Munster: Still plenty of iPhone XRs in stock

It’s been 12 hours since pre-orders began, but Gene Munster remains optimistic about iPhone XR sales. 

From a note to Loup Ventures subscribers that landed on my desktop Friday afternoon:

Apple began taking preorders for the iPhone Xr on Friday at 3 a.m. ET. Between then and noon ET, we measured online lead times for delivery 9 times. The following are our takeaways:

  • We were surprised to see that lead times remained entirely unchanged except for several SKUs on T-Mobile.
  • By comparison, in September, the iPhone Xs and Xs Max had lead times as long as 3-4 weeks, and last year’s (Oct 2017) iPhone X had lead times of 5-6 weeks. As of noon ET, you can still order a Xr and have it delivered on October 26.
  • Drawing insights from lead times is not a science, given we don’t know how many phones Apple is able to produce. That said, over the years (dating back to the iPod), longer lead times have historically been an indicator of healthy demand and shorter lead times softer demand.
  • Despite this negative initial data point, we remain optimistic that the Xr will be the top-selling iPhone over the next 12 months, given it represents the greatest value. We continue to expect the Xr to account for 38% of new units in FY19.

My take: If it’s a choice between ample supply and weak demand, ample supply is probably the safer bet. With Apple’s early gains today holding up in early afternoon, the Street seems to be buying it.

Below: Apple’s iPhone XR video ad, one of the weirdest yet.

8 Comments

  1. Gregg Thurman said:

    Weekly production rate for the past 4 launch quarters (based on reported total quarter unit sales divided by weeks in the quarter) has been 5.755 Million units.

    However, in 3 of those 4 years, Apple introduced four new models (inc. memory variants). Last year Apple introduced six new models (inc. memory variants), and this year Apple is introducing nine new models (inc. memory variants).

    Making some non-scientific estimates based on nothing concrete, I believe increased (full-quarter) availability of the iPhone Xs variants will result in unit sales at least as great as December quarter 2017, except that all iPhone Xs variants will be available for the full quarter.

    Secondly, I believe iPhone Xr will add >10 Million units in the short (2 months) period of availability this quarter resulting in total December quarter iPhone units sold of at least 87 Million units with an ASP of ~$881.

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    October 19, 2018
    • Gregg Thurman said:

      Furthering the above.

      Last year saw 6.35% Weekly unit production increase YoY. Without the iPhone Xr, I believe, due to full quarter availability and the addition of the iPhone Xs Max, that weekly production should approach similar growth. Estimated iPhone unit sales sans iPhone Xr: 82.000 Million units.

      Now add in my expected iPhone Xr unit sales and we get a total (which I think is highly probable) of 92.000 Million units.

      Given the size of the iPhone installed base and the average age of those iPhones, I don’t think this estimate is unachievable.

      Looking, and hoping, for feedback. [anxiously awaiting December quarter guidance]

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      October 19, 2018
      • Gregg Thurman said:

        A fellow investor emailed to suggest that I shouldn’t expect the same rate of unit growth from second tier iPhones as I’m expecting from iPhone X’s/r. I agree, I’m reducing my iPhone units sold estimate for the December quarter to 88.000 Million units. ASP remains the same at $881.

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        October 19, 2018
  2. Richard Wanderman said:

    That is one weird ad, except for the “whew!” Which is great.

    0
    October 19, 2018
  3. Ken Cheng said:

    The number of launch countries would imply ample supply

    1
    October 19, 2018
  4. Jonathan Mackenzie said:

    The ad is more spec based than usual I think. Except for the lush visual style, this could be an ad for an android. (That’s obviously intentional.)

    0
    October 19, 2018

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