Sold and pre-order are two different number. In Apple jargon, any unit ship to the carrier is consider a sales. Any unit ship to Apple store are not considered as sales until a customer pay for the phone. The initial sales number increase inventory build up in any product launch. Pre-order consist of only customer order. And in China, it is all over the place as there is a lot of 3rd party reseller that the pre-order number doesn't get counted. Apple launch weekend number are 70-80% set as the order from all the carriers in the launch countries were known a lot time ago and they would be counted as part of the initial launch number. 5S/5C units already arrived in places like China. The only variable for initial weekend number is customer sales through Apple stores. The more countries that Apple launch the product, the bigger the initial weekend sales number unless carrier cut their order yoy. And Apple would be able to add more countries to the initial launch date list. The launch day sales number is very much a supply driven number.
China is already start pre-ordering today (they have a different reservation system than US or Europe because of the chaotic launch with 4S . They have a lotto like reservation system and no one will wait in line for store purchase) for the Sept 20th purchase and it is doing mighty good. Looks like all the gold and white are sold out in Hong Kong after 3 hours. And it is also gone in most Beijin, Shanghai stores.
5C is going to do better than 4S last year. If nothing else, adding Docomo 61M 3g user to the potential customer pool in a country with 40% penetration rate is pretty good recipe of increase sales.
If the 5C is not a flagship phone you haven't seen the ones from the competition.
Not sure what is your point here.
I've seen a lot of competitors, and some of them - HTC One, some of new Sony models... arguably some Nokias... look more "premium" to me than 5c. Granted this is based on released photos - maybe real-life encounter with 5c will change the impression.
Yes and IPhone has 40ish% IPhone penetration in Japan while Iphone has only low teen type of penetration in China IPhone sale is going to be Hugh in Japan this coming year with their little price war and Docomo.
Ps: Just went to apple China site. Look like black 16G, no contract is still available but every thing else include China telecom 16g black are gone for the first day sales.
While I'm no Blackberry fan, the argument about profits and cash reserves are what they said about them, and it's not turning out well.
Here's hoping that Q4 brings some Apple surprises and 2014 or 2015 brings a new category of Apple innovation. The new Apple team needs to prove itself in a big way the more it releases rehashes of existing product lines
Yes and IPhone has 40ish% IPhone penetration in Japan while Iphone has only low teen type of penetration in China IPhone sale is going to be Hugh in Japan this coming year with their little price war and Docomo.
Ps: Just went to apple China site. Look like black 16G, no contract is still available but every thing else include China telecom 16g black are gone for the first day sales.
Black? There is no black iphone 5c!?
Can u clarify?...
Here's hoping that Q4 brings some Apple surprises and 2014 or 2015 brings a new category of Apple innovation. The new Apple team needs to prove itself in a big way the more it releases rehashes of existing product lines
Good thing they do not have to prove anything to the rest of the world, something that's also out there.
Not this again. You could say the same thing the previous years. Those who could afford the 4S could get the 5, those who could afford the 4 could get the 4S. And yet each time the flagship breaks records and the combined product line sells tens of millions.
What was the point of a new model if it is just the same old tired strategy of last years model , this years model and the year before's model? Plastic looks cheaper. It looks like a product for teenagers. Except it is too expensive.
And it is because this is a new model, not last years model continuing to sell, we would expect - and Wall Street expected - the figures for the launch weekend.
The trolls in these forums have a flexible reality when it comes to Apple.
Apple is either doomed and failing and losing the innovation race to whichever their favorite competitor is -- OR --
Apple is too rich and powerful and evil and unfair to whichever competitor is the poor helpless underdog is at the moment
Who makes the last argument. This is partially an investor site. I have options vesting in Jan which are not yet underwater but could be be. The market anticipated a new cheaper phone which would have lower margins, but much higher sales leading to higher overall earnings. This is why the stock increased over the Summer. Like it or not the stock market is acting rationally here.
And its total BS that it only costs $200 to make a 5C. Total BS. What about the cost of maintaining/updating the OS? The cost of the retail stores? Cost of having great customer and technical service? Cost of R&D? Those are not free. While other companies can produce cheap crap for $400 those same companies don't have to pay a dime for OS development (Android is free), OS updates (they are off the hook, only carrier does it), customer service (ever tried calling Samsung CS?), retail space, and R&D (just copy Apple).
