Apple's (AAPL +3.26%) new iPhone 6 and iPhone 6 Plus will obliterate sales records in China in the months ahead. Take it to the bank.
Source: Apple.
This is by no means a special or unique insight of my own. After all, analysts far and wide have long maintained the new Apple iPhone 6 and 6 Plus will help spur the mother of all refresh cycles in both America and China.
Last weekend, Apple's latest iPhones became available for preorder in the People's Republic of China for the first time. And then this coming weekend, Apple's latest and greatest iPhones will officially go on sale in China.
While we'll have to wait at least a few more days for an official sales figure from Apple, one publication made waves earlier this week when it claimed that Apple has received a whopping 20 million preorders for its iPhone 6 and 6 Plus. And although I hate to burst their bubble, that simply won't be the case. Here's why.
The case against 20 million
The first and, in my mind, most alarming issue with this story's widespread traction stems from its source -- the notorious Taiwanese tech publication Digitimes. For those unfamiliar with Digitimes, suffice to say it's a rumormonger of truly epic proportions.
The company, often hiding behind what it claims as firsthand sources "inside the supply chain," has a long and storied track record peddling the absurd and implausible to technology readers for years. Among many other illegitimate claims, in 2007, it published an article claiming Intel chips would power the then-upcoming iPhone. In 2011, the publication stated that Apple's suppliers would begin production of the still-elusive iTV television set in Q1 '12.
These are just a small sample, but hopefully you get the gist by now. Simply said, the originator of this story alone should have been enough to stifle the 20 million iPhone 6 preorder story before it started.
Too rich for my blood
The second key aspect that should have kept this rumor squarely on the launch pad is the magnitude of the number claimed -- 20 million. Although Apple doesn't specifically break out its device sales figures by region, there's still overwhelming evidence that calls this claim into question. For starters, think about how 20 million new iPhones would relate to Apple's historic sales data in China.
|
|
Cost in China (in $US) |
Claimed Number of Pre-sales |
Total Pre-sale Revenue |
|---|---|---|---|
|
iPhone 6* |
$860 |
20,000,000 |
$17,200,000,000 |
|
iPhone 6 Plus* |
$990 |
20,000,000 |
$19,800,000,000 |
*represents pricing for 16 GB iPhone 6 and 6 Plus
Source: Apple press releases and Digitimes.
Even for Apple, that's a lot of money. Consider, for a moment, that Apple generated a total of $25.4 billion in revenue in China in all of its fiscal year 2013, and this paints the claim in proper, implausible proportion. Also, the figures only reflect the potential revenue from the smallest 16 GB iPhones. However, because Apple's pricing scheme will likely push users toward the more expensive 64 GB version, and that the larger-screened iPhone 6 Plus caters especially well to Chinese consumers, there's plenty of reason to think that the above figures would largely lowball the actual windfall revenues 20 million presale orders would provide for Apple.
Source: Apple.
In my final attempt to debunk the 20 million Chinese preorder figures, it also makes sense to compare that total versus the iPhone 6 and 6 Plus's American debut several weeks ago. Late last month, Apple set another record for first weekend iPhone sales at an impressive 10 million units. Hopefully, you're sensing where I'm going with this one. Simply said, it's also extremely unlikely that Apple saw a historically unprecedented 2x sales outperformance in China versus its debut in North America, it's most prominent market in terms of revenue.
Only time will tell
I could certainly be wrong here. Admittedly, there's no hard-and-fast rule saying that China couldn't necessarily produce this kind of massive sales surge. However, in light of the myriad factors presented above, I've hopefully convinced you that this rumor is likely without merit.
This instance also serves a fresh reminder that a story is only as good as its sources. Digitimes has deservedly earned its reputation as a less-than-credible source for tech news. In the future, any reports coming from it should be taken with more than a grain of salt.
Investors and enthusiasts should also expect this weekend's iPhone 6 and 6 Plus sales debut in China to smash records. That's ultimately what will matter most as the biggest tech storyline of 2014 continues to play out before us.
