iPhone and Mac to shine in Apple's Q2 2015 earnings, analyst says

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  • Reply 101 of 128
    fracfrac Posts: 480member
    melgross wrote: »
    Exactly who pays for that 'free' phone then?
    The customer that's who!

    Not exactly free is it then?

    unless there is some magic fairy dust that buys the device, the customer pays in the long run.

    If the phone price rapidly drops to free, then the manufacturer and the carrier take the hit. We've seen this for Windows phones, where a new top line model drops from $199 to $99 in a month, then to free a month later. It's the manufacturer who takes that drop. The subsidy remains the same, unless sales are so bad that the carrier demands that the subsidy be lowered as well. It's why we haven't seen a new top line Win Phone in some time.

    There seems to be a lot of confusion about subsidies, price reductions and BOGOF offers...and who ultimately pays.
    My near neighbour, a regional carrier exec here in the UK, puts it like this.
    The carrier undertakes to move 'x' number of phones in say a quarter, at a price agreed with the manufacturer which in turn determines the offer price and repayment agreement.
    If the carrier sells them all in that period or can move more, then they might get a slightly better price on successive batches they order, over and above the initial sales agreement. That means the carrier and the manufacturer get a bonus.
    If the carrier fails to move all the phones in that period, they may have to take a small hit by reducing the upfront deposit at select high selling stores, until they catch up with the initial sales projections. That's a small bonus for 'some' buyers.
    If the sales fall well short of projections, the carriers may offer BOGOF deals which means a hit for both carrier and manufacturer, but mainly it falls on the manufacturer. The mechanism used is generally called channel stuffing since the manufacturer just ships more phones, at little or no cost to the carrier. The manufacturer can then report shifting more phones, even though they never recover the full cost and the carriers still get an additional contract payment if the phone is activated.
    As a general rule, customer repayment rates are never reduced, since the money is borrowed upfront by the carriers to finance the deals initially and 'they' also have to meet repayment commitments to the banks.
    It's no coincidence that Blackberry's and Samsung's profits fell off a cliff when BOGOF offers started to appear.
    When I asked my neighbour's opinion about the S6's chances, he shrugged and said "We'll see" sans much enthusiasm.
  • Reply 102 of 128
    cnocbuicnocbui Posts: 3,613member
    Quote:
    Originally Posted by melgross View Post





    Both, apparently. The latest reports out of Samsung GPS home market in S Korea, where they have dominated phone sales foe a long time, has their S6 sales at very low levels, and iPhone sales beating them, a surprising development. Remember that the S5 sold 40% less than Samsung anticipated (Samsung's own statement), and 20% less than S4 sales, which themselves were just 10% higher than S3 sales.



    And Apple's phone sales last quarter ware higher than all of Samsung's smartphone sales, even though Apple's cheapest phone, off contract, they way most people buy phones around the world, is $399, whereas, the average price of Samsung's smartphones is about $250, and as I stated earlier, Apple average phone goes for $689. That really does say something.



    I expect that the S6 may sell better than the S5, as it had better, but how much better, since the S5 did so poorly?

     

    iPhone 6 sales are not beating S6 sales in Korea.  The Atlas Research report had 2nd week in April figures of 35,003 sales of iPhone 6s vs 79,586 for the Samsung S6/edge.  Furthermore, The Atlas report that claimed iPhone 6 sales had declined only marginally, doesn't appear to be quite accurate as it failed to take into account the near 50% drop in iPhone sales in the weeks prior to the S6 launch, possibly due to anticipation of the S6 launch.   iPhone 6 sales were 65018 in the 3rd week of March and were down to 35003 in the 2nd week of April.  The AR figures only represent store sales and don't account for online sales.

     

    The problem with S6 sales appears to be that Samsung severely miscalculated how high the demand for the Edge model would be, presumably assuming it's price premium would deter buyers, so at launch they had fewer Edge models than the standard model.  What actually appears to be happening in some markets is that there is actually significantly more demand for the Edge model than the standard.  In the UAE, for example, Demand is said to be 65 / 35 % in favour of the Edge.  Samsung initially thought demand for the Edge would only be 20-30 %, hence the severe shortage as pre-orders were actually for 50% for the Edge.  Bloomberg is reporting that so large is the demand for the Edge that Samsung have brought a third production line for the curved screen online to increase output from the current 2 million a month to 5 million.

