Are Apple cooking their numbers?

sebtomato

Regarding the collapse of Phone 4U, and people not getting their iPhone 6, apparently only 130 pre-paid for one and won't get it.

Carphone Warehouse has said that they will get people a refund if they get their iPhone through them, but it's really a fairly cheap marketing stunt given the small number.

And to be honest, only 130 pre-ordering an iPhone 6 ahead of the launch from a major high street phone retailer? Not really inline with Apple's "amazing" launch numbers. Hmm, something is not quite matching.

Since I bought an iPad in December a couple of years ago, which had been supposedly out of stock in all shops since July, and realised that it had been built in July, I am very suspicious of their numbers, and they are surely constraining the stock sent to shops to make some buzz.

I remember some Apple employees going to the US to some Apple stores, and asking to buy some iPads. There were none in stock, until they showed their badge, and three brand, unopened and sealed new suddenly appeared from the stock room.

I know they are very keen on their own staff to go and queue at an Apple store for getting the latest iPhone, at full price (no staff discount on iPhones, but makes some nice queue pictures for the news), and quite a few of them are happy to spend a significant part of their income on Apple products (not a very good career path if they don't).

So could Mr Cook be "cooking" some numbers? Do they have a very big warehouse full of unsold stock somewhere.

bowlhead99

The failing retailer phones4u only managed to book 130-140 pre-orders on the Friday and Saturday before going bust on the Monday and missed out on most of the pre-order period because they were in administration by then. Perhaps if they were generating more sales they would not have been a failing retailer.

That doesn't necessarily call into question the fact that Apple claimed 4m global preorders in the first 24 hours of the preorder window, or eventually 10m sales including preorders plus the opening long weekend. Lots of those sales will surely just be to retailers rather than end customers. Many customers will have preordered direct from an Apple store to get the full 'experience', given phones4u didn't give you any discount and only via Apple could you get the various special editions.

I don't think there is any doubt that major electronics retailers restrict available stock to create a buzz - having long lines for a product is good marketing. If there was always enough stock up front, people wouldn't need to queue to make sure they got the latest gadget 'first'; and a trendy sought-after product is what helps make the brand be able to charge premium prices for average tech.

Of course, sometimes a manufacturer's hand can be genuinely forced by supply problems when they literally can't produce enough to meet their ambitious launch deadlines, but that is often a negative for the business because people may go to a rival instead (e.g. PS vs Xbox holiday launches).

So, if you can't get a particular model of a product for a long time with the colour you want or the ram configuration you want, it can be a combination of issues - either Apple don't have the product, or they had it but have sold a batch of them on to a retailer you haven't tried, or they do have it but don't want to release it (because they'd prefer to sell the white ones now and make the black ones or the ones with bigger tech specs a little more sought after to make sure they can sell all those too at their price point), or they are holding a load back for celebs and VIPs and apple employees, being people who are more important to be seen carrying one than you are, etc etc.

Whether Apple or one of their retailers are willing or able to let you buy a product today can be down to marketing. But 'cooking the numbers' usually refers to misstated financial statements or fabricated press releases (e.g. numbers sold at launch). I don't think there is any evidence that this has occurred.

When they cut off the financial statements for Q3 reporting, they will have sold a certain number to customers or retailers (which will be booked as revenue in the accounts), and they'll have a certain number sitting in their own inventory or work-in-process (which will be sitting in the balance sheet in their own accounts). If that tells a different story from the formal press releases about how many they sold in the first few days or weeks, then you could say the numbers may be cooked, but I doubt it will (not that the quarterly accounts are likely to have enough detail for you to prove it anyway).

If you don't mean 'cooking the numbers' in terms of financial statements being misstated but merely speculation about how much inventory would be on hand to supply people if they didn't want to create a buzz, I guess it's a non-issue for investors. Investors are happy to see the high early sales and are only concerned with stock levels if they result in customers dropping their potential purchase and going elsewhere causing unsold stock - I guess from your own example, you were happy to wait for the stock to get to you, rather than go Samsung or another rival. The palavers over how 'bendable' the new phone is, or whether the iOS 8 update really works, or to what extent the EU might accuse them from receiving 'state aid' via low taxes in Ireland... are more interesting/concerning for investors than the management of whether you have to wait a week for your phone.

Any delay that doesn't result in you going elsewhere, just helps them sell it at a premium price due to scarcity. Simple supply and demand - they have the monopoly on supply of iphones so have no incentive to oversupply it or move the price somewhere that's suboptimal on the profitability curve.

jimjames

Only 130 prepaid in cash maybe. Not surprising it's a low number as very few likely to pay cash.

Rest paid with credit card or as contract upgrade and will get full refund or phone so not included in that 130 and likely to be in the thousands.

Perfect example of someone adding 2+2 and getting 5.

I know a lot of people with iPhone 6 so I'd suggest numbers are correct.

nidO

Their numbers are bound to be correct, but its well known Apple like to pull the "low stock" card to try to create buzz and demand.

This demonstrates their position nicely:

https://www.youtube.com/watch?v=eJyMEkb_8to