The BOM costs were brought up in response to a poster who tried to argue that a plastic case would not reduce the price of the phone by $250. Assuming all other costs you mention are the same, the BOM costs are totally relevant to this discussion.
In reverse, what about all the profit from app sales, music sales, video sales, applecare warranties, overpriced accessories etc etc. All of these easily cover the cost of R&D, customer service, retail stores (all of which are amortized across all apple products not just the 5C).
HUGE profit my AZZ. Again show me another phone on the market that has the same quality as the 5C and is sold for $400? There is none. Again show me a company that sells $400 phones exclusively and makes big money of it. There is NONE. Samsung makes the majority of their profits on their $600 phones and barely breaks even selling $400 phones. Did you notice the ONLY TWO smartphone makers that many any money sell a TON of $600 phones? Nokia/LG sell a bunch of phones but make no money because they sell to the mid-level $400 - which leads to no profits. Why would Apple want any piece of that pie?
And its total BS that it only costs $200 to make a 5C. Total BS. What about the cost of maintaining/updating the OS? The cost of the retail stores? Cost of having great customer and technical service? Cost of R&D? Those are not free. While other companies can produce cheap crap for $400 those same companies don't have to pay a dime for OS development (Android is free), OS updates (they are off the hook, only carrier does it), customer service (ever tried calling Samsung CS?), retail space, and R&D (just copy Apple).
iSupply estimated that the manufacturing cost of an iPhone 5 was $199 parts plus $8 manufacturing. Personally, I suspect they underestimated the build part of that for the 5. This was a year ago, and prices of hi-tech parts are on nearly always on a downward trend due to advances in technology. Given this, and the fact the iPhone 5c is essentially an iPhone 5 in a cheaper plastic case, costs will be less.
But, sure, that's not all costs.
Yet, maintaining the iOS is independent of the number of phones sold - it's actually a good argument for going for marketshare providing reasonable margins can be maintained. You've the done the work, paid for the development of the software - that cost is fixed whether you sell 1m, 10m or 100m. The cost per iOS device rapidly diminishes the more you sell. The major Andriod merchants do spend time and money, not as much but they put their own developed software on them to try and gain a competitive advantage over other Android phones. Some e.g Samsung are spending money developing a whole OS *shudder*.
Retail stores? They more than pay for themselves! Apple takes the cut of the profit that would go to the resellers and does damn well out of it.
Apple saves some of R&D by focusing on relatively few models. And R&D for the iPhone 5c would be very low, as it's a derivate of the technology already developed for the iPhone 5. Samsung et al, have to do it for countless devices in their 'mud at the wall' manner.
There's advertising, but Android manufacturers tend to spend more.
And then, there are the big financial pluses to Apple of marketshare. Every iOS device sold means more revenue to Apple through the App Store & iTunes content. And every new customer is likely to be a lifelong purchaser of Apple gear.
The market anticipated a new cheaper phone which would have lower margins, but much higher sales leading to higher overall earnings.
If the $550 5C has 40% gross margins, the gross profit is $220. Say that it sells 10 million units in a month to make $2.2b.
If the 5C was $450, it would have 27% margins ($120 profit). To exceed the $2.2b, it would need to sell over 18 million units.
If the 5C was $400, it would have 17.5% margins ($70 profit). To exceed $2.2b, it would need to sell over 31 million units.
These are gross profits too and other expenses need to come off these so a $400 price point is probably not that feasible, they'd have to use cheaper components to build it. And would the demand be 3x higher going from $550 to $400? Samsung has devices all the way down to $100-200 and their smartphone unit sales are just over double Apple's.
The $450 price point looks like it would be feasible but they're better letting the customers decide that with their buying or lack of it.
If they have higher gross margins than 40%, it gives them a lot of flexibility in being able to lower the prices over time and more importantly may allow 3rd parties to have much better sales offers, depending on the wholesale prices - it gives healthy margins to everyone: carriers, resellers and Apple.
