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April 25, 2012



Apple's Q1 2012 (CY2011 Q4) had 14 weeks, while this past quarter only had 13 weeks. So, in Q1 they sold on average 2.64M iPhones per week, while in Q2, they sold 2.70M per week. Seen this way, sales are actually up.


Tomi, you're move to not to completely remove the mistakes regarding iPhone sales in China was a good move. You sometimes introduce your theory as a fact and that's likely to bother some people. Thanks for introducing the Finn in you, in form of integrity and honesty. Having said that, I still disagree on how Nokia/MS/WP will succeed. ;-)

Now, having those volume declines published for Verizon and AT&T - maybe expecting something similar for Sprint - how do you see the golden opportunity given to WP players now? You have surely heard the statements from both AT&T and Verizon, not only opening the door for third ecosystem, but clearly handing this over to WP. Heavy subsidies (400 USD quoted) is... Yes, what is it? Outrageous?


@ds, @tcb The same argument you make was made 5 years ago about the US. The pieces didn't fall into place in one day there either. In the large scale, Apple's market share strategy is actually a lot like Sammy's: exploit Moore's law and increasing manufacturing capacity to move down in price points by selling last year's/two years ago's model.

The other thing I don't really buy is that, internally, people at Apple are dogmatic about fragmentation. Steve Jobs never was that big on intellectual consistency (he of the 2-color iPhone put out a "flower power" iMac), and I doubt that the people he worked with are overly rigid either.

What is really going on, I think, is that *right now* they sell everything they can make in two colors/one size, and this makes the App ecosystem better/stickier. When it becomes convenient to have more models or give up a little on margins, presumably Apple will pivot, like they did with the iPod.


iPhone sales of 35 million topped the "whisper number" of 32 million. How could Tomi be disappointed? Earlier in the day analysts were all skittish because AT&T and Verizon reported lower sales than expected (though iPhone still comprised more than half of those carriers' smartphone sales), and had even started ratcheting down estimates to the 28-30 million range.

Listening to Tim Cook on the analyst call, I'm guessing that he's getting to the point of letting bygones be bygones with Samsung. I think he's content to split the market with them, particularly since they are an important supplier. He doesn't have Jobs' personal vendetta, and he's made his point about IP. I wouldn't be surprised to see some type of settlement and cross licensing agreement, particularly as Google/Motorola Mobility is fast becoming a common enemy. An Apple/Samsung duopoly, with the two companies splitting virtually all of the profits and about 40% of the volume, is probably far more stable than the "one company at the top" model that dominated for the past 15 years or so.


@Louis, Apple is pretty serious about avoiding fragmentation. Jobs was OK with different colors, but note that one of the first things he did was drop several product lines. Their strategy on Macs was "Consumer and Pro" and that's it. Now the Mac lines have largely converged. Expect the Mac Pro to be dropped, and the MacBook Pro line to merge into the MacBook Air line.

On the mobile device side, it's clear that enterprises are comfortable adopting the iPad and iPhone. It's what their employees want. Maybe Windows 8 will make a play on the tablet side, but that's speculation right now. I don't see Apple making an "iPhone Nano" or one with a QWERTY keyboard. Perhaps they'll make a smaller tablet, but even that might be wishful thinking. Cook already shot down the idea of a touchscreen Mac (even as Microsoft is requiring touch input for all Windows 8-certified PCs). For all the talk of convergence, it seems we have more devices than ever. Remember, as devices get smaller, there's less of a penalty to carrying things around. I can fit an iPhone, iPad, and MacBook Air (or Android/Ultrabook equivalents) in the same case that previously held a 5-6lb notebook.


@Tomi, the big "drop" was completely expected after the blowout launch of the iPhone 4S. Look at the US sales. AT&T and Verizon sales were down sharply in the quarter. The stock was pummeled during the day because of it. Remember, Q4 had a lot of pent up demand because of the "delay" in the iPhone 4S release. We may need some analysis of the European carrier numbers to get a better sense. However, most analysts were expecting sales of 32 million, and had started ratcheting that down when the AT&T and Verizon results came in. So you were likely the only analyst expecting an increase in sales from Q4-11 (calendar - not Apple Fiscal).

The real story is that Apple is finally starting to get growth in China, and that it is able to compensate for the maturing markets in Europe and North America. With 1 new phone release a year, Apple will go into a peak-and-valley trend in those markets. That sales "declined" only 2 million is pretty amazing given that the 37 million phones sold in Q4-11 represented a more than doubling of their previous quarter.

Tim F.

Isn't the most obvious question (considering that Apple is actually the clearest in reporting their data), what is Tomi basing his 24% versus 22% market share off of? We have a few manufacturers left to report. Most of the Asian manufacturers no longer provide smartphone unit data so we are left with estimates from Asian analysts happyto pump up domestic markets.

