product is shipped. For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, the Company defers revenue until the customer receives the product because the Company retains a portion of the risk of loss on these sales during transit. If at the outset of an arrangement the Company determines the arrangement fee is not, or is presumed not to be, fixed or determinable, revenue is deferred and subsequently recognized as amounts become due and payable and all other criteria for revenue recognition have been met."

http://media.corporate-ir.net/media_...APL_10K_07.pdf

All numbers in Apple's SEC filings are SHIPPING numbers.
post #27 of 68
Quote:
Originally Posted by valanchan View Post

Do analysts live in the real world of 2008?
Do they really think that what is sold in the US stays in the US?

It looks a bit ridiculous to read that these iPhones are described as "missing" in the first place.

Even in Steve Jobs' keynote a year ago he described it as the best iPod yet. That would sell tens of thousands right there.

Attention grabbing headlines make analysts more famous --- which is why every fanboi only knows 1 analyst, Munster, because he makes the most attention grabbing headlines.

There are a lot of categories in which the "missing" iphones can go --- iphones sitting on the shelves of some Hong Kong or Madrid or Moscow or Toronto cell phone store haven't been sold to the consumer yet. They are the grey market's inventory.
post #28 of 68
Quote:
All numbers in Apple's SEC filings are SHIPPING numbers.

Clearly the shipping in the SEC filing refers to items shipped to a customer, big or small, who is the final customer. Hence the reference to online sales. A product in the channel is clearly in the channel, not sold or shipped to the final customer.
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post #29 of 68
Quote:
Originally Posted by asdasd View Post

Clearly the shipping in the SEC filing refers to items shipped to a customer, big or small, who is the final customer. Hence the reference to online sales. A product in the channel is clearly in the channel, not sold or shipped to the final customer.

Customers don't mean the end-user.
post #30 of 68
Quote:
Originally Posted by samab View Post

Read the 10K SEC filing (page 38):

"Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. Product is considered delivered to the customer once it has been shipped, and title and risk of loss have been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped. For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, the Company defers revenue until the customer receives the product because the Company retains a portion of the risk of loss on these sales during transit. If at the outset of an arrangement the Company determines the arrangement fee is not, or is presumed not to be, fixed or determinable, revenue is deferred and subsequently recognized as amounts become due and payable and all other criteria for revenue recognition have been met."

http://media.corporate-ir.net/media_...APL_10K_07.pdf

All numbers in Apple's SEC filings are SHIPPING numbers.



Yup. And some of the media seems to be picking up on that. For example:


"In the 2007 fourth quarter, Apple shipped 2.3 million iPhones."

http://biz.yahoo.com/ts/080125/10400451.html?.v=1


Oh, and here's an interesting excerpt from back in September on the issue:


One source of confusion surrounding the iPhone and its sales could lie in how the numbers are calculated. Apple can count iPhones shipped to AT&T stores as sales, even before they have made their way into consumers' hands. Estimates vary depending on what point in the process the tally is made.

Earlier this summer, AT&T revealed that it activated far fewer iPhones than were sold by Apple, and one of the reasons given for that gap was that a large number of iPhones may have been in transit as the quarter closed on the night of 30 June.


http://news.zdnet.co.uk/communicatio...9289118,00.htm



So, apparently, not a new problem.


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post #31 of 68
It clearly does in the case of Educational or online customer. Apple distinguishes between inventory in the Channel, and sales.
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post #32 of 68
Quote:
Originally Posted by asdasd View Post

It clearly does in the case of Educational or online customer. Apple distinguishes between inventory in the Channel, and sales.

It doesn't say that Apple distinguishes at all. It merely stated that a portion of the revenue is not recognized immediately. It is only because they fear there is a loss DURING transit. These products were NEVER in the channel in the first place.

Does Apple think that the iphones are going to be lost in transit when they are shipping it to the carriers?
post #33 of 68
Quote:
Does Apple think that the iphones are going to be lost in transit when they are shipping it to the carriers?

