Piper: over half million "missing" iPhones likely in channel

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Comments

  • Reply 41 of 67
    nvidia2008nvidia2008 Posts: 9,262member
    Quote:
    Originally Posted by JeffDM View Post


    Do you get enough of a look to know they aren't the copies / knock-offs? I suppose for that price for sale, they should be the real thing, but if you see people carrying them, do you get enough of a look to see it's real?



    A valid and interesting point. However, the knock-offs are too far behind in terms of features, etc. Those buying into the grey/gray market tend to be a more sophisticated lot, that is, they are not the type that buy fake iPod-looking "iPods".



    Think of a Rolex, and a Rolex fake. Think of a iPod nano, and an iPod nano fake. The iPhone and iPhone fake would fall in somewhere in between there. Not sure how to substantiate it, but the "fake" iPhone phenomenon has not quite taken off... Yet.
  • Reply 42 of 67
    penchantedpenchanted Posts: 1,070member
    Quote:

    There are probably hundreds of thousands of iphones that have been bought by grey market resellers all over the world. But they are just sitting on their shelves in their stores. It's not technically sold yet.



    These units are, in fact, sold which is why the discrepancy between the number of units sold/shipped and the activations have come into question. If Apple provides extended terms, those units are still sold and reflected in Apple's financials as account recievable. Even if Apple has stuffed the channel, those units would be sold on Apple's books.



    In Apple's case, product enters the gray market by either being sold to a customer at an Apple store (including online), being sold to a distributor or being stolen from Apple, and then being resold to a gray market seller. All of the units in the gray market would have already been accounted for either through sales or inventory write-downs due to theft.



    Quote:

    I was talking about the price reduction on the AppleTV, not the price reduction on the iPhone which we know Apple took a charge for ( over two quarters I think). According to your theory there is no difference between items in channel and items sold to final customers, in either case the item is marked as "sold" and revenue is accounted for. Therefore an immediate reduction in the Apple Tv price would be a charge against APple in the next quarter from retailers who would have - according to you - have already paid for it ( or Apple in any case would have accounted for the revenue in the previous quarter).



    If there is no distinction between sold and In Channel then a price reduction of channel inventory has to accrue a charge to the company since it has already been marked as revenue. I dont see that happening.



    Many companies handle price protection for their channel partners by taking a monthly charge based on a percentage of sales to create a reserve account on the balance sheet. When a channel partner submits a claim for price protection for the wholesale price paid on qualifying units, the company issues a credit to accounts receivable and debits the reserve account in the amount of that claim. This is the reason you rarely see great fluctuation in the financials.
  • Reply 43 of 67
    samabsamab Posts: 1,953member
    Quote:
    Originally Posted by penchanted View Post


    These units are, in fact, sold which is why the discrepancy between the number of units sold/shipped and the activations have come into question. If Apple provides extended terms, those units are still sold and reflected in Apple's financials as account recievable. Even if Apple has stuffed the channel, those units would be sold on Apple's books.



    In Apple's case, product enters the gray market by either being sold to a customer at an Apple store (including online), being sold to a distributor or being stolen from Apple, and then being resold to a gray market seller. All of the units in the gray market would have already been accounted for either through sales or inventory write-downs due to theft.



    I know that from Apple's accounting point of view --- grey market inventory is still technically sold. The problem is that wall street analysts and fanbois directly translate that amount into the conclusion that there are great international demand for unlocked iphones worldwide.



    There could be very few people actually buying iphones in Hong Kong, Madrid and Moscow --- maybe lots of window shopping, but actually very few purchase.
  • Reply 44 of 67
    penchantedpenchanted Posts: 1,070member
    Quote:
    Originally Posted by samab View Post


    I know that from Apple's accounting point of view --- grey market inventory is still technically sold. The problem is that wall street analysts and fanbois directly translate that amount into the conclusion that there are great international demand for unlocked iphones worldwide.



    There could be very few people actually buying iphones in Hong Kong, Madrid and Moscow --- maybe lots of window shopping, but actually very few purchase.



    I agree that the availability of iPhones in gray market shops does not prove great international demand for unlocked iPhones. However, the (admittedly anecdotal) number of people using iPhones where they are not yet offered does attest to some demand for unlocked iPhones and helps to account for the "missing" iPhones. The "missing" iPhones is some combination of channel inventory (which appears to be inline), iPhones sold into legitimate markets but not yet activated and the gray market (which is difficult to actually size).