  • Reply 103 of 128
    foggyhillfoggyhill Posts: 4,767member
    Quote:

    Originally Posted by Nightsky View Post

     

     

    I think most iPhones sold in the UK are sold subsidised on 2 year contracts. Otherwise the iPhone would simply be too expensive for most people. There is a substantial and growing market for smartphones sold off contract or on 1 month rolling contracts simply becuase many people don't want to be tied down for 2 years. I don't know what percentage of iPhones are sold that way but my guess is not very many given the high price of the iPhone unsubsidised. 


     

    People have credit cards and line of credits, they can "subsidize"/borrow for the phone, themselves...  There is no such thing a subsidies (its a total perversion of the definition), they're just loans at not to horrible interest rate (5-6% per year). Tim Cooks seemingly said that non subsidized Iphones are not a rarity but a majority, so it seems you estimation is off.

  • Reply 104 of 128
    foggyhillfoggyhill Posts: 4,767member
    Quote:

    Originally Posted by Nightsky View Post



    What "industry structural changes" are causing the iPad's rapid sales decline? I don't understand that. I thought the sales decline was due to a combination of a market flooded with much cheaper alternatives and the fact that iPad users are not uprgrading as frequently as expected.

     

    We will see if there is in fact a rapid decline at the next Apple earning call. Up to now the decline as been modest year to year (-18%). The whole tablet market is going way way down market is the most likely explanation. While the top high has been occupied at 90% by Apple and everyone who has one is still using it. Most people I know with tablets have not upgraded their first one (which often is a Ipad 2).

     

    Nobody's doing money in the tablets these days but Apple.

     

    Apple could improve Ipad's fate by increasing their use cases beyond media. Continuity/handoff last year was a first step, a tight integration with the new Apple TV/home kit  would be a good second step.

  • Reply 105 of 128
    dasanman69dasanman69 Posts: 13,002member
    foggyhill wrote: »
    People have credit cards and line of credits, they can "subsidize"/borrow for the phone, themselves...  There is no such thing a subsidies (its a total perversion of the definition), they're just loans at not to horrible interest rate (5-6% per year). Tim Cooks seemingly said that non subsidized Iphones are not a rarity but a majority, so it seems you estimation is off.

    Yea because the 20% credit card interest rate makes sense.
  • Reply 106 of 128
    gatorguygatorguy Posts: 23,508member
    foggyhill wrote: »
    We will see if there is in fact a rapid decline at the next Apple earning call. Up to now the decline as been modest year to year (-18%). The whole tablet market is going way way down market is the most likely explanation. While the top high has been occupied at 90% by Apple and everyone who has one is still using it. Most people I know with tablets have not upgraded their first one (which often is a Ipad 2).

    Nobody's doing money in the tablets these days but Apple.

    Apple could improve Ipad's fate by increasing their use cases beyond media. Continuity/handoff last year was a first step, a tight integration with the new Apple TV/home kit  would be a good second step.

    I suspect the "post-PC world" meme may have been a bit premature, at least as regards tablets being the device that replaces them. I see far fewer tablets out and about than I used to, so I personally don't think it's just that the older ones are lasting so long. I don't believe they're used as much as they were.
  • Reply 107 of 128
    dasanman69dasanman69 Posts: 13,002member
    gatorguy wrote: »
    I suspect the "post-PC world" meme may have been a bit premature, at least as regards tablets being the device that replaces them. I see far fewer tablets out and about than I used to, so I personally don't think it's just that the older ones are lasting so long. I don't believe they're used as much as they were.

    The novelty wore off plus the bigger phones can do the job well enough in many cases.
  • Reply 108 of 128
    mstonemstone Posts: 11,510member
    Quote:
    Originally Posted by Nightsky View Post

     

     

    Do you have any evidence to substantiate that highly offensive and racist comment?


