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The Strange Math of Apple's Alleged Massive iPhone 5 Order Cuts
zacharye writes "The Sunday evening Wall Street Journal article claiming that Apple had cut its iPhone 5 display orders drastically for the March quarter made quite a splash. The way WSJ wrote its piece seemed to support the original Nikkei claim about Apple cutting its iPhone 5 display orders in half from the originally planned order of 65 million units. This would be a massive adjustment. But Apple uses the same new display type for both iPhone 5 and the latest iPod touch. Neither WSJ nor Nikkei addressed this, however — both seemed to be referring to just iPhone 5 displays. The math just doesn't add up."
Someone is getting rich out of this
Watch those corners
i rarely see ipod touches these days in NYC because iphones are so cheap. still means apple is not going to grow sales enough to keep the stock going up.
stocks go up on growth. apple needs at least 20% revenue/profit growth to move the stock.
in the US more than 50% of people have smartphones. the only people who don't have them are privacy nuts and old people. even my mom knows an ipad 5 is coming soon.
apple's profits are in the $50 billion range.
law of large numbers
who else is left to buy an iphone 5? not the people in developing markets who can't afford them
same with Mac's. Nice computers, but anyone willing to spend $2000 on a laptop already has one. and the ipad is making a traditional computer something you rarely use at home
this is the genius of Google's latest nexus phone. why compete with apple where they will lose when they can grab market share where apple can't go?
Stocks went SO CLOSE to dipping below 500. Lowest I can see is 500.13 USD.
If Apple had previously ordered 65MM 4" screens their total iPhone sales would be about 50MM iPhone 5's, 20MM 4/4S (plus 10MM iPod touch units). Quite frankly, that is impossible territory there for the December quarter, but filling the channel and a subsequent draw-down as they move more to a 6-month update cycle could possibly explain a "50% drop in screen orders."
Quite frankly, crap like this makes me want to get out of the stock market altogether. (Which is exactly what it is intended to do.)
The math adds up once you view it through the lense of stock market manipulation. I suspect the source of the rumour will match up rather nicely with someone who made an enormous amount of money shorting Apple today.
why is BGR even trying to do math on something it has no numbers on?
did you forget to take your meds?
Quite frankly, crap like this makes me want to get out of the stock market altogether.
Like every other Apple shareholder that is why the value of 13 Dells market cap got wiped off Apples Market cap in three months. I notice Apple shares continue to plunge..currently hugging just above 500. Its also why you see less people singing Apples praises here.
In reference to spin. "Apple's orders for iPhone 5 screens for the January-March quarter...dropped to roughly half" and "The latest model comes with a longer, four-inch screen compared with the 3.5-inch screens used in all previous iPhone models.". There is no wiggle room there.
I suspect they just finish their talk with Sharp to shift from Sharp/LG's old screen to IGZO.
Apple has serious competition now. Back when they were the only game in town they could do as they pleased.
But fat margins and high market share rarely last. And when margins and market share come down so does the stock.
A company whose primary product is a smart phone has the highest market capitalization in history? That smacks of Tulips. You know it can't last.
The article seems to suggest that the Iphone 5 sales weren't that bad, so the cut in display orders wouldn't make sense because the Ipod Touch uses the same screen.
So what are the Ipod touch numbers? I have no idea what they are, but I could see the Ipod Touch losing huge marketshare with all the tablets and smartphones being tossed about, Maybe this is an attempt to hid the fact that one of Apple's cashcows has finally fallen?
Or maybe the Ipod Touch sales are still very high, and the cut in display orders info isn't really that dramatic - or maybe the cut is spread out among a few months and Nikkei got its info mixed up.
There's not enough info to know, and barely enough for the brave to make gambles on.
There are rumors that Apple is changing displays for the iPhone 5S ...
It's unlikely Apple completely blew the estimated sales for iPhone 5 in the March quarter by that much. The most likely explanation is that the rumor is just wrong. Next most likely is that the 5S is coming soon and gets a slightly tweeked screen. Maybe even just a slightly different part from the same supplier. Whoever leaked the info saw the partial cancellation, but isn't aware of the replacement order. And, remember, even if 5S isn't coming until the next quarter, Foxconn might have to start taking delivery of screens this quarter, in order to ramp up production and build launch inventory.
This usually happens when there are shenanigans or when the producer is anticipating new product releases in their pipeline are about to come out. I am in favor of claiming a bit of both at this point.
The article clearly states that orders for other components are also being cut. The screens were just an example. I think one of Apples big problems are there are many people, like me, that would never buy an iPhone (unless some miracle happens and apple tears down their walls, gives control back to the user, and stops suing everybody for stupid patents). It is also difficult for them to keep trying to sell new phones with incremental updates to their current users.
