5 Million unit sales for Apple is promising, previous estimates were unrealistic, say experts

Wednesday, September 26th, 2012 5:31:39 by

Apple’s new smartphone, the iPhone 5, has received mixed reviews from experts at Wall Street. Though the handset is quite an elegant piece of electronics, its new Maps app has been lacklustre and the debut sales did not go as planned.

Prior to the release at retail stores, analysts expected iPhone to sell in tune of 6 to 10 Million units. However, the Monday report said that Apple had made only 5 Millions sales over the first weekend.

According to Sterne Agee analyst Shaw Wu, the initial estimates of 10 Million-unit sale were quite unrealistic. Even five Million is whopping figure in its own right. However, he also maintained that the supply chain disruption might have caused some problems; Apple might have hit an even bigger number.

“In the big picture, it doesn’t really matter how many they sell in a few days,” Wu said. “It matters what they sell over the next two quarters.”

“Every time there’s a new technology there’s a bit of a learning curve before you can ramp production,” he continued. “There’s a bunch of new components here.”

The new iPhone brings a number of new components, some of them even the first for the industry. The new in-cell touch-screen technology is one of the most prominent and most discussed one. It is the first time in smartphone industry’s history that touch-sensors and liquid crystals have been fused together in a single layer, making the component cheaper and thinner.

However, despite being cheaper, it is the most expensive one in the iPhone 5 package, costing the company at $44 apiece, according to a teardown analysis conducted by IHS iSuppli. Following closely is Qualcomm’s 4G LTE chip, for the first time in an iPhone. It costs Apple $34 in a single handset.

The phone itself costs Apple $207 for the 16 GB model in manufacturing, according to IHS iSuppli. It sells for $649 without a contract. The profit margin is 68 percent, which goes higher with the increase in storage capacity.

Apple shares were down 2.5 percent on Tuesday to $673.54 after dipping 1.3 percent on Monday.

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