    When you live there and you see very young teens, maybe 14 years old, nursing babies, you sort of put two and two together. It is sad, and I blame it on cheap rum which many of the unemployed men consume like soda, chugging it down by the roadside starting first thing in the morning. There are more responsible indigenous families though, and they provide the workforce for the farming industry there. It is a very complicated situation. In a way they are both protected and controlled by the government because they are natives. They don't need any identification, papers or even a name and the crimes they commit among themselves are almost never prosecuted. They also can legally cross the border with Costa Rica without a passport. They have their own semi autonomous state in Panama but they are nomadic by nature. Now, the children are required to go to school but few actually do. The children are also prohibited from working in the fields but they go along with the family and eventually end up working anyway, not so much as needed labor, but just mimicking their parents. You can read that Wikipedia page but it has been sanitized. Nevertheless the modern citizens in Panama honor their protected status and respect their traditional customs.

  • Reply 109 of 128
    melgrossmelgross Posts: 33,334member
    gatorguy wrote: »
    Mel, I usually do pretty well finding stuff on the web but for the life of me I can't find where Cook stated that. Do you have a link to share?

    EDIT: You could well be correct. While I still can't find the quote from Cook himself I do see where The Fool mentioned it in August last year and attributed it to him, saying 75% of the iPhones sold that particular quarter were not subsidized.

    He stated that in a conference call a couple of quarters ago, or so. I listen to all those calls, so I hear those statements. You'd need to find a transcription somewhere. Despite what you think, as you always pop in when I say things like that, I never make things up. There's no point. But that doesn't mean it is easy to find.
  • Reply 110 of 128
    melgrossmelgross Posts: 33,334member
    dasanman69 wrote: »
    Unless they're all using credit cards like you said in the previous post which means that they actually end paying way more than had they been on contract.

    Only if you carry over your payments. If you pay it at the end of the month, there are no further charges other than a possible yearly fee, which is small. We buy almost everything through AmEx. We pay it every month. For the small amounts that might require Visa or MasterCard, we pay those off too.
  • Reply 111 of 128
    melgrossmelgross Posts: 33,334member
    brlawyer wrote: »

    Thanks for reminding me of the obvious, melgross - I was already a Mac user back then, when Apple got SERIOUSLY burned with PowerBook supply issues (having seriously underestimated demand for them in the 90s) - my point is exactly the same; Mr Cook is way above his head in the CEO role; he should stick to COO and nothing else, particularly in view of the most recent product availability debacles (and I am not even talking about the AWatch, of course).

    Most people would disagree with you.
  • Reply 112 of 128
    melgrossmelgross Posts: 33,334member
    mstone wrote: »
    I can't follow your logic. First you said iPhone subsidy was the same as comparable phones. I offered an example where it was not. You said that no one wants S6 anyway because it is inferior which is why they are giving them away. I observed that first you said comparable phones but then you say S6 is not comparable, hence, no phone is comparable with iPhone, which I agree with, but you can't have it both ways. Either the subsidy is the same for comparable phones or there are no comparable phones. Which is it? The total cost of ownership is obviously much less if the phone is free.

    You're twisting things around that weren't said, or said in the way you think they were said. You're confusing yourself.

    It's pretty simple. Similarly priced phones have about the same amount of subsidy. Similarly priced phones are comparable, because people often decide what price they will pay for a phone, either subsidized, or at full price. So they "compare" those phones.

    But if they like one phone more than another, in large numbers, those comparable phones end up with different levels of desirability. Prices drop on these less popular phones. After a while, they become so much less popular that they may no longer be regarded as comparable. How many people really think the now old top line Win Phone is comparable? Not many.

    But you still need perspective on this. Even if the S6 doesn't sell as well as some hope, there will be millions buying this phone. It will still be a popular phone, just not an immensely popular phone. Not like Blackberry or Win Phone though. Likely it will sell well enough that the subsidy, and price, won't be reduced. So it will remain "comparable".
  • Reply 113 of 128
    dasanman69dasanman69 Posts: 13,002member
    melgross wrote: »
    Only if you carry over your payments. If you pay it at the end of the month, there are no further charges other than a possible yearly fee, which is small. We buy almost everything through AmEx. We pay it every month. For the small amounts that might require Visa or MasterCard, we pay those off too.

