80% of reduced iPad shipments attributable to channel inventory decline

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Comments

  • Reply 61 of 88
    kdarlingkdarling Posts: 1,640member

    Quote:

    Originally Posted by joebloggs View Post



    Thanks for the detailed response.


     


    You're very welcome.  This article might also be helpful:


     


    http://www.asymco.com/2012/05/28/shipped-and-sold-a-brief-introduction/


     


    Quote:

    Originally Posted by plovell View Post



    No, this does not make sense.



    Apple has always reported SALES and not SHIPMENTS.


     


    Correct, Apple reports sales. 


     


    The critical part you're missing, is that those sales are mostly to retailers and carriers.


     



    • The moment an iPhone is shipped to a retailer, it is counted as sold.


    • The moment a Galaxy arrives at a retailer, it is counted as sold.


     


    Both companies account for returns separately, btw.


     


    Quote:


     In fact [Apple] has occasionally pointed out that other vendors do report shipments, and sometimes inflate them by channel-stuffing.



     


    Yep, they say stuff like that, but they never say who they're talking about.  That way, they're not to blame if people mistakenly presume they meant their big rivals.

  • Reply 62 of 88
    ankleskaterankleskater Posts: 1,287member

    Quote:

    Originally Posted by Rogifan View Post





    Whether its shipped or sold, who besides Apple reports figures on a quarterly basis? It seems other companies like Samsung only do it when they feel like it and for certain products.


    Fair question. It's true that Samsung doesn't. Who does? Blackberry. Nokia. LG. Motorola doesn't. Not sure about others. 


     


    I may be wrong about some of these, but I'm sure someone will check just so they can jump on the chance I might be.

  • Reply 63 of 88
    ankleskaterankleskater Posts: 1,287member

    Quote:

    Originally Posted by KDarling View Post


    Yep, they say stuff like that, but they never say who they're talking about.  That way, they're not to blame if naive people presume they meant their big rivals.



    Kind of like when they used to question the definition of "activation".


     


    I think we can now draw up a chronology of issues du jour in the mobile industry, particular in the iOS v. Android context (and contest):


     


    2008-2010: activation


    2011-2013: sold v. shipped


    2013-?: mobile usage (aka What are Android devices used for?)

  • Reply 64 of 88
    tallest skiltallest skil Posts: 43,388member
    2008-2010: activation
    2011-2013: sold v. shipped
    2013-?: mobile usage

    At least we finally have something that doesn't rely on Google not lying, huh?

    Remember how we didn't know what "activation" meant to Google? And how they still won't tell us?
    Remember how we didn't know what "sold" meant to Samsung? And how they still won't tell us?

    Now we have third parties that can read usage. Should end once and for all.
  • Reply 65 of 88
    pendergastpendergast Posts: 1,358member

    Quote:

    Originally Posted by KDarling View Post


     


    You're very welcome.  This article might also be helpful:


     


    http://www.asymco.com/2012/05/28/shipped-and-sold-a-brief-introduction/


     


     


    Correct, Apple reports sales. 


     


    The critical part you're missing, is that those sales are mostly to retailers and carriers.


     



    • The moment an iPhone is shipped to a retailer, it is counted as sold.


    • The moment a Galaxy arrives at a retailer, it is counted as sold.


     


    Both companies account for returns separately, btw.


     


     


    Yep, they say stuff like that, but they never say who they're talking about.  That way, they're not to blame if people mistakenly presume they meant their big rivals.



     


    You keep ignoring that Apple ALSO reports channel inventory.


     


    It's more transparent than any of the other big rivals I've seen. 

  • Reply 66 of 88
    philboogiephilboogie Posts: 7,675member
    But when an Apple product is shipped to a retailer, and they are obligated to pay for it, be it full price or in xx installments, Apple receives their asking price, no? That would make it a sale in my book.
  • Reply 67 of 88
    geekdadgeekdad Posts: 1,131member

    Quote:

    Originally Posted by asdasd View Post





    The people who made that distinction were idiots.



    Apple reports sales to channel and sales to customer - i.e. online sales from the Apple store. Mostly to channel.


    You are 100% correct. They report it as shipped equal a sale. If anyone needs more evidence then lets see what Apple themselves report in their own reports:


    Form 10-K Annual Report Filed Oct 31, 2012 by Apple Inc.


    Link: http://investor.apple.com/secfiling.cfm?filingID=1193125-12-444068


    From page 26


     


    Revenue Recognition


    Net sales consist primarily of revenue from the sale of hardware, software, digital content and applications, peripherals, and service and support contracts. 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. The Company recognizes revenue from the sale of hardware products,

  • Reply 68 of 88
    gatorguygatorguy Posts: 24,388member
    At least we finally have something that doesn't rely on Google not lying, huh?

    Remember how we didn't know what "activation" meant to Google? And how they still won't tell us?
    .

    Of course they've "told you". I've told you. Others have told you too as I recall.
    "For those wondering, we count each device only once (i.e., we don't count re-sold devices), and "activations" means you go into a store, buy a device [and] put it on the network by subscribing to a wireless service."

