How many iOS devices will Apple Ship in the next six months?

Of the $42.5 billion Apple spend buying capital assets[1] more than half was acquired in the last three years. Net of depreciation these assets are currently worth $20.1 billion and the spending rate is about $12 billion per year.

This strategy of spending on capital assets is primarily in support of its particularly integrated approach to its product strategy. The purchasing of tooling for product manufacturing gives many benefits, including ability to deliver uniquely differentiated hardware, a predictable ramp and availability of parts throughout the product lifecycle.

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One additional benefit (for us) is that we get to inspect the allocation of resources prior to production and therefore we can more easily forecast the product’s supply. Spending on tooling happens in advance of production and the company also provides full year predictions of its spending.

The fiscal year forecasts relative to actual spending is shown below. Note the correlation with iOS units shipped one quarter after the spending was booked.

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After reporting its second quarterly earnings, we received an update on what amount to half of the full year’s spending giving us only two more quarters of variability. The current projections for the next two quarters imply about $2.8 billion per quarter spending.

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The pattern from previous years is shown below for comparison. Note the Even/Odd year patterns.

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The company also offered revenue guidance for FQ3 and therefore we can even make an educated guess on the next data point (57 million iOS devices) on the following graph:



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The result is likely to be 120 million shipped between April and September.

It’s remarkably predictable.


  1. Includes land and buildings $5.6b, Machinery, equipment and internal-use software $32.1b and Leasehold Improvements $4.7b []
  • Tom Van Avondt

    It’s remarkably predictable … but there is the watch … so the mix will be a bit harder to predict as the watch is still an accessory to the phone . what would interesting to put in the equation is the rest book value of all the tools still there … more variables but I am sure this equation with more variables will find a place in your model. Thanks, good read and happy to visit these thoughts


    Apple opened R&D centers in Israel, Japan, London, Boston, etc.

    Do these count in the R&D budget and/or Property.

    How come people doing analysis correlate R&D rise with product
    when most of the design and research of ipad for example was done prior to 2005.

    also discounted is the head count rise which should correlate with R&D pretty well.

    • R&D is not part of capital expenditures. R&D are operating expenses (Income Statement), CapEx is a depreciable asset (Balance Sheet).

  • iObserver

    Are you counting apple watch as an iOS device?

    • No

      • pk_de_cville

        Why not?

        Watch will have a definite halo and build a higher garden wall. It will be impactful in a few significant ways.

        Take one, in emergencies, Watch will save lives through the hyper available 911 alert. The media predictably will headline the first Watch lives saved (The ones where they couldn’t use their iPhone.). These first two stories will have Watch be bought by a tranche of people with dangerous health or personal safety conditions. (Another whole tranche of spouses, children, parents, friends will get them to protect their special person.)

        Watch deserves to be counted as an iOS device because it’s critical to iPhone function and sales. (And it isn’t really a watch.)

  • Nooge

    Great analysis as usual.

    However I think this coming quarter will be significantly below the trend of sales per investment. The Apple Watch requires quite a bit of new investment in tooling since it has far more variations than typical for a single Apple product. Four metals (rose gold is a different alloy), some of those also coated, two covers (ion glass and sapphire), many variations of bands and don’t forget multiple sizes (case and bands). Then add that almost all the tech it’s new for Apple, so not made in massive quantities Apple needs, requiring extra investment: S1 sealed SOC, optical heart rate, taptic engine, sapphire cover, digital crown, etc.

    On top of that they are severely supply constrained and have had to ditch one supplier and have to ramp another very aggressively (read expensively) for the taptic engine. Apple’s own delivery estimates indicate the watch will basically stay shipping in quantity around late June. So sales will be realized later than intended.

    Therefore I expect an extra quarter lag in realizing the sales and earnings on this investment.

    • Nooge

      And on second visit I see you said over the next six months, so my comment is mostly invalid. I do expect margins on Apple watch to be lower initially as Apple likely buys a lot of equipment that will be depreciated quickly. Then next iteration of watch can use and get higher profit margin.

  • Harmonica2

    Typo: “a predictable ramp and availability of parts *throughout* the product lifecycle.”

  • The watch capital assets have been spent before launch, machinery is bought before production. They are ramping up for the watch and they are building on demand but machinery is in place for first ramp.
    The question is: is the budget reflecting actual watch preorders or better are watch sales better or worse than Apple’s predictions?
    120 millions should refer to the total production of items, including: Watch, iPhone, iPad, iPod, Apple TV.
    I believe Apple has been conservative on Watch sales as usual and the new Apple TV could also shake up things.
    So forecast could be a little more difficult this year with new lines of products ramping up.

  • Frank

    120 million seems low. Considering they will do about 52-55 million iPhones this quarter and sept qtr iPhone sales always stronger than June quarter. That would imply iPad sales will be less than 7 million per qtr. which seems very low to me.