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something isn't jiving here. could AAPL be lowballing this? maybe they booked advertising or some R&D against the iphone profits? $18/phone just doesn't seem to match up to anything.

Of course Apple booked R&D, advertising, coffee, notebooks, electricity, sticky notes, pencils and just about every other imaginable expenditure against their profits. If they didn't, they wouldn't be profits now, would they?
 
Leopard Rebates

Does anyone know when they are going to start allowing free upgrades to Leopard with new Macs? It seems that since the release time has been announced, they should start offering that upgrade to keep sales healthy and also to save customers from buying software with a short "best-before" date.
 
Now that's more like it. ATT can't fudge activation numbers in their reports, but they can fudge activation problems, way under reporting them, as they can credit the difference between their numbers and Apple's as gifts, people waiting for activation and activation refused due to credit.
 
Just saw a feature on the Today show about iPhones disappointing sales.
Talk about spin from the major corps losing in this battle. How can anyone see these figures that blow away any cell phone ever sold and say the figures are weak?? Can you say "Over blown analyst's prediction?"
 
4,475 iPods/hour x 30 hours = 134,250 iPods in 30 hours​

Close enough. The point being that people had been waiting to buy this product for months and even with all the hype, they only did twice what the iPod does routinely.

Comparing this to the initial ipod release isn't even fair, because I don't think there's anyone out there who didn't see this as an 'iPod phone' and already thought of it as the latest revision of the ipod which they probably already own. So much so I that I'd wager almost 100% of iPhone buyers had previously owned an ipod.

Huh? What did you mean by this comment?

I mean put the numbers in context: Just because they sold a ton of units doesn't mean the product is doing well. You have to sell what you need to sell in order to make a profit, and be profitable at the rate you want.

Apple profited $818m on sales of $5,410m last quarter. That's a profit margin of 15.1%.

That means, to keep up with the profitability of their other products, the iPhone has to make at least that much. Keep in mind the iphone could've cost upwards of $10m to develop, plus the hype machine which could've easily been $5m, plus the lost sales from postponing leopard, plus the lost sales of not hyping their mac offerings for a while (it's a marketing thing), and you have a serious investment that has to be paid off and get a 15.1% profit or higher.

If Apple can't make that much money off the iPhone, they'll probably drop the product.

Now, I think that they will make at least that much, but bearing in mind it's all for **** until they do, this 270k is not that much.

People think that 270k in the first day is 'amazingomfg1!', but it's like opening weekend at the box office: sales decline exponentially after the first day, so estimating total future revenues from the first day is really pointless (though it's less so with movies, for obvious reasons).

Let's not forget that Zune sold a crapload of units the first day it came out. We all know where that is ending up.
------------------------------

And by the way, someone was saying Apple only made $18/phone (they took the $5m recorded and divided it by 270k). This is wrong.

I've taken 2 years of accounting courses. Apple is doing what is called 'deferment' with their sales numbers. This means they mark some of their transactions as "not marked as revenue yet but it's assured we will." If you look at the deferred revenue for the iPhone/AppleTV/iPhone Accessories (they combine these in their statements), it's actually $180m. We'll say most of that is from the iphone just for kicks.

270/180000 is about $670/phone, minus the other stuff they lumped in which is of unknown value.

I think they're keeping the exact dollars in revenue a secret on purpose, I wont conjecture why. Also keep in mind that this is only revenue, not profit.

That $5m number is simply what they've bothered to mark as their revenue, for various reasons. They admit though that they will add $180m to their 'revenue' numbers soon.

So $18/phone is a silly number.
 
Close enough. The point being that people had been waiting to buy this product for months and even with all the hype, they only did twice what the iPod does routinely.

