Apple -- October 31, 2020

In a long note like this there will be content and typographical errors. 

Disclaimer: along with the Bakken, I am inappropriately exuberant about Apple. This has nothing to do with investing in AAPL. This is simply about Apple, the company and their products. 

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. 

So, let's start here:

In the graphic above, note the delta between the end of the 4th quarter (the September-ending quarter) and the 1st quarter (the December-ending quarter). Some are predicting that 2020 - 2021 will be similar to the 2014 - 2015 experience based on iPhone 12 sales. The question is whether the 1Q21 spike will be significantly greater than a year earlier or if Apple revenue has plateaued.

From the graph:

• 4Q14: $40 billion; 1Q15: $75 billion or an increase of 87.5%.
• 4Q20 = $64 billion. 1.875 x $64 = $120 billion.
• 4Q20 = $64 billion. To get to $100 billion, that would be a 56% jump.
  

Folks like me, Tim Cook, and others can rave about record iMac and MacBook revenue, services revenue, and wearables revenue but the fact remains: APPL's share price "depends" on iPhone sales in the December-ending quarter.

Some suggest that iPhone 12 will be the most successful phone since iPhone 6, released in September, 2014. From wiki:

Apple Inc. announced that, within 24 hours of availability, over 4 million pre-orders of the iPhone 6 and 6 Plus were made, exceeding the supply available—an Apple record. 

Ten million iPhone 6 and iPhone 6 Plus devices were sold in the first three days, marking another Apple record. 

Apple iPhone 6S & 6S Plus were introduced in September 2015 selling 13 million units which set the record for sales in the first three days from last years release. 

Three months after its release, the iPhone 6 generated 71.5 million unit sales. 

During their lifetime, the iPhone 6 and iPhone 6 Plus sold a total of more than 220 million, making them the best selling iPhone models and one of the best selling mobile phones of all time. 

The exact total sales of the iPhone 6 are unknown, but it's estimated that roughly 222.4 million units of the iPhone 6 have been sold as of June 2017.

The iPhone SE was released in 2016. I have the iPhone SE and I bet I'm one of many.

Fast forward to September / October, 2020. Apple announces iPhone 12 series -- there will be four versions. Two were released at about the same time as they were announced; due to anticipated demand, the other two versions were delayed until adequate numbers could be put into the supply chain for the anticipated demand. 

The four versions (starting at):

• iPhone 12 ($799) -- 6.1-inch display -- available for ordering at time of announcement
• iPhone 12 Pro ($999) -- 6.1-inch display -- available for ordering at time of announcement
• iPhone 12 Pro Max ($1099) -- 6.7-inch display -- pre-order November 6, 2020 -- note: pre-order, not delivery date or availability
  
• iPhone 12 Mini ($699) -- 5.4-inch display -- pre-order November 6, 2020 -- note: pre-order, not delivery date or availability

Logistics, link here.

Several of Apple's ‌iPhone 12‌ and 12 Pro models sold out within a few hours of launch, and many new orders are now shipping out later in November. 

We can likely expect to see similar constraints for the upcoming iPhone 12 Pro Max and 12 mini, as these devices were held back due to rumored production issues that required Apple to wait to build up enough supply. 

Given the situation with ‌iPhone 12‌ and 12 Pro pre-orders, those planning to purchase a 12 mini or 12 Pro Max should plan to do so right when pre-orders go live on Friday, November 6 at 5:00 a.m. Pacific Time.

Pricing, link here. 

Size matters. I love these "price points." Seriously, even without knowing the difference between the "Pro" and the "Pro Max" wouldn't you spring for the "Pro Max" at only $5 extra per month? I guess it simply comes down to whether you want the 6.1-inch display or the 6.7-inch display. The buzz: folks "loooove" the larger display. 

And "everybody" has a trade-in.

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iMac

On a completely different note, we now turn our attention to the iMac -- the desktop that was supposed to have died years ago. Link here. 

The desktop iMac comes in two versions, the 21-inch and the 27-inch. The latter is new and the size I've been waiting for, for the past several years.

 The 27-inch comes in three models: $1799; $1999, and $2299. 

The $1999- model appears readily available but the $1799 is a bit delayed and not available at our local Apple store. Meanwhile, the $2299-model is even a bit more delayed than the $1799-model. Recession? What recession?

I bought the $1799 model at Costco last week: it was on sale, $100 off. Costco limited sales to two per customer. No waiting. Same day. Walked in. Walked out. Fifteen minutes tops.

The desktops are being used for telemedicine, distance learning, etc. If your employer is springing for it, buy the $2299-model -- that helps explain the relative supply shortage there.

From social media:  

• Yeh - .... Just ordered 27" iMac - 3-4 weeks delivery. New Zealand.
• My 2020 iMac was supposed to be 3 weeks but arrived after 1 week.  

Most folks can understand "everything" Apple being delayed but not the desktop, but there it is. Delayed by several weeks.  

I have been waiting for the larger iMac for years but a) did not need it; and, b) had no place to put it in our small apartment. But now that we have converted our dining room to a distance-learning room for Sophia, a) we had a reason to get it; and, b) we had a place to put it.  

Spectrum cable is expensive, but all of a sudden we're getting much more value for our buck.

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Other Items Of Interest

Apple's Form 10-K also revealed the following details:

• As of September 26, 2020, Apple had approximately 147,000 full-time equivalent employees, an increase of 10,000 employees from one year prior.
• Apple spent $18.75 billion on research and development in the 2020 fiscal year, up approximately 16 percent from $16.21 billion in the 2019 fiscal year. Apple said this increase was primarily due to "headcount-related expenses."
• Apple spent $2.95 billion on warranty claims in the 2020 fiscal year, down approximately 23 percent from $3.85 billion in the 2019 fiscal year. [Not said, but probably related to the keyboard.]
  
• Amid mounting scrutiny over its App Store practices, Apple acknowledged that if the commission it collects on certain purchases were to decline, the company's financial results could be "materially adversely affect."