Claims of weakening demand for Apple's iPhone 4S disputed

Posted:
in iPhone edited January 2014
A Taiwanese newspaper made waves on Wednesday by claiming that Apple has reduced orders for the iPhone 4S, but a trio of separate reports specifically dispute the rumor.



Taiwan's Commercial Times cited unnamed sources in reporting that Apple has cut orders for the iPhone 4S and iPad 2 leading into the fourth quarter of calendar 2011. The report claimed that sales for the iPhone 4S in particular have not been as strong as Apple anticipated, prompting the company to reduce shipments by 10 percent to 15 percent.



But that report was quickly disputed Wednesday morning by analyst Maynard Um with UBS Investment Research, who said the claims are entirely "without merit." He cited his own sources who said that the iPhone 4S continues to see strong demand as it continues its rapid expansion to new countries around the world.



In addition, Um said that various Apple suppliers indicated they have seen strength going into the holiday buying season, which also contradicts any claims of weakening demand. He said that if Apple were to be reducing orders for any product, it could be the iPad, though he shared no evidence of Apple reducing orders for its touchscreen tablet.



Separately, analyst Mike Abramsky with RBC Capital Markets also pounced on the report out of Taiwan, noting that it's at odds with the strong sell-through the iPhone 4S has seen thus far at multiple carriers in countries around the world.



"One explanation is that the reduced orders (if true) may be related more to AAPL pulling back its typical over-ordering of components... to secure availability, particularly for this high profile launch during the holidays, rather than slowing sellthrough vs street expectations," Abramsky wrote in a note to investors.



He noted that online availability of the iPhone 4S remains at shipping times of one to two weeks. He also said checks conducted on Nov. 4 showed the iPhone 4S is the top smartphone at all major U.S. carriers: AT&T, Verizon and Sprint.



Gene Munster of Piper Jaffray also chimed in Wednesday morning, calling any talk of reduced iPhone 4S orders from Apple "off base." He remains confident in his forecast of 26 million iPhone sales for the quarter, and 112.5 million in calendar year 2012, both of which would be new records for Apple.



Munster and his team polled 30 Apple retail stores this Monday, and 17 of them, or 57 percent, indicated they were completely sold out of iPhone 4S units. Of the remaining 13 stores that had stock, none of them had availability of all of the different models.



"Given the stock outages at U.S. Apple stores nearly one month after the launch, we believe it is unlikely that Apple would cut production, when it clearly cannot build iPhones fast enough to meet demand," Munster said.







The claims by the Commercial Times are especially surprising because the iPhone 4S has already gotten off to a record setting start. Sales of Apple's latest smartphone topped four million in its first weekend alone, and during his company's quarterly earnings conference call last month, Apple Chief Executive Tim Cook said he's confident that a new record for iPhones will be set in the current holiday quarter.



Since then, strong sales have been a continued storyline for the iPhone 4S, with one report earlier this week indicating that 85 percent of Apple's retail stores are seeing daily stock-outs of the company's flagship smartphone. International interest has been strong as well, as preorders in Hong Kong sold out in just 10 minutes last week, while South Korean carriers sold 200,000 units in the first day of preorders.
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Comments

  • Reply 1 of 44
    jragostajragosta Posts: 10,473member
    Commercial Times' track record is pretty lousy. My favorite is their insistence that Apple was going to produce a netbook in 2009. Not only did they make that prediction, but they claimed that Wintek would do the assembly and that the panels had already been ordered. Probably using the same unnamed sources.
  • Reply 2 of 44
    Quote:
    Originally Posted by jragosta View Post


    Commercial Times' track record is pretty lousy. My favorite is their insistence that Apple was going to produce a netbook in 2009. Not only did they make that prediction, but they claimed that Wintek would do the assembly and that the panels had already been ordered. Probably using the same unnamed sources.



    Quoting Commercial Times (Taiwan) is like quoting Paul Thurrott or Rob Enderle on Apple products.



    That being said, IF there is any reason for a reduction in component supply purchasing it is probably due to re-sourcing or updating to newer/different components, say like a shift from hard drives to SSDs for example.
  • Reply 3 of 44
    solipsismsolipsism Posts: 25,726member
    Anecdotally that hasn't been my experience. On top of that it goes against past iPhone trends without showing any signs to suggest such a change in interest.
  • Reply 4 of 44
    Nothing more than market manipulation here, IMHO. Rumors, rumors, and more rumors: the easiest way to drive AAPL (or any other equity) down.
  • Reply 5 of 44
    charlitunacharlituna Posts: 7,215member
    Quote:
    Originally Posted by jragosta View Post


    Commercial Times' track record is pretty lousy. My favorite is their insistence that Apple was going to produce a netbook in 2009. Not only did they make that prediction, but they claimed that Wintek would do the assembly and that the panels had already been ordered. Probably using the same unnamed sources.



    Sounds about right.



