US carrier promotions help drive higher demand for Apple's iPhone, strong March quarter expected
Demand for Apple's iPhone has been higher than expected in the first quarter of calendar 2014, thanks in part to new smartphone promotions by U.S. wireless carriers, new tracking data reveals.
The results of the latest AlphaWise Smartphone Tracker survey from Morgan Stanley were shared with AppleInsider on Wednesday, revealing sell-through data via Web search analysis through March 15. The figures suggest that iPhone shipments for the March quarter thus far are tracking ahead of market consensus expectations.
The AlphaWise survey, detailed by analyst Katy Huberty, suggests that demand for Apple's iPhone will be at 42 million units for the quarter. That's considerably ahead of market consensus, which expects the company to sell 38 million iPhones over the three-month span.
As for why iPhone sales may be stronger than expected, Huberty theorized that new U.S. carrier promotions initiated in the first quarter of calendar 2014 could be driving incremental demand. That may be an increase from late 2013, when carriers were strictly enforcing 24-month contract terms during the holiday shopping season.
Huberty counted a total of nine major promotions announced by the "big four" U.S. carriers thus far in 2014, including changes to AT&T Next and Verizon Edge, Sprint's new "Framily" plan, and a new T-Mobile "Uncarrier" offer that pays termination fees.
In addition, Huberty noted that several large U.S. retailers ran iPhone promotions this quarter, including Walmart and Best Buy.
While the survey shows that demand for Apple's iPhone is high, production may not be keeping up with that demand. Morgan Stanley's supply chain analyst Jasmine Lu expects Apple to build between 38 million and 39 million iPhones in the first quarter of calendar 2014.
But Huberty noted that the AlphaWise Smartphone Tracker data was a strong indicator of Apple iPhone shipments throughout 2013. The tracker posted results closer to Apple's actual quarterly iPhone sales than Wall Street consensus in three out of four quarters.
The latest data also suggests that Apple saw an improvement in all major regions except China, where the iPhone saw an earlier launch than in previous years, making the 2014 comparison more challenging. However, Huberty expects that the debut of the iPhone on China Mobile, the world's largest wireless provider, may slightly offset those difficult comparisons.
The results of the latest AlphaWise Smartphone Tracker survey from Morgan Stanley were shared with AppleInsider on Wednesday, revealing sell-through data via Web search analysis through March 15. The figures suggest that iPhone shipments for the March quarter thus far are tracking ahead of market consensus expectations.
The AlphaWise survey, detailed by analyst Katy Huberty, suggests that demand for Apple's iPhone will be at 42 million units for the quarter. That's considerably ahead of market consensus, which expects the company to sell 38 million iPhones over the three-month span.
As for why iPhone sales may be stronger than expected, Huberty theorized that new U.S. carrier promotions initiated in the first quarter of calendar 2014 could be driving incremental demand. That may be an increase from late 2013, when carriers were strictly enforcing 24-month contract terms during the holiday shopping season.
Huberty counted a total of nine major promotions announced by the "big four" U.S. carriers thus far in 2014, including changes to AT&T Next and Verizon Edge, Sprint's new "Framily" plan, and a new T-Mobile "Uncarrier" offer that pays termination fees.
In addition, Huberty noted that several large U.S. retailers ran iPhone promotions this quarter, including Walmart and Best Buy.
While the survey shows that demand for Apple's iPhone is high, production may not be keeping up with that demand. Morgan Stanley's supply chain analyst Jasmine Lu expects Apple to build between 38 million and 39 million iPhones in the first quarter of calendar 2014.
But Huberty noted that the AlphaWise Smartphone Tracker data was a strong indicator of Apple iPhone shipments throughout 2013. The tracker posted results closer to Apple's actual quarterly iPhone sales than Wall Street consensus in three out of four quarters.
The latest data also suggests that Apple saw an improvement in all major regions except China, where the iPhone saw an earlier launch than in previous years, making the 2014 comparison more challenging. However, Huberty expects that the debut of the iPhone on China Mobile, the world's largest wireless provider, may slightly offset those difficult comparisons.
Comments
Demand for Apple's iPhone has been higher than expected in the first quarter of calendar 2014, thanks in part to new smartphone promotions by U.S. wireless carriers, new tracking data reveals.
Virtually every carrier promotion & advertising campaign I see in Canada features everything but Apple products. Plans are available at great prices to all but iPhones. If you want an iPhone you have to select an upper tier plan. I'd love to see someone challenging the legality of offering a less expensive plan to users of certain devices.
Now that the analysts see an uptick in shipments outpacing their original estimates, guaranteed they'll raise their targets to astronomical levels which Apple can't meet and claim it as a disappointment. They play their cards so well that most people buy into the shell game. Just too bad the SEC didn't prosecute more of these guys for stock manipulation.
In the emerging markets iPhones will be the phone of choice for those who can afford it. And note there are usually plenty of wealthy people in those locations who are used to getting the best.
So increasing number of carriers and locations plus established markets choosing iPhones over Android will cause a good increase in sales.
Note that android phones cover all types of capabilities and is essentially becoming the new Symbian. Apple doesn't need or want that business because the margins are too low. What they will do is bring in more mid price options that put a downward pressure on the competitors.
Otherwise analysts will just increase their expectations so they can be disappointed which they love.
Think secret!
Some of the promos seem to be iPhone specific, such as this one:
http://www.macrumors.com/2014/02/28/best-buy-iphone-deal/
Yes but let me rephrase: were there only iPhone promotions?
Oh, certainly not. Who follows Android phone promotions anyway? There's always some promotion going on, always has been. On the other hand Apple and/or it's resellers haven't typically offered much in the way of promos. Perhaps an iTunes card with purchase, something like that. Recently there has seemed to be a lot more in the way of iPhone sales, promotions, and even permanent price reductions from discounters than normally seen. Don't you think so?
Are these promotions iPhone only? If not, Katy, how do you explain why Android isn't getting a bump as well? iPhone demand will be high regardless of promotions.
There is a segment of society that want iPhones but just can't quite afford them. If a promotion brings the cost of iPhone ownership down into the "can afford" zone, then you can expect Apple to benefit more than their Android counterparts.
That is to say, the desire to own an iPhone has always been there. Plenty of surveys, even in emerging markets, indicate that Apple is the brand most craved. Subsidies and promotions just lower the bar enough to turn some of those would-be Android owners into iPhone owners. Looking over the history of iPhone, including US and other markets, the trend is clear: where up-front costs are reduced, iPhone dominates.
So I don't see your and Huberty's viewpoints as incompatible. I think they are both at play.
Thompson
Sounds like pump and dump to me. Now when Apple doesn't announce 42 million iPhones shipped in the quarter the stock will tank.
Exactly. Anytime I see "analysts" and "higher than expected" or "lower than expected" sales, it has the stench of pump and dump.
It's not in Wall Street's interests for Apple's sales to actually meet expectations, since that does nothing to move the stock price or spur a wave of transactions (i.e., commissions). This kind of report indicates to me that the actual iPhone sales for the quarter will be less than 42 million, at which time the stock will take another dump because the sales did not meet the "higher than expected" expectations.
Stock will surely go down on this news.
Absolutely. Here’s the plan. Talk up sales, claim they’re higher than expected. Talk AAPL up. Then when the results come in and Apple is slightly below this prediction, but still having sold more than originally predicted, AAPL drops and you take home the cash... IF you’re short. This is how Apple has record quarters but disappoints. This should be illegal but it’s not apparently.