Most people thought Apple patented rounded rectangles. But in reality they have patented all roundings including rounded numbers. So that explains the difference.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Without the iPhone or iPad, Apple would still be very profitable
...no it wouldn't what a load of rubbish,its profits would take a massive dive instantly. Most of their profits come from the iPhone. Secondly without the iPhone/iPad is Apple relevant.
I've never met a person who does the wi-fi thing you mentioned.
Even if you're out of range of Wi-Fi, you can still make calls on a dumbphone. U.S. carriers tend charge a far larger recurring fee for a smartphone than for a dumbphone. For example, dumbphone plans on Virgin Mobile (a Sprint MVNO) start at $5 per month. Until this gap closes, some people will still carry a dumbphone and a 4" tablet (iPod touch, Galaxy Player, etc.) to save on the recurring fee.
Apple is a very secretive company, and we really don't know what's going on. The pundits in the WSJ think they do, but they really don't know either. They're just pulling bits and pieces from various places, slapping them together and making assertions, (even when the assertion is made in the form of a question), without knowing if they have all the pieces.
but I could see the Ipod Touch losing huge marketshare with all the tablets and smartphones being tossed about
Technically, a "tablet" and a "PDA" are the same thing in different sizes, making iPod touch a 4" tablet. But perhaps you're right that some people who would have bought a 4" tablet are buying a 7" tablet (Kindle Fire and Nexus 7) or Apple's own 8" tablet (iPad mini) instead.
If only you could get a discount for paying full price for *any* phone.
Unfortunately, that's not possible in the US.
It's been possible since the first prepaid carrier offered a smartphone. By now, Virgin Mobile USA (a Sprint MVNO) offers the iPhone 4S with 1200 minutes, 2.5 GB/mo of 3G data, and unlimited EDGE data for about $40 per month. See if your favorite carrier offers prepaid plans.
If you're actually in an area where it's feasible to go without an actual phone service, good for you. If you're not, then there's an inherent cost in having a cell phone, which needs to be considered. It's the difference in cost that's the issue.
Case in point, if you're already paying that $50/mo for another phone
Which I'm not. I carry a $5/mo flip phone for those few calls I can't make on a land line, which are mostly to arrange rides and the like.
I've said before that the world's love affair with Apple is slowly eroding, and so it seems iPhone 5 orders are not quite what Apple was expecting. 2013 is going to be a very tough year for Apple and coming out with cheap iPhone mini's or doing minor revamps of existing products are not going to cut it. Unless Apple does something truly innovative with iOS and iPhone in general, this slow erosion of their market will pick up speed.
Cutting back screen orders because they want to introduce a new product does not make any sense, why place an order so large in the first place? Is Apple so completely out of touch they don't even have a firm release cycle for future products when they ship a new product? Like they didn't know the 5S release cycle when they shipped the iPhone 5? I would be dumping Apple stock if this is their emerging trend, release a product with ridiculous expectations on sales, cross their fingers, and when the sales don't reach their inflated estimates dump the product and rush a new version to market???
Nothing about this speaks of a company that is being run properly.
I haven't thought of anything clever to put here, but then again most of you haven't either.
The cheapest payLo plan I see is $20/mo.
That's true among monthly plans, which appear to be designed for people who have dropped their land line. But pay as you go plans start cheaper: $20 per 90 days. They must have eliminated the $15 per 3 months tier fairly recently. It appears $20 buys 400 minutes in 1 month or 100 minutes in 3 months.
The phenomenal rise of Apple is a bubble in every understood meaning of the word. Apple brings nothing unique to the market (even Microsoft is more inventive as a company), relying purely on existing ideas that have previously been under-marketed. These old ideas are then wrapped in Apple's special mix of high-fashion, and small-minded elitism.
Now, as every informed person knows, a bubble only grows when certain conditions are met. Ideally, new ideas and products are able to keep the bubble appealing, inviting existing investors to invest more, and bringing in new people at a growing rate. Then, there is the widening access to the more general marketplace, through the production of slightly cheaper product.
-the list of new products and worthwhile wrinkles on old ones eventually dries up, or ceases to draw significant interest.
-going down-market, no matter how slowly, will eventually destroy the business model.
-the competition has increasing ability to eat into the marketplace.
Apple had a very good run indeed, but in the end achieved nothing lasting. The new age of computing will be far cheaper and far more versatile than the old, and has no place for the insane profits a company like Apple needs to justify itself.