The common criticism seems to be 'why would you buy a 5C when $100 more gets you a 5S?'. This is a good thing for investors if people are being driven to higher models (assuming they have similar margins).
It's not good from the consumer side and I certainly wouldn't buy a 5C when an older iPhone 5 with the same components will be on sale for the same price or less because it's a better quality product. From the business side, they've got their upsell to their flagship product to maintain high average selling prices. The markets will decide if it's a good strategy and Apple will adjust accordingly if it's not quite right.
A buyer is having to choose between the plastic model shown here on top and the higher quality and cheaper 4S underneath (3.5" display though) and the higher quality, metal and same priced 5 underneath:
The white iPhone 5 is one of the best designed phones Apple has ever made and to go back from that to plastic isn't all that appealing when the iPhone 5 will be available in places:
but like I say, if the outcome is more people buying the 5S, that's better.
Who makes the last argument. This is partially an investor site. I have options vesting in Jan which are not yet underwater but could be be. The market anticipated a new cheaper phone which would have lower margins, but much higher sales leading to higher overall earnings. This is why the stock increased over the Summer. Like it or not the stock market is acting rationally here.
The market also expected unicorns sh1tting rainbows too. Stock market isn't rational. If it was it wouldn't go gaga on rumors and innuendo.
Here’s the problem with all this. People are running around with their heads cut off, claiming it’s the end of the world, whatever… But they’ve forgotten one simple thing.
THISISLASTYEAR’SPHONE.
Did you see doom and gloom when Apple didn’t release the iPhone 4S’ sales numbers in the week before the iPhone 5 went on sale? How about the 4 for the 4S? No? Who gives a flying frick?
Originally Posted by Connie
I hope everything is ok at Apple headquarters, as the lack of an announcement really is really something to worry about for our Apple fans.
Originally Posted by Cash907
If they're willing to take this kind of speculative hit by not announcing numbers, it would seem as though the truth would earn an even deeper hit. Sad.
Nice concern trolling; get off our website.
Originally Posted by pazuzu
I wish Tallest were around. He would clarify all this mumbo jumbo.
See above.
Originally Posted by Mac-Daddy
Please don't glorify him
It’s either me or you; which do you want, the one who’s right or the one who’s whining about glorifying?
My apology. The Apple store pre-order in China yesterday is only for 5S. And they sold out all the first day store pick up model except 16G space grey unlocked in 7 out of 8 Apple stores in China. The China Telecom 16G space grey were all sold out.
iSupply estimated that the manufacturing cost of an iPhone 5 was $199 parts plus $8 manufacturing. Personally, I suspect they underestimated the build part of that for the 5. This was a year ago, and prices of hi-tech parts are on nearly always on a downward trend due to advances in technology. Given this, and the fact the iPhone 5c is essentially an iPhone 5 in a cheaper plastic case, costs will be less.
But, sure, that's not all costs.
Yet, maintaining the iOS is independent of the number of phones sold - it's actually a good argument for going for marketshare providing reasonable margins can be maintained. You've the done the work, paid for the development of the software - that cost is fixed whether you sell 1m, 10m or 100m. The cost per iOS device rapidly diminishes the more you sell. The major Andriod merchants do spend time and money, not as much but they put their own developed software on them to try and gain a competitive advantage over other Android phones. Some e.g Samsung are spending money developing a whole OS *shudder*.
Retail stores? They more than pay for themselves! Apple takes the cut of the profit that would go to the resellers and does damn well out of it.
Apple saves some of R&D by focusing on relatively few models. And R&D for the iPhone 5c would be very low, as it's a derivate of the technology already developed for the iPhone 5. Samsung et al, have to do it for countless devices in their 'mud at the wall' manner.
There's advertising, but Android manufacturers tend to spend more.
And then, there are the big financial pluses to Apple of marketshare. Every iOS device sold means more revenue to Apple through the App Store & iTunes content. And every new customer is likely to be a lifelong purchaser of Apple gear.
Have you ever look at an Apple quarterly earning report? All you ranting was answered there. BOM is just one part of the product cost, the warranty cost, the spoilage in manufacturing, the shipping cost, the price concession to retailer all come into the cost of good column in addition to BOM cost. Apple as a company has about 37-38% gross margin. And below gross margin in the operating income statement is the development cost, tax, other income etc etc to arrive in earning and earning per share.
