Apple’s just announced that they’ve sold over 5 million iPhone 5 units between Friday and Sunday. Is that an impressive number? Is that number that will make invest firms short Apple stock? Does the answer lie somewhere in the middle?
Let’s look at the last iPhone, the 4S, to get some perspective. Apple sold 4 million of those during the device’s opening weekend. Now an extra million with the iPhone 5 sure does sound good, but then again the 4S launched in 7 countries, whereas the iPhone 5 launched in two additional markets, Singapore and Hong Kong. Tim Cook, Apple’s CEO, said that the company “sold out” of their initial iPhone 5 supply, and that they’re hard at work making more. So was Apple unprepared to feed customer demand or is there more to the story?
Again, let’s look at the last iPhone to get a better sense of what’s going on. The 4S is, for all intents and purposes, the iPhone 4, but with a new set of guts. That means increasing production wasn’t probably all that difficult from a logistical point of view. Meanwhile the iPhone 5 has a new screen, it’s made out of new materials, and it has new guts, which means there likely wasn’t a lot of sharing of resources taking place during the manufacturing process. That should help explain the sell out.
But still, 5 million, doesn’t that sound a bit low? Horace Dediu, one of the most quoted online personalities covering Apple, guessed that 6 million units would be sold during opening weekend. Piper Jaffray’s Gene Munster, another highly quoted personality in the Apple community, said 6 million iPhone 5 units on opening weekend would be the “worst case” scenario. Sorry to say this guys, but Apple ended up about a million short.
Compared to everyone else though, there’s very little, if anything, to complain about. Take Nokia for instance, who bet the company on Windows Phone in early 2011. Their best quarter, in terms of Lumia sales, was the second quarter of this year. Any guesses as to how many Windows Phones they sold during that time? Barely 4 million. In other words, Apple sold more units of their flagship device in one weekend in a single digit number of countries than Nokia sold an entire portfolio of products (Lumia 610, 710, 800, 900) in three months on the global market. When you compare the iPhone 5 to that, Apple’s practically swimming in champagne.
Then there’s Samsung, who said that two months after launching the Galaxy S III, their flagship smartphone, they sold 10 million units. That’s 5 million a month, whereas Apple did 5 million a weekend. Does that mean Samsung isn’t as competitive? Not really. They have a smartphone portfolio that’s difficult for most journalists to wrap their heads around. From their smallest Android phone, the 2.8 inch Galaxy Pocket, to the 5.5 inch Galaxy Note II that’s due to hit European store shelves next month, Samsung is in the best position to outsell the iPhone in terms of units. Profits however are a different story altogether, but let’s not go there.
So what should you take away from the 5 million iPhone figure? Has Apple peaked? Probably not. Has their growth slowed down? We can’t say that definitively since the iPhone 5 has been out on the market for less than a week. So does this mean the iPhone 5 is a failure? Absolutely not, but from the first weekend of sales it looks like it didn’t meet wild and enthusiastic expectations that people have set.
Speaking about people, they get it, the iPhone is a great device that gets any job done without a hitch. But at the same time people also get that there’s more out there.
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