Business

09.23.13

Apple’s New iPhones Met by Strong Demand

Who says we’ve reached peak Apple? Over the weekend, the company captured the public’s imagination (and dollars) with the launch of two new iPhone models.

It turns out that reports of Apple’s death have been greatly exaggerated.

It was a big weekend for Apple with the release of its new line of iPhones. The company should say a hearty “thank you” to all the fanboys and fangirls who embraced the new product. They should also start pronouncing the phrase “xie xie ni.”

130923-OConnor-iphone-tease
Andy Wong/AP

Why? For the first time, Apple simultaneously released a new product in the U.S. and China. And that combination of developed-world and developing-world demand powered Apple to a blockbuster launch.

Over the weekend, the combined release of the 5S and the somewhat more economical 5C resulted in the sale of nine million devices, shattering the record of five million for the iPhone 5.

Apple also saw more than 200 million downloads of its new operating system iOS 7.

The biggest driver of the record sales was, as mentioned, likely the concurrent release for the first time in China, where the phones have a significant markup. The new gold iPhone was reportedly so popular in China during presales that suppliers had to boost production.

There are a couple of reasons to be skeptical of the notion that Apple will be able to appeal to a new class of less-affluent consumer with its moderately cheaper iPhone. As the Huffington Post notes, the robust number of 9 million was for two phones, and Apple did not release separate numbers for the sales of the two models.

AAPL Chart

AAPL data by YCharts

In the past, Apple was quick to crow about its successes. But it appears the 5C did not have enough early hits either domestically or in China for Apple to brag about. And of course there are the perennial stories about how the new models are really fragile and easy to break, or are easy to hack.

On the positive side of the ledger, there was a great feel-good Wall Street Journal op-ed on Saturday about how students using the new upgrade can turn their smartphones into microscopes.

The best stories out of the weekend came from the crazy Apple store lines. 

In Southern California, homeless people were hired to wait overnight and buy iPhones for a businessman. He reportedly paid each $20-40 per device. Predictably, when things did not go according to plan with a few of the homeless hires (their tickets were not accepted in the Apple store), a scuffle ensued and the businessman was taken away by police. According to the Los Angeles Times, many of the homeless were left stranded and uncompensated after he left.

In New York meanwhile, lines wrapped around the block at Apple stores. And according to Bloomberg, at the flagship store on Fifth Avenue, there were people trying to pay $1,000 for a spot in line, as well as Chinese immigrants looking to buy iPhones to sell back in China (where the markup is quite high).

Speaking of mark-ups, Apple’s stock got one on Monday morning. The buzz created by those headlines, not to mention the prolific sales numbers, triggered a pre-market share increase of 4 percent. And Apple adjusted its filing with the SEC to say that revenue in the current quarter will come in at the high end of its estimate.