Android will dominate in the future- which is to say a sane version of Linux will dominate. ARM will dominate, and Intel will die. Yes, Apple was first to recognise and benefit from these trends, and will even soon throw Intel's CPUs out of almost all of its computers, but it doesn't matter.
The ARM SoC doesn't need high-fashion brands or mega-expensive kits. Apple isn't responsible for things like the excellence of the LCD displays- these pour out Asian factories at ever lower cost for the use by any company.
Why did Apple turn to the courts. Because they know they have no useful 'innovation' left. The bubble is on the verge of a massive collapse, and all Apple can do is use their massive cash reserves to try to delay this.
Why would you want your future 'airbook' to be from Apple, when you could own an identical product, at a third of the cost, running some future version of Android. Why would you want to be paying 5 times more for your Apple tablet, or twice as much for your Apple desktop, or 1.5 times more for your Apple phone? Because you always have?
Remember, Apple could have played this differently. After having mugged the idiot elitist, Apple could have used their profits to try to dominate the entire ecosystem, with products from the extremely affordable to the insanely expensive. Instead, Apple wholeheartedly got behind the bubble, and dedicated their entire efforts to doing everything they could to inflate it.
Apple has only recently started paying dividends and it doesn't look like they're giving away that much cash at all.
I'm thinking the article dealing in strange math is the one that used an overly-high dose of speculative and vague terms. Here's the real summary of the BGR article:
Let's assume (charitably) that Apple sells a made-up number of iPhones in Q4. In Q1, sales might be some other made-up number less than the previous made-up number. Sales of iPods also decrease from Q4 to Q1, but might add yet another made-up number of units to screen sales. So, if the most likely number of 4-inch screens Apple is expected to sell in Q1 is a completely made-up number based on the previous made-up numbers, why did Nikkei publish a report with a real number in it? And if we question this real number based on our made-up numbers, why not question everything?!
Try googling:
apple call options jan 19
Over half a billion dollars could be liberated (in the Iraq sense) if AAPL remains below $550 through this date, then rises.
Maybe they have enough displays to make all the iPhone 5's they're going to sell, so the iPhone 6 can be released sooner. The quicker they're churned out, the more they'll sell.
Um...no...someone posted Apple's 3rd quarter statement on here in another thread and no, they aren't profitable without the iPhone / iPad. The iDevice market in combination with iTunes makes up 80% plus of Apple's sales right now. If you take away the iDevices, I think iTunes folds as IMHO there's much better music and content markets online (Amazon, Netflix, Russia, etc...).
Unless Apple can stay on top of the phone and tablet market, or create yet another market, their future isn't as bright as their immediate past.
Modern supply chain systems make extensive use of EDI and ERP systems. When you are Apple, and you really want to make sure you have sufficient capacity to supply your product, you tool up two suppliers to supply the full volume of your sales. As such, the EDI system says that in 6 months you will ship 32 million units x 2 suppliers = 65 million units.
At the 3 month mark, both suppliers are fully tooled up. As such, you cut the 3 month advance planning order to 16 million units x 2 suppliers = 32 million units. This should be close to actual sales. This is done, because the automated ERP systems will actually build 65 million phones, unless someone tells them to stop.
Crazy numbers like this happen all the time in some industries. 6 month = 2 million units/month. 3 month = 1 million/month. 1 month = 1.5 million/month. 2 week = 0.5 million/week. 1 day = 0.2 million/day. The numbers can be all over the place. Sometimes, the suppliers have no idea how many parts will be shipping the next day.
It's been reported that Apple was having not only bad yield problems, but touch interference issues with the new "in-cell" technology of the current screen.
A couple of articles have run in the last month saying Apple's supplier Innolux has a new "touch on" technology that would supposedly fix this. All the news articles said this would happen in the rumored iPhone 5s, and maybe that will be coming in the next 2 quarters or maybe Apple is going to do a silent replacement on the iPhone 5. If they did this, Apple would have to drop a lot of orders from other suppliers for the next quarter. Seems a lot more logical than what we've been told.
I put my money where my mouth is ( bought 10 more shares today, which is a lot for me)... not that that makes what I'm saying more correct, just that I believe in it :)
the iphone 5 isn't selling as well because of a number of problems. there's tons of bugs in ios 6. the iphone 5 battery dies fast and who was happy when apple changed the cable to a new lightning adapter that just smacks the world in the face of arrogance? all of Europe and the rest of the globe has moved to usb. why can't apple? oh right, because they're apple.
With a little luck this will be an end to all of the iCrap that is flooding the market. Most of the people I know that jumped on the iCrap 5 bandwagon are complaining about various things, small screen size compared to most other smartphones just to name one.
It really sounds like it.