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iPhones 5c and 5s launch performance illustrated

Apple today announced it has sold nine million new iPhone 5s and iPhone 5c models in the first three days after their launch. This performance is illustrated in the following graph:

Screen Shot 2013-09-23 at 9-23-7.12.13 PM

Note that the data is normalized to units/day.

The launch countries this year differed from last year in that they include all of China whereas last year only Hong Kong was included.[1]

The absolute number of 5x devices sold (not just shipped) seems to be an 80% increase from the 5 launch (9 million vs. 5) but accounting for China the increase is a more modest 29%.  ((The China launch event last year may have had a different dynamic as it occurred later and nearer to holiday season, but I’ll go with the unqualified data.))

However, perhaps the more relevant comparison is between different “S” generations of phones.

The data shows that the 3GS was 3x more rapidly purchased on launch than the original iPhone. The 4S was 4x more rapidly purchased on launch than the 3GS and now the latest 5s/c are 2.3x more rapidly purchased than the 4S.

The growth is certainly lower but from a much higher base. This should not be surprising.

UPDATE: Galaxy S 4 launch data is updated to show weekend performance. Previous graph showed performance over the first 27 days.

Notes:
  1. I am assuming that this year China includes Hong Kong. It would be good to confirm this. []
  • robdk

    Hi Horace

    Great graph! But the iPhone1 bar looks a bit small. Didn´t the sell 270k units, which gives 90k over 3 days?! That should be visible on the graph.

    • http://www.asymco.com Horace Dediu

      Yes, and?

      • Jeff G

        I totally laughed when I read this response. It reminds me of a Chinese lady who ran the donut shop near my house in Remond, WA. After each donut I/the customer would name, she would put it in the bag and say “Yes, and?” And it made me buy more donuts… I have to remember to use this reply more in varying circumstances like you did here.

  • stefnagel

    Let’s count the ways Apple just left the pundits behind, in the dust.

    • deemery

      1. Total sales
      2. Proportion of sales to the 5s higher end model.

      However, many pundits are speculating that sales would have been even greater if the 5c were cheaper. And that’s an interesting perspective. My guess is the Apple faithful were interested in the Next Big Thing of the 5s fingerprint sensor (and I admit to being very interested in that model once my own contract runs out), and 5c will be more popular to those who are looking for ‘just a smartphone’ as time goes on. But I think even a token price drop could spring a lot of latent interest from the ‘just a smartphone’ people.

      • Boltar

        @deemery:
        “However … many pundits are speculating that sales would have been even greater if the 5c were cheaper.”

        That’s not speculating, that’s basic economics. Speculation would be the claim that profits would be higher if the 5c were cheaper, which is much more questionable.

      • charly

        Iphones are status products and for those cheaper == more sold doesn’t hold.

      • macyourday

        Maybe you buy status symbols. I just want stuff that doesn’t make me want to pulverize with a sledgehammer like my $700 Navman and $5000 Scamsung TV. Apple products may not be perfect, but they s##t on most others electronic “timesavers” I’ve mistakenly purchased.

      • charly

        A $5000 TV is a beta products with the possible exception of overpriced Bang&Olufsenn tv’s.

        Seeing ios 7 keyboard and there is no doubt that Apple isn’t perfect.

      • Idon’t Know

        Again…you know nothing…

      • charly

        I want to thank you for this enlightening comment.

      • dorkus_maximus

        Apple did a good bit of business selling the 4 and 4s at lower prices (free in the case of the 4, with a contract) when the 5 came out.

      • charly

        A contract is not free. Even a 4 is still an expensive phone

      • http://twitter.com/FrancoisPrigent François Prigent

        Well i remember well hearing samsung eu director stating, we bet on quantity 2 years ago. Ok now i think they will win over time, because iphone, is both a constrainst to apple wares, plus, a cycle with almost no innovation now.

      • Jeff G

        True. If they gave them away for free, they would presumable move the maximum number of units possible. May this would make gallstreet happy.

      • anon_coward

        last month i was telling my mom she might be able to buy a $300 iphone off contract, but it didn’t happen

        at that price point there really is no profit to be made to no reason for apple to sell to that market

      • stefnagel

        Tell her to check the used market. A lot of 5′s are going to show up.

      • Derek Wildstar

        you can, technically, on t-mobile buy a new 5s for $99 off contract, but then have to pay $21 a month for it.
        or goto att/sprint/verizon for 0 down, and 24 a month (not a contract, but installment plan)

      • Idon’t Know

        That was a dumb thing to tell your mom. Apple would have had to sell it at or below cost to do that.

      • anon_coward

        i thought they would make something like a 4S in the $299 range off contract specifically for developing markets. but even then its hard to make a profit at that price once you figure the credit card fees and other selling costs. you are talking less than $100 BoM plus the ios support, etc

      • charly

        Most companies would kill for those margins. And IOS needs marketshare to survive

      • Vincent bowry

        Not really, iOS is doing fine without selling cheap stuff.

        E.g.: Net Applications mob web usage (Global Aug2013):
        Android 28%
        iOS 55% (and climbing)

      • charly

        Mac os was doing fine in 1985 but wasn’t doing great in 1991. Same is happening to IOS only faster

      • Sander van der Wal

        How fast will that be then? State a date.

      • electonic

        She is able to buy 399$ iPhone of contract. And it’s a great device.

      • stefnagel

        Apple has it right. Build a great product. Then charge enough to build an even better product. Behind the scenes, whack away at costs but never to the detriment of the product.

      • charly

        Fingerprint scanners don’t work. They are to easy to fool. Not that that would worry Apple as they are not really known to be secure.

      • http://www.jphotog.com Hrunga Zmuda

        Other fingerprint scanners didn’t work. That’s a whole lot different than what you said (which is so far proving to be incorrect – in terms of functionality and security).

      • charly

        Fingerprint scanners don’t work because every time you touch something you leave your fingerprint behind. It is that simple

      • Herding_sheep

        And you think you’re important enough for a person to go through the effort to reproduce your fingerprint in a manner that would allow someone to get into your phone?

        You’re not that important. 95% of iPhone owners aren’t either. They’re just random, low-profile people.

        I’d say its a hell of a lot easier peaking over someones shoulder and watching them input their password than it would be to reproduce a pristine fingerprint left on their phone in a way that could fool the sensor.

      • charly

        I’m not, but my iphone 5S is enough of a monetary reason. Especially because it has my fingerprints on it

      • sdbryan

        @charly since you don’t seem to have spent much thought on the details, I’ll provide some. You notice an iPhone as a target of opportunity. You grab it and take off. Now you pull out your 2400 dpi scanner and scan all the smudged fingerprints on it. Now you can try unlocking with your collection of artificial fingerprints until one works. While doing this the iPhone has been making its position known to the victim.

        Now that you have unlocked the phone you still have no way to wipe, reinitialize, change the find capability without knowing the owner’s AppleID and password (these are new design features of iOS7). Good luck when the police come knocking on your door and later offer to take your fingerprints.

      • charly

        Unlocking allows access to the software stack. Then finding a hole inside that isn’t that hard

      • sdbryan

        Assuming less than perfect technique for the fingerprint it is worth noting that after 5 attempts the user has to type sign in, not further attempts.

        The problem with claims like this one is that there are too many details glossed over in making the claim (e.g. “Finding a hole inside that isn’t that hard”)

      • charly

        Thinking about it and theft isn’t the main issue anymore. It is more private pictures and mail. This would allow for a targeted attack and a fingerprint on a glass. Something really doable.

        I know people will say that this is better security for the people who normally would have no security. But to many will assume that it is secure while it isn’t. This is security your wife can crack if she thinks you are having an affair. 4 digit code is something she probably can’t crack.

      • sdbryan

        I doubt this will make your day but on one point we sort of agree. I also think private pictures and mail are a more important issue. Where I still take issue is that if the target is someone you know, like a spouse or other close relative or acquaintance, I still think being sneaky and watching the passcode being entered is easier to accomplish.

        I always wait for the corresponding iPod touch to be released (I think data fees for cellphones are absurd) so I can watch for a year to see how the security questions sorts out

      • http://www.jphotog.com Hrunga Zmuda

        Fingerprint scanners don’t work because you leave fingerprints around? Right, and cars don’t work because you leave skidmarks on the street?

