One billion sold

In Q3 2014 Apple’s revenues were 5.3% higher than the upper end of their guidance. This is the highest error in guidance since the new range-bound  reporting regime started two years ago.

The following graph shows the guidances given since 2005 and the actual revenues. The error (as a percent of upper guidance) is given in the second graph.

Screen Shot 2014-10-23 at 10-23-10.44.28 AM

Note how since the newer, presumably more accurate method was introduced in 2012, the errors have decreased on average. As a result, for these two years, forecasting performance for Apple was no longer challenging. The only questions for the analyst were how to allocate the revenues among products and to guess how many shares would be retired.

Is this about to change? Could forecasting make a comeback as sport and leisure?

Assuming no error in Q4 yields the following shipment forecast:

Screen Shot 2014-10-23 at 10-23-11.11.17 AM

That’s about 95.5 million iOS devices in the quarter. That also means that the one billionth iOS device will have been sold sometime in the next few weeks.[1][2]

  1. McDonalds took 23 years to serve its first billion hamburgers []
  2. Over 650 million iPhones, 115 million iPods touch, 265 million iPads []
  • Since they counted as Android devices even toys, why not count Apple TV which is iOS based even if it does not allow apps (for now)?
    It certainly adds to the platform, it is a media viewer, a device screen viewer and app have been written to use Apple TV for games.
    With Apple TV the billionth device has already been sold.

  • LTMP

    Asymco: Analysis From The Future!

    “In Q3 21014 Apple’s revenues were 5.3% higher”.

    I’m not sure if I should be happy that Apple will be around in 19,000 years or sad that their revenues will be the same as today 🙂

    • Tatil_S

      If it is in today’s dollars, I’ll take it. 🙂

  • stefnagel

    Does McDonalds still publicize hamburgers sold? Which suggests how sticky the Apple number is: A billion iOS users or a billion adult credit card users? Priceless.

  • GlennC777

    I think Apple exceeding its own guidance was the best news from this quarter’s earnings report. Or to put it another way, consider the effect if Apple had fallen short of its own guidance. Where they have fallen short of analyst predictions, we have still been able to say that they met their own guidance, therefore it was the analyst’s miss, not Apple’s.

    With Apple giving their own – accurate – guidance, either a beat or a miss becomes legitimately significant. The question becomes, why did they beat their guidance? Whatever the the answer, it is very positive for the platform and for the company.

  • Sacto_Joe

    The only way Apple could have underestimated revenue is if they had spare capacity. That is not a pleasant thought, because every unfulfilled demand is a potential sale lost to competitors.

  • Sacto_Joe

    There’s a fascinating article in the Grey Lady that’s worth a read:

    One thing struck me: It says that “Sales typically surge every two years when, as now, Apple does a major iPhone upgrade.” Is that what’s driving the unexpectedly huge demand?

    • invented

      That doesn’t even appear to be true. Even just eyeballing the shipments graph above you can see that 4 to 4S was a much bigger jump than 4S to 5, in both absolute and relative terms. I think they just made it up.

      • Sacto_Joe

        You’ve left out a very important aspect of the jump from 4 to 4S: It occurred simultaneously with a shift in the timing of the release date from June to September. Note that after that shift, there was a huge spike in FY Q1 sales (the Winter quarter). The very first time we can expect to see this effect is in the present quarter, since it happens every two years, and it’s only been three years since the change from Fall to Winter releases.

      • invented

        That doesn’t particularly matter either way, since it just confirms that their statement isn’t well supported by past evidence.

      • Sacto_Joe

        It “isn’t well supported” yet. But it may turn out to be true. We’ll know a lot more in January.

      • Tatil_S

        An article using the term “typically” while there are not any historical facts to support or refute the claim, is evidence enough that the author has no problem disseminating “opinions” without regard for facts. I usually lose desire to parse through the rest of that article to see if the rest is fact based or merely “truthy”.

        It is not like NYT issues corrections quickly to serve as embarrassing teachable moments for its writers and editors. Do you remember the article a few years ago when they accused Apple to be paying half the taxes it claimed it was in its financial reports? Have they even acknowledged the error?