This week, Canaccord Genuity released its monthly wireless store survey, and as expected, it was good news for Apple (AAPL -1.37%). This survey compares the top three smartphone spots at the four major U.S. wireless providers -- Verizon, AT&T, Sprint, and T-Mobile US -- and for September, no other handset maker even placed. That's right: Apple's iPhone 6, iPhone 6 Plus, and iPhone 5s were the top three, respectively, at all the major vendors.
That result led Canaccord Genuity analyst Michael Walkley to lower his Android smartphone estimates and raise his estimates for iPhone shipments to 63 million units in Apple's holiday quarter and nearly 180 million this calendar year. For investors, is this too aggressive, or can Apple sell 63 million (or more) units this quarter?
Based on history, it will be tough
One thing's for sure: It's going to be harder to set this record than before. Ever since Apple changed its release date to coincide with the seasonally heavy fourth fiscal quarter in 2011, sales have jumped. However, so have expectations. It's not just Canaccord Genuity that believes Apple will sell roughly 63 million units: Piper Jaffray's Gene Munster also thinks 63 million is a good figure.
And Apple's off to a great start by moving 10 million units in its first weekend. Just for a mere comparison, I used a regression analysis to attempt to ascertain the link between Apple's first-weekend sales and fourth-quarter sales. The numbers come to a much lower total than either analyst predicts:
Let's focus on the equation in the lower left corner. This equation attempts to predict Apple's fourth-quarter totals based upon the past relationship between its first-weekend sales and total quarterly sales. If the equation holds, Apple will sell 54.21 million units (2.23 times its 10 million first-weekend sales plus 31.9 million) and come in nearly 9 million units short.
And this is why China is so important ...
This could be the quarter that Apple moves significant units in China. After inking deals with China's three main telecoms -- China Unicom, China Telecom, and China Mobile -- Apple is set to benefit from the continued expansion of 3G and 4G penetration. Behemoth China Mobile plowed $7 billion into its 4G network last year in an effort to add to its subscriber base of nearly 800 million.
Apple also virtually ensured a hit by introducing a larger form factor with both units, but especially the phablet-sized 5.5-inch iPhone 6 Plus iteration. The phablet form factor is popular in the Asia-Pacific region. If the preorder numbers are correct, Apple can expect significant contributions to the iPhone forecast of 63 million units -- reports state there are 20 million units preordered in China, or nearly one-third of analysts' totals. In fact, Apple would boast nearly one-half of the 63 million unit total in just preorders if the China number is accurate.
In addition, that's only one country. Apple plans on rolling out the unit by a total of 69 countries by the end of October and 115 by the end of the year, making this Apple's fastest iPhone rollout. Look for these numbers to show up in fourth-quarter earnings and perhaps making the 63 million unit total low.
Apple's iPhone officially goes on sale in China on Friday, Oct. 17; look for sales figure leaks to come from multiple sources quickly thereafter. On a historical basis, selling nearly 63 million units in one quarter would appear to be a stretch for Apple. However, when one looks at the tremendous opportunity China possesses, that number may actually be low. In addition, Apple's quicker rollout can "pull forward" orders into the fourth quarter.
And even if Apple falls short of its 20 million preorders in China, remember that its iPhone is a "gateway" product -- one that traps users in its sticky ecosystem. Apple investors should be able to watch for good things from the company's China operations for years to come.