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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: slacker711 who wrote (171895)	7/20/2014 11:56:59 AM
From: pyslent	Read Replies (1) \| Respond to of 213182

I think I am a fair bit more bullish about the proportion of sales from the 5.5" model. The Note 3 sold at about half of the rate as the S4 during its initial launch and the Android device market has only continued its migration towards larger models over the last year. The S3 launched in 2012 and was already 4.8" and the 2013 flagships were almost all around 5" or larger. I do expect iPhone upgraders to pick the 4.7" model in large numbers, but think that the 5.5" model will sell well among Android switchers. Actually, that's my thinking as well. If, as you say, the Note represents 1/3 of high end Galaxy sales, and most iphone upgraders opt for the 4.7 model, then the 5.5 model will represent 1/3 of Android switchers. If I estimate the Dec quarter iPhone sales in terms of organic growth (normal upgrades and new user sales that would have happened with a standard new iPhone launch) and Android switchers (people opting for the new iPhone only because of the larger size, who would have otherwise bought a Galaxy S/Note), I get only a small percentage of 5.5 sales (about 3 million out of 40 million iPhone 6 buyers). This was a simplistic WAG estimates, of course: assumes 30 million iPhone 5S buyers last Dec, with organic growth of 10%, then layering on top 1/3 of 25 million Galaxy S/Note sales as the switch rate. When I do that calculation, i get 7.5 million Android switchers, about 3 million of which are Note sized. I took a look at consensus December revenue and it seems analysts are expecting $4.4 billion in revenue growth YoY. That is about 7.3 million extra iPhone units will all other product categories flat YoY. This seems low, but see the calculation above-- that's nearly the same number I'm coming up with for the Android switch effect. It's likely that the switch effect will be front loaded, and there will be a bigger bump than usual among "organic" iphone buyers as well. It would have been nice to see what Dediu calculated for 5/5S gross margin during the product cycle (he shows 50% at launch, no worse than the 4 and 3G, but those rapidly rose to 60%. I don't think that was true the past few years.

To: slacker711 who wrote (171895)	7/20/2014 12:17:50 PM
From: MGV	1 Recommendation Recommended By Doren Respond to of 213182

Note the last launch depicted in the graph shows estimated margins higher than 50% for the iPhone and nearly 2x the average margin of iPod, Mac, and iPad combined. For those worried about overall gross margins, keep worrying and I'll be happy to take your shares below 90.