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Tomas Gallucci

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Back of the Envelope Math [Jul. 6th, 2012|05:53 am]
Tomas Gallucci
Horace Dediu of asymo.com fame released numbers a while back analyzing Apple's monumental 2011 holiday quarter. To whit:


  • The iPhone has grown at an average rate of 100% year on year.

  • The iPad has grown at an average rate of 150% year on year.



It recently occurred to me what this means should the numbers hold true this holiday quarter: Apple can easily have a quarter with over $50 billion dollars in revenue.

Let's do some back of the envelope math.

37 million iPhones1 x 2 = 74 million iPhones to be sold in calendar Q4 2012.
15.5 million iPads1 x 2.5 = 31 million iPads to be sold in calendar Q4 2012.
------
105 million iPhones + iPads to be sold in Calendar Q4 2012.
x $500 Average Selling Price
-------
$52.5 billion for just iPhones and iPads

But $500 ASP is far below what was calculated here: $630/phone.
It is safe to say that the iPad has enjoyed an ASP of no less than $6002

And we haven't started counting Macs, iTunes, iPods, etc.

While I'm not a financial adviser and anything published here on this blog should not be considered professional financial advice, I believe it is safe to say that if Apple continues its upward trajectory, we will see a very impressive holiday quarter this year and therefore "You should bet on the Bitten Fruit"™.


1Apple's fiscal Q1 2012 statement
2seekingalpha.com
linkReply

Comments:
[User Picture]From: mrs_dragon
2012-07-07 01:19 am (UTC)
General rule of finance: By the time the average person has noticed a trend, the price is about to spike, and then plumment as everyone dog piles on and then panics and bails.

General rule of math: Things can't increase exponentially forever. In other words, two really great holiday seasons do not a third make.
(Reply) (Thread)
[User Picture]From: schpydurx
2012-07-07 07:43 am (UTC)
I agree with your premise but disagree with the conclusion.

The Law of Large Numbers will take effect at some point. But we've seen Apple create and destroy markets for over a decade now and there's no sign of them slowing down. It's true, for instance, that the iPod is not the market it once was; but the company has had substantial growth since the introduction of the iPod.

In fact, the iPod was disrupted by Apple itself on January 9, 2007 when Apple released a product that we know as iPhone, but in reality was an iPod that could make phone calls, though it's only been within the past year or so that the iPod has had negative growth.

I think that Apple will continue to disrupt themselves long before the competition does. If Apple sticks to their core values of design (as defined as how a product works, not how it feels), remaining a consumer-oriented company rather than chasing "enterprise" and continuing to be proactive instead of reactive, Apple will remain a very valuable company for a log time. The question will be what product(s) make(s) the bulk of the revenue stream that sustains that value.

I have many other reasons to believe that Apple will be a major player for a long time to come, but I don't know that I could fit them all in a single comment or even make coherent, cohesive arguments properly documented, though I do have some theories I want to explore in the coming days.
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