Comparing this to the initial ipod release isn't even fair, because I don't think there's anyone out there who didn't see this as an 'iPod phone' and already thought of it as the latest revision of the ipod which they probably already own. So much so I that I'd wager almost 100% of iPhone buyers had previously owned an ipod.
Ok I'll take that bet? $10k OK with you? You talking 99%+ 95%+, etc. what?

iPod is an established product with a product matrix that starts with pricing around $100 and tops out below the iPhone. iPod doesn't have a contractual agreement involved. iPod doesn't have a single cellular carrier involved. iPod is sold worldwide, iPhone is not yet. iPhone is entering a market packed with all kinda of devices (features sets and price points) and many well established players, etc.

You can only do minimal comparisons between the iPod and iPhone... so your (any) attempts to compare them are really pointless.

270k is a good start for the initial sales burst and clearing a million (which they seem confident in doing) by the end of FYQ4 is also a good sign. The existing iPhone isn't the end of this run... they will expand the markets they sell it in, they will expand the product matrix, and they will expand the feature set. All of that coupled with the high customer satisfaction (results in good word of mouth... of which I personally have seen 2 additional phones sold after they used mine for a short bit) will result in steady sales and accelerating sales at various points in time.
 
Ok I'll take that bet? $10k OK with you? You talking 99%+ 95%+, etc. what?

iPod is an established product with a product matrix that starts with pricing around $100 and tops out below the iPhone. iPod doesn't have a contractual agreement involved. iPod doesn't have a single cellular carrier involved. iPod is sold worldwide, iPhone is not yet. iPhone is entering a market packed with all kinda of devices (features sets and price points) and many well established players, etc.

You can only do minimal comparisons between the iPod and iPhone... so your (any) attempts to compare them are really pointless.

270k is a good start for the initial sales burst and clearing a million (which they seem confident in doing) by the end of FYQ4 is also a good sign. The existing iPhone isn't the end of this run... they will expand the markets they sell it in, they will expand the product matrix, and they will expand the feature set. All of that coupled with the high customer satisfaction (results in good word of mouth... of which I personally have seen 2 additional phones sold after they used mine for a short bit) will result in steady sales and accelerating sales at various points in time.

I think we're agreeing on most points: 270k is good but not 'amazing' and almost all iPhone buyers own or have owned an iPod.

I was also only comparing the iPhone to the iPod as far as impact on Apple's revenues. I believe I even said comparing the sales in another context "isn't fair".
 
Sounds like the original 1% or 2% had activation issues, is probably closer to 38% had activation issues given their 176,000 only activated.

Exactly, AT&T screwed up bad. What's worse is what happened to Apple stock the day AT&T reported quarter results.

just because someone bought an iphone doesn't mean they tried to activate it right away. please stop being a fanboy and think.
 
Comparing this to the initial ipod release isn't even fair, because I don't think there's anyone out there who didn't see this as an 'iPod phone' and already thought of it as the latest revision of the ipod which they probably already own. So much so I that I'd wager almost 100% of iPhone buyers had previously owned an ipod.

According to the iPhone Buyer Statistics, which was posted on front page MR (https://www.macrumors.com/2007/07/13/iphone-buyer-statistics-o2-confirmed-for-uk/)
• 3 of 10 were first-time Apple customers.
• for 4 of 10, the iPhone was their first iPod

So iPhone is venturing into a market that Apple hasn't ever before, getting new customers that have never considered Apple before, and furthering the Apple brand. To me, that's a success.
 
Not sure how 270,000 is 'good', when it destroys the sales record of any other phone in AT&T history.
 
Not sure how 270,000 is 'good', when it destroys the sales record of any other phone in AT&T history.
Actually I had meant to say "270k is a great start..." in my original post. ...given that it is a 1st generation product from a company new to cellular and has a high price point compared to industry norms (not just limiting it to "smart phones").
 
