Apple on track to sell 6.8 million iPhones in Q4 – analyst
In a note to clients issued Wednesday morning, Kaufman Bros.'s Shaw Wu reported on some interesting trends from his latest iPhone supply chain checks:
- Expensive iPhones — especially the $299 3GS — are doing better than expected in a tough macroeconomic climate. "Customers," he writes, "have surprisingly opted for higher-end models where they are willing to pay a premium for a faster processor, video recording, more storage, voice control, and other features."
- Apple, expecting a rush on its $99 3G iPhones, underestimated demand for the $199 and $299 models. As a result, there were widespread shortages of nearly all 3GS iPhones through the first weeks of July.
- "This is an interesting and arguably counter-economic trend," he writes, one that should lead to much higher profitability — perhaps as high as 1,000 basis points.
- Apple has adjusted its production mix and supplies are improving. Wu is currently modeling 6.8 million iPhones for Q4 — nearly equal to Apple's runaway fourth quarter last year (6.89 million iPhones) and up 31% from Q3 (5.21 million). It's a forecast, he says, that could prove to be conservative.
- He is picking up signs that Apple's suppliers could be gearing up to build 9 million to 10 million units.
Wu recently raised his price target to $184 a share — from $176 — based on 15 times his estimate of Apple's 2010 free cash flow plus net cash holdings worth $34 billion.
Apple shares were down a fraction of point to $159.73 in midday trading Wednesday.
As far as I remember, Apple always sold more of their higher-memory offerings. That´s why they killed the 4 GB iPhone so early…cause nobody wanted one. And I can understan, why. For as little as 100 bucks you can double your memory….I dont`had to think about it for a minute, which one to choose.
Especially if you think of the growing number of Apps, the TV-Shows that can be downloaded directly to your iPhone and so on.
And it ist also a great way for Apple to gain more and more money, if you consider, that the double-memory costs Apple only 20$ more, but they sell them for 100$.
Nevertheless, I love my iPhone 3G and I am looking forward to the end of August when I can finally renew my contract an get my all-new 32GB iPhone 3GS.
Let me explain it with the words of a great CEO:
"I LOVE THIS COMPANY" (Monkey-Steve) 
Cynik wrote about the app store: "It is a carefully crafted way of making sure that every time a developer makes a mistake… the developer pays."
Hey, man! I wouldn't have it any other way. Apple, Steve, and his band of merry men have created a phenomenal product. They shouldn't be paying for the mistakes of developers. The iPhone is selling at SPECTACULAR rates. Most developers are ecstatic to have this market. I'm delighted with the phone and I love all the apps. Thank you Steve Jobs.
I read your long comment … Im not a developer … just a customer.. I love your apps guys/girls… I usually buy most apps that come out… its a fun…
my kids love playing backyard farmland and many others.
I hope things work out for you developers… we need u…!
Cynik: Please read an article before you comment. Your long-winded comment had nothing to do with it…
Mr. Wu has missed the basic in economics that the symbiotic relationship between developers and Apple touts. When Apple sells more iPhones by advertising tons of apps, the developers win as they have more opportunity to sell their apps. I can tell you who made the good apps I love on my iPhone and I look for them to do more on other platforms. Mr. Wu just sounds like a developer whose app isn't doing well and has sour grapes.
The iPhone developer community is not all cheer and goodwill towards Apple's grand success with the iPhone.
In fact, there is potential trouble brewing in developer town in Appleland. there is beginning to be a "cult" of discontent.
The thing is, the App Store is screwing serious developers, BAD. It is a carefully crafted way of making sure that every time a developer makes a mistake… the developer pays. Apple lose nothing. But every time a developer wins….. Apple win bigtime.
See, when a good application is written, people talk about the iPhone, and the App Store. NOT about the small firm the developer owns, or the webstore the developer has created.
What this means is that developers for the iPhone are basically building the Apple brand instead of their own, everytime they go to work on a new iPhone app.
They are slowly getting wise to this fact, and I suspect the backlash is going to be ugly.
Apple love to talk about how there are 10 squizzilion apps you can have on your iphone. That was impressive, when everyone said it would never happen.
BUT…… it is now becoming apparent that of those 10 Squizzilion, there are maybe forty that are any good at all. The rest are just badly made toys with pretty eye candy logos.
Sooner or later, it is going to become VERY uncool to develop for the eyePhone. Sooner, I think. If all those developers turn hostile, the App store could end up going the way of VISTA. A joke. Known world wide for being a joke, and a waste of time.
It all depends on how snow leopard decides to handle enterprise development.
If Apple open up the calendar API and make networking transparent, then Apple have a real chance of hanging onto their new flock of developers. If not….. there is no future for them, and they know it.
You can't make a career out of developing for the App store. It is a dream, and people are waking up. If all those programmers have to wake up and go out into the marketplace, they are going to find that every single business on earth needs two fundamentals:
Networking and scheduling. In other terms, the Calendar API, and transparent networking.
Just now you can do just about everything on an iPhone EXCEPT scheduling and networking. If you want those features, Apple wants you to use Mobile me (which still doesn't work) and their own calendar programs.
But mobile me doesn't work properly, and even if you say "OK, I'll use iCal."…… you can't. You just cannot. The API is hidden by apple, so there is no way to make scheduling part of your application suite for a firm using iPhones.
Ergo, if you want to use the iPhone in business, you've really got to add it to a UNIX or microsoft system. If you pretend that you can help a business as an iPhone developer using Apple software and OS……. you're kidding yourself and your client. Sure you can use Apple development tools. If your client wants to play simple games and chat all day, and swap photos, then you are in with a heck of a chance of doing well.
But if they want to schedule their workforce and network between their employees…… we you're out of luck with Apple and the iPhone.
Apple have invented "Exchange for the rest of us." with two massive flaws: First, the Apple product (mobile me) doesn't work. Second, "the rest of us" does not include developers.
Hence my interest in Snow Leopard.
If Apple do not fix networking and scheduling with this release, I think they will ridiculed by the developer and business community. They will not be able to laugh it off, either.
The mobile technology is growing and more and more businesses and developers are demanding the tools to get on with business software development. If Apple miss that boat with the Snow leopard, I just don;t think the developers or the business owners will give them another chance. People want solutions today, and if that means going with google tools and Palm style hardware…. that is where the emerging market share will go, and Apple will return to its long time status as provider of cool looking but largely useless computers for people who have too much spare time.
I think people are just working the numbers. The diff between the 3G and 3GS is $100 or roughly 1 month of service. If that $100 is significant to you, you most likely cannot afford the service. It is better to spend the extra money and either enjoy the features or future-proof yourself.
Once again Apple customers demonstrate their staggering lack of interest in cheapskate.
We want a reasonable price, but the product itself is the first and most important factor.
I got in at 80, was ready to take profits but cannot because this company is doing everything right. I just keep moving my sell price now at 175.