        That makes no sense. The fact you leave fingerprints on things means nothing. The question is, does the fingerprint scanner on the iPhone increase security. (Note I did not say make them impregnable.) If the answer is yes, then they work. It’s just a question of how effective.

        If it takes longer than it does for me to realize my phone has disappeared and I can brick it before they can try a fingerprint, then that’s something.

      • claimchowder

        Just use the tip of your nose, then.

      • you-know-who

        I’ve heard people have used their toes or cat’s paw prints, but not the nose yet. if so, you could also use your “you-know-what”. But the thought of it being cut off by thieves might dissuade people.

      • macyourday

        You of course have one and can prove this? I got one on Friday and have registered four fingers. Three of my own and one of my partner’s. Apparently the not working fingerprint scan still unlocks the phone, so long as it hasn’t been shut down (an added security function), so I’m confused now, does it work or not charly?

      • charly

        It works like a a cheap 3 number combination bicycle lock works. That is not really

      • Idon’t Know

        Dumb. Apples does work of course and Apple has far better security than anyone else. This is actually well known making your comment and exercise in ignorance.

      • charly

        Looking at Mac OSX and how fast they close security holes and it is obvious that their security is worse than anybody else.

        ps. How many windows phones have been cracked and compare that to every version of iphone.

      • Herding_sheep

        Apple doesn’t care about security….they only created a closed “walled garden” software platform in 2008 much to the dismay and negativity of critics and competitors who love to use that as a competitive weapon. They took it in the chin, were willing to be misunderstood with that controversial decision, all in the service of not caring about their users’ security.

        Hit the nail on the head man.

        If Windows Phone was as high of a target as the iPhone is to hackers, I guarantee you we’d see more than the iPhone currently sees. When you’re the target and the object of envy of the entire hacker world, and the only problems we see are exploits that allow the sideloaded applications to install, I’d say thats a pretty good job.

        But then again, your comment lacks any bit of intelligent insight, so I don’t know why I’m even wasting my time.

      • charly

        They have that walled garden not because of security but because they are control freaks. And 30% is a nice bonus reason.

      • Sander van der Wal

        The app shopping experience on smartphones earlier than iOS was awful. Had to be done on a desktop computer, the installation procedure was complicated, paying was complicated. Apple turned this into a two tap proces, as easy as buying a song on iTunes.

        And 30% was cheap at the time, Handango wanting 70% of the sales price for themselves.

      • claimchowder

        Really? How do you know?

      • charly

        You want to claim that Apple isn’t a control freak?

      • pk_de_cville

        Charles,

        You’re a control freak.

        Go away.

      • Steve__S

        @Charly… I don’t think you really understand the level of security that is intended for any phone lock system. This isn’t like an on-line banking system. Numbers can be “hacked”. Gestures can be “hacked”, etc. All someone has to do is watch you log in… then take your phone. You see, you need a combination of things.
        1. You have to find a way to get someone’s finger prints (assuming you even know which finger is used for authentication).
        2. Then, you need to find a way to scan that at 2400dpi or higher (per the “hack”).
        3. Find a way to print it with the correct resolution.
        4. Then, you can try the hack and see if it works.

        In the meantime, the user knows his/her phone was stolen and both wipes / deactivates the phone using the “find my phone” feature on the web through iCloud. By the way, since this is iOS 7, the phone can only be reactivated with the Apple id of the person they stole it from. Likewise, the person who steals the phone is left with a useless brick…. that has been wiped and can’t be reactivated by the thief.

      • charly

        1. It will be the thumb but probably every finger can be used.
        2. 2400dpi = any reasonable camera with close up zoom.
        3. Photo printer
        4. You don’t need a 100% success rate for a $700 phone to be “prudent” if thieving can be considered prudent.

        Jailbreak it before returning it to network access and Apple can do nothing.

      • http://www.noisetech-software.com/Home.html Steven Noyes

        It is anything but easy. Do you have a print from the right person? The correct finger? Is it not smeared? No jailbreak for the 5S yet.

        You post is full of more holes than face unlock.

      • Steve__S

        “3. Photo printer”
        Not likely. Only successful fingerprint copy required at least 1200dpi laser printer. Despite dpi ratings on photo printers, the output is not as sharp as a laser printer.

        “Jailbreak it before returning it to network access and Apple can do nothing.”
        Nope. The following excerpt from an article at the Guardian explains why:

        “Find My iPhone” now adds an extra dimension of post-theft security: you can track it while it’s on, and if it’s turned off (thieves’ favoured method) then powering it up again will present a screen requiring your Apple ID (used to activate the phone) and password. Without those, the phone remains encrypted – and effectively useless to anyone else.

        So, you see… after the phone is stolen, it’s a race between the thief duplicating your fingerprint and the victim deactivating their phone on iCloud. Again, the thief is going to have to duplicate a complicated process of duplicating your fingerprint and that assumes he/she even has a good image to work with.

      • Laurent Giroud

        That works only if you assume that thieves will not adapt their methods which is a quite naive assumption.

        TouchID adds zero security if a relatively simple procedure can bypass it. Thieves will just learn to put the phone in a case opaque to radio waves and not touch it until they reach home where they can extract the fingerprint, log in then jailbreak. Given the likely high margins available on the stolen iPhone market this will soon be steal-an-iPhone 101.

        Also note that they might also be able to obtain the user’s Apple ID password since it’s now stored on the device so TouchID can be used to pay in the iTunes store.

        TouchID certainly adds a lot of convenience but it does not add significant security unless it’s coupled with a timed password. Which means that for most users it might actually decrease security.

        I wish Apple released information about stolen iPhones so we could track TouchID’s effectiveness in this regard. I anticipate that they will continue not providing much.

        This being said I can’t wait to have my 5S.

      • Steve__S

        In terms of additional security, I think Apple missed the opportunity for two factor authentication. Technically, they still can do this, but haven’t so far.

        You mention the Apple ID password being stored on the device. I’m not sure if that’s true. I do know the Apple ID credentials are required to do anything with the device once it’s reported stolen. However, assuming the ID is on the device, where is it? Is it in the secure enclave like the fingerprint data? If so, is there any evidence this has been hacked yet? Not that I’ve seen.

        Anyway, to your point, I certainly agree that Touch ID is about convenience. However, I would suggest that it’s much easier to watch someone enter their 4 digit passcode than it is to lift their fingerprints and create a mold, etc. Likewise, it’s certainly no less secure than it was before.

      • tfd2

        i think you have to think about next year’s compare too… it’s going to be hard enough to top 9m next year. if they’d sold even more, it would be even harder to beat. and everyone knows that they have to sell more and more each time, or they’re a failure.

        maybe if they drop the price on the 5c next year, they can sell 13 or 14m, including the iphone 6 or whatever.

  • http://www.isophist.com/ Emilio Orione

    Much higher base means more or less growth?
    Less growth because the market is shrinking more growth because there are more up-graders from previous version that sum up with new buyers, what is the balance?
    If we assume that there is a lot a room in the market, as Tim Cook said this week, than a larger user base could mean more growth not less.
    Obviously the new product must appeal current owners, but that is typical of Apple and of technology items, to really increase product value each time.

    For people that assume that high end smartphone market is almost sold out and few users want to increase their experience passing from modest to premium smartphones than Apple launch performance has been outstanding.

    • jeff

      rebuyers are not growth… if you have no new users you will essentially be steady state and have 0% growth…

      • jeff

        it’s good to have rebuyers, it means you have a permanent business that isn’t going anywhere, and it allows you to have growth; however it makes it harder to grow in high percentage terms…

      • http://www.isophist.com/ Emilio Orione

        Yep, but I was speaking about first day iphone buyers growth, some will be new users (coming from non consumption or other smartphone brands) and some will be upgrades from a previous iphone version.
        The 3 million day number refers to actual 5c/5s sales not to new platform users.

  • Accent_Sweden

    An underreported filing by Apple to the SEC states that Apple now expects to be at the top end of their previous guidance for Q4. I would assume this means they are selling more than even they originally expected. At the same time, they must have had 9 million iPhones to sell this weekend, so they planned that right.

