Thursday Grok: Are iPhone 4S sales about to tank?

Thursday Grok: Are iPhone 4S sales about to tank?

Supply chain problems rumoured, but money men unmoved

Tracking market share on a weekly or monthly basis, as many product managers do in the IT industry, is a guaranteed first class ticket to the Loon Lounge. You need to ride the helicopter occasionally, take a look through the wide angle lens. Breathe in for seven seconds. Hold for five seconds. Breathe out for seven seconds. Much better.

Now panic — iPhone 4S sales may be tanking. Tanking with a capital T. It’s like global warming, only much worse. But only if you credit this report in the <i>DigiTimes</i>, and not everybody does.

DigiTimes quotes unnamed sources saying Apple's supply chain partners are being told to pull on the reins and reschedule activity until after Christmas due to weaker than anticipated sales, and supply chain problems. DigiTimes itself seems to have picked up the tip off from a report in the Chinese language Commercial Times, which apparently suggests that "Some international IC players have also indicated that their revenues are likely to slide by 10-15% in the fourth quarter due to the shipment adjustments for iPhone 4S."

The money men aren't buying it though. A story in <i>Apple Insider</i> quotes analyst Maynard Um with UBS Investment Research describing the claims as entirely without merit."He cited his own sources who said that the iPhone 4S continues to see strong demand as it continues its rapid expansion to new countries around the world."

Then again, the same Apple Insider piece quotes another analyst, this time from Mike Abramsky at RBC Capital Markets saying there may indeed be some merit to the supply chain angle but the explanation may be more sanguine. Abramsky is quoted saying "One explanation is that the reduced orders (if true) may be related more to AAPL pulling back its typical over-ordering of components... to secure availability, particularly for this high profile launch during the holidays, rather than slowing sell through vs street expectations," Abramsky wrote in a note to investors."

For his part, and in a tweet, <i>Business Insider</i> CEO and editor, Henry Blodget, said the second aspect of the report — component shortages — makes more sense than weak sales, and he references this post by Benedict Evans to suggest there has been no slow down in Facebook usage data to support the declining sales proposition.

Blodget makes this point: "Last quarter, there were a couple of vague reports like this followed by a surprising short fall in iPhone sales in Apple's September Quarter results." But perhaps the best evidence mitigating against the report is this observation from <i>GigaOM</i>, "And, let’s not forget, Apple has already gone on record with huge expectations for the coming months. The usually circumspect and conservative executive team that regularly sandbags its quarterly estimates said point blank that this coming quarter will be Apple's for iPhone sales yet."

Grok sought a comment from Apple in the US late last night, but none was forthcoming by time of publication this morning. And we also contacted Samsung to ask if its sales are likely to be impacted materially this quarter by component supply problems. You know, just to be fair and balanced. No response was forthcoming by time of publication. As of 6am this morning, Grok found no reference to any Apple response across the media. This, of course, means absolutely nothing at all. It's not a crime to ignore the media, and silence does not give consent.

UPDATE: Samsung, unlike Apple, responded to our query post publication saying that for its part it was not experiencing any problems related with supply due to its diversified supply chain.

Andrew Birmingham is the CEO of Silicon Gully Investments. Follow him on Twitter @ag_birmingham

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