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The iPhone 5 (AAPL) accounted for 68% of iPhone sales in Oct. '12, estimates research firm CIRP....

The iPhone 5 (AAPL) accounted for 68% of iPhone sales in Oct. '12, estimates research firm CIRP. That's down from the 90% claimed by the iPhone 4S in Oct. '11, and indicates a mix shift towards cheaper/lower-margin iPhones. Also: only 9% of Oct. '12 iPhone 5 sales involved very high-margin 64GB models, compared with 23% of Oct. '11 4S sales. If those numbers are accurate, they might have something to do with Apple's light FQ1 gross margin guidance (along with other things).
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Comments (35)
  • Ted Bear
    , contributor
    Comments (598) | Send Message
     
    Can you say "Commodity"?

     

    Without new products, it's just a commodity business. How many can you make, and how cheap can you make em?

     

    Ask HP, which has had a new product in thirty years. It took a long time for them to pay the price, but now bankruptcy looms for the once high flyer.

     

    Without new products, Apple could go the same route.
    3 Dec 2012, 05:41 PM Reply Like
  • gensearch2
    , contributor
    Comments (1464) | Send Message
     
    HP's problems were and are well beyond "new products". Among other areas of incompetence they were following the Gilette model for printers/ink. Except they forgot about the third party suppliers and refills. ... That was a big oops.

     

    If there is one thing any company needs to master to do well, it's "customer satisfaction". It doesn't matter what they make, what services they provide or what they sell. If they have high "customer satisfaction" and they make money doing it, they'll be a around.
    3 Dec 2012, 07:11 PM Reply Like
  • no one really
    , contributor
    Comments (137) | Send Message
     
    HP destroyed their reputation for quality. They got rid of lines of serious, high dollar, specialized equipment because they wanted to be a big computer maker. Unfortunately, the race for the bottom in cheap computers killed ahy chance of making money at that.

     

    They used to make products that were solid, worked well, and kept running forever. The laserjet3 would run forever, into 100k pages or more. Their early inkjets were far better than anyone elses, including Apple's.

     

    Now, their printers are cheap crap with expensive inks. Their drivers and software are horrible -- my hp works better on linux with open source drivers than on the mac with the official HP ones. The wireless never really worked, and anytime I don anything with the little screen, it asks to download a firmware update and requires me to approve the terms and conditions. Every. Single. Freaking. Time.

     

    Once you give up quality, you compete solely on price. HP went that route, (and a bunch of other stupid ones later), and it's nearly killed them.
    4 Dec 2012, 01:21 AM Reply Like
  • BobLodie
    , contributor
    Comments (3) | Send Message
     
    Get a grip on things.
    4 Dec 2012, 04:49 AM Reply Like
  • dwilly
    , contributor
    Comments (93) | Send Message
     
    everything they have is new and it's the best. People have the choice to go cheap. Everyone says they need new products, like what???
    4 Dec 2012, 08:59 AM Reply Like
  • strozzi
    , contributor
    Comments (82) | Send Message
     
    Can't argue with stats, but the conclusions are dubious.
    3 Dec 2012, 06:00 PM Reply Like
  • theregans
    , contributor
    Comments (57) | Send Message
     
    The're not stats. The are estimates to be taken for what they are worth. Not much in my opinion.
    3 Dec 2012, 06:07 PM Reply Like
  • jswieter
    , contributor
    Comments (176) | Send Message
     
    Agreed. Doesn't supply constraints limit how many new iPhones they can sell? In a large growing global market. Just wait until production and sales improve.
    3 Dec 2012, 06:51 PM Reply Like
  • merechino
    , contributor
    Comments (137) | Send Message
     
    Gypsies reading their taro cards.
    Sprint sold truckloads of 4S. That is a new carrier carring the iPhones.
    Either half-full or half-empty. It is a larger glass.
    3 Dec 2012, 07:18 PM Reply Like
  • skleiniv
    , contributor
    Comments (74) | Send Message
     
    Jswieter, good point. At the end of the day, we as traders have to pick stocks we feel confident in while at the same time never forgetting what the herd mentality can do to a stock. In the case of apple it has literally changed our world & the way we communicate forever. Least we forget that the tablet that apple invented just a few short years ago has once again changed the landscape? Just look at its impact on personal pc's. Before that the iPhone & before that the iPod. A lot has been written about apples downward spiral, yet it's still up almost 45% for the year! I think this company still has a lot going for it so will stay with my positions.
    3 Dec 2012, 07:24 PM Reply Like
  • Applocrat
    , contributor
    Comments (957) | Send Message
     
    If they sold 90 percent of the new product, the line would be that they have no lower priced offerings. Now its that the phones are becoming commoditized. Truth is they are selling everything they can make. Period.
    3 Dec 2012, 07:39 PM Reply Like
  • dondisa
    , contributor
    Comments (34) | Send Message
     
    This is part of AAPL's strategy; to continue to make leading phones while offering the older ones to address lower price points. It will erode margins, but not necessarily as much as we think, given that the older phones get cheaper to make by comparison to the newer ones. It's a smart alternative to the proliferation of models seen with other manufacturers, but it remains to be seen whether it will be good enough to sustain AAPL in the ecosystem wars.

