Apple Shines, But You Ain’t Seen Nothing Yet

A new iPhone in September would put this quarter’s results in the shade

Once again Apple has reported a set of results that defy the general economic gloom. Sales of iPhone and iPad devices were ahead of every expectation, with Mac and iPod numbers very strong as well.

Apple’s chief operating officer, Tim Cook, singled out China as “key to our results”, and mentioned Brazil, Mexico and the Middle East, too. It’s clear that buyers in emerging markets are finding the iPhone just as desirable as consumers in more mature markets. And, remarkably in these straitened economic times, are able to find the money to pay for it. Remember that the average selling price of an iPhone is over $600.

More importantly, this was the first time that Apple has not launched a new version of its mobile device in June. The iPhone 4 is now more than a year old.

The results appear more remarkable against a backdrop of slackening demand in the iPhone’s traditional markets. Talking to network operators and distributors around Europe, we believe demand for the iPhone4 has been lower than expected in the past couple of months.

These distribution partners are quick to point out this doesn’t mean the iPhone has lost its lustre. It’s a reflection of the many subscribers with older models 3G or 3GS iPhones who are coming to the end of their two-year contracts. They’re a large and growing pool of valuable customers who took the iPhone when it was offered by just one network in each country.

When these customers are approached by operators to upgrade, they say they’ll hold onto their current device. I think they’re waiting for the next-generation iPhone, which is rumoured to be coming out in September.

Some of the distribution partners we’ve spoken to have said these users are probably early iPad adopters who were caught out by the rapid introduction of the iPad 2 less than nine months after the launch of the first Apple tablet. They don’t want to be caught out again.

The problem for operators that used to have exclusive deals for the iPhone will be how to retain customers who now have a choice of network. And other operators have an opportunity to tempt those potentially high-spending iPhone users to switch networks. It could be a testing time for all involved, especially as we expect initial supplies of a new device to be very scarce.

Whatever happens, it’s likely we won’t have to wait long to find out. During the announcement of Apple’s results, chief financial officer, Peter Oppenheimer, said the company had “a future product transition” that would “impact our September quarter”. A new device in September would be a starting gun for the next wave of Apple mania.