Apple is a for profit enterprise. So they will try to maximize profit as they see fit. If they make a mistake, they will pay dearly for it. If they are right, the company will make a lot of money. The cost of goods has very little to do with the pricing of the merchandize in the market. If you have take a economy 101 class, you should understand the concept of supply and demand. Just because Apple can produce a product with low cost does not mean that it need to sell it at low price. The market will be the arbiter.
The media piled onto Apple declaring the 5C to be a total flop, aided by bloggers, paid naysayers, and Analysts.
Ringing that bell of doom!
And yet, the 5C is very quickly revealing itself to be a winner along with the 5S breaking sales records and blazing a trail of success.
No one could be bothered to wait a short amount of time to see how well the 5C and 5S would actually sell. No one gave a sh*t about actual sales numbers.
It was just, fail fail fail fail fail fail fail.
Well guess what?
Fail to the fails. These phones are going up, and Apple is setting the stage for a huge surge.
Don't believe me? Fine, short the stock. I'm long, baby.
Have you ever look at an Apple quarterly earning report? All you ranting was answered there. BOM is just one part of the product cost, the warranty cost, the spoilage in manufacturing, the shipping cost, the price concession to retailer all come into the cost of good column in addition to BOM cost. Apple as a company has about 37-38% gross margin. And below gross margin in the operating income statement is the development cost, tax, other income etc etc to arrive in earning and earning per share.
Apple is a for profit enterprise. So they will try to maximize profit as they see fit. If they make a mistake, they will pay dearly for it. If they are right, the company will make a lot of money. The cost of goods has very little to do with the pricing of the merchandize in the market. If you have take a economy 101 class, you should understand the concept of supply and demand. Just because Apple can produce a product with low cost does not mean that it need to sell it at low price. The market will be the arbiter.
What's your problem with my post? It's like you're replying to a post I didn't make. I specifically state that I recognise that BOM, aren't the only costs.
The main point made was that the biggest cost cited in the post I was replying to was iOS development. And that is a fixed cost regardless of how many iPhones (and other iOS devices) Apple sell. Thus going for high sales maximises efficiency: that particular cost becomes less per phone.
Of course reseller markup has to be accounted for - is that not implied in my statement that Apple Stores are not an iPhone 'cost' as retaining that markup keeps them in the black.
RE being for profit. A fair number of posters say they are shareholders. That undoubtedly shapes their perspective. I simply couldn't care how much profit Apple makes. I don't own shares, what's it to me? Arguments that run "Apple is winning because Apple most money" are lost on me, although I can appreciate that if I was a shareholder it would be vital. I'm just a customer: Apple making enough money to continue to making great products, is all I care about. imo the ecosystem is what makes iOS great. Maintaining the supremacy of that iOS ecosystem, is what I care most about - and that means to me marketshare is more important than margins. I'd sacrifice a bit of the latter to gain the former.
Comments
Sold and pre-order are two different number. In Apple jargon, any unit ship to the carrier is consider a sales. Any unit ship to Apple store are not considered as sales until a customer pay for the phone. The initial sales number increase inventory build up in any product launch. Pre-order consist of only customer order. And in China, it is all over the place as there is a lot of 3rd party reseller that the pre-order number doesn't get counted. Apple launch weekend number are 70-80% set as the order from all the carriers in the launch countries were known a lot time ago and they would be counted as part of the initial launch number. 5S/5C units already arrived in places like China. The only variable for initial weekend number is customer sales through Apple stores. The more countries that Apple launch the product, the bigger the initial weekend sales number unless carrier cut their order yoy. And Apple would be able to add more countries to the initial launch date list. The launch day sales number is very much a supply driven number.
China is already start pre-ordering today (they have a different reservation system than US or Europe because of the chaotic launch with 4S . They have a lotto like reservation system and no one will wait in line for store purchase) for the Sept 20th purchase and it is doing mighty good. Looks like all the gold and white are sold out in Hong Kong after 3 hours. And it is also gone in most Beijin, Shanghai stores.
