Apple’s iPhone 6 and 6 Plus went on sale Friday and shattered previous opening-weekend records, selling more than 10 million units during the period. Those sales may just be the start of a virtuous cycle for Apple — a cycle that could include new product introductions and weighty revenue growth.
“Sales for iPhone 6 and iPhone 6 Plus exceeded our expectations for the launch weekend, and we couldn’t be happier,” Apple CEO Tim Cook said. “We would like to thank all of our customers for making this our best launch ever, shattering all previous sell-through records by a large margin.”
The sales numbers show there was a pent-up demand for these phones, noted IDC mobile devices analyst Ramon T. Llamas. “Ten million is a good strong start,” he told the E-Commerce Times. “I think it’s a precursor of what we can expect for the rest of this quarter and the holiday quarter.”
That depends on Apple’s ability to keep up with demand, though — even Cook admitted as much.
“While our team managed the manufacturing ramp better than ever before, we could have sold many more iPhones with greater supply, and we are working hard to fill orders as quickly as possible,” he said.
Those supply constraints and the absence of China from the initial mix of countries offering the models make the weekend sales figures even more impressive, maintained Brian J. White, an analyst with Cantor Fitzgerald.
“In our view, this is a very big print for Apple given the supply constraints and that the company did not have the benefit of China this year,” he wrote in a research note.
“Apple executed extremely well in the face of severe supply constraints,” White added.
By Sunday evening, stocks of the iPhone Plus, which has a 5.5-inch Retina display, were exhausted, White reported, and 48 percent of the iPhone 6, which has a 4.7-inch display, were sold out.
“Despite these supply constraints, Apple managed to deliver another record opening weekend,” White said.
As of Monday, Apple was advising consumers there would be a four-to-seven day shipping delay for the phones.
Apple has predicted the iPhone 6 and iPhone 6 Plus will be sold in 115 countries by the end of the year. As the company continues to add markets, more pressure will be applied to the supply chain.
“The question is, how fast can they meet demand going forward?” wondered IDC’s Llamas. “If you’re in nine countries at launch — not including China — what will happen when you’re in a hundred different markets and China comes aboard?”
6 Versus Plus
Apple has released only combined sales figures for the iPhone 6 and 6 Plus. That has given rise to speculation about how one model is doing in sales compared to the other.
One way to assess that is to compare the amount of Web traffic created from the phones. Over the weekend, 1.3-2.2 percent of Web traffic could be attributed to the iPhone 6, but only 0.2-0.3 percent to the 6 Plus, according to Fiksu and Chitika.
Those numbers seem to contradict surveys of customers waiting in line to buy iPhones over the weekend, who largely said they were buying the 6 Plus.
One possible explanation is that many of the larger iPhones were being purchased by resellers who intended to send the units to countries where they initially won’t be available — such as China, Russia and Poland, suggested Philip Elmer-DeWitt, writing for Fortune .
While Apple may be filling a gap in its product line with the 6 Plus, it remains to be seen how popular the unit will be.
“At most, the Plus will account for 30 percent of all sales,” IDC’s Llamas predicted. “It’s a big device. It’s expensive. And just because you have large hands doesn’t mean you’re going to buy a Plus.”
More Robust Revenue
The mix of sales is important to Apple, because if the Plus becomes a hot seller, it will significantly affect iPhone revenue, which accounts for half the company’s total take.
Even if the Plus isn’t a runaway bestseller, Apple has created incentives for its customers to part with a little more cash when upgrading their iPhone.
“Paying $100 to go from 16 GB to 64 GB of storage will be a valuable upgrade for consumers and increase the average sales price for many phones,” Patrick Moorhead, founder and principal analyst at Moor Insights & Strategy, told the E-Commerce Times.
In addition, “because they changed the form factor, everybody needs a new case — so that will make Apple richer as well,” he pointed out.
The importance of the iPhone launch goes beyond company sales records.
“This is not just a weekend sales story — this is a multiproduct, multiyear growth story,” Trip Chowdhry, managing director for equity research for Global Equities Research, told the E-Commerce Times.
“Innovation is back at Apple after three years of pause, and we are entering a new era,” he said.
That will be good news for Apple stockholders, added Cantor Fitzgerald’s White. “We believe Apple is in the midst of a ‘super cycle’ that we expect will keep the stock heading in an upward trajectory.”