    The only reason they might have reduced orders slightly (but likely more like 5-10% at some factories) is because they need to use some production lines to gear up for the iPad 3 if it is going to come out in the first half of Q2. But I suspect they aren't and never were. I think part of the whole thing with moving the iPhone to the beginning of Q1 was to get the iPhone kicking off the fiscal year and to get the rollouts closer together to try to reduce resellers from pulling their stunts of buying to ship overseas because X isn't getting it for 3 months.



    Now that the iPhone is top of Q1, the iPad will likely be more like the end of Q2 to top of Q3 so there's no need to bother with stock pilling now, wait until January and start that. This info is likely totally wrong or it is old info based on old trends that aren't being applied this time. Or they just read it wrong. Perhaps the whole thing was that after they get past the launch rush they would reduce the lines as demand slowed by 10-15% (which hasn't been triggered yet). Whatever it is, I don't trust them to have sources reliable enough to take it as they say it.
  • Reply 6 of 44
    red oakred oak Posts: 665member
    Gene's projection of 26 million phones for the quarter seems too conservative. Given the demand and the rollout across so many countries, I have to believe Apple will be able to sell at least 10 million a month. I would not be shocked if they hit 35 million



    Keep in mind all the 3GS and 4 sales. New loverly price points are going to suck the air out of the room for the Android pieces of shit



    Apple is doing a great job with this launch. Congrats to the team
  • Reply 7 of 44
    gqbgqb Posts: 1,934member
    Ok, which is it?

    One one hand Apple gets criticized when it doesn't ramp up 100% for big rollouts (like the IP4s), with claims that they want to give the illusion of high demand with lines.

    On the other, if they do ramp up big time (as they obviously did this time) and then adjust as the initial surge passes, the mills crank out garbage like this saying that 'demand is down'.



    Give me a break.
  • Reply 8 of 44
    jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by GQB View Post


    Ok, which is it?

    One one hand Apple gets criticized when it doesn't ramp up 100% for big rollouts (like the IP4s), with claims that they want to give the illusion of high demand with lines.

    On the other, if they do ramp up big time (as they obviously did this time) and then adjust as the initial surge passes, the mills crank out garbage like this saying that 'demand is down'.



    Give me a break.



    You're starting to get the idea.



    Pick any random idea. If Apple does that, they're wrong. If they don't do it, they're also wrong.



    It saves the analysts from having to think. They simply say "Apple is wrong" and that's their story for the day.
  • Reply 9 of 44
    Whether this rumour is true or not, the iPhone 4S remains a fairly minor upgrade and demand is likely to recede in 2012, certainly in established Western markets, without price initiatives that tempt customers to switch. IPhone growth is likely to be driven by Apple entering new markets.



    A lot of existing iPhone users, myself included, have bought every single model. Each successive one was a quantum leap above the previous version making the decision to upgrade almost a no-brainer. There comes a point, however, when even the most die-hard fan has to ask do i really need to get a new phone every year?



    I will be interested to see what % of existing iPhone 4 users upgrade to the iPhone 4S. I for one will not be. I just didn't see the increase in performance as being significant enough to justify it, especially given the cost. Had it been the much rumoured, slimmer lighter iPhone 5 with a larger screen and longer battery life, then I would already have bought one.
  • Reply 10 of 44
    I just received my iPhone 4S 64GB in 3 business days from Hong Kong! I think demand must be light, but Apple hasn't adjusted estimated shipping times (as stated when I ordered on apple.com they were 1-2 weeks).



    Ordered on Friday 11/4, the phone shipped from Hong Kong on Sunday 11/6 and I received it yesterday, Tuesday 11/8. Wow!!
  • Reply 11 of 44
    macrulezmacrulez Posts: 2,455member
    deleted
  • Reply 12 of 44
    Quote:
    Originally Posted by Tailpipe View Post


    Each successive one was a quantum leap above the previous version making the decision to upgrade almost a no-brainer..



    First, I disagree with many of your points, including your insistence that it is a given that sales will slow because the 4S is a minor upgrade. These are personal opinions, not facts, so your prognostication is just your personal viewpoint.



    Second, it is not true that each iPhone was a quantum leap. Consider the 3GS, for example. Same form factor, just faster with a few more hardware features LIKE: video, better camera, etc. Sounds a bit familiar, eh? Kinda like the difference between 4 and 4S.



    So, did the 3G to 3GS transition result in 'slowing sales'. Did consumers reject it because it wasn't a 'quantum leap'? No - quite the opposite. In fact, the 3GS is still a good seller, despite the fact that it is now over two years old.
  • Reply 13 of 44
    jungmarkjungmark Posts: 6,690member
    Quote:
    Originally Posted by AppleInsider View Post


    A Taiwanese newspaper made waves on Wednesday by claiming that Apple has reduced orders for the iPhone 4S, but a trio of separate reports specifically dispute the rumor.



    Taiwan's Commercial Times cited unnamed sources in reporting that Apple has cut orders for the iPhone 4S and iPad 2 leading into the fourth quarter of calendar 2011. The report claimed that sales for the iPhone 4S in particular have not been as strong as Apple anticipated, prompting the company to reduce shipments by 10 percent to 15 percent.