So Tomi is hunting for an 8% decline in Apple's clear data rather than questioning his own estimates, the estimates of Asian analysts, and unreported data from other manufacturers?

I don't see any mystery whatsoever. I just see someone looking in the wrong place.

Tim F.

"Now, having those volume declines published for Verizon and AT&T - maybe expecting something similar for Sprint - how do you see the golden opportunity given to WP players now?"

This is a complete misapprehension of the US market. Because of the introduction of the 4S and the holiday season, all US carriers so a large gain in the previous quarter. Apple's share did not decrease, it increased. This is not an opportunity for Windows Phone to steal share -- Apple is sucking up share.

Regarding Sprint, I'm certain we will see exactly what we saw with Verizon -- it will take 5 quarters to 2 iPhone releases to become the majority of all smartphones being sold, and Apple will have a complete and utter lock on the US market -- completely able to destroy any of the big 3 carriers on a whim, if they so choose, because the vast majority of iPhones are sold outside the US and now even AT&T and Verizon together mean far, far less to Apple than Apple does to each of them individually.


@Tim: The iPhone is saving Sprint, and attracting new customers.

@Tomifan: "Tim Cook must be fired" would be a good title.


@Louis, your argument would be validated by having IPhone 4S/3GS country split and seeing it dominating sales charts in emerging economies. Do you have such data?


Sprint sold 1.5 million iPhones, vs. 1.8 million in the holiday quarter. That's a much smaller drop than either AT&T or Verizon. They are well on pace to sell the 20 million phones they reportedly committed to sell over the next 4 years. Meanwhile, they stemmed the tide of subscriber losses. That's the real value of the iPhone to carriers. We'll see what happens to T-Mobile USA. There is likely a very good reason why they are remapping their 1900MHz spectrum to 3G and planning to use their AWS spectrum for LTE. Those are the same frequencies AT&T uses. My guess is that the next iPhone will support LTE in the same bands as the new iPad models (though they may be separate models as is the case with iPhone), and perhaps the EU frequency.


Tomi - you are comparing apples and oranges here, looking for the huge declines and lost iPhones.

"... to find where the lost iPhones are if the industry grew only by 60% in a year...". The industry grew 60% in a year, while iPhone grew 88% in that same year. What lost iPhones are you talking about if Apple grew almost a third faster then the industry?

The only lost iPhones come from the small 5% sequential QoQ decline between Christmas quarter and Q1. That is absolutely normal seasonal pattern. And we still do not know what the sequential QoQ growth for the smartphones is. With huge volume drops coming from Nokia, volume declines at RIM,HTC,and now Apple -we may have flat, few percent down or few percent up growth from Q4 to Q1. Depending mostly on how exceptionally well Samsung did. So the Apple QoQ performance is +- few percent in line with the industry.

And that iPhone in China grew 5 times number is pretty meaningless, if you don't know the basis from which it grew 5 times. Especially if you try to count how many millions less iPhones Apple sold elswhere. It could be 5 million if the starting basis was 1 million, 500K from the basis of 100K or 10 million from the basis of 2 million.

Also remember that Apple only counts official iPhone sales as China sales. And Apple has been selling iPhone on only 1 network there last year. All those millions of iPhones that made it into China unoficially, and so boosted overall iPhone performance in Q1 2010 and likely even 2011 - they are not part of Cook's 5x China growth remark. As a matter of fact, they may actually be part of those "lost" iPhones in Q1 2012. Now that Chinese users can buy iPhone officially, they don't need to get it from intermediaries in U.S and Europe. So some iPhones that in 2010 and 2011 were bought in Europe/U.S and smuggled into China, but added to non China sales- are now bought officially and counted as China sales.


Tomi, why do you insist on comparing qoq for Apple, and making it sound so significant? What do you really learn from it?

I and others have written many times that iPhone sales (because of few models and only one launch a year, and spread out over the year on a global basis) will fluctuate up and down on a quarterly basis - all of it signifying little. Instead, you should look at 12-months over the last 12-months (ensuring that there is one launch within the 12 months). Then you'll see what's happening. It's a lot more informative.

Although iPhone sales in the US declined qoq, note that the 4Q11 was the launch quarter, so there was pent up demand from the 3Q11. Regardless, Apple still dominated smartphone sales at the biggest three US carriers - according to one analyst, iPhone sales declined from 63% to 59% of total smartphone sales. Android/BB/WP7/etc get the remaining 40% plus sales at the smaller T-Mobile, prepaid and regional carriers.


Darwinphish is a genius! And I think the so called decline in market share is resting on an unproven estimate of total smartphone sales increasing sequentially. !

That certainly did not happen in the USA. So if Apple's weekly sales were the same sequentially, and total smartphone sales went down in Europe as they did in the USA, then perhaps the iPhone market share increased to say 26% from 24% instead of declining to 22%

The devil is in the denominator.



George Colony also think that apple is/will go down

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