    I believe the original articles claiming doom due to immense inventory overhang were overblown, but I also agree with you that seeing products offered in shops around the word does not prove immense worldwide demand for the current iPhone model. At any rate, I suspect Apple is anxious to get a 3G version to market.
  • Reply 45 of 67
    samabsamab Posts: 1,953member
    Quote:
    Originally Posted by penchanted View Post


    I believe the original articles claiming doom due to immense inventory overhang were overblown, but I also agree with you that seeing products offered in shops around the word does not prove immense worldwide demand for the current iPhone model. At any rate, I suspect Apple is anxious to get a 3G version to market.



    The problem is that there isn't much difference in channel inventory between Apple fanboi public enemy #1 (Sacconaghi's 670K) and Apple fanboi cheerleader #1 (Munster's 521K)



    Munster said that 5 weeks of channel inventory is normal --- but 5 weeks (512K) means the annual sales number is only 5.3 million.



    3.7 million + 5.3 million = 9 million.



    So either Munster is saying that Apple is going to miss the 10 million iphone target by 1 million or that there is going to be 1 million excess channel inventory by the end of the year.
  • Reply 46 of 67
    penchantedpenchanted Posts: 1,070member
    Quote:

    So either Munster is saying that Apple is going to miss the 10 million iphone target by 1 million or that there is going to be 1 million excess channel inventory by the end of the year.



    Or, as I said in the other thread, Apple opens sales into additional markets. They have already said they plan to do this although we have no further details.
  • Reply 47 of 67
    samabsamab Posts: 1,953member
    Quote:
    Originally Posted by penchanted View Post


    Or, as I said in the other thread, Apple opens sales into additional markets. They have already said they plan to do this although we have no further details.



    You are assuming that Apple CAN sign other carriers in additional markets.
  • Reply 48 of 67
    penchantedpenchanted Posts: 1,070member
    Quote:
    Originally Posted by samab View Post


    You are assuming that Apple CAN sign other carriers in additional markets.



    Yes, I am. Why are you assuming they cannot?
  • Reply 49 of 67
    samabsamab Posts: 1,953member
    Quote:
    Originally Posted by penchanted View Post


    Yes, I am. Why are you assuming they cannot?



    It's a moving target, isn't it?



    Apple already lowered the iphone price by $200 and analysts still questioned whether they can meet the 10 million unit target.
  • Reply 50 of 67
    penchantedpenchanted Posts: 1,070member
    Quote:
    Originally Posted by samab View Post


    Apple already lowered the iphone price by $200 and analysts still questioned whether they can meet the 10 million unit target.



    And we have no way of knowing if the $200 price drop was planned or in response to below-target sales. Since Apple met its goal of 1M iPhones sold within days of dropping the price, I am guessing it was a planned price drop rather than a response. This should really piss off the people who feel that Apple gouged them with the initial price.



    As far as analysts doubting Apple making its very public 10M unit projection, oh well. I have not seen Apple backing away from this projection at all and I have a hunch they have better visibility to not only their ongoing numbers but also they iPhone expansion plans.



    Quite frankly, you are coming across increasingly as an iPhone hater unable to acknowledge any positive results from the iPhone.
  • Reply 51 of 67
    mcdavemcdave Posts: 1,129member
    Quote:
    Originally Posted by pdiddy View Post


    Nobody cares where the iPhones went. Please stop filling up my RSS reader with this piddle.



    Why can't someone get bit by a shark so I don't have to hear about iPhones that people have purchased but haven't begun using yet?



    We're trying:



    Close

    Closer



    A bit more on topic someone here had a confirmation from Vodafone NZ that they've had 3,000 iPhones on the network. I assume that Aus will have 3-4 times that many. Worldwide that unlocked figure has to be huge.



    McD
  • Reply 52 of 67
    samabsamab Posts: 1,953member
    Quote:
    Originally Posted by penchanted View Post


    And we have no way of knowing if the $200 price drop was planned or in response to below-target sales. Since Apple met its goal of 1M iPhones sold within days of dropping the price, I am guessing it was a planned price drop rather than a response. This should really piss off the people who feel that Apple gouged them with the initial price.



    As far as analysts doubting Apple making its very public 10M unit projection, oh well. I have not seen Apple backing away from this projection at all and I have a hunch they have better visibility to not only their ongoing numbers but also they iPhone expansion plans.



