Lead times for the lower-cost iPhone 12 have been short, they say, because supplies are plentiful.
From a note to clients by analyst Samik Chatterjee that landed on my desktop Friday:
Recent surveys from Wave7 Research into sales trends in the US across carriers in October, which covers only the iPhone 12 and iPhone 12 Pro, indicate that contrary to the perception based on lead times, sales for the iPhone 12 SKU are doing quite well and tracking better than for iPhone 11, and a better supply situation is keeping lead times in check.
Additionally, sales of the iPhone 12 might be benefitting partly from the longer lead times on the Pro, as highlighted in our iPhone Availability Tracker. On the drivers of interest in the new iPhone models, which has been concluded to be better than iPhone 11 models by greater than 50% of sales reps across carriers, 81% of the reps see 5G being a key driver of the higher consumer interest – which bodes well for the orders of the iPhone 12 Pro Max and iPhone 12 Mini as well (shipping today). Separate from the launch, 97% of Apple stores are now open (vs. 86% in early October and 58% in early September) with Apple looking to expand “Express” storefronts from 20 to 50 in coming months.
Key highlights from the WAVE7 Research survey for October include:
- 43% of sales representatives at the carrier stores noted that sales for the iPhone 12 SKU are up relative to iPhone 11 SKUs in late October; although about 30% of the reps indicated that early sales were weaker.
- 85% of stores surveyed had iPhone 12 units in stock at their store, which is a complete contrast to only 5% with the 12 Pro in stock.
- Sales for the iPhone 12 SKU are exceeding those of the 12 Pro, despite the investor perception based on shipping lead times and might be benefitting in part from the supply constraints for the 12 Pro, leading customers to choose not to wait for delivery.
- Interest in the new iPhone 12 series of models is stronger than for the iPhone 11 series a year ago, based on 62% of sales representatives. 81% see 5G as a major factor.
Maintains Overweight rating and Street-high $150 price target.
My take: The problem with lead time equations is that they have two unknowns — one is supply and the other demand.