iPhone SE: The Hero of Apple’s Quarter
New research has come out regarding smartphone sales, and it provides a glimpse into Apple’s fiscal third quarter results.
Counterpoint Research announced, on July 20, that US smartphone sell-through has dropped by one-fourth in the second calendar quarter compared to the same period in 2019. A few details about the study are worth highlighting:
- Apple outperformed the sector, but not by much: a drop of 23% year-over-year.
- The postpaid channel was impacted less than prepaids – which is good news for Apple.
- April was the worst month, when most retailers were closed and sales volume dropped in half.
- Stimulus checks and the reopening of carrier stores helped in the second part of the quarter.
- Samsung was also a relative winner, largely due to a strong online channel.
iPhone SE: perfect timing
The iPhone SE will probably save Apple’s smartphone sales in the US, at least to some extent. Counterpoint itself seems to believe so, based on its data observations:
This is very much in line with the “what could go right” section of my iPhone earnings preview. Here was my take on the entry-level model, published early last week:
The good and the bad news
The good news is that the iPhone SE might have been the antidote to otherwise very soft sales in what I think will be the most challenged of Apple’s geographic segments. Elsewhere around the world, I do not believe that the Cupertino company will face the same difficulties, as (1) the Eastern economies have been further ahead in the coronavirus cycle and (2) other countries in the Western hemisphere have done a better job than the US at shaking off the COVID-19 crisis.
The bad news is that the iPhone SE is a lower price point device that I believe carries lower margins. Apple’s smartphone unit sales resilience in the US may not translate very well into total revenue strength. Also, should I be right about profitability, whatever top-line traction the company can gain from the iPhone SE will not impact earnings as much as the iPhone 11 could.
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