Apple says iPhone 3G S pre-orders will be filled on time
The Boy Genius Report cited internal sources at AT&T as saying that customers who had not ordered the new phone by June 15 would have to wait one to two weeks after the launch to receive their order or stand in line to buy one.
While availability of the new iPhone at AT&T stores is still uncertain, there appears to be no shortage on Apple's side. The company's website continues to take pre-orders for the product without reservation, informing users that their new phone will be shipped to arrive on time on the 19th, with free shipping to boot.
Early pre-orders are reportedly already shipping.
The introduction of the new iPhone 3G S at $199/$299, down from the original $499/599 for the first generation iPhone, and the slashing in half of the current iPhone 3G's price tag are expected spur demand significantly. While Apple will likely increase its market share as a result, concerns are being raised about the companyâs ability to sustain its historically high margins.
On June 9, following the price-cut announcement at WWDC the previous day, Keith Bachman of BMO Capital Markets summarized the companies move, saying âApple is playing the [price] elasticity curve.â
The key to keep margins from falling below the 34.8% level they reached in the year-ago period is for Apple to sell so many units that volume counteracts decreased per-unit revenue.
Gene Munster of Piper Jaffray told Marketwatch that, "historically, a 50% cut in iPhone pricing has increased demand by two times [over prior sales levels]. The bottom line is we are increasingly confident in our iPhone estimates."
New volume must be great enough to make up for the $1.3 billion projected loss from the cuts, according to Samuel Wilson of JMP Securities. The firm is warning investors to not expect increased margins this year, and estimates third quarter margins to come in at 33%.
In addition to greater volume of sales, the broader market created by the $99 entry level model and a revamped new version will drive the same economies of scale that enabled Apple to remain fiercely competitive in iPod pricing while retaining relatively high margins.
Undercutting Apple in price in the smartphone market will be even more difficult for competitors than matching or beating the price of the iPod was. Additionally, Apple's leading library of mobile apps also play a role in differentiating and adding value to the company's iPhones, tipping the scales for many buyers who might be open to considering other devices.
44 Comments
sounds like when Palm and Sprint said to expect out of stock situations...
AT&T was doing the same by scaring consumers lol...Gotta love these companies.
New volume must be great enough to make up for the $1.3 billion projected loss from the cuts, according to Samuel Wilson of JMP Securities. The firm is warning investors to not expect increased margins this year, and estimates third quarter margins to come in at 33%.
How interesting - is Mr. Wilson aware that the price cut is only $100, while Apple gets over $400 per iPhone? Even on the 3G selling for $99, it's only roughly a 20% price cut. Plus, according to the teardowns, the cost of production has fallen enough in the past 12 months that margins on the $99 8 GB iPhone 3G should be higher than they were for the $199 8GB iPhone 3G a year ago.
1.3 billion... let's see, that's $99 times 13 million. Kinda bizarre way to look at it - if Apple sells 13 million iPhones starting now, that will bring in revenue of around $7.2 billion assuming average rev per unit of $550.
I just find it pretty nuts that someone could look at the price cut, then assume 13 million sales, and STILL come out saying that it's a negative. Oh well...
Gene Munster of Piper Jaffray told Marketwatch that, "historically, a 50% cut in iPhone pricing has increased demand by two times [over prior sales levels].
Can't argue with history.
He must have the sales figures for the last five or ten 50% iPhone price reductions right there in front of him...
Any predictions on the opening weekend sales, end of quarter sales, end of fiscal year sales and sales up to CES 2010?
Good work Apple. Gotta love it.