     

    And don't underestimate AAPL's "incremental" improvements. Reviewers say that once you use the iP5, the 4S seems heavy, old and dated - particularly the display, which was state of the art 3 months ago.

     

    Yes, inventing the markets (iPod, iPhone, iPad) gave AAPL a 3-5 year lead, which is now expired. But don't think there are no more surprises to come.
    3 Dec 2012, 08:20 PM Reply Like
  • Eric Dee
    , contributor
    Comments (1190) | Send Message
     
    I love it when people ass ume that there is nothing new coming, same here, sell me you stock.
    4 Dec 2012, 05:04 AM Reply Like
  • Andrew A
    , contributor
    Comments (153) | Send Message
     
    Grow up! Apple is the largest company in the world and now going global. Please sell me your stock!!
    3 Dec 2012, 08:20 PM Reply Like
  • kkamat1
    , contributor
    Comments (4) | Send Message
     
    Volume will ,I hope compensate for margins.
    3 Dec 2012, 08:24 PM Reply Like
  • bocajoe
    , contributor
    Comments (7) | Send Message
     
    I bought my wife an iPhone 4at AT&T for $100.00. Great product at a low price. Why not count those sales also?
    3 Dec 2012, 08:24 PM Reply Like
  • PersonaNonGrata
    , contributor
    Comments (62) | Send Message
     
    Hopefully it was 4s, no? :)
    4 Dec 2012, 09:35 AM Reply Like
  • Applocrat
    , contributor
    Comments (957) | Send Message
     
    and the methodology looks suspect...
    3 Dec 2012, 09:58 PM Reply Like
  • rocback
    , contributor
    Comments (991) | Send Message
     
    You are comparing apples and oranges. Here is a good quote from the comment section of the study you quote:

     

    I think the data are being misinterpreted: If you compare *new* iPhone sales (i.e. iPhone 5 in October 2012 and iPhone 4S in August 2012 (what's new about that?)), you see that the iPhone 5 sold only 40% 16 GB units (10/12), but the iPhone 4S sold 59%16 GB units (8/12). When the iPhone 4S became the "legacy" iPhone, it was limited to 16GB *only*, which (un)naturally forced 16 GB sales to 100% of "legacy" iPhone 4S sales. The new phone sold mostly 32 GB units. I'm too lazy to look at the CIRP report at the moment, but what would be more enlightening would be to look not just at percentages, but actual *quantities* of phones sold.
    3 Dec 2012, 09:59 PM Reply Like
  • dwilly
    , contributor
    Comments (93) | Send Message
     
    but, isn't Apple picking up more customers selling them the 4's? I would guess they will eventually upgrade or buy a Pad
    4 Dec 2012, 09:03 AM Reply Like
  • Applocrat
    , contributor
    Comments (957) | Send Message
     
    exactly. Apple wants new customers above all!
    4 Dec 2012, 10:24 AM Reply Like
  • shangjeen
    , contributor
    Comments (337) | Send Message
     
    Ruh-Roh......

     

    Margin compression is coming. I've talked about this for awhile.

     

    Apple was always an outlier in the smartphone industry - and now, things are slowly coming back to the way it should be. The share prices are also coming back to earth - and they may be due another earnings miss (or more) in 2013.

     

    If you're in the red - you may want to consider cutting losses.
    3 Dec 2012, 10:14 PM Reply Like
  • dwilly
    , contributor
    Comments (93) | Send Message
     
    any company would kill for those margins, I would like to know the competitions margins which are never mentioned
    4 Dec 2012, 09:04 AM Reply Like
  • ArmchairHero
    , contributor
    Comments (114) | Send Message
     
    More negative signs pointing to this Q's disappointment. Generals get shot and taken to the woodshed in deflationary market.
    3 Dec 2012, 10:51 PM Reply Like
  • Ronin.
    , contributor
    Comments (1487) | Send Message
     
    The iPhone 5 has been selling well, and despite much of the hand-wringing, Cook is seeming to be pulling off the difficult feat of shoring up and increasing supply...even though they are making dramatic shifts in component suppliers, away from Samsung. it looks like this transition is on-going, and successful. Apple is still scrambling to meet its launch goal of 100 countries by year end, and has had to play catch up. In the US, wait times for the 5 have gone from 3-4 weeks to 1...what this tells me is that supply has been increasing over time, but overall global demand has been robust and keeping Apple working hard at continuing to increase supply.

     

    Demand probably intensified going into December due to our Christmas season, and combining US demand with the new launches will keep those Foxconn workers busily employed for a while yet...don't forget that another big demand hurdle will be the China launch and then providing enough phones for their holiday season.