    And how many people have the expendable cash to do that? Certainly not 100% of the 75%
  • Reply 114 of 128
    gatorguygatorguy Posts: 23,508member
    melgross wrote: »
    He stated that in a conference call a couple of quarters ago, or so. I listen to all those calls, so I hear those statements. You'd need to find a transcription somewhere. Despite what you think, as you always pop in when I say things like that, I never make things up. There's no point. But that doesn't mean it is easy to find.
    I would never accuse you of makeing things up Mel. Like the rest of us tho your memory has sometimes failed you. If never hurts anything to verify, right?
  • Reply 115 of 128
    melgrossmelgross Posts: 33,334member
    mjtomlin wrote: »

    They're hardly "meaningless" numbers. It depends on what you're looking for? Looking at what leaves the assembly lines is an indication of a company's sales expectations. Apple is good at selling just about everything that's shipped and keeping enough in the channel to satisfy further demand. So if Apple ships 10 million iPads versus 16 million in the year ago quarter, it could mean one of two things: 1. They have enough left in the channel from the previous quarter or, 2. They don't expect to sell as many as the previous year.

    There's a serious problem comparing the sales of different companies when they give out numbers that are based upon different calculations. For example, as we've been saying for some time, and as Apple says, their numbers are predicated on a customer that's paid for a device. So their numbers are called, by them, "sell through". But other than the now Lenovo owned Motorola, other companies refer to "sold" numbers as sell-in. That means sold to distributors, retailers, carriers, etc. not at all the same thing. Those numbers could easily be higher.

    Other use the shipped term, which could mean anything. For some, it means from the companies warehouses to distributors, retailers and carriers. To others it means leaving the loading dock at the factory.

    And for others, notably Samsung, there are no quarterly numbers given out at all. Any numbers you see about them are from writers and analysts. They have no meaning at all, because they can never be verified later from a company official source at a financial conference. These numbers need to be read with a very skeptical eye.

    Apple also gives out another number which bears watching. It's the number of weeks in the channel. Those are units that have been shipped. Not to customers, as that's taken account of in the sales numbers, but to distributors, retailers, carriers, and the company's own warehouses. You can figure out an approximate number for that by taking the average sales for a week in the quarter, and multiplying it by the number of weeks Apple has in the channel. It's approximate, because Apple will give a number such as 4 to 6 weeks, or something like that. And the sales in the quarter either rise or fall as the quarter progresses. But add those numbers to the sales numbers Apple gives, and you have an approximate shipped number.
  • Reply 116 of 128
    melgrossmelgross Posts: 33,334member
    dasanman69 wrote: »
    I just can't see that 3 out of 4 people plunked down $650-$950 in cash.

    Strange though it may seem, that what most people around the world do.
  • Reply 117 of 128
    dasanman69dasanman69 Posts: 13,002member
    melgross wrote: »
    Strange though it may seem, that what most people around the world do.

    Not when there's a cheaper alternative.
  • Reply 118 of 128
    melgrossmelgross Posts: 33,334member
    dasanman69 wrote: »
    First they ALL do not last that long no matter how well maintained. An original iPhone must have horrendous battery life if any, and no student is going to walk around with such an old phone because they'll get ridiculed. I'm hispanic and I know that the less fortunate are often teased.

    Do you live in a poor country where hand me down are common for phones. Even here, in the USA, many families give older models to others in the family.
  • Reply 119 of 128
    melgrossmelgross Posts: 33,334member
    Do you mean Native Americans?

    The only people who could possibly be called "native Americans" would be the South American Indians. The rest are just interlopers. Those in Central America pushed out those in N America about twelve thousand years ago. Then the last migration pushed them out into C America about seven thousand years ago. And they, in turn, pushed out the first group into S America.

    So who are the Native Americans? Why, none of them! They all came from N Asia, and the Europeans were just the forth wave of migration. The first group were the first humans on the continent though.
  • Reply 120 of 128
    melgrossmelgross Posts: 33,334member
    nightsky wrote: »
    I think most iPhones sold in the UK are sold subsidised on 2 year contracts. Otherwise the iPhone would simply be too expensive for most people. There is a substantial and growing market for smartphones sold off contract or on 1 month rolling contracts simply becuase many people don't want to be tied down for 2 years. I don't know what percentage of iPhones are sold that way but my guess is not very many given the high price of the iPhone unsubsidised. 

    You think, but you don't know. Having been in London numerous times, I've found that most people do buy their phones. And people, please stop saying that the phones are too expensive to be bought outright. Many people do the unthinkable thing, and SAVE to buy a product. They have two whole years to save up for it.
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