An odd thing happened yesterday, the launch day for the iPhone 5.
In some Apple Stores in New York City, anyway, the lines weren't that long.
Oh, sure, they were long in the morning, because a handful of nutbags had been camping out for days.
But, by mid-morning, they weren't long. And by the afternoon, some stores, including the huge centrally located one in Grand Central Station, had no lines and plenty of phones.
So that made it seem as though Apple had done something remarkable: More than met initial demand.
Of course, there are two ways to meet demand:
- You can create an overwhelming amount of supply (tens of millions of iPhones), or
- Demand can be lower than you expected.
So, that's the guessing game that Apple stock traders get to play this weekend.
Did Apple produce and distribute so many iPhone 5s before launch day that it sated what initially appeared to be absolutely massive demand?
Or...
Was demand actually not that great?
Initially, demand certainly appeared to be great: Apple announced 2 million iPhone 5 pre-orders, and Piper Jaffray analyst Gene Munster reported that launch-day lines at three stores (including the 5th Avenue flagship) were 83% bigger than last year's lines for the 4S.
So that sounded promising.
But then, at some stores, the lines quickly disappeared.
Now it certainly could well be that Apple has gotten so good at preparing for iPhone launches, and its production lines in China have now gotten so proficient at gearing up, that Apple was able to produce and distribute more than the 6-10 million iPhones that are expected to be sold this weekend (the midpoint, 8 million, is twice last year's number).
In fact, this early and massive production could have been one reason that so many details about the iPhone 5 leaked out.
On the other hand... The smartphone market in the US and some other developed markets that Apple launched in yesterday are maturing rapidly, and many (most?) potential iPhone buyers may be tied into contracts that won't let them upgrade to the iPhone 5 for many months or a year. And Apple's primary competitor, Samsung, has been selling a phone that is in some ways superior to the iPhone 5 for the entire summer, and that may have siphoned off some demand.
So, it's possible that, despite the hype, the demand for the iPhone 5 actually wasn't all that great.
We'll know next week, when Apple releases its first weekend sales numbers. (Assuming Apple releases these numbers).
In the meantime, via Piper analyst Gene Munster, here are the numbers you'll want to consider:
- ~2 million iPhone 5s were pre-ordered, which is twice the number pre-ordered last year.
- Apple launched the iPhone in 9 countries this year, instead of the 7 it launched in last year (it hasn't launched yet in the biggest market, however--China).
- Apple is expected to sell 6-10 million iPhones in the opening weekend, with 8 as the target number, according to Gene Munster.
- Last year, Apple sold 4 million iPhone 4Ss in the opening weekend.
- Taking into account the pre-orders, Apple will have to sell 6 million phones from stores to hit the 8 million, versus 3 million phones sold from stores last year.
And how about the December quarter?
Apple sold 37 million iPhones in the December quarter last year. The "whisper" expectation for this year's December quarter is a staggering 50 million.
So, based on what we know so far, how's that 50 million looking?
Well, looking at just pre-order demand (2X last year), the 50 million looks conservative. If Apple sold 2X as many phones as last year, it would sell 74 million phones in the December quarter.
But...
This year's launch sales are likely to be a bit more front-loaded. Apple launched the 4S slightly later last year, so many of the early sales were booked in the December quarter.
This year, some iPhone pre-orders--the ones that were expected to be shipped "2-3 weeks" after the launch, will probably hit the December quarter, but most of the iPhone 5 launch sales will go into the September quarter. So the big launch-weekend frenzy will mostly boost the September quarter, not the December quarter.
In light of that, based on the pre-order demand, the 50 million number looks reasonable and probably slightly conservative.
But we'll know more next week, when we get the launch weekend sales.
If they're at the top of the 6-10 million range, expectations for the December quarter will skyrocket.
If they're at the bottom of that range, expectations will droop.
Let the fretting begin...
SEE ALSO: Here's The First iPhone 5 Ad
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