No becuase that transit is not a sale, it doenst matter. What do think happens to stock already in channel when prices drop ( like the AppleTV) - should Apple not take, and declare, a charge the next quarter since it has already marked these items - according to you - as sold?

Have they mentioned that there is to be a charge next quarter?
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post #34 of 68
Quote:
Originally Posted by hongkongmarc View Post

I live in Hong Kong and I see iPhones all over the place even though they're not 'officially' available yet...and they sell for about $US600

Do you get enough of a look to know they aren't the copies / knock-offs? I suppose for that price for sale, they should be the real thing, but if you see people carrying them, do you get enough of a look to see it's real?
post #35 of 68
Quote:
Originally Posted by asdasd View Post

No becuase that transit is not a sale, it doenst matter. What do think happens to stock already in channel when prices drop ( like the AppleTV) - should Apple not take, and declare, a charge the next quarter since it has already marked these items - according to you - as sold?

Have they mentioned that there is to be a charge next quarter?

It is considered deferred revenue --- during transit.

The iphone "rebate" is only recognized when the customer redeems it and would be charged back on a cost-to-cost basis of the redeemed item.

http://seekingalpha.com/article/5084...nscript?page=4

But they don't change the 'UNITS" in shipment. They change the revenue and cost column.
post #36 of 68
You may have deliberately misread me.

I was talking about the price reduction on the AppleTV, not the price reduction on the iPhone which we know Apple took a charge for ( over two quarters I think). According to your theory there is no difference between items in channel and items sold to final customers, in either case the item is marked as "sold" and revenue is accounted for. Therefore an immediate reduction in the Apple Tv price would be a charge against APple in the next quarter from retailers who would have - according to you - have already paid for it ( or Apple in any case would have accounted for the revenue in the previous quarter).

If there is no distinction between sold and In Channel then a price reduction of channel inventory has to accrue a charge to the company since it has already been marked as revenue. I dont see that happening.
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post #37 of 68
Looks like global unlocked (or grey market inventory as you call it, good term), iPhones so far maybe in excess of 1 million. At my local IT "centre" a dude (among many, many shops) tried to sell me one for about equivalent of USD $900.
post #38 of 68
..The end result: there are likely only several hundred thousand units unaccounted for ..

with a global market in every thing else, it is not possible to restrict sales arbitrarily.

the grey market exists becasue of the price fixxing that exists between countries.
it is there for every product-why would iphone be an exception??

here in australia iphones are avalable from fly-by-night shopfront stores and online for $600AUD
delivered in a week..no warranty

but just swap in a SIM from local telco and it works!!

those that need be the first with the latest, have a few options to get one without going to hongkong.

seems the grey market in hongkong gets their supplies direct from AT&T...big shipping boxes 'full' of iphones direct from US

so it is no surprise to those that know

just a surprise the free market analysts know so little about the free market!!

or not?
given the notion of a free press, you only 'know' what you are 'told'

which the US has in abundance...
i'll leave discussion of US public knowledge and manipulation of markets by press release to anothe time and place. insider trading may be illegal, but that only matter sif yoiu are caught!

similar to supplying the grey market i suppose
post #39 of 68
Quote:
Originally Posted by nvidia2008 View Post

Looks like global unlocked (or grey market inventory as you call it, good term), iPhones so far maybe in excess of 1 million. At my local IT "centre" a dude (among many, many shops) tried to sell me one for about equivalent of USD $900.

"gray market" exactly the term to use. It's been around for some time. I have no idea how long.
post #40 of 68
Quote:
Originally Posted by JeffDM View Post

"gray market" exactly the term to use. It's been around for some time. I have no idea how long.

It's not the "grey market" part of it that is important. It is the "inventory" part that is important.

Even Wall Street analysts don't break this important part down in the iphone equation.

There are probably hundreds of thousands of iphones that have been bought by grey market resellers all over the world. But they are just sitting on their shelves in their stores. It's not technically sold yet.
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