    • hannahjs

      Exactly. That makes far more sense than the floating buzzkill that Apple deliberately held up production to spur demand, or as a nervous response to pundit negativity, fearing unsold inventory.

      • Idon’t Know

        That idea was always idiotic.

    • Luis Alejandro Masanti

      Maybe they built 9M and expected to sell them in the first week and they sold them in the first weekend.

  • Keith

    Hong Kong included. HK starts selling both iPhones on 20 Sept

  • Strange Numbers

    Your S4 numbers look like you took their 1st month Sales (10 million) and divided by 30 to give 333,000 per day, which is a rather strange thing to do without mentioning it.

    • BC2009

      Maybe Horace would have better data to work with if Samsung provided it. Instead, Samsung wanted to announce “10 Million” so they managed to *ship* 10M phones to carriers and retail outlets in like 68 countries. Most of those devices were sitting on the shelves and not sold. You could walk into almost any retail outlet when the GS4 came out and find stock on the shelves.

      If you ask me, Horace was being generous by not mentioning the fact that many of those GS4′s were not sold units, but stocking the shelves. Maybe Samsung should post their real numbers for each launch instead of trying to fool people that the GS4 launch was twice as big as the iPhone launch even though they were talking about the first 30 days versus the first 3 and talking about shipments to stock shelves versus completely sold-out and back-ordered iPhone 5′s.

    • http://www.noisetech-software.com/Home.html Steven Noyes

      Based on web usage data, there was no real bump in usage for the GS IV like the iPhone 5. It seemed people just upgraded to the GS IV when their contract was up or their current phone died. Few seemed to go out of their way to buy it because it was new.

      http://twitter.com/StevenNoyes/status/350629072201732096/photo/1

    • http://www.asymco.com Horace Dediu

      I updated the graph to reflect launch volumes for S 4 over first weekend. Several of the products are shown with longer than one weekend “launch windows”. They are also noted with an asterisk.

  • Walt French

    Some wise soul noted how the “internet communicator” aspect of the iPhone got the least cheers at the intro. Even those very close to the Apple story can have a hard time grokking how the parts will come together into a whole with brand new functionality.

    Maybe that’s the story behind the “S” phenom. The phones are “new,” but more easily conceptualized and so have lower uncertainty. But I actually think that’s not true for the 5s: Airdrop; the better micro-location info; control over identity/ownership; … seem necessary for tackling whole new, as-yet-undeveloped services.

  • Jurassic

    For comparison, the original iPhone sold 1,389,000 units in the first year. That is less than half of the number of iPhone 5c + 5s sold in just the first 3 days!

    • Derek Wildstar

      “That is less than half of the number of iPhone 5c + 5s sold in just the first 3 days!” —- not entirely true, since 9,000,000 in the first three days, I would say 1,389,000 first iphone first year, is about half that of the 5c+5s sold in the FIRST day (3,000,000 per day for 3 days = 9,000,000)

      • Blinx182

        He said the first three days, not the first day .

      • Herding_sheep

        And he was saying that its actually half of just the first day of sales, not the total weekend.

      • Derek Wildstar

        Exactly, which is why I posted above for more comparison clarity. 9,000,000/2=4,500,00; 9,000,000/3=3,000,000; 1/2 of 3,000,000 = 1,500,00 — So, 1,389,000 close to 1,500,00 than 4,500,000, Yes?

      • Derek Wildstar

        I’m not sure what your point is of pointing that out; He said the original iPhone sold less than half as much in the first year, compared to 3 days of numbers for the iPhone 5c+5s. Which then I said it was half as much in the first DAY, not first 3 days, which is even more striking. Half of three days worth = 4.5M, 1/3 of three days worth = 3M, 1.389M is closer to being half of 4.5 or half of 3? I hope you can understand now.

      • Derek Wildstar

        reread that I said, maybe you’ll then understand.

  • sbono13

    Horace, mind saying how you know that the 9 million unit figure Apple released today was on a sold through basis rather than sell-in? Apple traditionally reports sell-in, at least on earnings calls.

    “The absolute number of 5x devices sold (not just shipped) seems to be an 80% increase from the 5 launch (9 million vs. 5) but accounting for China the increase is a more modest 29%. “

    • http://www.noisetech-software.com/Home.html Steven Noyes

      Given the impossible nature to find one in stock locally (Walmart, BestBuy and local Verizon stores) were sold old late Saturday, I doubt the differences are huge.

      • sbono13

        Not true on the 5C. Gene Munster has analysis out saying that he believes there’s 2-3 million 5C’s out in the channel that is included in the 9 million unit figure. Sounds like a reasonable guess considering the size of Apple’s channel inventory was 11 million at quarter end.

      • ddblah

        We will see whether this smart guy is correct or not soon. By then, I hope he will not change his story.

      • ddblah

        Oh, by the way, he could have asked Apple before he puts out his guestimate.

      • sbono13

        Maybe he did? Apple wouldn’t help him guess the contribution of channel fill among the reported sales, but certainly would clarify whether their definition of sales includes sell into the channel in this case. In fact, I could send an email to investor relations myself.

      • sbono13

        Here’s what IR said in an email when I inquired about how Apple defined sales with respect to the announced 9M sales figure. This is what the industry calls “shipments” to differentiate from end user sales/ activations.

        “Same definition as last year: We recognize revenue on sales into the channel, sales from our retails stores, and online sales that have been delivered.”

      • DesDizzy

        I agree. Sales are “Sales’. Apple either “Sells” direct via stores or online and receives cash immediately or sells to telco’s and they have to pay in 30/90 days (I presume the former). In the case of the launch weekend, since it was widely spread by telco’s that they had none left (5s) and were complaining about not getting enough stock, I fail to see how Gene trying to save face, by claiming he was correct ex. channel inventory, because he got it so wildly wrong stacks up.

    • http://www.asymco.com Horace Dediu

      They explicitly use the word “sell” not shipped because they have the confidence that there is no channel inventory.

      • sbono13

        Apple always uses the word “sold” when discussing unit volumes at earnings, when it is unambiguous that they are talking about sell-in. Moreover, I have never heard them use the word “shipped” to refer to anything other than a product launch. Isn’t it likely they are being consistent with their terminology in this press release?

        “As for the details of the quarter, I’d like to begin with iPhone. We sold 31.2 million iPhones compared to 26 million in the year ago quarter, an increase of 5.2 million, or 20%. We had a sequential decrease of about 600,000 iPhones in channel inventory in the June quarter translating to iPhone sell-through of about 31.8 million units.”

      • gbonzo

        Apple sells many of those phones to channel. They use the word sell because they sell them to their customers. Some of those customers are big cellular operators who buy more than one. That is why your “shipped” and “sold” terminology is so confusing, at least to an investor like me. Why can’t we use terminology that is consistent with how the company sees the world?

        I have said this before to you, but “sell-in” and “sell-through” are clear terms that could be used instead of “shipped” and “sold”.

      • The Silver Fox

        Gene Munster claims that the 9 million number includes 3.5 million channel fill

        http://9to5mac.com/2013/09/23/gene-munster-blames-channel-fill-for-missing-apples-iphone-number-by-4m-units/

  • Kevin Crossman

    The 4S numbers are skewed due to the delayed (more than one year) launch of the product, vs. the only-a-year-since launch of the 5 and 5c/5s.

  • gbonzo

    “The growth is certainly lower but from a much higher base. This should not be surprising.”

    Law of large numbers?

    • http://www.asymco.com Horace Dediu

      Nope.

      • gbonzo

        Sounds like you believe that growth often moderates when calculated from a higher base. That is a financial rule of thumb called Law of Large Numbers.

    • The Silver Fox
      • gbonzo

        That author is confusing a mathemathical Law of Large Numbers with a financial rule of thumb called Law of Large Numbers that relates to growth of large enterprises. Nobody has suggested that these would be the same. So the article refutes a straw man argument.

      • Sacto_Joe

        Source for this “financial” Law?

      • gbonzo
      • Sacto_Joe

        The REAL “Law of Large Numbers”:

        “In probability theory, the law of large numbers (LLN) is a theorem that describes the result of performing the same experiment a large number of times. According to the law, the average of the results obtained from a large number of trials should be close to the expected value, and will tend to become closer as more trials are performed.”