    That was two years ago. Like the ATT commercials say, it's not complicated.

    http://www.engadget.com/2011/12/20/googles-andy-rubin-defines-android-activation-trumpets-700-0/
  • Reply 69 of 88
    arlorarlor Posts: 532member

    Quote:

    Originally Posted by Pendergast View Post


    iPads for everyone.


     


    This is why iOS doesn't support multiple users.



     


    I'm sure that's Apple's theory. But there's no way I'm spending $500+ per person for two adults and three kids. Thus the kids don't get to use the iPad due to its lack of meaningful parental controls. 

  • Reply 70 of 88
    pendergastpendergast Posts: 1,358member

    Quote:

    Originally Posted by Arlor View Post


     


    I'm sure that's Apple's theory. But there's no way I'm spending $500+ per person for two adults and three kids. Thus the kids don't get to use the iPad due to its lack of meaningful parental controls. 



     


    Better parental controls would be nice.


     


    Or a "Guest Mode" / "Kids Mode" where you select which apps appear (same data, mind you).


     


    Kids don't need iPads anyway. I didn't have anything nearly in that price range growing up. 

  • Reply 71 of 88
    pendergastpendergast Posts: 1,358member

    Quote:

    Originally Posted by geekdad View Post


    You are 100% correct. They report it as shipped equal a sale. If anyone needs more evidence then lets see what Apple themselves report in their own reports:


    Form 10-K Annual Report Filed Oct 31, 2012 by Apple Inc.


    Link: http://investor.apple.com/secfiling.cfm?filingID=1193125-12-444068


    From page 26


     


    Revenue Recognition


    Net sales consist primarily of revenue from the sale of hardware, software, digital content and applications, peripherals, and service and support contracts. 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. The Company recognizes revenue from the sale of hardware products,



     


     


    Yes, yes, yes.


     


    BUT, Apple also reports channel inventory (which is not sold to an end-user). So you have pretty much all the data. How do other companies stack up? Often, we're comparing Apple's quarterly numbers with all that data with cherry-picked specific data sets (often vague) OR simply analyst guesses. 

  • Reply 72 of 88
    ankleskaterankleskater Posts: 1,287member
    pendergast wrote: »

    Yes, yes, yes.

    BUT, Apple also reports channel inventory (which is not sold to an end-user). So you have pretty much all the data. How do other companies stack up? Often, we're comparing Apple's quarterly numbers with all that data with cherry-picked specific data sets (often vague) OR simply analyst guesses. 

    Apple "reports" channel inventory? All of it? You're sure?
  • Reply 73 of 88
    asdasdasdasd Posts: 5,686member

    Quote:

    Originally Posted by ankleskater View Post





    Apple "reports" channel inventory? All of it? You're sure?


    As far as I can see, yes.


     


    They report weeks of channel inventory. "We entered the quarter with 4 weeks of inventory, and ended with 2". The 4 weeks would be the 4 times the weekly shipments at the end of the previous quarter, the 2 would be 2 times the weekly shipments at the end of the actual quarter. This isn't totally exact, as the weekly figure isn't exactly known, but it can be very closely approximated.


     


    PS> AI can we change this editor. Its nonfunctional on iPhones, and slow as molasses on Safari.

  • Reply 74 of 88
    philboogiephilboogie Posts: 7,675member
    gatorguy wrote: »
    Of course they've "told you". I've told you. Others have told you too as I recall.
    "For those wondering, we count each device only once (i.e., we don't count re-sold devices), and "activations" means you go into a store, buy a device [and] put it on the network by subscribing to a wireless service."

    Ah, you should've taken away the quotes, that would be funny. At least that's how I read/perceived the words in the first instance.
  • Reply 75 of 88
    ankleskaterankleskater Posts: 1,287member

    Quote:

    Originally Posted by asdasd View Post


    As far as I can see, yes.


     


    They report weeks of channel inventory. "We entered the quarter with 4 weeks of inventory, and ended with 2". The 4 weeks would be the 4 times the weekly shipments at the end of the previous quarter, the 2 would be 2 times the weekly shipments at the end of the actual quarter. This isn't totally exact, as the weekly figure isn't exactly known, but it can be very closely approximated.


     


    PS> AI can we change this editor. Its nonfunctional on iPhones, and slow as molasses on Safari.



    Which report are you citing, if I may ask?

  • Reply 76 of 88
    gatorguygatorguy Posts: 24,388member
    philboogie wrote: »
    Ah, you should've taken away the quotes, that would be funny. At least that's how I read/perceived the words in the first instance.

    LOL!
  • Reply 77 of 88
    asdasdasdasd Posts: 5,686member

    Quote:

    Originally Posted by ankleskater View Post


    Which report are you citing, if I may ask?



    Any. All conference calls and transcripts. Sample from Peter Oppenheimer from Q3 quarter last year, which is the first quarter to come up in google


     


    http://seekingalpha.com/article/321818-apples-ceo-discusses-q1-2012-results-earnings-call-transcript?page=2


     


     


     We sold 15.4 million iPods compared to 19.4 million in the year-ago quarter. Total iPod sales were ahead of our expectations and iPod touch continued to account for over half of all iPods sold. iPod share of the U.S. market for MP3 players remains at over 70% based on the latest monthly data published by MPD. And iPod continued to be the top-selling MP3 player in most countries we track based on the latest data published by GFK.


