It was reported that demand for iPhone 5 remains strong, as supply and yields continue to improve. On the other hand, total iPad sales during the holiday season may prove lower than what industry pundits expect. That because sales of the iPad Mini cannibalizes sales of iPad 4.
Strong Consumer Demand for iPhone 5
During his talks with Apple’s supply chain, Shaw Wu of Sterne Agee discovered that lead times for iPhone 5 are now at the same day. That is definitely an improvement from previous turn around of two to four days.
Because of this, the analyst increased his iPhone forecast to 47.5 million units for the holiday quarter from 47.3 million units. Apparently, his expectations are higher than what market watchers speculate that Apple will sell 45 million to 46 million iPhone.
In another news, major telecommunication operator in Indonesia are expecting brisk sales of iPhone 5. As stated by Erik Meijer, chief commercial officer of PT Indosat:
We will be offering the iPhone 5 at several sales points, including two 7-Eleven convenience stores in Teluk Betung and Bintaro at midnight.
iPad Mini Sales vs. iPad 4 Sales
The iPad, on the other hand, got a reduced sales projection from Shaw Wu. From 25 million, he decreased his prediction to 23.5 million units. His new forecast is a bit below the market consensus of between 23 million and 24 million. That’s because he cited continuous constraints on iPad Mini supply and lower build orders for iPad 4.
Sales of the full-size Apple tablet may be slower than expected because it is being cannibalized by smaller and less expensive iPad Mini. Wu added that demand for the 7-inch iPad remains strong, suggesting that people’s preferences are shifting to smaller form factors. However, shipments of the iPad Mini remains limited because of supply constraints.
Based on the conversation with various set of investors in the recent weeks, Wu believes that AAPL stocks will continue to be volatile until the end of the year. This instability is what the analyst called “non-fundamental factors” like profit taking, instead of reflecting on the company’s recent performances.
However, as we enter 2013, investor sentiment will likely shift back to fundamentals. We are at the beginning of two big product cycles that will likely last 3-5 quarters and see margins poised to improve with greater scale and improving yields.