    Quite frankly, you are coming across increasingly as an iPhone hater unable to acknowledge any positive results from the iPhone.



    It's always been a moving target.



    Apple want 1% of the worldwide market. But the worldwide market grew from 1 billion cell phones in 2006 to 1.1 billion cell phones in 2007. This year, it will go to 1.2-1.25 billion cell phones.



    You can't have it both ways. The point is that wall street analysts --- when they made their initial forecasts --- never forecast a price cut so soon and so dramatic. If Apple drops the iphone price in 3 months, you are going to say that it's all been part of the orderly plan by Apple and nothing to do with their trying to hit the target number.
  • Reply 53 of 67
    nvidia2008nvidia2008 Posts: 9,262member
    Quote:
    Originally Posted by samab View Post


    You are assuming that Apple CAN sign other carriers in additional markets.



    Quote:
    Originally Posted by penchanted View Post


    Yes, I am. Why are you assuming they cannot?



    Here's the gem: Apple has sold probably in excess of 1 million globally outside of signed carriers... Right now based on their 10 million by 2008 target, they are well ahead of the curve. By the end of this month they would have reached 4.5 million iPhones sold. By end of JANUARY.



    With 11 months to go... Apple has no need to sign carriers. They would look to sign for official iPhone launches, for 1. revenue from carriers, 2. as a strong branding/marketing to push stronger into such overseas markets. Eg. Japan, China first. Aus and NZ not so urgent, though important.



    Steve was quite worried about their first mobile phone, however, now that it is a clear winner, they are going to MILK it for all it is worth. And then some.
  • Reply 54 of 67
    penchantedpenchanted Posts: 1,070member
    Quote:

    With 11 months to go... Apple has no need to sign carriers. They would look to sign for official iPhone launches, for 1. revenue from carriers, 2. as a strong branding/marketing to push stronger into such overseas markets. Eg. Japan, China first. Aus and NZ not so urgent, though important.



    I think that you are saying that Apple could offer the iPhone in new markets without signing a carrier for those markets. I disagree. Apple will not devalue the the deals they have made with their existing carriers by offering the iPhone unlocked in new markets. At least not for the near-future.
  • Reply 55 of 67
    samabsamab Posts: 1,953member
    Quote:
    Originally Posted by nvidia2008 View Post


    Here's the gem: Apple has sold probably in excess of 1 million globally outside of signed carriers... Right now based on their 10 million by 2008 target, they are well ahead of the curve. By the end of this month they would have reached 4.5 million iPhones sold. By end of JANUARY.



    You are assuming that sales are steady.



    Most consumer electronics items are sold during the christmas quarter. Q1-Q3 are lean quarters.
  • Reply 56 of 67
    tbagginstbaggins Posts: 2,306member
    Quote:
    Originally Posted by nvidia2008 View Post


    Here's the gem: Apple has sold probably in excess of 1 million globally outside of signed carriers... Right now based on their 10 million by 2008 target, they are well ahead of the curve. By the end of this month they would have reached 4.5 million iPhones sold. By end of JANUARY.



    Sure. Not too bad, for 7 months of sales. But its below pace for their goal to sell 10 million over 12 months.





    Quote:

    With 11 months to go... Apple has no need to sign carriers.



    You make it sound like Apple gets 18 months of sales total to meet their goal of 10 million sold. They don't. The goal was for 12 months of sales.



    Otherwise, the whole "we want 1% marketshare" thing makes no sense. The worldwide cellphone market is approximately 1 billion units per year (and increasing). 10 million sold in 12 months would be 1% marketshare, more or less.



    If it were over 18 months, Apple would need to sell 15 million iPhones to get 1% marketshare. So, obviously, they aren't talking about 18 months.









    .
  • Reply 57 of 67
    asdasdasdasd Posts: 5,285member
    Quote:

    Sure. Not too bad, for 7 months of sales. But its below pace for their goal to sell 10 million over 12 months.



    It is calender 2008 to be exact. A few points to Samab ( and others)



    1) Nothing you have said convinces me that Apple sees channel inventory as sales

    2) The grey market is significant. These units are not just technically sold but actually sold, although their unlocking does mean reduced incremental revenue to Apple it also signifies demand outside of Europe and the U.S. Were they just gathering dust the numbers would not be so huge. People are coming back.

