Apple Q2 Results Could Mean No iPad Mini, No iPhone Nano, Late Launch of iPhone 5
Will Apple release an iPhone 5 in June? Will it have a cheaper alternative to the $650 iPhone? Will Apple release a 7-inch tablet to cut Amazon Inc.'s growing share in the tablet market? The numbers from financial results filed yesterday may gauge the feasibility of everyone's projections.
Apple Inc. (NASDAQ: AAPL), the world's top tech company by market value, reported net profit of $11.6 billion, or $12.30 a share, on $39.2 billion of revenue for the second quarter ended March 31, 2012, up from $6.0 billion of net profit on $24.7 billion of revenue in the year-ago quarter. Data compiled by Bloomberg News show that analysts had predicted profit of $10.02 a share on revenue of $36.9 billion.
Apple's unceasing ability to outdo projections and gain sales growth despite intense competition DEBUNK rumors about:
(1) an iPad Mini
Apple sold 11.8 million iPads during its fiscal second quarter, a 151 percent unit increase over the year-ago quarter. iPad sales were up from 4.7 million units in fiscal second quarter of 2011, although they were down from 15.4 million units sold during the first quarter of fiscal 2012, which included sales during the Christmas holidays.
Apple Stores in the U.S. and nine other countries started offering the new iPad -- also known as iPad 3 -- on March 16, and sold 3 million units in the first three days. The third generation iPad, which features a higher-resolution display, a new processor, and support for high-speed 4G LTE data networks, was made available in another two dozen countries on March 23.
Talks about an iPad Mini -- an iPad that would have a 7-inch display and priced under $300 -- gained ground after Amazon saw success with the 7-inch Amazon Kindle Fire. Amazon was able to sell 4.7 million units of the Kindle Fire in the fourth quarter of 2011 (based on estimates of market researcher IDC), proving that there is a market for cheaper tablets. Although the Kindle Fire doesn't have superior specs (just an 8 GB storage capacity, 1 GHz dual-core processor, has no cameras), the new tablet has been widely seen as a vulnerable alternative or threat to the iPad given it's 60% cheaper than the iPad and it's backed by Amazon's cloud infrastructure and deep array of digital content.
While the recent iPad quarterly sales figures failed to beat the analysts' average forecast of up to 13 million, the figures have allowed Apple to maintain a market share of around 60 percent of the tablet market. Hence, an iPad Mini might be more rumor than real.
The 9.7-inch tablet, which has an entry level price of $499, is set to be released in 20 more countries, mostly in Asia and Latin America, this month. Although the tablet was made available in Hong Kong last month, it hasn't been released in mainland China, were Apple has gained astounding growth.
(2) a June release date of the iPhone 5
Apple in October last year unveiled a marginally improved iPhone 4S, instead of the mythical and radically different iPhone 5. While it does have an improved camera, software and processor and a revolutionary virtual assistant named Siri, it retained the 3.5-inch screen, copied the design of the iPhone 4, and didn't have 4G LTE support. Despite the lukewarm reviews, the iPhone 4S delivered record sales of 4 million units in the first three days.
As a result of the iPhone 4S's so-so performance improvements, battery issues and lack of new features, there are concerns that interest in the device would peak earlier than previous models, and that it may be necessary for Apple to release the iPhone 5 sooner rather than later.
Apple has said that it sold 35.1 million iPhones in the March 31 quarter, an 88 percent growth over the year-ago quarter, and beating the 30 million units forecast by Wall Street analysts. iPhone sale in the greater China region saw a five-fold jump.
In the fiscal first quarter ended Dec. 31, 2011, Apple disclosed iPhone sales of 37 million, an increase of 128% compared to the same period in 2011.
Given the surge in iPhone sales outside the U.S., Apple would likely stick to an October -- rather than a June -- release date of the sixth generation iPhone. The iPhone 4S was released in October last year while prior models were unveiled in June.
The iPhone 5 to be released October is expected to have an all new design, lighter, wider and longer than the previous model, a 4.6-inch screen, a bigger battery, a quad-core chip (or just a dual-core A5X chip with quad-core graphics processor like the new iPad) and 4G LTE support.
The iPhone 5 is expected to be less than 8 mm thick with the use of new Liquidmetal alloys for the case and in-cell display technology that would place the panel's touch sensors inside the color filters rather than above them.
(3) a second cheaper model called the iPhone Nano
The cheap iPhone rumors are back. Citing a report in China Times, Boy Genius Report claims that Apple is working on a low-cost entry-level "iPhone nano." A low cost iPhone would allow Apple to build more market share in the low-end smartphone market dominated by Samsung and Nokia and in emerging markets where the $199 for an iPhone on a two-year contract and $649 contract-free are steep.
But the "iPhone nano" more likely is rumor than real given that there were also reports early this year about a 7-inch iPad mini (only a 9.7-inch new iPad a.k.a. iPad 3 was released).
But Apple's ability to maintain high margins and sales growth despite intensifying competition from Android rivals shows that Apple need NOT sell lower priced devices -- specifically the iPhone nano -- in order to remain competitive.
Gross margin was 47.4 percent compared with 41.4 percent in the year-ago quarter.
"That shows they are able to maintain their pricing without compromising on growth," said Morningstar analyst Michael Holt.
"There are lower-priced alternatives from the Android world that are becoming more compelling. The concern was that Apple might sell more older models to be more competitive. That would have shown up in the gross margin. But aggregate gross margin and average revenue per device show that this hasn't happened."
Hence there won't be a second, cheaper model allegedly called the iPhone nano when Apple launches the iPhone 5 in October.