5C is going to do better than 4S last year. If nothing else, adding Docomo 61M 3g user to the potential customer pool in a country with 40% penetration rate is pretty good recipe of increase sales.
China has reservations due to scalpers.
We'll start seeing "Beleaguered Apple" news any second now.
The trolls in these forums have a flexible reality when it comes to Apple.
Apple is either doomed and failing and losing the innovation race to whichever their favorite competitor is -- OR --
Apple is too rich and powerful and evil and unfair to whichever competitor is the poor helpless underdog is at the moment
Not sure what is your point here.
I've seen a lot of competitors, and some of them - HTC One, some of new Sony models... arguably some Nokias... look more "premium" to me than 5c. Granted this is based on released photos - maybe real-life encounter with 5c will change the impression.
Yes and IPhone has 40ish% IPhone penetration in Japan while Iphone has only low teen type of penetration in China IPhone sale is going to be Hugh in Japan this coming year with their little price war and Docomo.
Ps: Just went to apple China site. Look like black 16G, no contract is still available but every thing else include China telecom 16g black are gone for the first day sales.
Here's hoping that Q4 brings some Apple surprises and 2014 or 2015 brings a new category of Apple innovation. The new Apple team needs to prove itself in a big way the more it releases rehashes of existing product lines
Can u clarify?...
Good thing they do not have to prove anything to the rest of the world, something that's also out there.
What was the point of a new model if it is just the same old tired strategy of last years model , this years model and the year before's model? Plastic looks cheaper. It looks like a product for teenagers. Except it is too expensive.
And it is because this is a new model, not last years model continuing to sell, we would expect - and Wall Street expected - the figures for the launch weekend.
Who makes the last argument. This is partially an investor site. I have options vesting in Jan which are not yet underwater but could be be. The market anticipated a new cheaper phone which would have lower margins, but much higher sales leading to higher overall earnings. This is why the stock increased over the Summer. Like it or not the stock market is acting rationally here.
And its total BS that it only costs $200 to make a 5C. Total BS. What about the cost of maintaining/updating the OS? The cost of the retail stores? Cost of having great customer and technical service? Cost of R&D? Those are not free. While other companies can produce cheap crap for $400 those same companies don't have to pay a dime for OS development (Android is free), OS updates (they are off the hook, only carrier does it), customer service (ever tried calling Samsung CS?), retail space, and R&D (just copy Apple).
The BOM costs were brought up in response to a poster who tried to argue that a plastic case would not reduce the price of the phone by $250. Assuming all other costs you mention are the same, the BOM costs are totally relevant to this discussion.
In reverse, what about all the profit from app sales, music sales, video sales, applecare warranties, overpriced accessories etc etc. All of these easily cover the cost of R&D, customer service, retail stores (all of which are amortized across all apple products not just the 5C).
HUGE profit my AZZ. Again show me another phone on the market that has the same quality as the 5C and is sold for $400? There is none. Again show me a company that sells $400 phones exclusively and makes big money of it. There is NONE. Samsung makes the majority of their profits on their $600 phones and barely breaks even selling $400 phones. Did you notice the ONLY TWO smartphone makers that many any money sell a TON of $600 phones? Nokia/LG sell a bunch of phones but make no money because they sell to the mid-level $400 - which leads to no profits. Why would Apple want any piece of that pie?
And its total BS that it only costs $200 to make a 5C. Total BS. What about the cost of maintaining/updating the OS? The cost of the retail stores? Cost of having great customer and technical service? Cost of R&D? Those are not free. While other companies can produce cheap crap for $400 those same companies don't have to pay a dime for OS development (Android is free), OS updates (they are off the hook, only carrier does it), customer service (ever tried calling Samsung CS?), retail space, and R&D (just copy Apple).
If the $550 5C has 40% gross margins, the gross profit is $220. Say that it sells 10 million units in a month to make $2.2b.
If the 5C was $450, it would have 27% margins ($120 profit). To exceed the $2.2b, it would need to sell over 18 million units.
If the 5C was $400, it would have 17.5% margins ($70 profit). To exceed $2.2b, it would need to sell over 31 million units.
