Apple rumored to have cut CDMA iPhone 4 orders by half as sales slow
Sales of Apple's CDMA-based iPhone, which made its debut on Verizon earlier this year, have reportedly eased considerably following initial pent-up demand, prompting the company to halve its production of the device for the remainder of 2010.
According to a report by DigiTimes, iPhone 4 assembler Pegatron this week reported a net losses of NT$559 million (US$19.38 million) for the first quarter of 2011 with per-share earnings of negative NT$0.25 and gross margin of only 1.8%, all historical lows.
The results are said to have surprised market watchers, who were initially bullish on the manufacturer's performance in 2011 after it landed orders to produce the CDMA iPhone 4 for Apple. Looking forward, those market watchers are said to be "turning conservative about CDMA iPhone 4 shipments in the future as volumes may not be as strong as expected."
Specifically, the report claims that Pegatron originally expected to ship 10 million CDMA iPhone 4s to Apple in 2011, but "sources from upstream component makers pointed out that Apple's orders already saw a significant reduction and the volume is estimated to drop to only five million units."
For its part, Apple is believed to have already assembled and shipped more than 3 million CDMA iPhone 4s during the first calendar quarter of 2011, 2.2 million of which were activated by Verizon and another million or so that went to fill the channel or were purchased and exported unactivated.
Assuming DigiTime's latest report is accurate, it would suggest Apple only plans to sell roughly 1 million units per quarter for the next two quarters before it introduces a universal iPhone 5 around the fourth quarter of 2011 that will be capable of running on both CDMA and GSM networks.
Though much excitement in the consumer space proceeded this January's launch of the CDMA iPhone on Verizon's network, demand for the device is believed to have quickly trailed off due to a number of factors, including initial reviews that placed the speed of the carrier's 3G network well behind that of rival AT&T's.
Consumers are also believed to have seen less of a value proposition in the initial Verizon device, which arrived with a design and feature set nearly identical to the existing iPhone 4 for GSM networks, which history would suggest is nearing the final stretch of its life-cycle.
Add to that weeks of rumors of an all new, universal iPhone 5 heading to manufacturing this September, and it may be safe to presume that the best days for sales of CDMA-capable iPhones are yet to come.
According to a report by DigiTimes, iPhone 4 assembler Pegatron this week reported a net losses of NT$559 million (US$19.38 million) for the first quarter of 2011 with per-share earnings of negative NT$0.25 and gross margin of only 1.8%, all historical lows.
The results are said to have surprised market watchers, who were initially bullish on the manufacturer's performance in 2011 after it landed orders to produce the CDMA iPhone 4 for Apple. Looking forward, those market watchers are said to be "turning conservative about CDMA iPhone 4 shipments in the future as volumes may not be as strong as expected."
Specifically, the report claims that Pegatron originally expected to ship 10 million CDMA iPhone 4s to Apple in 2011, but "sources from upstream component makers pointed out that Apple's orders already saw a significant reduction and the volume is estimated to drop to only five million units."
For its part, Apple is believed to have already assembled and shipped more than 3 million CDMA iPhone 4s during the first calendar quarter of 2011, 2.2 million of which were activated by Verizon and another million or so that went to fill the channel or were purchased and exported unactivated.
Assuming DigiTime's latest report is accurate, it would suggest Apple only plans to sell roughly 1 million units per quarter for the next two quarters before it introduces a universal iPhone 5 around the fourth quarter of 2011 that will be capable of running on both CDMA and GSM networks.
Though much excitement in the consumer space proceeded this January's launch of the CDMA iPhone on Verizon's network, demand for the device is believed to have quickly trailed off due to a number of factors, including initial reviews that placed the speed of the carrier's 3G network well behind that of rival AT&T's.
Consumers are also believed to have seen less of a value proposition in the initial Verizon device, which arrived with a design and feature set nearly identical to the existing iPhone 4 for GSM networks, which history would suggest is nearing the final stretch of its life-cycle.
Add to that weeks of rumors of an all new, universal iPhone 5 heading to manufacturing this September, and it may be safe to presume that the best days for sales of CDMA-capable iPhones are yet to come.
Comments
Sales of Apple's CDMA-based iPhone, which made its debut on Verizon earlier this year, have reportedly eased considerably following initial pent-up demand, prompting the company to halve its production of the device for the remainder of 2010.
2010? I guess that's a typo!
Assuming DigiTime's latest report is accurate, it would suggest Apple only plans to sell roughly 1 million units per quarter for the next two quarters before it introduces a universal iPhone 5 around the fourth quarter of 2011 that will be capable of running on both CDMA and GSM networks.
why is everyone treating the Sept-release as a fact?
