The technology world is abuzz with anticipation over the upcoming earnings from Apple (AAPL 1.45%). Analysts are out with their best guesses of how many iPhones the electronics giant will have sold in its fiscal first quarter. Apple's first quarter is crucially important for the company, since it covers the holiday shopping season.
Until Apple's official numbers are released, iPhone sales are anyone's guess. But some analysts are cutting their sales estimates, despite a number of signs that point to a relatively promising quarter.
Holiday iPhone sales almost certainly set a record
Apple generated strong sales numbers in the previous quarter, and it's likely the fiscal first quarter saw much of the same. For the quarter ended Sept. 28, Apple sold 33.8 million iPhones. That was up from 26.9 million in the same quarter the year prior. At the time, Apple projected fiscal 2014 first-quarter revenue to clock in between $55 billion and $58 billion. If it manages to earn $55 billion in revenue, that would represent year-over-year growth.
And, Apple's sales in the holiday quarter 2012 did not benefit from the new iPhone releases. In 2013, Apple released its iPhone 5s and iPhone 5c devices. It's true that the upgrades weren't exactly a leap forward, however, which is why analysts are relatively down on Apple this holiday season. There seems to be a pervasive sense of pessimism from the analyst community over Apple's iPhone sales.
For example, analysts at Societe Generale downgraded Apple, citing increasing smartphone competition. Their firm calculates Apple sold 52 million iPhones. But again, if that figure proves to be accurate, it would still represent another record for Apple.
And, while the holiday quarter won't be helped, Apple's newly announced partnership with China Mobile (CHL +0.00%) represents a huge tailwind in future quarters. Apple gaining access to China Mobile's more than 750 million users means a lot more iPhones to be sold in future quarters.
If not Apple, then who's selling smartphones?
Increasing competition is always a threat in the technology world, but it doesn't seem like other smartphone makers are lining up to eat Apple's lunch. Samsung (NASDAQOTH: SSNLF) posted its first quarterly profit decline in more than two years in its most recent quarter, due in large part to weak smartphone sales. Samsung's mobile devices division posted an 18% drop in operating profit on a quarter-to-quarter basis during the holiday period.
As a result, it's clear that if any company stole business from Apple in the holiday quarter, it wasn't Samsung. And it certainly wasn't BlackBerry (BBRY 2.62%), whose sales are falling off a cliff. BlackBerry's revenue collapsed 30% through its first three fiscal quarters. BlackBerry devices may still hold prominence in security and at the enterprise level. But as far as the consumer market goes, BlackBerry is still in free-fall.
Of course, it should be noted that Google (GOOG 2.30%) remains a threat. And it goes without saying that Google is firing on all cylinders. After all, its most recent quarterly revenue grew 19%. Moreover, industry research firm IDC found that Google's Android operating system accounted for more than 80% of all shipments in the third quarter.
Plenty of growth to go around
Google has clearly carved out a huge piece of the smartphone pie for itself, and that's not likely to change any time soon. In addition, while Samsung probably had a poor holiday quarter, it's not going anywhere either. But there doesn't seem to be any significant threat to Apple's iPhone sales. That's because the global smartphone market is so huge, and it's growing extremely quickly, particularly in the emerging markets.
Research firm Gartner found that worldwide smartphone sales reached 250 million units in the third quarter of 2013, up 46% year over year. Not surprisingly, Asia/Pacific led the way, with 77% growth in smartphone sales. Apple will soon reap the rewards of its newly announced partnership with China Mobile, which won't support the holiday quarter, but certainly will benefit Apple in the near future.
As a result, investors may want to think twice before getting too bearish on Apple's first quarter. It's likely Apple sold more iPhones during the quarter than ever before. With its partnership with China Mobile on the horizon, Apple may have a fantastically profitable road ahead.