Suggesting $148.08 total revenue per iPhone. (Granted this is just a very general ballpark figure, given the factors stated above. But holy smokes, that's a nice ballpark to play in. My understanding is that most consumer electronic gear has super thin margins - 27% is quite an achievement.)

didn't apple say it did not book iPhone revenue for the last 2 days of the quarter, but would begin booking revenues THIS quarter?

didn't it say the $5M was for accessories?

or am i remembering incorrectly?
 
iPod and iPhone comparisons

[You can only do minimal comparisons between the iPod and iPhone... so your (any) attempts to compare them are really pointless.]

I think there are some interesting comparisons. Both iPod and iPhone are consumer products introduced by Apple at similar prices, the initial 20G iPod being $500 and the iPhone $499 and $599. They are both products being introduced by a "first-time manufacturer" with no prior product experience...into a large and mature market will many manufacturers of many models at cheaper price points.

Both products were the target of much anti-Apple publicity, predictions of failure and false expectations. Both products were predicted for failure by the "experts", who claimed that they were too expensive for the actual features. Both products are clearly aimed at the consumer market, the "rest of us", and both products depend on consumer differentiation based on being a more user-friendly interface and user experience. Both products are criticized as "nothing new or innovative" but just an arrangement of features offered on existing products at much lower cost. In both cases, Apples failure was predicted "now that they are taking on the big boys".

In both cases, there was dismissal of their impact as merely "Apple hype", and the sales were attributed to "only the fanboys" and the early success would be a fading "fad". In both cases, the competition rushed "iPod-killers" and "i-Phone killers" to market, attempting to clone Apple features.

Somehow, "it looks like deja vu, all over again". Same game, different competitiors. This is so interesting. Can the wireless carriers, cellphone manufactures, Microsoft, PC-experts, core-development community, IT departments, Symbian, Palm and Blackberry be successful and kill the iPhone? Or will Steve Jobs once again be voted "Entrepreneur of the Year"?
 
You know, I feel bad. That last comment came off as way too snide. I get the love of the company. I have two macs, had two ipods, and have slowly converted my family into Apple people. So I get it. But sometimes (especially now with the stock at 150) I worry that "irrational exuberance" will lead to a lot of small time investors getting hurt in the short run, which isn't good for anyone.

BlueT, you sound like a good person to answer this question, which might put the stock price in a more subjective perspective:

what's the p/e for the quarter just ended, given the exceptional results?

thanks
terry

...Microsoft...made an amazing $14 billion last year, and that's just incredible.

I appreciated your lengthy analysis. Thanks. The statement above reminded me that I think i'd noticed MS's net income was a considerably higher % of revenue than apple's. Is that correct? And if so, do you have an opinion on why that's the case? I thought apple had pretty high margins.

thanks
 
I appreciated your lengthy analysis. Thanks. The statement above reminded me that I think i'd noticed MS's net income was a considerably higher % of revenue than apple's. Is that correct? And if so, do you have an opinion on why that's the case? I thought apple had pretty high margins.
Apple primarily sells hardware, Microsoft primarily sells software. Software has very high margins (given most of the cost involved is booked as R&D and the cost of production of software is minor).
 
BlueT, you sound like a good person to answer this question, which might put the stock price in a more subjective perspective:

what's the p/e for the quarter just ended, given the exceptional results?

thanks
terry



I appreciated your lengthy analysis. Thanks. The statement above reminded me that I think i'd noticed MS's net income was a considerably higher % of revenue than apple's. Is that correct? And if so, do you have an opinion on why that's the case? I thought apple had pretty high margins.

thanks

also, when looking at msft, software is much much cheaper to process and also cheaper to market. you can proliferate the market with software much faster than you can with hardware. Thats why Dell will never get to the heights Msft has with its windows programs.... I cannot wait till june 08 when i buy a mac!
 
Does anyone know when they are going to start allowing free upgrades to Leopard with new Macs? It seems that since the release time has been announced, they should start offering that upgrade to keep sales healthy and also to save customers from buying software with a short "best-before" date.

Perhaps you didn't notice that this is a thread for iPhone discussion?
 
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