From a note to clients by Rosenblatt’s Jun Zhang that landed on my desktop Monday:
We believe combined iPhone XS and iPhone XS Max preorders to be about 10 million in the first three days. This is based on current wait times in most regions (1-2 weeks) and our estimated weekly production volumes from OEMs. We believe iPhone XS and iPhone XS Max preorders to be weaker compared to the iPhone X preorders, which we had estimated last year to be about 12 million in the first three days, with lead times of 3-5 weeks.
Based on our research, we believe Apple will produce a combined 35-36 million iPhone XS and iPhone XS Max units in calendar third and fourth quarter. This is below what we believe Apple had produced for the iPhone X in 3Q17 and 4Q17 (36 million). Our channel checks suggest a total of ~10 million iPhone XS and iPhone XS Max units will be shipped by the end of September, while a total of ~15 million units will be produced by the end of September…
Although it is too early to tell iPhone XR sales, we believe iPhone XR sales will be higher than iPhone XS and iPhone XS Max sales at JD.Com. We will be comparing iPhone XR sales to sales of the iPhone 8 and 8+. Our current expectations for iPhone XR production are for about 60 million units to be produced, which is above iPhone 8 and 8+ production of 44-45 million units, and 50 million units to be shipped in the second half of 2018.
My take: More support for the theory that the people’s choice this fall will by the iPhone Xr.
CORRECTION: An earlier version of this item misspelled Jun Zhang’s name. I have no excuse.
Doing the arithmetic on Yhang’s numbers I get 75 Million iPhone XS, iPhone XS Max and iPhone XR sold in the December quarter.
Average unit sales for the last 4 years has been 76.2 Million units. It would appear that Yhang is not forecasting any volume for iPhone 8/8 Plus and iPhone 7/7 Plus units.
A modicum of iPhone 8 and iPhone 7 unit sales of 10 Million (12% of total units sold) during the December quarter results in 85 Million iPhones sold. [Historically older model iPhones account for 20% to 30% of total December quarter unit sales.]
My December quarter total iPhone unit sales estimate is 86.640 Million units (YoY unit growth 12%).
While we’re on the subject there is something else we should be considering.
During FY2017 Apple offered a total of 13 iPhone models ranging in price from $349 to $869. ASP for that year was $652.
During FY2018 Apple offered a total of 15 iPhone models ranging in price from $349 to $1.149. ASP for that year (estimated) was $756.
For FY2019 Apple will be offering 17 iPhone models ranging in price from $449 to $1,499. Estimated ASP will be ~$900.
Without offering any more new models, by FY2021 Apple will be offering 27 total iPhone models ranging in price from $549 to $1,499. Estimated ASP will be ~$1,099.
That last ASP looks pretty incredible until you consider what the Motorola Brick sold for in the late 1980s. If memory serves me well I paid $700 for it (no plan). Factor in 2% annual inflation and that Motorola Brick sold for the equivalent of $1,320 in today’s dollars and didn’t do anything.
Apple isn’t pushing the limits of affordability, it is pricing the iPhone for about the same as the Motorola Brick and providing one hell of a lot more utility, at a cost of about $1.50 per day (ASP amortized over two years).
I don’t see any “support” for the theory in this story, but I think the theory is worth considering. Apple is in the enviable position of having three very attractive iPhone offerings coming out within a month of one another. I do think the potential popularity of the Xs is being underplayed. For those to whom money is no object, it’s the smallest of the three and will appeal to those who prefer a smaller form factor.
It may be that some of the more frugal folks will tend to hold back on their purchases until the arrival of the Xr. That may reduce the sales a bit in Q4 fy ‘18, but won’t have any impact on the Xs or the Xsm, since they are already in backorder mode. If it has an impact, it will be on sales of the 8 and the 8+.
As the Bard said, this is much ado about nothing.