Assuming DigiTime's latest report is accurate...
DigiTimes is not a credible news source so I wouldn't assume anything they write is accurate.
the sales experience alone should have drove me out, but an hour later at the cash register, i walked out with a phone.
worst (sales & phone) experience ever. i returned the phone and went back to t-mobile.
why is everyone treating the Sept-release as a fact?
I was thinking the same thing. It's true that there are many circumstantial reasons to believe that might be the case, but it's pretty far from a fact, and Apple loves surprising people. Don't get me wrong -- if I were betting, I'd bet on September over June or July. But I wouldn't bet much.
As for the larger story -- I'm a little surprised that they would cut orders just because Verizon's sales are (allegedly) weaker than expected. Aren't there other CDMA carriers in the world (South Korea, India) that could also sell these phones? Or are their networks sufficiently different that a CDMA phone for Verizon couldn't simply be re-allocated to one of those carriers?
I for one predict that CDMA iPhone 4 orders will continue to diminish, and by late 2011 they will be down to a slow trickle, with the biggest decline in sales coinciding roughly with the announcement and release of iPhone 5. Sorry if this comes as a shock to anyone here.
I get your sarcasm, of course it is common sense that sales of a CE device will slow at the end of the life cycle and before an obvious upgrade. However, I had just been noticing how many of my coworkers are buying Verizon iPhones right now. 2 last week and one this week. Considering that is out of 40 coworkers, it seemed to me to be a high number. All three are existing Verizon customers and new to smart phones (so they are not at all concerned about simultaneous voice and data).
Anyway, I had just been feeling bullish about CDMA iPhone sales because it seemed that pent up demand was changing historical buying patterns...
Sigh. I guess that is why they call it anecdotal evidence!
I for one predict that CDMA iPhone 4 orders will continue to diminish, and by late 2011 they will be down to a slow trickle, with the biggest decline in sales coinciding roughly with the announcement and release of iPhone 5. Sorry if this comes as a shock to anyone here.
Don't worry, Apple still will sell more iPhone 4s this (April-June) quarter than the previous and set another all-time record.
Don't forget though... the white iPhone on Verizon will kick on CDMA sales for a few months, before dying down.
why is everyone treating the Sept-release as a fact?
I was thinking the same thing. It's true that there are many circumstantial reasons to believe that might be the case, but it's pretty far from a fact, and Apple loves surprising people. Don't get me wrong -- if I were betting, I'd bet on September over June or July. But I wouldn't bet much.
In life circumstantial is more than enough to make a likely scenario. We can?t verify everything in life first hand or qualify every statement or we?d end up with comments that look like a privacy policy.
It?s not just the rumours, it?s the lack of a Special Event in April for iOS 5.0. so developers can have a lead in for the June/July release. It?s the fact that Lion will drop this Summer which has historically pushed focused to other parts of Apple?s business, though before it was from Mac OS to iOS. There are other little things that just make it seem most likely at this point.
As for the larger story -- I'm a little surprised that they would cut orders just because Verizon's sales are (allegedly) weaker than expected. Aren't there other CDMA carriers in the world (South Korea, India) that could also sell these phones? Or are their networks sufficiently different that a CDMA phone for Verizon couldn't simply be re-allocated to one of those carriers?
South Korea isn?t a good candidate. LG is the only carrier it would make sense and they are the smallest in the country. Having a CDMA(2G)/UMTS(3G) phone doesn?t make much sense when UMTS can do voice and data at good rates. India is large but there are many issues there, too. I think China?s smallest carrier China Unicom would make the most sense for a CDMA/CDM2000 device for the next addition outside the country. Overall I think Sprint would make the most sense.
Not surprised here. When you really look at Verizon-CDMA, why would anyone want that network? Verizon has crippled the iPhone: higher cost of entry, slower network, no data/voice multitasking, no global access, and limited conference call features (can not add more than 1 and can not drop individual participants).
Hmmmm, I don't know. Lets ask the 100+ million subscribers they have.
why is everyone treating the Sept-release as a fact?
I agree, it can also be read as the sales are as expected and they plan on a new phone on July..
Either way they are saying the iPhone 4 is likely to remain Verizon's #1 handset until the iPhone 5...
I for one predict that CDMA iPhone 4 orders will continue to diminish, and by late 2011 they will be down to a slow trickle, with the biggest decline in sales coinciding roughly with the announcement and release of iPhone 5. Sorry if this comes as a shock to anyone here.
Then the iPhone 4 16GB sales will explode when it becomes the introductory device at $99.
I think China?s smallest carrier China Unicom would make the most sense for a CDMA/CDM2000 device for the next addition outside the country.
You mean China Telecom (中国电信).