    We ended the quarter within our target range of 4 to 6 weeks of iPod channel inventory on a look-forward basis. 


    Ok so not exact. You have to do some maths by assuming 5 weeks, and "looking forward" i.e. there would be more sales in the holiday quarter were that the next one, so that needs to be taken into account. 


     


    iPhones were exact


     


     


    I'd now like to turn to iPhone. We were thrilled to sell a record 37 million iPhones compared to 16.2 million in the previous December quarter. This represents 128% year-over-year growth compared to 40% growth for the smartphone market overall in the December quarter, based on the latest published estimate from IDC. We experienced very strong iPhone sales growth in all of our segments, thanks primarily to the tremendous popularity of iPhone 4S.


    Customers have been captivated by Siri, which let's them use their voices to send messages, place phone calls, schedule appointments and more. Siri understands what users say, knows what they mean and helps them with everyday tasks and information requests. iPhone channel inventory increased sequentially by about 200k, leaving us with a little under 6 million iPhones in the channel at the end of the quarter, and below our target range of 4 to 6 weeks on a look-forward basis.


     


     


     


     


  • Reply 78 of 88
    asdasdasdasd Posts: 5,686member


    However, its also clear they are shipping to channel, and counting sales to channel as sales, including when channel increases -- this means that they are counting devices which may never sell as do all the others (In Apple's case they do always sell, though).


     


    This causes them problems in transition quarters, or quarters where they are following on y-o-y from a release quarter.

  • Reply 79 of 88
    ankleskaterankleskater Posts: 1,287member

    Quote:

    Originally Posted by asdasd View Post


    Any. All conference calls and transcripts. Sample from Peter Oppenheimer from Q3 quarter last year, which is the first quarter to come up in google


     


    http://seekingalpha.com/article/321818-apples-ceo-discusses-q1-2012-results-earnings-call-transcript?page=2


     


     


     We sold 15.4 million iPods compared to 19.4 million in the year-ago quarter. Total iPod sales were ahead of our expectations and iPod touch continued to account for over half of all iPods sold. iPod share of the U.S. market for MP3 players remains at over 70% based on the latest monthly data published by MPD. And iPod continued to be the top-selling MP3 player in most countries we track based on the latest data published by GFK.


    We ended the quarter within our target range of 4 to 6 weeks of iPod channel inventory on a look-forward basis. 


    Ok so not exact. You have to do some maths by assuming 5 weeks, and "looking forward" i.e. there would be more sales in the holiday quarter were that the next one, so that needs to be taken into account. 


     


    iPhones were exact



    With all due respect, this is not a report. This is something mentioned during a discussion/conference call, without detailed definition. 


     


    Why am I nitpicking? 


     


    Well, people here pay more attention to Apple discussions. So they learn more (even if they don't understand what they are learning) about Apple and conclude that Apple is more transparent. Those who question transparencies of all of Apple's rivals, have you read the transcripts of their earnings calls?


     


    Channel inventory is NOT reported in units in Apple's 10-Q or anyone else's, to the best of my knowledge. All companies, however, are compelled to report on estimated value of their assets, including inventory. 


     


    Really important to get one's facts straight before criticizing one or the other.


     


    Quote:

    Originally Posted by asdasd View Post


    However, its also clear they are shipping to channel, and counting sales to channel as sales, including when channel increases -- this means that they are counting devices which may never sell as do all the others (In Apple's case they do always sell, though).


     


    This causes them problems in transition quarters, or quarters where they are following on y-o-y from a release quarter.


     



     


    And what happens what channel inventory counted as sales doesn't sell through? We learn about this in subsequent quarters in the form of write-downs. This happened with BB and MS. So what's not transparent?

  • Reply 80 of 88
    asdasdasdasd Posts: 5,686member


    ankleskater.


     


    I didn't realize you were trolling, so I answered the questions in good faith. This is the legally binding document produced at every conference call. It is not the Q&A session, although they will mention channel if asked then too.


     


    To be clear; Apple reads from a script which is prepared, and then is published and it has to be legally correct subject to civil and criminal offenses. This then IS most definitely an official report.


     


     This refutes your claim ( or at least the rhetorical sneer "Are you sure about that"). The 10Q, as far as I remember, is balance sheets and total inventory, and isn't broken down, but no company does. However I haven't been an investor for a year or so.


     


    So yes, they publish their channel inventory in the legally binding prepared script for their conference call. As for whether other companies do this, it depends on the companies. Amazon doesn't even break out the Kindles, nor yet their AWS, although that will change. However that was not the question at hand. 


     


     


    Quote:


    And what happens what channel inventory counted as sales doesn't sell through? We learn about this in subsequent quarters in the form of write-downs. This happened with BB and MS. So what's not transparent?



     


    Whats not transparent is that we can only estimate channel when channel doesn't sell through.

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