     

    Currently, Apple probably can't sell any more iPhone 5s than they have been, as they are barely able to meet demand as it is. That being said, it is not surprising to me that legacy iPhone models are selling well, as I have found them to be very competent smartphones with Retina display, good camera and video, decent battery life, with access to Apple's ecosystem, and SIRI in the case of the 4S. Margins for these devices are not as bad as some "chicken littles" like to pronounce, and with Apple selling out their 5s, they are probably happy to see others opting for the older model iPhones rather than going to the competition.
    4 Dec 2012, 12:19 AM Reply Like
  • b0a4pkd
    , contributor
    Comments (28) | Send Message
     
    Seems to me the AAPL train has finally turned from an express to a local. I held Apple 6 x's during its run from about $72. Thankfully I made money every time. But, back then the stock only went up. After their latest report the street has beaten the stock down. I believe, its with good reason. A growth stock raises so swiftly as the market tries to find fair value for it. When you continue to smash expectations the expected earnings raise precipitously. I think its only normal what is occurring. As far as the long term I will not touch Apple again. Competition is stiff. Steve Jobs is gone. There is no proof this company can create another blockbuster product. I may be wrong, bit I am turning my attention to the next Apple type stock. Some I like are CVLT PETM SHW NTSP.. Good luck to you all!
    4 Dec 2012, 02:26 AM Reply Like
  • Dennis Baker
    , contributor
    Comments (1369) | Send Message
     
    The very last paragraph of the AtD article kind of says it all:
    ––––––––––––––
    Caveat: It’s impossible to say how many of the consumers purchasing legacy and lower-storage iPhones are incremental sales that Apple might not have otherwise seen or lost full-price iPhone sales.
    ______________
    Surveys showing what percentage of phones sold are current versus previous generation phones are irrelevant until you have an understanding of how many current generation phones sold.
    4 Dec 2012, 02:37 AM Reply Like
  • PersonaNonGrata
    , contributor
    Comments (62) | Send Message
     
    Dennis,
    Exactly.
    4 Dec 2012, 09:39 AM Reply Like
  • Chunghua
    , contributor
    Comments (2) | Send Message
     
    Interesting! Apple sells commodity and Samsung sells new products.
    4 Dec 2012, 04:42 AM Reply Like
  • byron
    , contributor
    Comments (3) | Send Message
     
    Question:
    Is the switch from windows to Ios by so many, bit by bit, yr by yr, part of the take over strategy or just a fortunate, inevitable outcome and a kind of insurance re future earnings?
    4 Dec 2012, 04:47 AM Reply Like
  • 100XT
    , contributor
    Comments (72) | Send Message
     
    All this speculation on percentage of this and percentage of that, seems very confusing. Does anyone think stock price will break above the 200 day MA (around$600) within the next couple days/weeks? If so, why? This seems to be a developing resistance level. Otherwise, $635 ( the peak price back in April) another resistance level? Maybe it can only break above this level when everyone sees the actual Q1 results? Then and only if Apple delivers a great Q1, will it be able to retrace back to its 52 week high? Maybe I'm just paranoid right now (despite a lot of the positive speculation)that the stock may stall at 200 day MA. On the other hand, one of those special dividends(I keep hearing about on CNBC) or stock split could push it above the 200 DMA. That would be a good thing! It would put more buyers in the stock. Giving it better foundation for further upside. Maybe the stock is currently forming the right shoulder of a classic head and shoulder pattern and ONLY if Apple does something drastically good (absolute blowout quarter with increase guidance, Apple TV, china market, blah, blah, blah) we are all just range bound.
    4 Dec 2012, 04:48 AM Reply Like
  • John1138
    , contributor
    Comments (161) | Send Message
     
    It still really depends on numbers of phones not simply percentages. Sell an overwhelming number of 5's and the selling of lower phones can easily reflect a reach to a different customer pool that are more price sensitive.
    4 Dec 2012, 12:31 PM Reply Like
  • Ronin.
    , contributor
    Comments (1487) | Send Message
     
    Yes, the 4 and 4S buyers are likely made up of a different group, many late-adopters...Apple customers upgrading mostly already own a 4 or 4S, and their upgrade path would probably be to the 5, the iPad and the mini...

     

    It is possible that high unit sales of legacy phones are those moving from competitor platforms and those moving from non-smartphones... either one can be interpreted as quite positive...
    4 Dec 2012, 02:25 PM Reply Like
  • Applocrat
    , contributor
    Comments (957) | Send Message
     
    honestly, one of the knocks on apple is that they are dependent upon a constant stream of innovation, falling behind the competition etc. If older products are selling well, what does that say about the state of the game?
    4 Dec 2012, 02:43 PM Reply Like
  • Ronin.
    , contributor
    Comments (1487) | Send Message
     
    Innovation is important, but so is management of product life cycles, and the ability to execute (just look at Surface as a comparison)...people get caught up in excitement of the new, but undervalue other crucial business aspects...
    4 Dec 2012, 03:19 PM Reply Like
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