I skipped my long walk yesterday and paid the price last night — it was a rough night, spent mostly tossing and turning, left to right and left to right. That lack of necessary exercise pushed up the sugar levels, which is never a good thing if you happen to be a diabetic. Between toss and turns, there was frequent sips of water, for such is the side effect of higher sugar levels. So, around 4 am, I gave up trying to sleep and here I am — skimming Twitter, reading my emails, answering them and ignoring most of them. However, one of them stands out — a report based on proprietary data (they call it UBS Evidence Lab iPhone Monitor) collected by UBS Research.
The gist of the report is that during the three months ending December 31, 2014, there was a consumer demand (sell-through) of 69.3 million iPhones. Apple in comparison reports sell-in. In other words, the demand for Apple’s iPhone 6 and 6+ is pretty strong. UBS estimates that in the period stretching from October 1, 2014 to December 31, 2014, Apple had a sell-in of 67 million iPhone units and a total revenue (from all Apple product lines) of $68 billion. In comparison, Apple had sales of $57 billion during the three months ending December 31, 2013.
If UBS estimates are accurate, majority of the growth for the company during the holiday is coming from the iPhone sales. With 34% growth in year-over-year iPhone revenues*, according to UBS estimates that product line alone would account for about ($19.7 billion) $43.4 billion* in sales for the December 2014 quarter. Xiaomi, the copycat smartphone maker, reported full year 2014 to be 61.1 million phones and had revenues of $12 billion and profit of $56 million.
For comparison sake, Intel is projected to have sales of just over $55 billion for the entire 2014. Cisco Systems, another key technology company, had sales of shade over $46 billion for its fiscal year 2014. Tim Cook’s effort to woo and nurture the Chinese market has paid off. iPhone, is seeing a boom in demand, thanks in large part to China and its deal with China Mobile. “China could constitute as much as 35% of shipments in the quarter compared with 22% a year ago,” UBS Research notes.
Whatever, the reasons, my mind keeps going back to the number — approximately $20 43.4 billion* dollars of iPhones — from total expected sales of $68 Apple’s total sales for the three months ending December 31, 2014. It explains everything about the company, its priorities and why it is starting to show signs of wear and tear across its other product lines.
Marco Arment has come out and said what most have felt: declining standards and fraying quality of the OS X experience. The subsequent twisting of his words has made him regret writing his critique but I think his point does stand. I have been a long vocal critic of Apple and its ability to deal with the Internet, and of course its spotty record around apps that need a networked experience. Don’t get me wrong — I love Apple, and want to keep using their products. I don’t want to ever experience the Apple of John Scully.
It is and will always be my biggest fear about Apple, having been of that generation that suffered mediocrity from Cupertino. The competition is fierce and there are copycats everywhere. There are others such as Google who are being innovative and perhaps can use their immense capabilities in machine intelligence, data and connectedness to trump the Apple hardware. In many ways these are the best of times for Apple — I mean $20 billion of iPhones sold in just three months — and they are also the worse of times.
For me, it is time to head down to the gym, and force myself to walk for about an hour to ensure, a normal day at work. I just finished writing on a Mac. I am going to listed music using my Beats Audio headphones (an Apple company) on my Apple iPhone 6+. For now Apple has most of my gadget budget and attention. I hope they don’t lose it.
* I had erroneously and regretfully missed “iPhone revenue growth” in my original version of the piece. Instead od writing the iPhone revenues of about $43.4 billion, I ended up pointing out the iPhone revenue growth of $19.7 billion. Instead it is 34% growth in iPhone revenues (or approximately $11 billion) from December 2013 quarter of $32.4 billion. I am extremely sorry about the error.
January 7, 2015/San Francisco