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The Strange Math of Apple's Alleged Massive iPhone 5 Order Cuts 298

Posted by samzenpus
from the looking-at-the-numbers dept.
zacharye writes "The Sunday evening Wall Street Journal article claiming that Apple had cut its iPhone 5 display orders drastically for the March quarter made quite a splash. The way WSJ wrote its piece seemed to support the original Nikkei claim about Apple cutting its iPhone 5 display orders in half from the originally planned order of 65 million units. This would be a massive adjustment. But Apple uses the same new display type for both iPhone 5 and the latest iPod touch. Neither WSJ nor Nikkei addressed this, however — both seemed to be referring to just iPhone 5 displays. The math just doesn't add up."
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The Strange Math of Apple's Alleged Massive iPhone 5 Order Cuts

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  • by schlesinm (934723) on Monday January 14, 2013 @12:23PM (#42582383) Homepage

    Someone is getting rich out of this

    And the SEC is starting to investigate [wsj.com]

  • by Anonymous Coward on Monday January 14, 2013 @12:28PM (#42582433)

    If your reason for getting out of the market is information asymmetry, you are right. You and I have a lot less information than managers in the companies and those with access to those managers.

    Despite this, I stay in the market and have done well. I have two undergrad degrees in Finance and an MBA. Basically, I take a very simple strategy -- I invest almost exclusively in index funds and diversify geographically. index funds have the advantage of very low management fees and I track the market as a whole. Since I am more limited in my information, i don't try to pick winners and losers. those who do it full time and have more information have already adjusted the price for this info. And since I am not churning my portfolio and giving a broker a lot of money, I will do better than the average investor. I won't hit home runs, but I also won't hit into the retirement ending double play. And when I am talking about retirement, I am looking for the (relatively) safer choice.

    - MyLongNickName

  • by UnknowingFool (672806) on Monday January 14, 2013 @12:38PM (#42582545)
    Or someone not using common sense. BGR points out that the best estimates of Q4 sales is 52M iPhones (during a holiday season). The original estimate of 65M for Q1 is being halved. First of all who put out the original estimate (certainly not Apple)? Second of all, whoever put the original estimates forgot that sales of consumer electronics most likely drop after the holidays. So lack of common sense.
  • by Chuckstar (799005) on Monday January 14, 2013 @12:48PM (#42582629)

    It's unlikely Apple completely blew the estimated sales for iPhone 5 in the March quarter by that much. The most likely explanation is that the rumor is just wrong. Next most likely is that the 5S is coming soon and gets a slightly tweeked screen. Maybe even just a slightly different part from the same supplier. Whoever leaked the info saw the partial cancellation, but isn't aware of the replacement order. And, remember, even if 5S isn't coming until the next quarter, Foxconn might have to start taking delivery of screens this quarter, in order to ramp up production and build launch inventory.

  • by dc29A (636871) * on Monday January 14, 2013 @01:00PM (#42582755)

    for single people its $90 a month for the carrier bill

    Holy shit, that's a lot of money for cellphone service.

  • by phantomfive (622387) on Monday January 14, 2013 @01:07PM (#42582855) Journal
    Usually the Wall Street Journal gets it accurate when it speculates on Apple, so unless they're trying to throw away their reputation and score a quick buck, probably not.
  • by realityimpaired (1668397) on Monday January 14, 2013 @01:07PM (#42582861)

    iPhone 5 is what, around $200 with a 2-years contract in the USA? But these monthly fees are likely to be around $50 or more, so $200+(24x$50)=$1400 at the least.
    iPod touch 5th generation is $300. That's less than a quarter of the cost. There's free wi-fi everywhere in NYC so iPod touch + VoIP = free calls.

    And if people are too stupid to include their monthly fees in the cost of their iPhone, too bad. You can't fix stupid.

    You need to compare what you would pay otherwise for the service contract, rather than taking the entire cost of the monthly service. If you're actually in an area where it's feasible to go without an actual phone service, good for you. If you're not, then there's an inherent cost in having a cell phone, which needs to be considered. It's the difference in cost that's the issue.