    3) The grey market is significant in other ways - Apple is not going to try and get 1% of the global market without actually going global. There seems to be an idea floating around that the US is 50% of mobile sales: it is not - it is 20%. The long tail of all other countries is important, and they will add carriers as they need them. Clearly India, China, and Japan are no brainers, Latin America has 500 million people. The middle classes in these countries are far more numerous than American chauvinists think. The rest of Europe is open etc.

    4) There will be a price reduction in developing countries: Apple is declaring revenue from the iPhones as incremental over eight quarters . This, along with the incremental revenue from 02, and AT&T etc. will give them room to offset future reductions in sticker price with no downward effect on quarterly revenue, or margins. That, I suspect, is the aim. Get the early adopters to subsidise the rest.

    5) I am pretty sure that we will see a 3G phone , and most other hatebois criticisms ( spurious or not) will be addressed in software.

    6) The SDK will make a huge difference. This is a fully features OS on a phone. The applications will blow away anything else on any other mobile platform.

    7) People who come to the end of their contract will move to an iPhone if impressed by the iPod touch. Case in point: my brother with an iPod touch, living in Germany, will move to an iPhone when it goes 3G and his contract ends. The touch will go to his wife. He has no other Apple equipment. Uses a Dell. The entire line of iPods will eventually be touch, with the exception of the shuffles.



    But keep spreading the FUD, if not here then elsewhere, I hope to do some option trading on Apple when it hits bottom. This may be your aim too.



    ( Maybe I shouldnt post :-) )
  • Reply 58 of 67
    tbagginstbaggins Posts: 2,306member
    Quote:
    Originally Posted by asdasd View Post


    It is calender 2008 to be exact.



    I tend to agree, but it seems to depend who you talk to, lol. I've also heard its from June '07 to June '08, or that its 'fiscal year '08. Whatever. The one thing that's for certain- its a 12-month period.





    Quote:

    There seems to be an idea floating around that the US is 50% of mobile sales: it is not - it is 20%.



    By overall unit volume, sure. But the important stat is what percentage of the expensive phone market the US is. I don't know the precise answer, but I wouldn't be shocked if it was significantly above 20%.





    Quote:

    5) I am pretty sure that we will see a 3G phone



    Well, duh. The big question is, when? The only thing we can say right now is that there'll likely be one for the Asian launch.





    Quote:

    But keep spreading the FUD



    I wouldn't automatically assume that's what samab is doing. Paranoia does not become us Apple faithful. FUDsters in general tend to be stunningly obvious, and usually throw in an "Apple sucks, har har har" type comment or two. Not a subtle lot, they.



    .
  • Reply 59 of 67
    asdasdasdasd Posts: 5,285member
    Quote:

    By overall unit volume, sure. But the important stat is what percentage of the expensive phone market the US is. I don't know the precise answer, but I wouldn't be shocked if it was significantly above 20%.



    I would. The smart phone industry in the U.S. is not that advanced - that is in fact why the lack of 3G in the States is less of an issue for the iPhone there then anywhere else. Without these proper connection speeds smart phones are less useful, and most do not have Wifi. This is one of the situations where the U.S. is less technologically advanced then other countries, even poorer ones ( there are others: trains, for instance).



    Here is an interesting link from symbian ( mentions the iphone in passing) :



    http://www.symbian.com/about/fastfacts/fastfacts.html





    some money quotes



    Quote:

    # Sales from China accounted for 12% of Symbian smartphone sales in Q2 2007 9

    # The smartphone market in China is set to grow substantially, with forecast shipments projected to reach 29 million units by 2009 10



    12% of all sales in not to be sneezed. Same with Japan ... all adds up.



    Here is something even more interesting



    Quote:

    The smartphone segment of the handset market is seeing strong annual growth and is expected to rise from 57 million units in 2005 to around 250 million units by the end of 2010. The advent of single chip designs will inevitably attract a growing number of licensees and drive greater penetration into the mid-market, so that by 2010 we still see Symbian leading the market with a 65% share," Andrew Brown, mobile devices specialist, IDC.



    The iPhone actually does better than Symbian in the US, according to Jobs at MWorld. Now it probably wont take that position in the rest of the World, but a 10-20% of this market is not to be sneezed at. Long term this is huge.
  • Reply 60 of 67
    tbagginstbaggins Posts: 2,306member
    Another big factor to consider is, can you really expect the rest of the world to go as ga-ga for the iPhone as the US has? Especially without a 3G model? \





    .
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