There's a Connection
Mikey Campbell had a great report on how Apple's iPhone X is successfully beating back Samsung in the US.
"During Q4 2017, all the three new iPhones were strong sellers — the three were the top three selling phones in the U.S. market," Shah said. "However, since its launch on Nov. 3, the iPhone X outsold the iPhone 8 and iPhone 8 Plus by a 2:1 margin. What this means is the super-premium segment (above $800) has grown from almost 0 percent in previous years to 25 percent share of the total smartphones sold in USA during Q4 2017, which speaks volumes for the potential of USA market and the U.S. consumers' buying power."
Adding color to the hard data, Research Director Jeff Fieldhack noted Apple grew its sell through by 20 percent in a U.S. market that grew only 2 percent over the same period.
"This means Apple has been successful to take share away from Samsung in the premium," he said.— Mikey Campbell, AppleInsider
Does anyone else remember all the doom and gloom predictions regarding how difficult it would be to find the iPhone X? The fact that things didn’t turn out that way is directly related to the rumored “production cut backs.”
Both the Nikkei Asian Review and the Wall Street Journal wrote stories within the last week about how Apple is slashing production orders due to weaker than expected demand. Something seems off. They’re interpreting their data based on an out-of-date manufacturing model.
The part that none of the financial journalists seem to be taking into account is the extra manufacturing capacity that Apple would had to have put into place this year to deal with two major iPhone models.
Creating new product lines to target new customers is great, but there are significant additional costs to doing that. You need more inventory, more manufacturing capital, more employees, etc. If the volume isn’t there, it could end up being a losing proposition. That’s why the operations guys are usually pushing aback against the sales and marketing guys about how they need to consolidate their product lines.
So, what am I getting at? Apple was probably forced to fire up many more manufacturing lines than they have in previous years. This would directly lead to a larger than usual drop off after Q1 was over. It’s possible that both Apple’s production cut backs are bigger than usual and that sales are higher than ever.
Apple had no way of predicting what the breakout between the iPhone 8 and X was going to be. Therefore, the safe option was to pad the ramp-up capital for each model since it would be better to have too much capital than too little. If Apple has too much inventory, they can sell it in Q2. If they have too little, they could lose the sale forever. My guess is that the “production cut backs” were in relation to both the 8 and the X. Possibly even mostly the 8. However, headlines about iPhone 8 production cut backs are a lot less juicy.
A bigger than usual production cut back doesn’t necessarily mean that sales were disappointing, it just means that they built more inventory up front. When both the iPhone 8 and the X were launched, I was surprised how readily available both models were. Within 3 weeks the iPhone X was available for pickup at just about every Apple Store around me. The iPhone 8 didn’t even have lines. This further supports the thesis that Apple simply built more inventory up front than usual.
I had written a while back about how Apple could lose over 10% of their unit volume and still make just as much money due to the more profitable iPhone X. The fact that they’re actually selling more iPhones than ever means they’ve hit the jackpot.
Now available in iBooks —> The Tesla Bubble
Adding color to the hard data, Research Director Jeff Fieldhack noted Apple grew its sell through by 20 percent in a U.S. market that grew only 2 percent over the same period.
"This means Apple has been successful to take share away from Samsung in the premium," he said.— Mikey Campbell, AppleInsider
Does anyone else remember all the doom and gloom predictions regarding how difficult it would be to find the iPhone X? The fact that things didn’t turn out that way is directly related to the rumored “production cut backs.”
Both the Nikkei Asian Review and the Wall Street Journal wrote stories within the last week about how Apple is slashing production orders due to weaker than expected demand. Something seems off. They’re interpreting their data based on an out-of-date manufacturing model.
The part that none of the financial journalists seem to be taking into account is the extra manufacturing capacity that Apple would had to have put into place this year to deal with two major iPhone models.
Creating new product lines to target new customers is great, but there are significant additional costs to doing that. You need more inventory, more manufacturing capital, more employees, etc. If the volume isn’t there, it could end up being a losing proposition. That’s why the operations guys are usually pushing aback against the sales and marketing guys about how they need to consolidate their product lines.
So, what am I getting at? Apple was probably forced to fire up many more manufacturing lines than they have in previous years. This would directly lead to a larger than usual drop off after Q1 was over. It’s possible that both Apple’s production cut backs are bigger than usual and that sales are higher than ever.
Apple had no way of predicting what the breakout between the iPhone 8 and X was going to be. Therefore, the safe option was to pad the ramp-up capital for each model since it would be better to have too much capital than too little. If Apple has too much inventory, they can sell it in Q2. If they have too little, they could lose the sale forever. My guess is that the “production cut backs” were in relation to both the 8 and the X. Possibly even mostly the 8. However, headlines about iPhone 8 production cut backs are a lot less juicy.
A bigger than usual production cut back doesn’t necessarily mean that sales were disappointing, it just means that they built more inventory up front. When both the iPhone 8 and the X were launched, I was surprised how readily available both models were. Within 3 weeks the iPhone X was available for pickup at just about every Apple Store around me. The iPhone 8 didn’t even have lines. This further supports the thesis that Apple simply built more inventory up front than usual.
I had written a while back about how Apple could lose over 10% of their unit volume and still make just as much money due to the more profitable iPhone X. The fact that they’re actually selling more iPhones than ever means they’ve hit the jackpot.
Now available in iBooks —> The Tesla Bubble
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