    Case in point, if you're already paying that $50/mo for another phone, and don't plan on switching to another carrier any time soon, then that service contract doesn't need to be considered beyond "what will it cost me to break the contract if a better deal comes along?" And even then, it's really more of a question of "how much do I stand to save if I cancel and go with this other plan, amortized over the period of the contract" than it is an actual base consideration. In that case, the relative cost of the phone is actually $200.

    What I don't understand, however, is why people need to spend large amounts of money on the latest and greatest phone in the first place. When the phone is so expensive you need to sign your soul away for a prolonged contract in order to subsidize it, perhaps you should be considering alternative options. Smart phones do not have to be that expensive, and there's no reason you *need* the newest and greatest phone. You can get a Galaxy S2 for $300 at retail, and it's got plenty of grunt for just about everything you could throw at it. It's not the S3, but you really don't sacrifice much, and it's a significantly less expensive option, especially when you consider the obligations of the contract. For me, the freedom to go wherever I want is more important, and I am quite happy with my less expensive Android phone.

  • by Missing.Matter (1845576) on Monday January 14, 2013 @01:13PM (#42582921)

    Which doesn't really make all that much sense. What has Apple actually done to cause such a stock drop?

    It's not what they've done, it's what they haven't done, and what others have done.

    Investors have this perception of Apple as an innovator, creating new markets where none existed, and this perception is built into the stock's valuation. With the iPhone 5, Apple released not a new innovative product, but yet another incremental iteration of the iPhone. Then they did it again with the iPad mini and iPad 4. All the while, you have headlines like Android surpassing iPhone market share, Samsung selling more Galaxy phones than iPhone. The iPad mini was perhaps the worst of the bunch, where Apple was perceived as following Google's lead into smaller tablets, especially when Steve Jobs was quoted as saying they would never do such a thing. Right or wrong, this perception is not good for the narrative that Apple is a leader and can magically create markets where none existed before.

    Perhaps the decline has everything to do with the Jobs RDF wearing off. Perhaps it has everything to do with Apple's first mover advantage in smartphones wearing off. Maybe it's just the competition heating up, or a combination of these and other factors. But what's clear is that Apple is no longer in a position to dominate the smartphone and tablet markets on their own, which is a real problem for them, since their massive profits are *largely* derived from iPhone sales.

    I don't think it's a coincidence that AAPL hit an all time high the day the iPhone 5 was released, and has been in a steep decline since then.

  • by tripleevenfall (1990004) on Monday January 14, 2013 @01:34PM (#42583189)

    I think part of this is a function of android getting better, and the user experience being a lot better than it used to be.

    But - I think this says more about the iPhone 5 than anything else. The 5 didn't really bring much to make Apple fans feel like they had to upgrade. An extra row of icons? Nobody cares about that. LTE is nice, but given the pervasiveness of wifi and the fact that most people are dealing with data caps, it didn't drive sales.

    After 5ish years, someone is finally pushing Apple in the mobile space. They'll have to begin innovating again.

    Competition is a good thing.

  • by Anonymous Coward on Monday January 14, 2013 @03:16PM (#42584285)

    You do, but really most of the Apple ecosystem does not want jailbreaks, and firmly supports Apple's active patching of JB-ed devices.

    As a developer, jailbreaking means piracy. Installious may be gone, but there are plenty of other services that do the same thing. So, jailbroken devices take food out of our mouths. I have to thank Apple that the 4S and 5 have kept the leeches at bay for a very long time, and with the Dev Team's back broken, JBs will end up a moot point because if they do happen, the next Apple model will be out, with the next iOS version patching it.

    As a user, iOS's security depends on the jail system. JB-ed devices have no security in place whatsoever (unlike rooted Android phones which at least still have separation via UIDs.)

    No non-jailbroken device has ever have had malware in the wild, and this is where the proof is in the pudding. I can be assured that data stored on an iOS device will be protected, by both storage encryption, and by extreme protection even on the CPU itself. No other mass-market device can give this assurance outside of milspec stuff that only works in SIPRnet.

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