        The FAKE “Law of Larger Numbers” (per your “example”):

        “In statistical terms, a rule that assumes that as the number of samples increases, the average of these samples is likely to reach the mean of the whole population.”

        What a joke.

      • gbonzo

        Those two are the same. Those have nothing to do with finance or investing or Apple. Nothing.

        The rest of that investopedia article decribes the financial rule of thumb that we should be discussing about.

      • Kizedek

        I am afraid the pundits confuse them when they say that Apple can’t continue to grow significantly. But Horace continues to show important considerations, such as:

        a) it isn’t a “zero sum game” — Apple has added value to its markets.

        b) markets are growing, shifting, merging all the time and have far more potential than we realize. Today’s vast market for smart devices barely scratches the surface of its potential and cannot be considered some kind of closed market. If people thought the PC market was vast, imagine one where potentially everyone on the planet could have a couple of mobile devices each.

        c) getting to a user base of 1B is pretty self-sustaining, whatever the percentage of the market that is or will be (one quarter, one fifth, one seventh, whatever). Plenty of room for multiple platforms.

        d) At some point, competition among smart devices will heat up and go beyond competing with non-consumption. Apple gets an advantage where playing fields are leveled — key features, services and differentiation become the focus.

        e) Any notions of Smartphone “saturation” also favor Apple as those with any device nominally labeled a “smart” device merely because it runs some version of Android, look to improve their user experience.

        f) Apple barely addresses whatever market there currently is, as its phones are on maybe half of the carriers that Samsung and Nokia are on.

        g) iOS and iPhones are provably the most sticky products and users tend to stick with it far more than users of the competition.

      • charly

        b) Sadly on this planet $500 is a fortune for the majority of people.

        c) Half the American population owning 2 IOS devices gets you to 300 million. Where will you find the other 700 million.

        d) Cost is the most important focus in a mature market.

        e) This assumes that the user experience with Apple is better but that is not even the biggest problem with your assumption. A user of a competing smartphone OS knows how that operating system works and he doesn’t know how IOS works so the user experience with IOS will simply be worse in the first few hours. Then they will find out you can’t change the keyboard and return it to the store.

        f) Are there really that many carriers left in markets that can afford Apple?

      • The Silver Fox

        Fair point re two meanings of the term Law of Large Numbers. However I refute your straw man assertion against the Lean Crew article author. He was responding to spurious academic citations employed by the New York Times in its article about Apple’s growth and the Law of Large Numbers. if the NYT had made it clear that it was using LOLN in the financial rule of thumb meaning that you quote, then that would be fair enough, but instead they tried to give their article false academic credibility

    • obarthelemy

      Absolute numbers are interesting, but so would be %age of installed base and total market.

    • Kizedek

      “Law of Large numbers?”

      No, merely a sense of perspective and where to assign significance.

  • nostupid

    most of the comments dont think, if you are a good manager/director (Genius usually is not) you simply dont build all that production capasity just for first weeks demand, that would stupid and ruin your profits. Selling or taking orders and delivering are two different things my friends.

    • obarthelemy

      Depends on
      1- how expensive the production capacity is to build( hint: the 5S is constrained, not the 5C),
      2- how time-dependent the drop-off in sales is (ie, are sales lost due to supply constraints made up later, or just plain lost),
      3- how much pressure you have on your time-to-market (can you delay launch by a month or two to build up stocks) …

      • point

        What would be the point of doing 3?

      • obarthelemy

        1- you want to have some stock to actually hand over to your customers. The first iPhones 5S was certainly built weeks (8+) ago, but they stockpiled a few millions before opening the pipes. They could have waited a bit more (gold version), or a bit less. I’m guessing they have a ball park of what launch demand will be, and how much of that they want to be able to fill right away.
        2- not having phones on launch day is an iffy proposition. On the one hand, queues and reports of scarcity drive up perceived value, on the other hand, disgruntled customers aren’t happy (thank you cap’n obvious)
        3- if there is a strong “latest and greatest” element to demand, being told they have to wait several weeks to get your phone might lead a few/some/a lot to simply give up, or to switch to whichever newer shiny pops up in the mean time.

        It’d be much easier if demand was flatter; as it stands now, Apple must choose between launching later, overbuilding machinery that’ll be unused after the launch spike, and/or fulfilling initial demand weeks later. That’s a nice problem to have though ^^

  • Foox

    Sold to carriers not individuals. Stop fudging figures

    • ddblah

      How do you know?

    • The Silver Fox

      The 9 million number includes sales to carriers AND individuals. A sale is a sale and provides revenue to Apple. What difference does it make if the sale is to an individual or to AT&T?

    • jameskatt

      SOLD means Apple is TAKING MONEY TO THE BANK. It isn’t like Samsung’s “sell-in” where it make zero money. Apple is selling. And every carrier is selling every model they have. Thus in the end, Apple is selling to actual individuals.

      • gbonzo

        All manufacturers report sell-in because that is when they all get the money. Most of them report roughly 4-6 weeks of channel inventory at the end of each quarter, like Apple. There is no need to invent fundamental imaginary differences here.

      • Kizedek

        Except the understanding is that the carriers aren’t left “holding the bag” with the other phones: they can return them, reduce prices, give them away, throw them in the bin, or whatever.

        However, we understand that Apple is able to ask for strict conditions of carriers taking the iPhone — they have to commit to selling a certain number, regardless. When Sprint came on board there was a lot of talk about its multi-billion dollar commitment (“betting the company” in effect, just to get the iPhone as that “salesman” for its services so it could keep its customers).

        The differences sound very concrete, quite unique, and not at all imaginary!

      • gbonzo

        You are confusing things, many things.

        Sprint committed to a multi-billion deal under which it is committed to buying iPhones in the coming years. Those iPhones are not yet manufactured, they are not yet shipped, they are not yet sold by Apple, nor are they booked as revenue for Apple. We were talking about the phones that Apple or another manufacturer makes, ships or sells, not phones that someone is contracted to buy at a later time.

        Next, inventories. Inventories (components etc.) that are in Apple balance sheet move very quickly. Channel inventories, which we were talking about, are not in Apple balance sheet and their turnover is not 5 days but about 5 weeks as we both know.

        Next, I absolutely have not said that Apple sales figures are inflated. I just have corrected some very stupid comments like “it isn’t like Samsung’s sell-in where it make zero money”. Sell-in is the point when all manufacturers get their money. Sell-in is a sale for the manufacturer, because cellular operator is one of their customers. Horace talks about “shipped” and “sold” which greatly confuses this fact.

      • Kizedek

        Yes, I know there are several things going on.

        The point I was trying to make about the commitment of carriers was that Apple has a tight plan and control and forecast. They aren’t “throwing things against the wall to see what sticks”…

        They aren’t doing a Samsung or an MS (Surface) and saying, “well, let’s make 2 million of these and hope we sell them”, with a write-down on all but 200K.

        Apple literally are selling every iPhone they can make! End of story. Whether that is over 5 days in a launch quarter, or over a period of five weeks the quarter before an anticipated launch of a new product, is really immaterial.

        In another comment, Horace says Apple is confident none of these 9M are “in the channel”. In other words, the 9 Millions can be confidently counted as sales because they either have been reserved and bought by the end user, or those carriers and outlets taking them have further orders in for so many more millions to be delivered in, say, a week! Many stores and carriers themselves have their own reservation systems and guage demand.

        Again, Apple will be quite reasonably selling some 40M iPhones this quarter, and letting you know exactly what the ending inventory is in the quarterly call — an SEC audited number, no less!

      • gbonzo

        “oops, we better slow production for the next six months”

        That is exactly what Apple did here:

        CQ4 2011: 37m iPhones
        CQ1 2012: 35m
        CQ2 2012: 26m
        CQ3 2012: 27m

        Obviously, they could have made 35 million or more units in those quarters when they only made and sold 26 and 27 million. They had capacity to do that as they already did that in two consecutive quarters.

        Why they chose not to? Demand.

        So, Apple throttles production based on demand. That is a fact.

      • Kizedek

        So, and? It doesn’t follow that this 9M is inflated. IF they get to the end of the quarter, having made, say, 40M, and knowing exactly how many are “in the channel” and where they are going… Then sure, they may choose to manufacture “only” 33 Million the next quarter and plan to retain same inventory.

