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The analysts at Detwiler Fenton - a Boston based research boutique that prefers not to attribute their work to individual analysts - asserts that despite widespread Street concerns, there are no signs of weakness in iPhone 5 demand. They also contends that investors have become far too concerned about recent reports that Apple is cutting orders to some suppliers.
Here are the key points from their research note:
- They contend that check with U.S. retailers find that "all indicators point to strong demand with increasing supply." Detwiler asserts that Apple had about 48% share of the smartphones sold in November with both Verizon and Sprint, up from the low 40s during October, and tracking to north of 50% in December. On a year-over-year basis, Apple's share is up 20% at these two carriers, the research firm says. At AT&T, they say share is flat year-over-year,
- While some retailers have been cutting prices on iPhones - WalMart and Best Buy, for instance - Detwiler thinks Apple is allowing the retailer to use the device as a lure for shoppers, and not to dump excess inventory or to spur demand. "There has been conjecture about softening demand given recent iPhone5 price cuts at big box retail however this appears to be more of a strategy to increase foot traffic versus demand softening," they say.
- The willingness to allow retailer to cut prices, on the other hand suggests an opportunity for Apple to move into lower cost phones, Detwiler says. This is a point Piper Jaffray's Gene Munster also continues to make - Apple could boost share by offering some cheaper options. "We believe the pricing flexibility suggests a greater potential willingness by AAPL to move to lower price points in the future with new product launches in order to secure share," the Detwiler analysts write. "AAPL doesn't want to get into a situation where, depending upon product launch timing, its market share fluctuates wildly. We also expect AAPL will get more Samsung-like with respect to both accelerated product refreshes as well as cheaper, new iPhones to target lower price points as opposed to relying on its old models."
- The iPhone 5's successor could arrive as soon as June. "There is increased chatter in the channel that the next generation iPhone will launch in the June quarter to blunt the impact Samsung's Galaxy S4 will have on the market and we believe some of the recent bearish notes on AAPL's March quarter could be a misinterpretation of channel data points," they assert. "Our checks suggest that key AAPL suppliers - suppliers that would sell into the next generation iPhone - are not seeing any material weakness from AAPL in the March quarter."
- Detwiler sees iPhone unit sales of 50 million in the December quarter and 43 million in the March quarter.
I would note that moving to a June release schedule - and away from the fall launches for the 4S and the 5 - would be a return to historical practice:
- Apple announced the 3G on Monday June 9, 2008...
- ...the 3GS on Monday June 8, 2009
- ...and the iPhone 4 on Monday June 7, 2010.
- All of those were launched at the company's annual developers conference in San Francisco....
- ...which so far has not been officially announced for 2013...
- ...but if the pattern holds, we could see iPhone 5S, or whatever they're going to call it, unveiled at WWDC on Monday June 10, 2013. Might want to block off your calendar.
