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Apple Witnesses Crazy Demand for Its iPhones
Posted by: Live investor (IP Logged)
Date: September 23, 2013 04:52PM

Apple (AAPL)'s flagship device of the season, the iPhone 5s and the lower cost iPhone 5c, hit stores on Friday. And as expected, there were endless queues of Apple lovers lined outside so that they could get their hands on the device on the very first day of the global release.

The handset went on sale on Sept. 20 in France, Germany, Singapore, Hong Kong, the UK and the U.S.

The Craze

Massive lines had formed outside Apple stores in New York, San Francisco, Sydney and Tokyo as this is the first time that the Cupertino hero broke its tradition and released two new iPhones for the first time in its history of launching the smartphone.

Apple observers saw signs of stronger demand for iPhone 5s than iPhone 5 last year. However, some caution that this might not be the correct tool for assessing the demand and craze for 5s. Unlike iPhone 5, buyers were unable to book their iPhone 5s online before the release date. This is another reason why there were plenty lining in the queue to grab the high-end smartphone. Brian Marshall, an analyst of the ISI Group said, “While it is likely some of this line is due to not having an early pre-order option for the 5s, we still believe it shows loyalty to the iPhone remains strong among Apple's installed base”. He estimates that the tech giant would sell approximately 6 million units of the phone in the first three days after its launch.

Piper Jaffray conducted a survey of 416 people standing in long queues outside stores in New York, Minneapolis and San Francisco and found out that over 95% of them had queued to buy iPhone 5s. An analyst of Piper Jaffray expects the Cupertino company to sell about 5 million to 6 million phones in the first three days. In comparison, Apple sold 5 million iPhone 5 in the first week of its release last year.

Supply Remains Disappointing as Always

Though iPhone 5s is available in stunning silver and gray, the gold colored 5s seems to be the most desired by Apple enthusiasts as it all got sold out in the very first day. According to Apple’s website, the company will not be able to ship the gold version before October. Only the silver and gray colored phones would still be available in seven to 10 days.

The iPhone is also available in the stores of the national carriers Verizon (VZ), AT&T (T), Sprint (S) and T-Mobile (TMUS). However, they have limited supply of the model. In fact, an unnamed source of one of the wireless carriers complained to Reuters that the iPhone model supply is disappointing.

Sales in the opening weekend are extremely critical as it shall decide Apple’s positioning and competitive standing to displace Samsung’s Google (GOOG) powered Android phones in the global smartphone market. It also a lot depends on how well Apple would be able to ship the iPhones to serve the global demand. Weather the company will manage to beat its own record of 5 million iPhones sold in the opening week last year is majorly dependent on the shipment and adequate supply of the 5S.

To Conclude

Apple has always been tight on the supply of its devices. Some say the incredible demand is why the supply falls short, while others say it is Apple’s strategy to keep supply limited initially to keep the tempo of craze on for a longer period. Now that the company is also giving importance to the Chinese market and has released the phones in the emerging economy on the same day as at home, it would be interesting to see how the mainland responds to it. iPhone 5c is particularly focused on emerging markets including China and India. According to a survey of 25 early customers lined at stores in Beijing, 22 were standing to buy the 5s, while there were only three 5c lookers.

There lies great excitement for Apple as the holiday season is about to begin in the domestic market. Additionally, positive response from emerging nations is also expected to boost iPhone sales enormously.

Stocks Discussed: AAPL, VZ, T, S, TMUS, GOOG,
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