These are gross profits too and other expenses need to come off these so a $400 price point is probably not that feasible, they'd have to use cheaper components to build it. And would the demand be 3x higher going from $550 to $400? Samsung has devices all the way down to $100-200 and their smartphone unit sales are just over double Apple's.
The $450 price point looks like it would be feasible but they're better letting the customers decide that with their buying or lack of it.
If they have higher gross margins than 40%, it gives them a lot of flexibility in being able to lower the prices over time and more importantly may allow 3rd parties to have much better sales offers, depending on the wholesale prices - it gives healthy margins to everyone: carriers, resellers and Apple.
The common criticism seems to be 'why would you buy a 5C when $100 more gets you a 5S?'. This is a good thing for investors if people are being driven to higher models (assuming they have similar margins).
It's not good from the consumer side and I certainly wouldn't buy a 5C when an older iPhone 5 with the same components will be on sale for the same price or less because it's a better quality product. From the business side, they've got their upsell to their flagship product to maintain high average selling prices. The markets will decide if it's a good strategy and Apple will adjust accordingly if it's not quite right.
A buyer is having to choose between the plastic model shown here on top and the higher quality and cheaper 4S underneath (3.5" display though) and the higher quality, metal and same priced 5 underneath:
The white iPhone 5 is one of the best designed phones Apple has ever made and to go back from that to plastic isn't all that appealing when the iPhone 5 will be available in places:
but like I say, if the outcome is more people buying the 5S, that's better.
The market also expected unicorns sh1tting rainbows too. Stock market isn't rational. If it was it wouldn't go gaga on rumors and innuendo.
The market also expected unicorns sh1tting rainbows too. Stock market isn't rational. If it was it wouldn't go gaga on rumors and innuendo.
Have you ever sold/bought/shorted a stock on a rumor? That is what the stock market is, it is human.
Here’s the problem with all this. People are running around with their heads cut off, claiming it’s the end of the world, whatever… But they’ve forgotten one simple thing.
THIS IS LAST YEAR’S PHONE.
Did you see doom and gloom when Apple didn’t release the iPhone 4S’ sales numbers in the week before the iPhone 5 went on sale? How about the 4 for the 4S? No? Who gives a flying frick?
Nice concern trolling; get off our website.
See above.
Please don't glorify him
It’s either me or you; which do you want, the one who’s right or the one who’s whining about glorifying?
B
Black? There is no black iphone 5c!?
Can u clarify?...
My apology. The Apple store pre-order in China yesterday is only for 5S. And they sold out all the first day store pick up model except 16G space grey unlocked in 7 out of 8 Apple stores in China. The China Telecom 16G space grey were all sold out.
Have you ever look at an Apple quarterly earning report? All you ranting was answered there. BOM is just one part of the product cost, the warranty cost, the spoilage in manufacturing, the shipping cost, the price concession to retailer all come into the cost of good column in addition to BOM cost. Apple as a company has about 37-38% gross margin. And below gross margin in the operating income statement is the development cost, tax, other income etc etc to arrive in earning and earning per share.
The media piled onto Apple declaring the 5C to be a total flop, aided by bloggers, paid naysayers, and Analysts.
Ringing that bell of doom!
And yet, the 5C is very quickly revealing itself to be a winner along with the 5S breaking sales records and blazing a trail of success.
No one could be bothered to wait a short amount of time to see how well the 5C and 5S would actually sell. No one gave a sh*t about actual sales numbers.
It was just, fail fail fail fail fail fail fail.
Well guess what?
Fail to the fails. These phones are going up, and Apple is setting the stage for a huge surge.
Don't believe me? Fine, short the stock. I'm long, baby.
Have you ever look at an Apple quarterly earning report? All you ranting was answered there. BOM is just one part of the product cost, the warranty cost, the spoilage in manufacturing, the shipping cost, the price concession to retailer all come into the cost of good column in addition to BOM cost. Apple as a company has about 37-38% gross margin. And below gross margin in the operating income statement is the development cost, tax, other income etc etc to arrive in earning and earning per share.
What's your problem with my post? It's like you're replying to a post I didn't make. I specifically state that I recognise that BOM, aren't the only costs.