        What’s that got to do with how Apple reports numbers — see, they are giving you accurate, accredited production/sales numbers.

      • gbonzo

        I have never claimed that this 9M number is inflated. That not at all what I am saying.

        I am just confronting stupid imaginary claims that basically try to say that Apple reported numbers are very different from everyone else’s numbers They are not. Any differences are minor.

      • Kizedek

        Oh, what numbers from everyone else? The non-accredited, hopeful, PR numbers put out by paid market consultants?

      • gbonzo

        “Apple literally are selling every iPhone they can make!”

        This sentence is a prime example of the kind of bullshit claim I am talking about.

      • Kizedek

        Well, get a clue, then, because it is pretty simple:

        A) at the quarterly call, Apple will tell you exactly how many it “sold” that quarter. Apple says it “shipped” 35.3M iPhones, exactly, into its channel. Apple tells you that it has exactly 994,000 in inventory. That means the “sell through” is 34,306,000. Apple tells us that the .9M represents about 3 weeks of inventory at current rate of sales, though they were aiming for four. Sounds like selling everything to me.

        B) Samsung or MS say in a PR statement or blog post that they shipped 10M of something, and that they probably sold 6M of them. But next quarter we hear rumors that there were lots of BOGOF offers, sales weren’t quite what was hoped for, they had 2M returned, and whoops, they are actually taking a write-down.

        Sounds quite different to me.

      • robdk

        Spot on! Just what I was going to write.

        Apple give legally binding documentation of sales. Sammy et al. leak false numbers to their favorite analyst, whom they are probably bribing at present…

      • gbonzo

        LOL, companies usually are not writing down items they have already sold!

        This Horace’s “shipped” and “sold” terminology is making SO much havoc inside your brain. Manufacturers sell phones to operators, believe me!

      • Kizedek

        I don’t think anyone is disputing that. The dispute is that it “means” something different for Apple.

        With Apple it means “sell through”. A sale to a carrier is as good as a sale to an end user. Because it is a certainty. And Apple gets its full price and margin.

        Of course, others “sell” phones to carriers. But barely make any margin, if not a loss, because the carrier doesn’t want to take a chance on the phone.

        That’s why, leading to our conversation, JamesKatt said:
        “SOLD means Apple is TAKING MONEY TO THE BANK. It isn’t like Samsung’s “sell-in” where it make zero money. Apple is selling. And every carrier is selling every model they have. Thus in the end, Apple is selling to actual individuals.”

        You replied that everyone “sells-in“, and said there is no need to “invent imaginary differences”

        Clearly, there are differences. Apple sells each and every phone it makes at the market cost it charges everyone.

      • gbonzo

        So for Apple: “A sale to a carrier is as good as a sale to an end user.”

        For others a sale to a carrier should not count, according to you. Because when others sell to a carrier and get the money, they don’t get the money and barely make any margin. Or whatever.

        You are wrong, don’t you understand? All manufacturers equally get the money when they sell to their customers. This applies to Apple the same as everyone else. Some of those customers are channel partners, but the same principle applies: they ALL get the money then! Do you get it now? A sale is a sale. That’s what the companies report since that is what affects their financial performance: “this many we sold and this is how much money we made”.

        In addition, to provide investors a service, they usually also report channel inventory situation, like Apple. You know that Apple knows their channel inventory better than anyone because they see the activations and can estimate from that? Others need to ask their partners “how many do you think you have sold” and the quality of the answers may vary. They generally provide channel inventory estimates measured as weeks and from that we can see how the channel inventory is developing. If a manufacturer reports channel inventory as 4-6 weeks every quarter, shouldn’t you think that at some point you may start to believe their sales numbers? Since the channel obviously is selling them forward and not stuffing them in the shelves in exponentially increasing quantities?

      • Kizedek

        Ahhh, don’t be so patheticallly pedantic. It’s OK. I know it creates some havoc in your brain, but it boils down to this:

        A “sale”, any “sale”, by an Android OEM is not as good as the mere existence of any iPhone, past present or future, sold or unsold.

        How do we know? Because Apple has 100B in the bank and OEMs are barely scraping by. Get over it.

      • gbonzo

        Not true. Samsung makes money from phones roughly in the same ballpark as Apple.

        So when I started commenting on this “it isn’t like Samsung’s sell-in where it make zero money”, I was RIGHT. You finally got it, didn’t you?

      • Kizedek

        Where from phones means producing a gazillion more units and forgetting 12B in marketing and promotion in order to show the making of money roughly in the same ballpark.

      • gbonzo

        Ok, so now they are making the money in the WRONG way by making too many phones! Obviously that is a big BOO BOO. Only Apple makes its money in the correct way and other ways of making money are not correct.

      • Kizedek

        Well, that is what we shall see, shan’t we? Whether iPhone sales at this level are indeed sustainable, and who shall be able to follow whom for how long.

      • gbonzo

        You are again changing the subject once you were demonstrably wrong on our original discussion. I have not claimed iPhone sales being non-sustainable nor have I said that the 9 million figure is inflated by channel build-up of iPhone 5C. Forbes magazine blog posts claim that, not me.

        This is where it started:

        jameskatt: “It isn’t like Samsung’s sell-in where it make zero money.”

        Can we at least agree on the following two things:
        1) I was not the first one to talk about sell-in in this part of the thread. Instead I was commenting at someone who was talking about sell-in.
        2) jameskatt was wrong in his statement that I quoted above.

        Ok? Can we put this to rest now?

      • Kizedek

        I’d love to put it to rest. But the problem is that we just don’t know how much money Samsung et al are or aren’t “making”.

        Because one difference that Horace points out, and one that you would have to agree to, is that Apple’s functional structure allowing a single P/L statement, vs. other’s divisional structures with multiple P/L statements allowing accounting to be obscured, makes a real difference.

        That’s not imaginary.

      • gbonzo

        You are one confused individual, I must say. Now you are claiming that a functional structure, where it is not possible to say how much people are working on phone R&D, for example, makes it easier to estimate Apple’s phone profits. In reality, it really is the other way round. A divisional structure would make it easier to estimate profits for that division. Read Nokia financial statements if you need an example.

      • Kizedek

        You don’t need to estimate it — Horace lays out all expenses including Cap Ex along side revenues and margins every quarter following the conference call.

        What people need to do is place others’ different statements alongside each other, so that “revenue” and “profit” from X can be balanced with, say, a Motorola or Nokia acquisition — to determine if a company is in fact as profitable as it wishes to portray.

      • gbonzo

        Apple phone profits are indeed an estimate.

        For previous quarter, Horace estimated iPhone operating profit to be $7.4 billion:
        http://www.asymco.com/2013/07/30/that-competition-thing/

        Strategy Analytics estimated it to be $4.6 billion:
        http://blogs.wsj.com/digits/2013/07/26/samsung-dethrones-apple-in-smartphone-profits/

        Apple does not provide margins and costs by product line. Those have to be estimated.

      • obarthelemy

        Actually, I saw a lot of that going on at a previous employer (Multinational, US-HQ, IT stuff, strongly declining). There are actually several ways to cheat the “sales accounting” system

        1- make a deal with a distributor where they buy truckloads of stuff, at regular price, in exchange for marketing $$, free products, referrals… You get to show “shipped” or even “sold” units depending on how you count shipped/sold, you get the revenue… expenses soar though, either that quarter or the next.

        2- discount your stuff heavily, so that stocking up makes sense. You still get to book some revenue, and a lot of unit sales. My distributors had *on average* **1 year* of inventory …

        3- set up a fake distributor and move stock back and forth. Good for faking unit sales, revenues, not so much.

        I don’t think Apple do those things. Nor Samsung

        There’s a 4- though: get distributors to sign binding long-term purchase agreements, guaranteeing sales even if end-user demand falters. We do know Apple does that.

      • dams

        They do that because they COULD, not the other party is stupid.

      • pk_de_cville

        gbonzo,

        Are you aware that all Apple’s numbers are provided within SEC defined and audited documents? And that Tim Cook would be charged with criminal fraud if the numbers were inaccurate?

        Are you also aware that Samsung does NOT report audited numbers regarding cell phone shipments? And that the CEO of Samsung was found guilty of felony bribery a few years ago AND that the President of S Korea pardoned him?

