Apple this year used the same sales recognition rules it has always used. From an accounting perspective, this year's 9 million is directly comparable to last year's 5 million.
There were differences Apple's sales recognition rules say they aren't counted as sold until they walk out the door. Supplies to Best Buy and other non-Apple stores (which are counted as sold) are probably just as tight this year as they were last year. That makes the so-called channel fill issue is a wash.
The mix of products sold were underestimated - the higher margin phones - which is very material to profits. Nearly every single analyst including Mr. Munster - missed this.
Last year - they had a pre order period and this year the higher margin 5s did not - a big difference and very material to profits. The demand is very very high for the higher margin product.
Apple has plenty of lee way to adjust pricing - it is very strategic to obtain higher margins and first and second run pass thru at the higher margins - it does not leave money on the table at the higher margin. If they would have come out of the gate with less margins - it would have missed on profits at the higher margin.
Many were modeling way less margins and mix to the lower end - that did not happen. They missed on the higher margin estimates which no one is talking about at all.
This does not include China Mobile - which you can believe is in very deep detail currently.
No one modeled the :
Higher Margin Mix Non-Revenue Recognition at the Apple Store including Mr. Munsters Comment Could not Model China Mobile - it has not happened for anyone as of yet
End of the Day: Profits (not just volumes)
Alot of folks are not looking at the big picture of profits and margins.
From anecdotal evidence? Please. Wasn't the link from Australia?
It is from Australia, so basing their opinions on what a few retail outlets in Sydney are reporting on the phone to journalists and trying to extrapolate globally is a bit of a stretch.
And while there may be a lot of stock sitting in retail inventory, there's no actual evidence that any of that contributes to the reported 9 million, other than supposition on the part of Munster et al. Historically, Apple have reported only actual sales to end consumers, while Samsung has reported in-channel sales. Apple may have changed their minds about doing that, but it's hard to see why. End-consumer sales would have to have been drastically worse than last year for it to make sense to suddenly try and obscure the numbers in this way.
This is, of course, simply my own supposition based on no information, but unlike a professional analyst, I'm not being paid to say it.
From anecdotal evidence? Please. Wasn't the link from Australia?
Yes, the link was from Australia. The same report notes that Apple stores here aren't close to running out of stock of the 5C. Apple aren't going to record sales of the 5Cs in their own stores that they know they haven't sold, but yes, anecdotally, it seems to stand to reason that demand generally, in Australia, is not that hot.
Does Apple count shipments to 3rd parties for sale as a sale?
As noted in the comment above, there's no evidence that Apple is counting unsold stock as a sale. But on the flip side, the same applies.
I guess all I'm saying is there's plenty of 5C stock around. Have Apple overestimated demand?
Yes, after years and years of being the ONLY company to publish actual sales numbers, they finally are resorting to channel stuffing just to make it seem like lots of people want to buy the new iPhone.
Comments
There were differences
Apple's sales recognition rules say they aren't counted as sold until they walk out the door. Supplies to Best Buy and other non-Apple stores (which are counted as sold) are probably just as tight this year as they were last year. That makes the so-called channel fill issue is a wash.
The mix of products sold were underestimated - the higher margin phones - which is very material to profits. Nearly every single analyst including Mr. Munster - missed this.
Last year - they had a pre order period and this year the higher margin 5s did not - a big difference and very material to profits. The demand is very very high for the higher margin product.
Apple has plenty of lee way to adjust pricing - it is very strategic to obtain higher margins and first and second run pass thru at the higher margins - it does not leave money on the table at the higher margin. If they would have come out of the gate with less margins - it would have missed on profits at the higher margin.
Many were modeling way less margins and mix to the lower end - that did not happen. They missed on the higher margin estimates which no one is talking about at all.
This does not include China Mobile - which you can believe is in very deep detail currently.
No one modeled the :
Higher Margin Mix
Non-Revenue Recognition at the Apple Store including Mr. Munsters Comment
Could not Model China Mobile - it has not happened for anyone as of yet
End of the Day: Profits (not just volumes)
Alot of folks are not looking at the big picture of profits and margins.
From anecdotal evidence? Please. Wasn't the link from Australia?
And while there may be a lot of stock sitting in retail inventory, there's no actual evidence that any of that contributes to the reported 9 million, other than supposition on the part of Munster et al. Historically, Apple have reported only actual sales to end consumers, while Samsung has reported in-channel sales. Apple may have changed their minds about doing that, but it's hard to see why. End-consumer sales would have to have been drastically worse than last year for it to make sense to suddenly try and obscure the numbers in this way.
This is, of course, simply my own supposition based on no information, but unlike a professional analyst, I'm not being paid to say it.
From anecdotal evidence? Please. Wasn't the link from Australia?
Yes, the link was from Australia. The same report notes that Apple stores here aren't close to running out of stock of the 5C. Apple aren't going to record sales of the 5Cs in their own stores that they know they haven't sold, but yes, anecdotally, it seems to stand to reason that demand generally, in Australia, is not that hot.
Does Apple count shipments to 3rd parties for sale as a sale?
As noted in the comment above, there's no evidence that Apple is counting unsold stock as a sale. But on the flip side, the same applies.
I guess all I'm saying is there's plenty of 5C stock around. Have Apple overestimated demand?