Apple's Cook, Maestri bullish on short- and long-term iPhone SE impact
Apple's 4-inch iPhone SE is attracting switcher and new-user sales in an otherwise slow period between major iPhone releases, and supply of the sought-after model is just now catching up with demand, leaving room for future growth, according to Apple executives.
At the beginning of Tuesday's Q3 earnings call, CEO Tim Cook commented on trends with the primary purchasers of the SE.
"Our initial sales data tells us the the iPhone SE is popular in both developed and emerging markets," said Cook, adding that "the percentage of iPhone SE sales going to customers who are new to iPhone is greater than we've seen in the first weeks of availability for other iPhones launched in the last several years."
"We had a very successful global launch of iPhone SE and demand outstripped supply throughout the quarter," he continued. "We brought on additional capacity and we are able to achieve supply [and] demand balance as we enter the September quarter."
Apple's supply issues with the phone have not yet been solved. AppleInsider spoke with corporate store managers for AT&T and T-Mobile, who both said that the SE is exceeding their expectations. One manager commented that they "rarely ever" have any stock of the 64GB model on hand for more than a few hours after arrival, with quantities in line with other models of the iPhone or new Samsung Galaxy-series devices. Similarly-sized deliveries of the 16GB model last less than a day.
Stock levels at AT&T's online store on Wednesday showed similar supply problems. An SE ordered today won't ship until August 1.
Apple CFO Luca Maestri addressed cannibalization issues on the call, dismissing any concerns about the loss of higher-end iPhone sales. "We see a higher rate of previous iPhone owners that really prefer the 4-inch form factor," he said. "We have not seen clear evidence of cannibalization from iPhone 6s or 6s Plus."
Maestri did admit that the SE dilutes the company's profit margins, but argued it was worth it for the "much bigger opportunity to bring more people into the iOS ecosystem."
The iPhone SE is similar in many respects to the last 4-inch iPhone, 2013's iPhone 5s, but adds an A9 processor, and is capable of 4K video recording. An NFC chip gives the phone full Apple Pay compatibility.
In April, Apple noted that the SE's demand at the time was primarily from iPhone users who prefer smaller form factors, in addition to switchers from other mobile phone vendors.
At the beginning of Tuesday's Q3 earnings call, CEO Tim Cook commented on trends with the primary purchasers of the SE.
"Our initial sales data tells us the the iPhone SE is popular in both developed and emerging markets," said Cook, adding that "the percentage of iPhone SE sales going to customers who are new to iPhone is greater than we've seen in the first weeks of availability for other iPhones launched in the last several years."
"We had a very successful global launch of iPhone SE and demand outstripped supply throughout the quarter," he continued. "We brought on additional capacity and we are able to achieve supply [and] demand balance as we enter the September quarter."
Apple's supply issues with the phone have not yet been solved. AppleInsider spoke with corporate store managers for AT&T and T-Mobile, who both said that the SE is exceeding their expectations. One manager commented that they "rarely ever" have any stock of the 64GB model on hand for more than a few hours after arrival, with quantities in line with other models of the iPhone or new Samsung Galaxy-series devices. Similarly-sized deliveries of the 16GB model last less than a day.
Stock levels at AT&T's online store on Wednesday showed similar supply problems. An SE ordered today won't ship until August 1.
Apple CFO Luca Maestri addressed cannibalization issues on the call, dismissing any concerns about the loss of higher-end iPhone sales. "We see a higher rate of previous iPhone owners that really prefer the 4-inch form factor," he said. "We have not seen clear evidence of cannibalization from iPhone 6s or 6s Plus."
Maestri did admit that the SE dilutes the company's profit margins, but argued it was worth it for the "much bigger opportunity to bring more people into the iOS ecosystem."
The iPhone SE is similar in many respects to the last 4-inch iPhone, 2013's iPhone 5s, but adds an A9 processor, and is capable of 4K video recording. An NFC chip gives the phone full Apple Pay compatibility.
In April, Apple noted that the SE's demand at the time was primarily from iPhone users who prefer smaller form factors, in addition to switchers from other mobile phone vendors.
Comments
i wonder if small form factor is only one factor for its success ... Along with smaller price. (?)
Since the SE is launched, Apple continued losing market share to Android, apparently the SE did not help stop this negative trend
If I were Apple, I'd be more worried that pre-6 and 6S customers are choosing the SE over this fall's release. The SE isn't cannibalizing 6/6S purchases, but it's most likely eating into iPhone 7 (or 6SE if you prefer) sales.
I still think we'll see 3 screen sizes in the 2017 iPhone due to the current SE's success.
The SE was not offered to "make" people switch.
It was offered to fill a gap for a VARIETY of potential buyers:
Smaller form factor, cheaper, with less bells/whistles (3D touch, 128gb, etc.)... and including potential switchers.
Just because ONE specific source of customers (i.e. switchers) was not dominated because of the lack of domination by ONE model (i.e. the SE), does not constitute a failure by any means!
Instead of cherry-picking, I'd like to hear more of your thoughts with context to strategy and ecosystem success/failure.
I think in context, the CFO was dismissing concern.
That doesn't mean there is no cannibalization but that there is little to show any material effect:
- whether or not previous iPhone users may have switched to Android for a 4-inch form factor (if SE was not offered) is hard to be proven.
- the number of sales lost to SE that would have otherwise been to 6s/6s+ is hard to determine.
And the net effect of those 2 factors/results is anyone's guess.
The only data he did share is that of previous iPhone owners... there seems to be higher rate that prefer the 4" form factor...jibberish?
Now...whether SE will cannibalize the 7 is to be seen.
But I say it's not a concern as the 7 is technically/feature-wise a completely different product.