      • Chaka10

        I think there is no risk the 9 mm number has any material undisclosed asterisk attached. Not only is it reported in an SEC current report, for which there is liability for material omissions, but Apple (unlike its competitors) gives transparency into channel inventory as part of its earnings call, which will come around in just a few weeks. There is zero chance in my estimate — zero chance — that Apple has built in any problems for themselves in that discussion to come. It’s frustrating that Munster has made a monster of this, rather than just admit he got it way wrong this time.

      • r00fus

        Yes, Apple is the least likely company to want to brag about their sales numbers. In fact, I think they’d have preferred a slightly smaller weekend # and more sustained growth – after all Apple doesn’t make money if people are clamoring for something Apple can’t supply. They make money when that item is sold.

      • Kizedek

        Except the understanding is that the carriers aren’t left “holding the bag” with the other phones: they can return them, reduce prices, give them away, throw them in the bin, or whatever.

        However, we understand that Apple is able to ask for strict conditions of carriers taking the iPhone — they have to commit to selling a certain number, regardless. When Sprint came on board there was a lot of talk about its multi-billion dollar commitment (“betting the company” in effect, just to get the iPhone as that “salesman” for its services so it could keep its customers).

        The differences sound very concrete, quite unique, and not at all imaginary!

    • http://www.jphotog.com Hrunga Zmuda

      Guess what. Apple has retail stores! Check it out. It’s kind of the opposite of the Microsoft stores which are clones of the Apple stores. Only they have customers in them.

  • robdk

    It is incredible how hard certain people are trying to diminish or degrade Apple’s achievement this weekend. Come on. Get real. 9 million. 3 days. This is a colossal logistics, production and marketing achievement.

    It is ridiculous with all this petty squabbling about a few 5C’s on a shelf somewhere. Anything to downtone this achievement. Get real and look at the queues, look at the delivery time at the Apple Store. Look at reality. Apple served the goods and people want them…

    Hats off to Tim Cook & Co.!

    • http://www.jphotog.com Hrunga Zmuda

      Not to mention the fact that it took less than a day for the 5s to at least partially sell out and drop to October shipping dates. I wanted 64 gig model, couldn’t find one anywhere on Saturday morning except Sprint models at the Apple store.

  • Rocco

    A possible way of estimating the number of 5C/5S sold to consumers:
    200Mio iOS7 = 50% of iOS installed base (https://mixpanel.com/trends/#report/ios_7)
    –> iOS installed base is ca. 400Mio devices.
    According to Mixplane, 5C/5S make up roughly 1.5% of active iOS devices
    –> 1.5% of 400Mio=6Mio 5C/5S are being actively used.
    This would leave 3Mio 5Cs to inventory fill.

    Ultimately the 5S as well as 5C numbers are solely supply driven. As long as demand exceeds supply on the first weekend, Apple can decide before the lunch how high the number of first weekend sales should be.

    • r00fus

      I’d lend more credence to your analysis if I could find out where you’re getting your installed base numbers from.

      • Rocco

        On Monday, Tim Cook said iOS7 was on over 200Mio devices. At that time Mixplane indicated that roughly 50% of all iOS devices were running iOS7. Thus the installed base has to be around 400Mio.
        https://mixpanel.com/trends/#report/ios_7

      • Dschinghis Cohen

        Newer devices will be used more often than older devices, especially after an OS-upgrade you want to try out the new features.

        So 200 million devices with iOS7 will probably produce more online traffic than 400 million devices with iOS6 or older.

        If Mixpanel would count every device only once, the percentage of iOS6 and older iOS versions, should only go down and not jump up and down: https://mixpanel.com/trends/#report/ios_7

      • Rocco

        Put in another way:
        the 9Mio 5s/5c that were announced would have been 4.5% of the 200Mio devices running iOS7 at the time.
        The usage metric from Mixpanel, as flawed an indicator as it might be, suggest that that the number of 5s/5c in consumers hand was actually smaller, i.e. closer to 6Mio.

  • ysamjo

    Am I the only one who thinks comparing 5s AND 5c sales to last years iPhone 5 (without iPhone 4S) is somehow crooked? https://twitter.com/ysamjo/status/382442646880272385

    • http://www.jphotog.com Hrunga Zmuda

      No, you’re not the only one, but you are mistaken that it’s crooked. Doesn’t matter what was sold last year. This is a different approach by Apple, having two current models (the iPhone 5 slightly improved and put in a polycarbonate body makes it a new phone to anyone looking for a new phone).

      • Kizedek

        And both launched on the same day

      • ysamjo

        still, it’s apples vs oranges…last year the iPhone 4s “launched” as new n-1 iPhone (it’s just a wording issue, you can’t let them out of the comparison)

      • Kizedek

        Perhaps I should have italicized “launch weekend” to provide the emphasis I was intending (in this sentence, I use quotes around the phrase to, well, quote it). The way you used quotes around “launched” indicates that you are doing the “air quote thing” (as I just did), as though it’s to wink at something that isn’t really so.

        When I said ” “launch weekend” “, I meant the actual weekend that the thing actually launched, for the first time. Ever. ‘Cause, you know, that’s what a launch weekend is. It’s not a “wording issue”, because the 4s didn’t launch last year, in any way, shape or form.

        It’s really just what I and a couple of others have said: Apple typically releases new products each year, and this was the weekend in which the new iPhones (in this case 2) were launched. Hey, I know, Horace could write a post that, you know, compares this launch weekend with previous ones.

      • ysamjo

        I perfectly understood your point, whether italiced or not.

        It’s just that you leave some parts out, as if Apple had last year 1 phone in its lineup, this year 2. And as we all know this is not true. Apple got 3 phones, every single year. To be fair we should compare the whole portfolio. I sincerely hope you finally get that.

        I would guess last years second lineup iPhone (4s) has maybe 15% to 20% additional sales that you need to add to the 5 million to make the performance comparable. The 4s launched with a new pricepoint and that was important.

      • Kizedek

        Oh, I do get it — and I replied about the very point above to Obart.

        Yes, to be fair, we should include the whole portfolio… either stick to what’s new for each launch weekend, or include the whole portfolio — in both cases (not just last for year).

        So, include the 4s this year, too. It probably wouldn’t add the same 15-20% it might have last year, so the total figures might be a little closer than they now appear (would that “appease” you?); but it might help us gain a little more perspective about relative iPhone performance during the launch period.

  • David

    If iPhone 5c is showed with 5s, shouldn’t SG4 mini be added to SG4?

    • twilightmoon

      Did they launch at the same time?

  • Chaka10

    When news started coming out in late June about disappointing Galaxy S4 sales relative to analyst expectations, the market (and blogosphere commentary) quickly took that as confirmation of a maturing (“saturating”) high-end smartphone market. Samsung share price declined, of course, but the market did not take the bad news for Apple’s main nemesis as bullish for Apple. AAPL declined below $400 briefly on June 25. On that day,I shared some thoughts on those developments three months ago via a comment I put up on Philip Elmer-DeWitt’s Apple 2.0, which I repost below. (It’s a bit self-congratulatory, but I do think it still has some current relevance, ie, as to the longer-term “so what” for Apple, which I reiterate, in the last sentence of the second paragraph of my post.).

    So in full, my June 25 post on the Apple 2.0 piece, Is Wall Street shorting Apple on weak Samsung Galaxy sales?:

    “Like I’ve said (in a recent blog response to Sacto_Joe), it’s undeniably a fair question — to the extent the S4 disappointment is further evidence of high-end smart phone market saturation, how is that a positive for Apple, which presently plays only in that space?
    The answer, I believe, lies in realizing that a saturating high-end smartphone market (in the sense of dwindling first time buyers), doesn’t mean no demand — rather it means increasingly demand will be driven by replacement buyers. However, the incredible rate at which high-end smartphone adoption has ramped up has meant that replacement demand hasn’t caught up as first adopter demand has slowed. I believe this has exacerbated the perceived disappointing demand for the iPhone 5, and even more so the S4 (realize that the most obvious/pre-disposed Samsung buyers likely already bought their SIIIs and Note IIs w/in 12 months from the S4 launch!).

