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What Tim Cook did not mention in "record sales" claim

by on29 September 2015

Wall Street has already seen through it

Yesterday Apple announced that its sold more than 13 million iPhone 6s and 6s Pluses in its first three days of launch and claimed it was a record. The Tame Apple Press sent its staff to dance in the streets, but the question was why does Wall Street look even more coldly at Jobs Mob?

The figures were pretty much in line with what Wall Street predicted, which was part of the problem. Wall Street had predicted a sales slump on the back of China's economic crisis, the saturation of the smartphone industry, and Apple's lack of a good product.

 It is true 13 million sales on the first three days were good and that it was a record. The most Apple has sold in the same period was 10 million iPhone 6's last year.

But when you look at how Apple rolled out these two new phones the figures were not as good as they should have been.

The clues were noticeable. This year queues at the Apple stores were 60 per cent lower than last year. While the whole concept of queuing when you have online pre-orders is daft, it was always touted by the Tame Apple Press that it was a sign of how successful the product was going to be.

Another sign that the phone was not selling as well as Apple liked was after a few days there was still plenty of stock in the shop. Apple famously "runs out of product" so that the Tame Apple Press that it has sold out, to boost the image of desirability. This time though a few calls to various stores found that there was still some products on the shelves.

So how did Apple get record sales? This is where the marketing comes in. We have been saying that Apple has been panicking as its iPhone sales are predicted to dry up. China was supposed to stop that rot, but then the country had a stock market crash. Investors in Apple started to believe that the share price had peaked and started off-loading them. Tim Cook made the amazing move of reassuring investors that everything was great in China by quoting figures which were before the stock market crash.

It paid off, but Jobs Mob needed a few good sales figures to confirm to investors that everything was ok. So what it did, it launched the iPhone 12 countries at the same time as the US, including China is still Apple's second biggest market, so effectively it was going to make the three day figure look huge. Apple forgot to tell the world how many phones it sold in China this time because people like me would deduct that figure from the 13 million to give a truer comparison to last year.

There is a reason why this important. Last year, which admittedly was huge for Apple in China, just one supplier, the E-commerce firm took 9.5 million pre-orders for the iPhone 6 and iPhone 6 Plus. If these sorts of figures were repeated then the Chinese sales would have added a huge amount to Monday's figures. But they obviously weren't.

FBR Capital Markets analyst Daniel Ives estimated that Apple sold more than 2 million iPhones in China over the weekend. But he thought that was a good figure.

Then there is the other element of smoke and mirrors that was spotted last year when Apple claimed it had sold 10 million phones nearly half of them were not activated. At the time Fortune Magazine tried to put that down to the fact that half of the phones bought in the US were by Chinese and headed to the grey market.

Even if that were true, Apple will have killed off a big chunk of those sales by launching on the same day in China. What was more likely was that half of the sales that Apple announced were those who it had shipped off to retailers and had not sold yet, or were pre-sales.

With all this going on, 13 million units is a pretty terrible figure, at least for Apple. It means that the first days of sale in the US and EU were lower than expected and even the Chinese sales could not help out enough.

IDC analyst John Jackson said that topping what the iPhone 6 achieved looks like a tall order, even for Apple.

Then there is what happens next. There are always big sales for Apple because it has a loyal fanbase who would cue to buy a rounded rectangle shaped dog poo if it had an Apple label. But these buy within the first few days. Sales to more rational people are what sustain the Apple empire and like Wall Street, we think these people are going to start leaving Jobs Mob for cheaper and better pastures.

Apple did OK probably slightly less than last year during the same period but its days of meteoric growth are over. Things could go very badly for the outfit if sales slump from this point on.


Last modified on 29 September 2015
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