    The unnamed sources work for HTC, Google, and Microsoft.
  • Reply 14 of 44
    Quote:
    Originally Posted by Tailpipe View Post


    Each successive one was a quantum leap above the previous version making the decision to upgrade almost a no-brainer.



    iPhone 1 to iPhone 3G - Introduced a plastic back instead of metal, 3g connectivity, A-GPS and a slight processor bump



    iPhone 3G to iPhone 3Gs - Introduced much faster speeds and a better camera, 2 x faster 7.2 mbps 3g internet connection



    iPhone 3Gs to iPhone 4 - Hardware re-design, retina display, better camera, much faster



    iPhone 4 to iPhone 4S - Antenna redesign, better camera, much faster, siri, 2 x faster 14.4 mbps 3g internet connection



    Some perspective
  • Reply 15 of 44
    Quote:
    Originally Posted by solipsism View Post


    Anecdotally that hasn't been my experience. On top of that it goes against past iPhone trends without showing any signs to suggest such a change in interest.



    I could see a slowdown, however I do not look at it as a change in interest. I think alot of people look for physical changes and the 4s looks the same as the iPhone 4. Siri being the feature most will notice but I am not sure that is enough to get them to upgrade.



    I didn't pre order my 4s, about a week later I went to the Apple Store, stood in line with about 12 other people and got three for my family.



    That tells me either one of two things, either the demand isn't has high or more likely Apple this time around did a good job of making enough iPhone to keep up with demand.



    One thing I don't see reported that much is the camera on the 4s is amazing. I really like iOS5.
  • Reply 16 of 44
    Quote:
    Originally Posted by jhende7 View Post


    iPhone 1 to iPhone 3G - Introduced a plastic back instead of metal, 3g connectivity, A-GPS and a slight processor bump



    iPhone 3G to iPhone 3Gs - Introduced much faster speeds and a better camera, 2 x faster 7.2 mbps 3g internet connection



    iPhone 3Gs to iPhone 4 - Hardware re-design, retina display, better camera, much faster



    iPhone 4 to iPhone 4S - Antenna redesign, better camera, much faster, siri, 2 x faster 14.4 mbps 3g internet connection



    Some perspective



    I'm confused... your post seems to make his point.
  • Reply 17 of 44
    cameronjcameronj Posts: 2,357member
    I hope all the irrational AAPL owners who think the world is out to get them make a note of this. I'd love to know of another company that has analysts falling over themselves to refute negative rumors about a company. It doesn't happen.
  • Reply 18 of 44
    mstonemstone Posts: 11,510member
    I was in Home Depot last weekend and saw this stylish woman with a potted plant in her shopping basket. She stopped a passing sales person to ask if he knew the proper care for the plant. He replied, No, but you could look it up on your iPhone in a couple seconds. She said I guess I can do that and whipped out her iPhone and started inputing her search. I was curious how the sales person just summed her up and assumed she had an iPhone or was he speaking in general terms as in "look it up on your smart phone". It is just easier to say iPhone rather than smartphone. Is the term iPhone becoming the generic form of the device such as Xerox means a photo copy?
  • Reply 19 of 44
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by extremeskater View Post


    I could see a slowdown, however I do not look at it as a change in interest. I think alot of people look for physical changes and the 4s looks the same as the iPhone 4. Siri being the feature most will notice but I am not sure that is enough to get them to upgrade.



    I didn't pre order my 4s, about a week later I went to the Apple Store, stood in line with about 12 other people and got three for my family.



    That tells me either one of two things, either the demand isn't has high or more likely Apple this time around did a good job of making enough iPhone to keep up with demand.



    One thing I don't see reported that much is the camera on the 4s is amazing. I really like iOS5.



    Look at the 3GS numbers over the 3G. An exterior change surely help create interest as we all like new gadgets but the numbers speak for themselves.



    Now look at the record breaking first weekend sales, records with ore-orders, the number of initial countries and rollout speed of new countries. I think Apple has really stepped up their ability to keep up with a massive demand.



    It's not perfect in the sense there are people having to wait, but considering the growth of this market and the record breaking number of units they will sell of one model phone this quarter I don't see how it's anything short of impressive.



    PS: You get AppleCare+? I think it's worth the price. If they give you replacements in a sealed box I may even purposely break mine in a year so I sell an unopened 4S on Craig's List. That ought to be worth $49.
  • Reply 20 of 44
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by mstone View Post


    I was in Home Depot last weekend and saw this stylish woman with a potted plant in her shopping basket. She stopped a passing sales person to ask if he knew the proper care for the plant. He replied, No, but you could look it up on your iPhone in a couple seconds. She said I guess I can do that and whipped out her iPhone and started inputing her search. I was curious how the sales person just summed her up and assumed she had an iPhone or was he speaking in general terms as in "look it up on your smart phone". It is just easier to say iPhone rather than smartphone. Is the term iPhone becoming the generic form of the device such as Xerox means a photo copy?



    We've been calling PMPs iPod for years. Though that is a different scenario since only 10% of phones in the US are iPhones.



    It has been pointed out to me by non-iPhone users that iPhone users are much like BB users in that they tend to refer to their phone by name. That makes me this the sales person also likely had an iPhone.
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