    This double whammy market dynamic, however, should resolve itself for Apple, at least with respect to replacement demand catching up, as soon as the coming 5S cycle, which will benefit from the massive 4S adoption from holiday 2011, coming up on replacement in holiday 2013. Longer-term, in the matured high-end smartphone market, I believe Apple will find iPhone growth at sustainable rates (and importantly stable margins) from, in no particular order: (a) reliable replacement demand from a loyal installed base, (b) net positive churn (more Android users switching than vice versa) and (c) organic growth in the high-end smartphone “pie” (driven by continued demographic growth of the middle class in EMs and by 3-to-4G adoption).

    So, I must say, this is playing out exactly like I’ve been expecting:

    First analysts (and some blogosphere pundits) simplistically expected iPhone 5 demand to grow at the same rate as for the iPhone 4S, and were therefor negatively surprised notwithstanding solid iPhone 5 demand. In a classic knee jerk, they quickly attributed this to alleged lack of iPhone innovation and increased competition, which led them to predict blowout S4 demand (simply switching favors from the iPhone 5).
    Then comes the second surprise — disappointing S4 demand!

    Next, I predict, will come the third surprise — iPhone 5S demand that exceeds expectations. That, I believe, will answer a lot of question marks on Apple (and I’m betting, on its share price). I predict we will start getting positive noises from Asia (Digitimes and the like) beginning late summer/fall, e.g., supply chain data showing higher than anticipated production, etc.

    As I began this post, I would reemphasize that iPhone prospects in a maturing high-end smartphone market remain an open question. I’m bullish, but that’s just my view.”

    • http://twitter.com/matthewwanderer matthew

      We’ve seeing an increase in iPhone market share in the States over the last several quarters. Based on the iPhone 5S’s performance thus far, I suspect this quarter will reflect yet another incremental step forward.

      I’ve said this a dozen times before, but when a market matures buyers, perhaps, become more discerning. That’s when Apple’s secret weapon comes into play: the Apple customer experience. Apple’s network of Apple Retail Stores and their customer service philosophy will slowly attract and retain smartphone users from the “other side”.

      • Chaka10

        I think the street is beginning to come around, which is good news (they are still highly relevant to the stock). The following is quoted from Susquehanna Financial Group‘s Christopher Caso, who raised his rating on the shares to “Positive” from Neutral, and hiked his price target to $625 from $440:

        “AAPL sold 228 mln iPhone units in 2011 and 2012, underscoring the size of the user base that provides the available market for a product cycle refresh. In addition, the relatively modest launches by Samsung and other OEMs this year has in our view reduced the risk that users would depart the AAPL ecosystem for Android; rather, we think the positive reception for iOS7 makes it more likely that AAPL would attract more users to the iOS ecosystem.”

      • http://twitter.com/matthewwanderer matthew

        “I think the street is beginning to come around”

        The tech and financial press have been pimping a steady stream of shoddy and inaccurate Apple stories for the last two years. Apple’s always been poked at by these characters, but irrationally anti-Apple coverage tends to come in waves or cycles. There are some indications that this recent cycle is coming to an end.

    • obarthelemy

      Samsung used to be the only credible high-end Android handset maker. They’ve been joined by HTC, Sony, LG, arguably Moto… Maybe analysts will at last drop the Apple vs Android and Apple vs Samsung jokes, and do real work on Apple vs high-end Android, which is the only relevant analysis.

      • Chaka10

        You’ve said that before, and I think you’re trying to imply that, just because the S4 disappointed, it doesn’t mean high-end Android as a group disappointed, ie, that there were other high-end Android devices that succeeded where the S4 failed. But I haven’t seen any data on that and really would ask you show some to back up your point.

        Actually, I have seen reports that suggest quite the opposite:

        “HTC One has failed. With August sales down another 16% MoM, 45% YoY and profit warning looming, now what? … while HTC may have gotten its carrier partners excited about their new flagship, that excitement was very short lived, because the end customer sales just weren’t there. With revenues falling so fast, there must be a lot of those Ones shipped in May, still sitting on retail shelves, unsold.” http://www.unwiredview.com/2013/09/04/htc-one-has-failed-with-august-sales-down-another-16-mom-45-yoy-and-profit-warning-looming-now-what/

        “The LG G2 has been on sale for over a week now in the U.S. In BGR’s review, we noted that despite a gorgeous display and smart design, the G2 doesn’t do much to stand out against its competition. … According to China Times, LG announced on Tuesday in Taiwan that it hopes to sell 10 million units of the G2 worldwide.” http://bgr.com/2013/09/24/lg-g2-global-unit-sales/

        “Motorola is exactly where it wants to be, [CEO Woodside] said.
        ‘When you set up to ramp a factory you need a plan, and we have shipment targets we need to make with our carrier partners, and where we need to be right now is 100,000 units and that’s where we are,’ Woodside told Reuters.
        At 100,000 units weekly, the plant is set to ship around 5.2 million handsets a year ….” http://www.sitepronews.com/2013/09/11/motorola-ceo-pleased-moto-x-sales/

        I also attach the IDC smartphone share chart. So, I really don’t see anything that supports your, frankly very loose, implication that the S4 disappointment is due to stronger competition from other high-end Android, rather than the iPhone.

      • obarthelemy

        Are we doing “pissing contest: Apple vs Samsung” or an analysis of the smartphone market ? Because while summing up Android’s high end to the GS was barely ok 3 yrs ago, it is now just plain wrong.

      • Chaka10

        Ok, let me spell it out precisely. There is a big difference, which you seem to be obfuscating, between non-Samsung high-end Android being available in the market and their being a material part of, and successful in, the market. The former is true, but without the latter, it’s not apposite to my original analysis to which you had replied. IOW, your reference to the availability of non-Samsung high-end Android devices is apposite in reply to my discussion of the S4 having been a disappointment only to the extent those devices have been successful (not just available). I’ve shown reports that they’ve largely been even bigger failures (so far). If you would suggest otherwise, please show data, rather than just telling me loosely that I’m plain wrong.

  • Chaka10

    Further to my post below, I offer the following excerpts from the the linked article from Gazelle on smartphone trade-ins during iPhone 5s/5c launch weekend (http://www.tuaw.com/2013/09/24/gazelle-saw-210-more-samsung-trade-ins-during-iphone-5s-launch/):

    “Gazelle reported a 210 percent jump in trade-ins of Samsung phones during the launch weekend.”

    “… 36 percent of those who said they were upgrading to the iPhone 5s said they were getting it because they were due for an upgrade, and only 16 percent said they were upgrading for the Touch ID fingerprint scanner”

    I think this is direct validation of the view that iPhone growth is ensured by (1) positive churn from other vendors and (2) reliable replacement demand. I think it’s especially important that the reliability of the replacement demand is based NOT on repeat tech hits (gimmicks) but broad platform stickiness (upgrades just because it is due…).

    • Nick V

      So what is the number (actual) to make it 210%? 60 people, 200 people?

      • Guest

        Yeah, I guess it’ would be naturally limited by the modest sales of Samsung high-end smartphones, but then, we’d not really know bc Samsung doesn’t disclose that info, right?

      • Chaka10

        Yeah, I guess it would be naturally limited by the modest sales of Samsung high-end smartphones, but then, we don’t really know because Samsung doesn’t disclose that info, right?

  • r00fus

    Horace, any way of getting ASP for these products so we can synthesize into profit bars instead of merely sold numbers?

  • obarthelemy

    To make things comparable, shouldn’t we at least go back and add (new model + previous model) sales for the previous launch too ? Such as 4S + 5 sales on the WE of the 5′s launch ?

    • Kizedek

      Why? Both of these are new phones launched on same day. Therefore, a direct comparison can be made of launch weekend to launch weekend.

      4S launch sales were taken into account the year before the 5′s launch.

      • obarthelemy

        because 2 phones is not the same as 1 phone ?

      • Kizedek

        And others make 20 phones to Apple’s 1. But that’s OK; we won’t hold it against you.

        You can certainly compare all the Android phones out there to the iPhone. Horace has and does. Knock yourself out.

        But this is a different exercise. It’s iPhones 5c and 5s launch performance illustrated (hint: I got that from the title). Last year, the equivalent would be: iPhone 5 launch performance illustrated. …year before that? iPhone 4s launch performance illustrated.

