Wednesday, January 23, 2008

Reading iPhone tea leaves

See Thursday update with AT&T results

Yesterday Apple released financial information for the 13 weeks ended Dec. 29. For the 52 week period, it sold 7.764 million Macs, 52.685 million iPods and 3.704 million iPhones. For calendar year 2007, it made $4.07 billion on sales of $26.5 billion, both record numbers.

However, the stock fell sharply based on weak guidance for the forthcoming quarter, which is a slow quarter for Apple like other electronics vendors. Also, the year-on-year iPod sales were up only 5% — suggesting everyone who wants an iPod already has one. Apple is proud of maintaining its MP3 player market share in the US, but category growth is slowing. The only bright news for the iPod is the iPod Touch, which prevented a decline in iPod sales and helped average selling price.

For our iPhone paper, I’m trying to measure iPhone sales from the limited crumbs of information that have been released. Apple was not at all transparent in their sales numbers for the iPhone — not even providing a US/international breakdown and forbidding its carrier partners from talking.

Here’s what Apple has disclosed (with the bold numbers being those that they made public).

DateNew salesInstalled base# of dayssales/day
June 29-June 30, 20070, 2007270,000270,0002135,000
July 1-Sept. 10730,0001,000,0007210,139
Sept. 11-Sept. 29389,0001,389,0001920,474
Sept. 30-Dec. 292,315,0003,704,0009125,440
Dec. 30-Jan. 15, 2008296,0004,000,0001717,412

The figures make clear that Apple got a huge boost from the September 6 price cut, and that the Christmas season also was very successful for the firm. However, it suggests that either it saw only modest sales from its European introduction (in the UK, France and Germany) in November, or that US sales have plateaued. I suspect demand in both regions will slacken as consumers wait for the 3G phone.

Bernstein Research is quoted as saying that Apple will only sell 7 million iPhones in calendar year 2008, missing its target of 10 million. But COO Tim Cook (seconded by CFO Peter Oppenheimer) was adamant about making the 10 million target, according to the analyst call transcript published by Seeking Alpha. They can’t both be right. Bernstein Toni Sacconaghi has been disparaged on the net by the Mac fans, which only proves he’s been more bearish than most last year.

But clearly, Apple will need a higher sales rate in 2008 to hit 10 million. Cook reiterated plans to enter Asia (presumably Japan and/or China) and more of Europe (Spain, Italy seem most likely) in 2008. He wouldn’t comment on a 3G phone, but IMHO even 3G and sales in Japan and more of Europe would not be enough to hit 10 million this year. If I had to bet, Steve Jobs must have another ace up his sleeve.

1 comment:

g said...

My, my, missed sales numbers here, subsidizing hardware there. What's going on at Apple these days?