        I don’t know what the equivalent for others would be. Maybe, Android X six months of life on life-support illustrated

      • obarthelemy

        “That the iPhone is only now split in two”… mmm, you mean metal casing changed for plastic casing in the n-1 version ? There have been 3/4 iPhones concurrently available for years; This year is the first time they try to pass off n-1 as new to bump up the launch day numbers.

      • Space Gorilla

        No matter how much Apple succeeds, Apple is not succeeding!

      • Nick V

        Split into 3. How many people were going for the free 4s?

      • Kizedek

        Well, considering that no-one really knew about the A7 at all, let alone 64-bit nature of it, it’s a bit disingenous to turn around and complain about the 5c which is, inside alone, exactly what most imagined a “5s over 5 update” on the order of a “4s over 4″ would have been.

        But hey, look at it this way: Apple not only upgraded a few bits inside the 5 to make the 5c (battery, antennae, LTE bands, etc.) for 100 LESS, but Apple ALSO made 2 new cases, and completely new parts that no-one expected, for the 5s.

        As SpaceGorilla says, “No matter how much Apple succeeds, Apple is not succeeding!”

      • obarthelemy

        I’m not complaining about the 5C. I’m just remarking that amalgamating it in the 5S’s launch figures is the same as including the 4S in the 5′s launch, etc, etc.

      • Kizedek

        In that case, I think they could include the 4s this year, too. My thinking would be that you either stick to what’s new that launch weekend, or you include everything that Apple is currently selling at that time…

        Because it could be interesting to note that if a person “happens” to walk into an Apple Store (or other outlet where iPhones are sold), or makes an online order, during that particular three-day period, then what made them walk out with, or choose, an n-1 or an n-2 when faced with the “new” product(s), or whatever you choose to call those products never before sold in that configuration? (regardless of how you choose to view the 5c.)

    • ysamjo

      You’re right, but I wouldn’t split the number by half…maybe we should add 25% to last years launch number: https://twitter.com/ysamjo/status/382792104973312000

    • sharrestom

      The proportion I have seen in the U.S is 3.6 iPhone 5s to iPhone 5c, and this trend favoring the iPhone 5S was seen worldwide though of varying proportions by country. I would guess that there were small numbers of iPhone 4S sold as well.

      Either way, the case is a three day introduction sales period for the iPhone, as it was last year.

      • obarthelemy

        Indeed, that seems to be the most common figure. Which makes 9m / 4.6 x 3.6 = 7m, or 2.3 per diem. Compared to 1.8/d for iP5, that’s +30%. Not bad, but not very much either.

      • sharrestom

        …”but not very much either”

        Grudgingly, obarthelemy gives Apple its due.

      • Joseph Carducci

        Candid question. Why is Apple the enemy to you? The best answer I can come up with is that (and we can stipulate in advance that I am trying to understand the anti-Apple viewpoint in general and not attacking you personally) is that the anti Apple party feels that a) Apple overcharges for technology that is available elsewhere for more reasonable prices, and thus preys upon the naively uninformed. And b) Apple takes and or is given credit for creativity they don’t truly have.

        I think the open vs closed system debate has always been something of a red herring. I have all three apps from the major e-readers Kindle Ibooks, and nook running happily on my iPad. You cannot run any software from the other platforms on a Nook or Kindle (at least as far as I know.)

        Point being if every app creator is able to bring his or her products to the app ecosystem, if Apple has content deals with all the major media outlets to bring their media libraries to iTunes, in what practical sense is the system closed?

        Near as I can tell, a profitable hardware business gives Apple the leverage to be relatively software agnostic and thus provide the most open marketplace for users.

        But I digress, if hundreds of millions of people over several increasingly information saturated years consistently choose and remain loyal to Apple products, isn’t logical to consider the possibility that the products offer some genuine advantage and its not all a ruse? One possible genuine advantage: ease of use.

        And as to the second point: Apple’s creative reputation. Isn’t there enough conceptual space in the concept of creativity to allow, at the very least, that even if Apple does not create every technology they use ex nihilo they figure out a pretty damn good way to put those technologies together in a powerful, user friendly package?

        It seems to me that any creative endeavor can be dismissed if you work at it. There were plays before Shakespeare and poems before Dante.

        Both of these men are fantastic examples of how our notion of creativity has changed over the years. Shakespeare rarely ‘dreamt up” his own material, he rewrote histories and classical myths.

        There was very little value placed on “original stories” in his time and place. Dante was ostensibly simply fleshing out Christian accounts of the after-life and recasting them in Virgil’s epic mold. Yet knowing all of this, we praise each of them as a creative genius because of the powerful way they added new life to old stories.

        So sorry for the digressions, but back to the point: What’s wrong with Apple?

      • obarthelemy

        Long term, I have an enormous issue with an ecosystem that is not only closed, but curated:
        1- the Windows equivalent of iOS’s model would be having only IE as a web browser, not being able to replace Metro with ClassicShell, not being able to install any app not vetted by MS (with a specific statement that apps competing with MS apps can be disallowed), being forced to buy a Wintel computer to develop for Windows, and to pay a 30% MS tax…
        2- today’s apps are yesterday’s books/music/movies. Developpers are today’s writers, pamphletists… Letting content not only be censored, but be censored at whim by a corporation (not even by an elected body) is huge risk. Everything is more or less OK now, but what about 10 yrs down the line when the CEO decides that not only sex/drugs/hate are disallowed, but also creationism or darwinism ? What if News Corp/Fox News takes over Apple ?

        In the shorter term, It’s very dispiriting to see 75% of Apple users having mostly no clue why they spent 3x as much on that phone rather than on any of the perfectly good non-luxury phones. They sure don’t use whatever Apple does better, they just bought a name and a case (which they usually hide in a sleeve), and are using 10% of the capabilities of a very expensive toy. I felt the same when my teenage niece blew $300 on a golden handbag :-p I guess I’m redirecting my frustration with users towards Apple.

  • GuruFlower

    Love to know what happened to all the iPhone 5 units that were pulled from shelves the evening of 9/19 to stock the new models on Friday. Back to China for repackaging as 5c’s or landfill? Apple would have credited their distributors for the returned stock, perhaps against 5c units? Doesn’t change anything as far as units sold but does confuse the issue slightly. Anybody have any (actual) insight on how this was handled?

    • sharrestom

      Speculation on my part, but there would certainly be price sensitive purchasers that would take a discount/added merchandise for a 5 purchase over a 5c or 5s. I haven’t heard or read of this being an issue before. Apple has the same policy every year with Mac updates and I’ve always been offered a decent discount on previous models to see if there was an interest.

      • GuruFlower

        I stand corrected. I can see now that some distributors (Best Buy, TMobile) are still selling the 16 GB 5 (and for the same price as the 5c!). I was under the impression it was discontinued.

      • sharrestom

        I suppose the best word to describe it is “deprecated” so there isn’t any continued production of the iPhone 5.

  • davel

    Horace
    I caught part of your appearance on Bloomberg this morning.

    I have a few questions. On the show you pointed out that Android users ( low end ) use the phones for browser activity and not much else.

    May I ask where you got the usage information? I have not seen much to date on how they use their devices, I just keep reading the same material how Android is swamping China.

    The Chinese companies are strong in their market. Some have designs on the more lucrative western markets. What are your thoughts on their prospects there?

    • obarthelemy

      I can speak for France, where the local subsidiary of a Chinese OEM (Tinno, aka Wiko in France) has shot to 3rd place on the back of their range of $250-ish phones (from 3″ to 5.5″ at more or less same price) as the market switched to unsubsidized contracts and prepaid. http://www.lsa-conso.fr/fort-recul-d-apple-dans-le-smartphone-en-france,147559

      A serious answer would require a serious analysis of subsidies and prices in the main markets: high contract prices -> subsidies -> no market for cheap/midrange phones.

    • http://www.asymco.com Horace Dediu

      The observation is the combination of three data points: units sold, browser share and Play store download data. If units sold is higher but Play downloads aren’t (and the absence of specifically designed Android-tablet apps) and if browser share is growing for Android it follows that most of the new Android devices are used more for browsing than for apps (more being relative to iOS tablets.)

      • davel

        Thanks Horace